Contributed By Gilat, Bareket & Co., Reinhold Cohn Group
Patent infringement cases are heard before the district court. Arbitration of patent disputes may take place before arbitrators operating within private arbitration institutions (mainly retired judges) or other attorneys from the private practice.
Third parties that wish to remove the effects of patents may:
Notably, an application for compulsory licence provides remedy to the applicant and does not result in the revocation or narrowing of the patent. This procedure has not been used since the early 1990s.
The Israeli judicial system consists of three tiers: Magistrates’ Courts, District Courts and the Supreme Court. Patent infringement cases are heard exclusively before District Courts as first instance.
Each of the six district courts has local jurisdiction within its district. Local jurisdiction (venue) among the six District Courts is determined by the general principles of choice of venue applicable to all civil litigation; of particular relevance to IP cases are the rules based on the defendant’s residence or place of business or the place of infringing activity.
A claim against a foreign entity that has no place of business in Israel may be brought before the District Court of Jerusalem, which has residual authority.
A leave of court is required in order to affect service out of jurisdiction. If the defendant is unable to challenge the leave, the court will deem to acquire international jurisdiction over the defendant.
Judgments handed down by district courts may be appealed to the Supreme Court without requiring leave. Other decisions, such as decisions in interim relief proceedings, may be appealed only with leave.
The Committee for Compensation and Royalties is a specialised body for resolving intellectual property disputes concerning employee entitlement to remuneration for service inventions.
There are no prerequisites (such as warning letters or engaging in mediation) for filing a lawsuit. Only the patentee and an exclusive licensee may file an infringement lawsuit. All co-patentees (and the exclusive licensee, if exists) must be joined as parties to an infringement action in order to have standing to sue.
For court fees for filing a lawsuit, see 8.2 Calculation of Court Fees.
Thus, in large-scale cases the court fees may reach significant amounts. The usual practice is to indicate merely a nominal amount for court fees; however, at the damages phase of the trial, the court fee for the full amount of the damages sought must be paid. One half of the court fees is paid as a condition to filing the lawsuit. The second half is payable before the trial date.
At the defendant’s request, the court may require the plaintiff to provide security for costs. Where the plaintiff is a limited liability company, the burden is on the plaintiff to prove that he or she is able to bear the costs if they are awarded against him or her. In the absence of such proof, the court will be inclined to order a security for costs. However, the court may not require a security if appropriate, having regard, inter alia, to the strength of the plaintiff’s case.
Where the plaintiff is an individual, although formal power to require security for costs exists, the court will usually refrain from making an order. However, where the individual plaintiff is a foreign resident lacking assets within the jurisdiction, the court will be inclined to issue an order (unless the plaintiff is a resident in a country that is party to a treaty with Israel in which the Israel agreed to waive the requirement of security for costs for residents of the other country).
Representation before courts and the Registrar is not mandatory. Nevertheless, it is highly recommended. Representation is made solely by lawyers licensed by the Israeli Bar Association. In addition, patent attorneys may, by leave of court, argue in court on non-legal matters related to an invention or a patent, provided that the party’s lawyer is present. In proceedings before the Registrar of Patents, the party may be represented by a licensed patent attorney.
Following a recent amendment to Bar Association law, foreign lawyers may represent clients in Israel in a limited capacity, namely by counselling on the laws of the jurisdiction in which the foreign lawyer is certified and drafting documents to which the law of the foreign jurisdiction applies. Accordingly, foreign lawyers are not permitted to represent or counsel clients regarding patent infringement litigation in Israel.
Foreign lawyers licensed to represent a party or interrogate witnesses on behalf of a party in a foreign jurisdiction may actively take part in proceedings before an Israeli court for the taking of evidence, pursuant to a foreign state’s letter of request in accordance with the Mutual Legal Assistance Between Countries Law 1998.
Preliminary remedies are available in the Israeli legal system. These include: preliminary injunctions, Anton Piller-type search-and-seizure orders, receivership orders, attachment (lien) orders, and other interim reliefs. In addition, the court has the power to grant any appropriate remedy under case circumstances.
A preliminary remedy is typically requested simultaneously with or shortly after filing the statement of claims; the court may grant a preliminary remedy prior to filing the statement of claims if it was found that such measure is justified in the circumstances, in which case the claim must be filed within seven days or as prescribed by the court.
In order to receive a preliminary remedy, the applicant must show that immediate intervention by the court is needed to preserve the status quo and to prevent irreparable harm. The applicant must also petition for interim remedy in good faith and in a timely manner to avoid the petition from being barred by the doctrine of 'unclean hands' or by laches, respectively. The court will consider whether the interim remedy is just and appropriate in the circumstances.
To obtain preliminary remedy, the applicant must establish through prima facie evidence that:
Interim relief proceedings are normally conducted inter partes. Ex parte remedy may be available if the applicant persuades the court by prima facie evidence that deferring the remedy until an inter partes hearing may defeat the purpose of the order or cause the applicant severe damage.
Applications for search-and-seizure orders, attachment orders, and orders restricting use of an asset (Mareva-like orders) are the exception to the general rule and are normally heard ex parte unless the court is satisfied that an inter partes hearing would not frustrate the purpose of the requested order. An ex parte order other than an attachment must be followed by an inter partes hearing within and no later than 14 days. Hearing an application for ex parte order, the court will exercise greater caution than in inter partes proceedings.
Applications for interim remedy are made as a written application. The respondent then has 20 days to respond to the application and the applicant may in its option reply to the respondent’s response. All factual contentions in the application, response and reply must be supported by an affidavit. As a rule, the parties have a right to cross-examine the affiants during the hearing of the application. The judge may issue the decision at the conclusion of the hearing or may defer the decision, either to take the matter under advisement or to allow the parties to sum up in writing. Applications for interim remedy may be resolved within days, weeks and sometimes several months.
The president of the remedy court or a judge to whom such powers were delegated may order the main case to be expedited in lieu of hearing an application for interim relief. Where the issues are complex, judges may be inclined to follow this route.
In general, for an interim remedy to be issued, the case should be relatively clear and strong. In recent years, there has been a decrease in the tendency of trial courts to issue such remedy.
Security for the defendant’s damages resulting from an expired temporary remedy order: as a precondition for interim remedy to be effective, the applicant is required to provide a personal unlimited undertaking and a third-party guarantee (typically, a bank guarantee) at an amount set by the court to indemnify the defendant for his or her damages if the claim terminates or the order expires.
The court may exempt the applicant from the requirement of providing a guarantee out of considerations of justice and for special reasons, but the requirement of providing a personal unlimited undertaking is a mandatory requirement. Also, the court may require the applicant to post a bond if the court deemed it just to do so, and the court as a general rule will require a bond in respect of ex parte orders unless the court deemed it just to exempt the applicant from such requirement.
On termination or expiration of a temporary remedy order, the defendant (respondent) may file, within six months, an application to order the plaintiff to compensate the defendant for damages it suffered from the order, and the court will rule on it. See Unipharm v Sanofi (in 2.13 Restrictions on Assertion of Intellectual Property Right), where the District Court ordered that a generic company that opposed a patent application that was withdrawn by the patent applicant may be entitled to disgorge part of the patent applicant’s profits. It was found that the patent application was prosecuted improperly in an attempt to extend the patent protection for a pharmaceutical product about to become off-patent.
Declaration of non-infringement: a third party may ask the court for a declaration that his exploitation of the invention disclosed in the patent does not constitute an infringement. The patentee and the exclusive right-owner are the respondent in this application. The applicant must give the patentee full details of the product or process he or she wishes to use. It should be noted that in these proceedings the applicant cannot argue that the patent is invalid. Furthermore, the grant or refusal to grant the declaration of non-infringement shall not be decisive on the question of the patent’s validity.
There are no special statutory limitation provisions regarding intellectual property matters, and these matters are subject to the general seven-year limitation period prescribed by law. This limitation period on infringement actions commences on the date when the cause of action accrued. The limitation period 'race' is suspended in the following circumstances:
If the plaintiff was unaware of the fact constituting the cause of action, for reasons not dependent on it, and that could not be prevented even by taking reasonable care, the limitation period begins upon the plaintiff learning of these facts.
Case law shows an accepted position that in patent infringement each act of infringement gives rise to a new claim. Thus, a claim that seeks an injunction is not time-barred by the statute of limitation even when infringement commenced more than seven years before the claim was brought. However, damages cannot be recovered for a period in excess of the seven-year limitation period.
Discovery, inspection and written interrogatories proceedings are available in Israel. There are no depositions, and, moreover, there is no pre-complaint discovery in Israel.
Interim orders such as Anton Piller-type search-and-seizure orders and receivership orders may also assist a party in the collection and preservation of evidence.
Discovery is not available against non-parties. However, a third party may be summoned to produce particular documents from third parties under subpoena duces tecum issued by the court on a party’s application. Disclosure from non-parties must be limited to specific documents.
A lawsuit is initiated by filing a statement of claims, which starts the exchange of pleadings. The statement of claims must set forth the facts that if subsequently proven establish the plaintiff’s cause of action, and thus requires substantially more detail than a complaint filed in the United States.
Nevertheless, the plaintiff need not prove any evidence at the stage of filing the statement of claims but will typically undertake private fact-finding and gathering of evidence before bringing a legal action, because the statement of claims must set forth in some detail the facts that support the plaintiff’s cause of action.
The defendant must respond with a defence statement within 30 days of being served with the statement of claims. The defence statement must set out all the material facts underlying the defences raised by the defendant. The plaintiff is entitled, but not obligated, to respond to the defence statement with a response statement within 30 days.
The case then proceeds to pre-trial hearing, which is intended for delineating issues in dispute between the parties and in which the parties are encouraged to resolve discovery and interrogatory controversies. If not settled, the case proceeds to trial. The judge prescribes the schedule for the submission of evidence, usually by way of written affidavits and expert opinions.
There may be another oral hearing before the judge to ensure that all the evidence has been submitted. Thereafter a trial hearing is held where the witnesses and experts are cross-examined. Afterwards, the parties exchange summations (usually in writing), and the judge later hands down the judgment.
There are no collective actions (such as class actions) for intellectual property proceedings. However, a patentee is exposed to class actions, for example, if he or she violates antitrust laws, as in the case of Sanofi (see 2.13 Restrictions on Assertion of Intellectual Property Right).
As a rule, if a rights-owner files suit against more than one defendant regarding infringement of the same rights and more or less the same factual background, the suits will be joined (and vice versa, if a few plaintiffs file suits against the same rights-owner).
The provisions of the Israeli Patents Act were amended in order to accord with the TRIPS Agreement regarding compulsory licence. Nevertheless, these provisions have little significance in practice and have not been in use since the early 1990s.
These provisions hold that if the patentee or the exclusive licence owner is misusing his or her 'monopoly power', the Registrar may grant a compulsory licence to exploit the patent to third parties who petitioned for a compulsory licence. This is provided that the motion was filed after the later of either three years from the grant of the patent or four years from the application date.
Examples of misusing monopoly power:
Upon request, the Registrar may also grant a compulsory licence for medical purposes for a patent product that can be used as medicament of a patented process for the production of a medicament.
Compulsory licence to exploit an earlier patent: If later the patented invention cannot be exploited without infringing an earlier patent, then the Registrar may grant a licence to exploit the earlier invention to the extent necessary and under the condition that the later invention serves a different industrial purpose and that it shows a considerable advance over the earlier invention.
Antitrust Law and Patents
The Patents Act, Section 49(b) expressly provides that the grant of the patent does not allow the patentee to unlawfully exploit the invention in a manner that breaches any other law. As such, although there are no special provisions in the Patents Act about antitrust law, note that there might be liability in accordance with antitrust law regarding a misuse of rights.
In particular, in a recent decision issued by the District Court in Unipharm v Sanofi the court held that the patent applicant, Sanofi, misled the ILPTO and breached the duty of disclosure, since a PCT application was filed that claimed priority from an application with an erroneous example. Sanofi continued to claim priority even though it knew about the error and did not include sufficient detail of the reason for the error and its circumstances.
This judgment creates, by way of judicial legislation, a new cause of action under the doctrine of unjust enrichment. It allows a private competitor to bring an action against an innovative pharmaceutical company (that was found to have improperly prosecuted a patent application), seeking accounting and disgorgement of its profits, as a punitive measure, without regard to any damage to the private competitor.
The court further held that it was irrelevant whether the error would have been easily overcome, as Sanofi argued. The court held that because of Sanofi's perceived omission, Sanofi was not entitled to raise this argument. These findings, if not overturned on appeal, mean that every error in a priority application known to the patent applicant must be rectified prior to filing a national application. This monumental burden applies also to errors that a person skilled in the art may easily overcome.
In addition, patent applicants are now subject to the highly broad duty of disclosure, the boundaries of which are unclear. This may in turn lead to an increase of inequitable conduct in litigation in the future, an indication of which can already be found in recent case law by the ILPTO.
In its suit, Unipharm further claimed that Sanofi's abandoned patent application was a "weak application" that was filed merely to block legitimate competition and, having reached this objective, was abandoned. The judge did not accept this argument.
It therefore left open the question of "whether, and under what conditions, the filing of a patent application, whose chances are slim, by an ethical company with the purpose of delaying the entrance of generic [products] into the market establishes cause for action for the generic company delayed [from entering into the market] following the patent application".
In addition to the findings regarding improper prosecution and breach of disclosure duty, the court found that Sanofi's actions amounted to abuse of a dominant position under Israeli antitrust law, and did so without discussing the relevant conditions stipulated by law in order for a company to be considered a monopoly.
It is worth noting that Sanofi appealed to the Supreme Court and Unipharm filed a counter-appeal. Both the appeal and the counter-appeal are currently pending before the Supreme Court. In addition, a class action complaint was filed against Sanofi for violating antitrust laws. This class action is currently stayed pending a decision in the appeal and counter-appeal.