UPDATE: On 3 December 2012, the secretariat of the World Trade Organization (WTO) released the minutes of Israel’s Trade Policy Review (WT/TPR/M/272) held on 30 October 2012 and 1 November 2012. According to the chair, Eduardo Munoz Gomez (Colombia), innovation was one of the salient points identified in the TPR noting that:
Innovation. Another outstanding feature of this TPR is to note that Israel is spending more money on research and development (as a percentage of GDP) than any other country. The success of the Israeli high-tech sector is well-known. Those of us who use Skype may recall that the VoIP technology (the Voice over the Internet Protocol) was invented in Israel. Israel has also a highly-developed desert agriculture with a lot of expertise in irrigation and water conservation. The drip irrigation that we all know was developed on an Israeli kibbutz. In short, there is probably a lot that Members can learn from Israel when it comes to innovation. So may I put the question to you, what is the Israeli recipe for stimulating innovation and growth, and what benefits do you see for trade?
The discussant, H.E. Mr. Fook Seng Kwok (Singapore), highlighted the reforms undertaken by Israel in the area of intellectual property noting “significant developments in aspects such as patents application legislation, drug data exclusivity protection legislation, and modernisation of copyright law.”
WTO Trade Policy Review of Israel covers new developments on fair use, data exclusivity and parallel importation
The WTO held its fourth review of Israel’s trade policies and practices on 30 October 2012 and 1 November 2012. The review is based upon a report by the WTO Secretariat (WT/TPR/S/272) and a report by Israel (WT/TPR/G/272). According to the WTO, the minutes of the meeting and the questions and answers will be made available by the Secretariat in 6 weeks. The current chair of the Trade Policy Review Body (TPRB), Ambassador Eduardo Munoz Gomez (Colombia) highlighted agriculture, market access, contingency trade remedies, and incentives as issues meriting “further attention and reflection by the Israeli authorities, while we have taken note of the detailed comments by Israel this morning” (Source: Concluding remarks by Chairperson, http://wto.org/english/tratop_e/tpr_e/tp372_crc_e.htm).
Specifically, on intellectual property, the Chair noted that “Members took note of the significant developments in the area of intellectual property. However, a number of questions and remaining concerns over intellectual property protection were raised, particularly regarding patents, copyright, and enforcement”. Although the questions and answers raised during Israel’s Trade Policy Review (TPR) will not be made available till 6 weeks after 1 November 2012, a closer examination of the reports prepared by the Secretariat and Israel, respectively, may provide further insight into Israel’s TPR in relation to intellectual property questions.
In the section on the TRIPS Agreement, the Secretariat report (WT/TPR/S/272) commences by highlighting an agreement reached by Israel with to United States to amend its legislation in relation to data exclusivity, patent term extension and patent application publication “in an effort to downgrade its status from the USTR Special 301 ‘Priority Watch List’ to ‘Watch List'”. Despite the amendment in Israeli legislation with respect to data exclusivity and with the other amendments in “advanced stages of the legislative process”, the Report states that USTR still placed Israel on its Priority Watch List for 2011 citing “delays in the implementation of the agreement”. In addition to USTR pressure, the WTO report intimates Israel’s OECD accession process played a role in legislative amends with respect to patent term extensions and test data protection.
115. In view of Israel’s large generic pharmaceutical industry, its pharmaceutical-related IPR provisions governing patent term extensions and test data protection have been a particular focus of attention in the process of its accession to the OECD. Under the current provisions, patent term extensions of up to five years are available to remedy delays in the granting of marketing approval for pharmaceutical products. Where the pharmaceutical protected by the underlying reference patents is approved for marketing in the United States and in the EU-15, an extension in Israel will only be available if reference patents have been extended in the United States and in at least one EU-15 reference country (the “two state requirement”). Where such marketing approval has only been granted in one of these, then extension of the reference patent in only one reference country is sufficient for a patent term extension in Israel. Under legislation passed in December 2005, the duration of extension is limited to the shorter of the earliest-expiring extension in 21 reference countries or the reference extension of shortest duration in days.116. The effect of this approach is that in Israel, an extension of the patent term beyond the TRIPS minimum standard of 20 years will in most cases expire either before or at the same time as the earliest-expiring parallel patent term extension in the reference countries. This ensures that in cases where extended patent protection has been granted among the reference countries, Israeli generic companies will usually be among the first permitted to begin producing the now off-patent product for the Israeli market once all other legal prohibitions have terminated. Under the agreement reached with the United States in 2010, Israel has committed to reduce the number of reference countries from 21 to 6 and to permit the filing of an application for extension even if the reference extensions under the “two state requirement” have not yet been granted. As of April 2012, the amendment of the patent term provisions enacting these commitments has been approved by the Ministerial Committee on Legislation and is proceeding with the legislative process.
117. With respect to test data protection, legislation passed in April 2005 introduced a data exclusivity regime protecting confidential test data of pharmaceutical firms from unfair commercial use. The statute was amended in 2011 to extend the period of protection in conformity with the 2010 agreement between Israel and the United States. Under this regime, protection is available for test data regarding drugs with new active ingredients, not merely new indications. Generic pharmaceutical companies may file applications based on bioequivalence during the exclusivity period, but marketing approval for such pharmaceuticals will only be granted after the protection for the originator’s test data has expired. The protection period, as amended in 2011, provides for a period of exclusivity of up to 6.5 years, calculated from the first product registration of the pharmaceutical in a number of developed reference countries including the United States and the European Union. This linkage of the term of protection to the reference countries is intended to encourage early launch of protected innovative pharmaceutical products in Israel. Under the amended regime, marketing approval for pharmaceutical products in Israel should be granted within 12 months of an application. This means that following a timely application for marketing approval, the effective duration of protection in Israel can last for five years. Neither registration nor marketing approval is required in Israel for pharmaceuticals that are exported (Source: WT/TPR/S/272).
With respect to the parallel importation of patented products, the Secretariat report notes that the Israel courts have “prevented the parallel importation of patented products where an exclusive licence existed, but no ruling has been made as to the rights of the patentee in this respect”. The report states that in a 2001 Supreme Court case that did “not directly concern parallel imports of patented products”, the Supreme court “indicated (by way of obiter) that the Patents Law does not prevent parallel imports”. Furthermore, the report notes:
[f]rom a regulatory perspective, a variation on the concept of parallel import of pharmaceutical products exists in amendments to the Pharmacist’s Ordinance in 1999, and the Pharmacists Regulations (Preparations) 1986 in 2000, which provide requirements for obtaining an import permit; however that regulation has no bearing on patent rights. An import permit will only be granted if the preparations have been shipped to Israel by authorized traders from recognized countries; and if the preparations have been stored only in recognized countries. Since 2001, there has been no further Supreme Court treatment of patent rights and parallel imports.
Finally, on the industrial property side, the report notes that while Israel’s generic industry could benefit from provisions permitting the exports of pharmaceuticals manufactured under a compulsory license, “Israel has not yet implemented the WTO’s Paragraph 6 System into domestic law”.
The Secretariat report also notes that another “significant development in Israeli intellectual property law is the introduction of the new Copyright Act 2007 which, inter alia, replaces the doctrine of fair dealing with that of fair use, thus providing a more flexible approach to copyright exceptions”. The report describes the “fair dealing” approach as relatively restrictive in contrast to the “more flexible and open-ended approach” of fair use.
129. With respect to limitations and exceptions, the 2007 Act adds a list of 11 new specific permitted uses for a work, the conditions for which are set out in each relevant section of the Act. The list is non-exhaustive and non-exclusive, thereby allowing for the definition of the term “fair use” to be further developed through case law. The most notable change brought by the Act is a general, open-ended permission to make fair use of a work. Section 19 is based on the fair use provisions under U.S. law, and authorizes fair use for purposes such as private study, research, criticism, review, journalistic reporting, quotation, or instruction and examination by an educational institution. The courts are directed to measure the fairness of a particular use in light of the specific circumstances of the case, applying the four factors applied by U.S. courts: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the value of the copyrighted work and its potential market (Source: Ibid).
The report clarifies that while “fair use is considered, exemption, or privilege under U.S. Copyright law”, the manner in which the 2007 Act is drafted “could support the interpretation that fair use is a permitted use and not merely a defence” with some arguing that “permitted uses should constitute ‘user rights'”. The report cites a case (Case No. 1636/08, Motion 11646/08, The Football Association Premier League Ltd. V. Ploni and others [in Hebrew], Tel Aviv District court, Judge Agmon-Gonen, Sept. 2, 2009) involving the streaming of British Premier League football matches over the internet with the court holding that the “purpose of the fair use doctrine was to preserve human rights and to ensure that all users have access to and can fully participate in cultural life and activities, including sporting events. The court argued that streaming could be considered as fair use and referred to other cases where social importance overrode the commercial purpose of the alleged infringement”. It should be noted that this case is under appeal.
With respect to the parallel importation of copyright-protected goods, the report notes that the 2007 Israeli Copyright Act defines “infringing copy” as “including the importation of a copy that would infringe copyright if it had been made in Israel”. However, under the Act, “a copy made under the authority of the copyright owner in the country of manufacture is considered a genuine good and not an infringing copy”.
Here below are the relevant footnotes from IPR section of WT/TPR/S/272.
48.  “Capacity for innovation” ranking 6/142 in World Economic Forum (2011).
49.  “Quality of scientific research institutions” ranking 1/142 in World Economic Forum (2011).
50.  Senor and Singer (2009).
51.  Israel signed those treaties in 1997 but has not ratified them.
52.  Viewed at: http://www.wipo.int/edocs/madrdocs/en/2010/madrid_2010_10.pdf.
53.  Euro-Mediterranean Agreement between the European Communities and Israel of 1995, Chapter 4, in WTO document WT/REG110/1.
54.  USTR-Government of Israel Agreement of 18 February 2010. Viewed at: http://www.ustr.gov/ webfm_send/1664.
55.  The Special 301 lists identify states whose intellectual property laws are seen as trade barriers to U.S. companies and products.
56.  Notified to the TRIPS Council in WTO document IP/N/1/ISR/C/10, 29 May 2008.
57.  WTO document IP/N/3/Rev.7/Add.1, 23 February 2004.
58.  WTO document WT/Let/582.
59.  ILPO (2010).
60.  M.N. 76 of 13 December 2009.
61.  Patent Law 5727-1967, SEFER HA-HUKIM 5727, at 148, as amended; Patent Law (Amendment No. 8) 5771-2011.
62.  OECD (2011c).
63.  The 21 countries are: Australia, United States, Iceland, Japan, Norway, Switzerland, Austria, Italy, Ireland, Belgium, United Kingdom, Germany, Denmark, the Netherlands, Greece, Luxembourg, Spain, Portugal, Finland, France, and Sweden.
64.  USTR–Government of Israel Agreement of 18 February 2010. Viewed at: http://www.ustr.gov/ webfm_send/1664.
65.  Five EU countries (United Kingdom, Spain, Germany, France, and Italy) and the United States.
66.  Pharmacist’s Ordinance (New Version) 5741-1981.
67.  OECD, (2011c).
68.  Supreme Court, Case Number 5379/00 (19.6.2001), Bristol Myers Squibb v. the Health Minister, and others.
69.  OECD (2011c), p.42; and WHO online information, “Israel (2009)”. Viewed at: http://www.euro.who.int/en/what-we-do/health-topics/Health-systems/medicines/country-work2/a-selection-of-country-profiles/israel-2009.
70.  Under the regulation, “recognized countries” are Australia, Canada, the EU member states, Iceland, Israel, Japan, New Zealand, Norway, Switzerland, and the United States.
71.  ILPO (2010).
72.  Section 1, Appellations of Origin and Geographical Indications (Protection) Law 1965, 5725-1965.
73.  Section 21B.
74.  Section 33A.
75.  Lisbon System for the International Registration of Appellations of Origin, Registration No. 512 of 17 October 1969.
76.  The Citrus Division of the Plant Production and Marketing Board v Israel Commissioner of Patents and Trade Marks  1011/05, Appeal Board (Jerusalem), 12 July 2007.
77.  South Africa is not a member of the Lisbon System for the Protection of Appellations of Origin..
78.  WTO document TN/IP/W/10/Rev.4, 31 March 2011.
79.  The Israeli Knesset passed the new Copyright Law on 19 November 2007, which entered into force on 25 May 2008, repealing the Copyright Law 1911 (as amended) and the Copyright Ordinance 1924. Viewed at: http://www.wipo.int/wipolex/en/text.jsp?file_id=132095.
80.  Section 4 Israeli Copyright Act 2007.
81.  CA 513/89 Interlego A/S v. Exin-Line Bros. SA 48(4) P.D. 133, 163 .
82.  Section 41 Israeli Copyright Act 2007.
83.  C.M. (Dist. T.A.)1146/08 The Football Association Premier League, Ltd. v. Ploni 08(3) Tak-District 2514 (2008).
84.  For instance: Elkin-Koren (2009), pp. 327; 342; and Dotan et al. (August 2010), pp. 511.
85.  Case No. 1636/08, Motion 11646/08, The Football Association Premier League Ltd. V. Ploni and others [in Hebrew], Tel Aviv District court, Judge Agmon-Gonen, Sept. 2, 2009.
86.  Case No. 1636/08, Motion 11646/08, The Football Association Premier League Ltd. V. Ploni and others [in Hebrew], Tel Aviv District court, Judge Agmon-Gonen, Sept. 2, 2009.
87.  Kelly v. Arriba Soft Corp. United States District Court for the Central District of California, Southern Division. 77 F. Supp. 2d 1116; 1999 U.S. Dist; Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007); Perfect 10 v. Google, Inc., et al., 416 F. Supp. 2d 828 (C.D. Cal. 2006).
88.  Section 45 Copyright Act 2007.
89.  Section 1 Copyright Act 2007; see also International Intellectual Property Alliance (2011), p.197.