Case Number
LCA 8127/15
Date Decided
6-15-2016
Decision Type
Appellate
Document Type
Full Opinion
Abstract
[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]
The rights in an Israeli patent, upon which the Ezetrol medical preparation is based, belong to the Respondents in LCA 8127/15, who are the Applicants in LCA 8263/15 (hereinafter: Merck). According to sec. 52 of the Patent Law (hereinafter: the Law), the period of the patent is 20 years from the date of the application, which was filed in 1994. In 1998, the Law was amended (hereinafter: Amendment 3) and the option of granting an extension order was added. Merck was granted an extension order until 2017. After this order was granted, the Law was amended again (hereinafter: Amendment 7). Inter alia, Amendment 7 provided that the extension period granted in an extension order shall be equal to the shortest extension period granted to the patent in certain countries designated in the Law (hereinafter: the Recognized States).
The Applicant in LCA 8127/15 and the Respondent in LCA 8263/15 (hereinafter: The Manufacturers Association) filed an application to shorten the extension order that had been granted to Merck, in light of the calculation method under Amendment 7. The Registrar of Patents, Designs and Trademarks (hereinafter: the Registrar) accepted the application and instructed that the period of the order be shortened, such that it would expire in accordance with the period of the extension order that had been granted to the patent in the United States. The District Court denied Merck's appeal on the very shortening of the order, but held that the period of the American extension could not be relied upon, since it was granted after the extension order had been granted in Israel. The court held that the extension order would remain in effect in accordance with the period of the extension order that had been granted to the patent in Germany. This led to the applications for leave to appeal. The discussion addressed the method of calculating the expiration date of the order and the constitutionality of shortening an extension order after it was granted.
The Supreme Court (per Justice N. Hendel, Justices Danziger and Shoham concurring) granted leave to appeal, granted the appeal in LCA 8127/15 and denied the appeal in LCA 8263/15, ruling as follows:
The principle rule for calculating the period of the extension order is that the period of the extension order shall be equal to the period of the extension that was granted to the similar patent in the Recognized States. The Law further provides that when an extension order is granted in a number of Recognized States, the period of the order shall be that of the shortest extension period granted in any of the countries. This last rule changed the legal situation that existed prior to Amendment 7.
The question before the Court was how to act when an extension order is granted in a Recognized State after an extension order was granted in Israel, when the period of the extension in the Recognized State is shorter than the period of the Israeli order. The language of the Law does not explicitly state that the period of an extension order granted in a Recognized State after the Israeli order was granted is not to be taken into consideration. The opposite is also not explicitly stated. Both options coincide with the language of the Law.
In terms of purposive interpretation, the purpose of the extension order is to compensate the pharmaceutical developers – the patent owners – in the form of a certain period of time, but not to over-compensate them. There is a consideration of uniformity among countries, which prevails over stability and determining a period that is known in advance, although these also play an important role in the entire picture. The legislature decided that the period between the application to register the patent and the approval to market it, or the extension period that was granted in a Recognized State based on that period, properly compensates the patent owner. Amendment 7 of the Law provided that the Registrar must seek the state in which the extension period that was granted was the shortest. The legislature provided that compensation that is calculated in accordance with the order of the state in which the extension is the shortest is appropriate and realizes the purpose of the Law. The public interest also supports this.
The above purposes better coincide with the interpretation that the periods of extension orders granted after the Israeli order should be considered. The legislature was of the view that the periods of the extension orders granted in the Recognized States all meet the criterion of compensating the patent owners for the time that they lost. The most appropriate compensation, in terms of striking a balance among all of the conflicting values and interests, is the shortest period of time that was granted in one of the Recognized States. It does not matter, in this respect, if the order in the Recognized State was granted before or after the order in Israel. In light of the above, when determining the period of the extension order, one must also consider orders granted in Recognized States after the order was granted in Israel.
As for the constitutionality of shortening the extension order, the transitional provisions of Amendment 7 provide that the calculation mechanism under the amendment will also apply to extension orders already granted. The transitional provisions do not amount to retroactive infringement. Even if the shortening of the period of the extension infringes a constitutional right, it passes the criterion of constitutional review under sec. 8 of Basic Law: Human Dignity and Liberty. This is a case of primary legislation for a worthy purpose – encouraging one of the fields of industry and reducing the price of pharmaceuticals for the entire public. The proportionality condition is also met. The compensation that Merck was awarded, in the form of the new extension period that was determined in the order is appropriate and realizes the purpose for which the arrangement was enacted. In a broad examination, Merck's economic situation was not harmed. What was harmed was the possibility that it may be improved. It was the legislature that granted it that possibility, and it was the legislature that subsequently took it away, without worsening Merck's overall situation. At the time when Merck registered its patent the arrangement of extension orders had not yet been enacted.
The infringement also does not reach the constitutional threshold. The calculation mechanism under Amendment 7, in and of itself, leads to an appropriate result. The situation that preceded Amendment 7 was one that benefited Merck in a manner that exceeded what was necessary. In other words, if the substantive provisions of Amendment 7 are above the constitutional threshold, then the legal situation that existed before them was certainly above that threshold. In the circumstances of the specific statutory development of this case, the constitutional threshold was not crossed. Reliance on a legal situation that was changed was neither argued nor proved.
The purpose is to grant appropriate compensation to the patent owner in the form of a period of protection that exceeds twenty years, but in a manner that does not excessively prejudice other important interests and values, such as opening the market for competition. Viewed in its entirety, the actual period of protection that Merck was awarded is longer than that to which it was entitled when the patent was registered. The shortening of the extension order was based upon a calculated and considerate policy of the legislature. The extension order granted in the United States is the relevant reference patent extension order in the circumstances of the matter. Therefore, the Israeli extension order that was granted to Merck has expired.
Keywords
Intellectual property, Constitutional Law -- Property Rights
