Contributed By Gilat, Bareket & Co., Reinhold Cohn Group
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.