January 27, 2014

Major Overhaul of the Israeli PTE System: Attention and Action Required

Eran Bareket, Senior Partner, Head of Legal Practice
Eran Bareket

Senior Partner, Head of Legal Practice

Gilat, Bareket & Co.
Dr. Ronnie Benshafrut, Senior Partner, Head of Life Science & Chemistry Practice
Dr. Ronnie Benshafrut

Senior Partner, Head of Life Science & Chemistry Practice

Reinhold Cohn & Partners
Chen Ben Dori - Alkan, Partner
Chen Ben Dori - Alkan

Partner

Gilat, Bareket & Co.

On January 20, 2014, the Israeli Parliament (the Knesset) completed the legislation process of an amendment to the Patents Act, overhauling the patent term extension (PTE) system1. This Amendatory Act, which significantly reforms the PTE system in Israel, was published in the Official Gazette (Rashumot) on January 27th, 2014, entering into force2. Failure to observe the revised PTE provisions might result in a loss of rights. Pharmaceutical companies that plan to obtain marketing rights for their drugs in Israel and that wish to enjoy extended patent rights under the PTE provisions, should carefully review their current SOPs pertaining to PTEs, in order to determine the appropriate changes that may be required.

No More Time Extensions for Submitting a PTE Application

A PTE application must be filed within 90 days of the drug’s first registration by the Israeli Ministry of Health (“MoH”). Hitherto, if the Patentee missed the deadline, the ILPTO had power to retroactively extend the time for making the submission3. The Amendatory Act abolishes this power. Consequently, failure to meet the deadline may now result in loss of rights.

Practical Advice:

A. General: Tighten up SOPs, to minimize the risk of missing the deadline. Educate relevant personnel regarding these changes in particular and the deadline requirements in general. 

B. Establish a direct reporting link between the local regulatory function and the Israeli patent attorneys firm: Experience shows that deadlines are often missed. A long reporting chain, between the local professional4, the Regulatory Department at the company’s headquarters, the company’s patents department and the Israeli Patent Attorneys Firm, is prone to errors. Establishing a direct reporting link between such local professionals and the Israeli patent attorneys firm may cut through the chain. Of course, authorization to submit a PTE application will be issued only by the authorized officer and not necessarily from the local professional.

C. Count the 90 days from the early registration date (and not the later marketing authorization date): As you may recall, we reported in the past that the 90-day period commences on the registration date, which often precedes the later date of the marketing authorization5.  This distinction is confusing to some, and errors have occurred. In the past, it was possible to obtain a time extension to rectify such an error; however, careful attention will now be required, as time extensions will cease to be available (this is another area appropriate for education of the relevant staff members). 


Pending Patent Applications: Change of Practice

Occasionally, the patent application is still pending at the time of a drug’s registration by the MoH. Hitherto, it was a requirement that the patent be in effect at the time of the PTE application’s submission. Accordingly, it was not possible to submit the PTE application within the 90-day deadline. More than 10 years ago, we were able to secure an ILPTO decision that allowed patent applicants to avoid this “Catch 22” in such a situation, by obtaining a time extension to submit the PTE application within a certain time period after grant of the patent6. This has been the standard practice since.

The Amendatory Act changes the scheme. Henceforth, PTE applications must be filed within 90 days of the drug’s registration, even when the patent application is still pending. However, examination of such a PTE application will commence only after the patent grant.

With respect to drugs that were registered before the Commencement Date of the Amendatory Act, while the patent application was still pending, the Amendatory Act’s transition provisions provide that the PTE application must be filed within the later of 90 days of the Commencement Date of the Act or the registration date. It is unclear whether this transition provision applies also when the ILPTO has already granted a time extension to submit the PTE application until after the patent’s grant7. Thus, such cases should be identified and a decision should be made regarding whether a PTE application should be filed prior to the expiration of 90 days from the coming into effect of the Amendatory Act.

Practical Advice:

A. Review cases in which the ILPTO has already granted an extension of time to submit a PTE application after the grant of a pending patent application and consider whether the PTE application should be filed within 90 days of the Commencement Date.

B. Timely submit PTE applications for pending patent applications: Drug registrations in Israel should be reviewed to ensure that the PTE will be timely filed in respect of relevant pending patent applications within 90 days of registration of the drug.  


Acceleration of Prosecution

One of the aims of the Amendatory Act is to ensure a final disposition of PTE applications sooner rather than later8. Accordingly, the Amendatory Act now provides that the examination of PTE Applications must begin within 60 days of submission9 and must end within 60 days of the later of the commencement of examination or from the date the applicant provided the ILPTO with the information it required to complete the examination10. These provisions apply to PTE applications that will be filed after the Commencement Date of the Act.

The Amendatory Act further provides that the ILPTO should conclude the examination of PTE applications that were pending on the Commencement Date within two years of commencement of the examination.

In addition, it will not be possible to obtain more than one extension of time for response to an Office Action during the examination period of a PTE application submitted after the Commencement Date.

Two-Stage Prosecution of PTE Applications in Some Cases and No Extensions in a Case of Bifurcated Examination

Since 2006, the Patents Act provides that in the event that a marketing authorization is issued in the U.S. or in Europe, a PTE Order will not be issued in Israel unless the term of the relevant U.S. or European patent was extended (the so-called “Two-States Requirement“).

In view of the new scheme that calls for a relatively accelerated examination, it was envisaged that a situation may occur, whereby at the time of the examination of the Israeli PTE application, all other conditions for the grant of the PTE may be met, but the PTE/SPC requests in the U.S. or in Europe may still be pending.

The Amendatory Act provides that in such cases, the Registrar will divide the proceedings into two stages: The ILPTO will first publish a notice of intent to grant the PTE order for a potential 3rd party opposition, leaving the examination of grant of the corresponding U.S. PTE and/or European SPC (as required by the Two-States Requirement) until a later stage11. The Amendatory Act requires the Patentee to notify the ILPTO of the grant (or final refusal) of the corresponding U.S. PTE and/or European SPC within 90 days of its grant. The second stage of examination will then commence and a supplementary notice of intent to grant the PTE order will be published for opposition12.

A notification regarding the grant of a U.S. PTE or a European SPC can be made up to 90 days after the expiration date of the patent, provided that the corresponding U.S. PTE and European SPC were granted before said expiration. This deadline is also non-extendible. Again, failure to meet the deadline may result in a loss of rights.

 

Practical Advice:

U.S. and European attorneys prosecuting the counterpart PTE/SPC should be in the picture:

(1) The attorneys prosecuting the corresponding U.S. and European PTE/SPC applications should be notified of the nexus between their cases and the IL case;

(2) Instructions should be given to the U.S. and European attorneys to report on the grant of the PTE/SPC directly to the Israeli counsel prosecuting the PTE application.

(3) Companies’ SOPs should be revised to reflect the need to timely report the US/EP developments to IL Counsel.


Reduction in the Number of Reference Countries

The Israeli PTE system is unique, in that it ties the grant and duration of the Israeli PTE to the grant and duration of term extension of corresponding and other related patents in “Reference Countries.” One of the amendments introduced by the Amendatory Act is the reduction of the number of Reference Countries from 2113 to 6: U.S., France, Germany, Italy, Spain and UK.  The PTE/SPC status in the other 15 countries will no longer affect the Israeli PTE.

Additional Changes

Other revisions include introducing a definition of a “Reference PTE Order,” amendments to the provision relating to the expiration of Israeli PTE Orders as a result of changes to Reference PTE Orders, and others. The effects of these revisions will be mostly case-specific and will, thus, have to be evaluated on a case-by-case basis. There are additional revisions introduced by the Amendatory Act, which will be reported on separately.

Time will tell how the above amendments will affect the Israeli PTE landscape.

1 The Patents Act (Amendment No. 11), 5774-2014 (“The Amendatory Act”). 

2 The date the Amendatory Act is published is its commencement date (“Commencement Date”).

By way of general background, we would like to remind that in February 2010, the Israeli government and the USTR signed a Memorandum of Understanding, in which Israel undertook to amend its IP legislation in three areas. The first area was marketing exclusivity: in 2011, the Pharmacists Ordinance was amended, extending the exclusivity period from five to six years. The second area was early publication (after 18 months) of patent applications and introduction of the entitlement to reasonable royalties’ compensation for infringement that occurred after early publication and until acceptance of the application: in 2012, the Patents Law was amended by introducing such provisions and certain additional amendments (see our May 1, 2013 Newsletter). The latest amendment concerns the third area; namely, patent term extensions.

3 Section 164 of the Patents Act, 5727-1967.

4 The person who is responsible for submission and monitoring of the application for marketing authorization in Israel. 

5 See our February 17, 2013 Newsletter. After the drug is registered, the manufacturer must submit a sample of the first batch for analysis by the MoH’s institute, to receive actual permission to market the drug.

6 See our February 2002 Newsletter.

7 Notably, from a Registrar Circular letter it emerges that the ILPTO took the position that the transition provision applies also to pending applications where extension for submitting PTE applications have previously been granted. Thus, past decisions granting an extension of time for submitting a PTE application until after a pending patent application has been granted, will be revoked, and a regular PTE application must be submitted within 90 days of the commencement of the Amendatory Act.

8 Subject (of course) to rules of reason and legality.

9 New Section 64E(A) of the Patents Act, 5727-1967.

10 New Section 64N(B) of the Patents Act, 5727-1967. As noted below, a different time restriction applies to PTE applications that were pending on the Commencement Date. 

11 As long as the PTE/SPC is granted no later than the expiration of the patent.

12  However, such supplemental opposition can relate only to the fact of grant of a U.S. PTE and European SPC with respect to the corresponding patent.

13 The U.S., fifteen EU countries, Australia, Iceland, Japan, Norway, and Switzerland.