ISRAEL MOVES AHEAD WITH PATENT TERM EXTENSION

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 006006

SIPDIS

STATE PLEASE PASS TO USTR: ESAUMS

E.O. 12958: DECL: 08/17/2015
TAGS: ECON ETRD KIPR IS ECONOMY AND FINANCE
SUBJECT: ISRAEL MOVES AHEAD WITH PATENT TERM EXTENSION
LEGISLATION

Classified By: Ambassador Richard Jones for reasons 1.4 (b) and (d)


1. (C) Summary. The proposed Patent Term Extension (PTE)
Revision which passed an initial reading in the Knesset in
July 2005, could become law as early as November 2005 and is
almost certainly assured a quick approval. Debate is
expected to resume in the Knesset Judicial Committee on
October 14. Post has repeatedly expressed reservations about
the legislation to the Ministry of Industry, Trade, and Labor
(MOITL),Ministry of Justice (MOJ) and Ministry of Finance
(MOF). These efforts have not proven successful in
dissuading the GOI from moving the legislation forward. We
recommend the USG actively seek to prevent the legislation
from being enacted. End Summary.

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ISRAEL TO MOVE AHEAD WITH PTE LEGISLATION
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2. (C) During the negotiations on data exclusivity
legislation in March 2005, the GOI told USTR that it would
not move forward on PTE legislation, pending consultations
with the USG on the issue. In a follow-up meeting on August
11, Ronit Kan, Director of the Foreign Trade Administration
at MOITL told EconCouns that Minister Olmert was interested
in revising the patent term extension draft legislation
because of its possible impact on trade. Kan said that
Olmert would ask the Minister of Justice, Tzipi Livni, to
suspend Knesset consideration of the legislation and form an
interministerial commission to study the legislation and its
impact on international trade. In a recent surprising
turn-about, during a September 28 meeting, Yair Shiran, MOITL
Director of Multilateral Affairs, told EconOff that the GOI
planned to move forward as quickly as possible with the
legislation when the Knesset next meets at the beginning of
November. A Knesset committee debate is scheduled for
October 14. (Note: Debate in committee can occur even when
the full Knesset is not in session. End note.)

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THE REASON FOR THE LEGISLATION
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3. (C) The Patent Term Extension legislation was first
proposed in September 2004. The origin of the legislation
appears to be a trade-off to local generic pharmaceutical
manufacturing interests in return for the limited marketing
exclusivity legislation that was adopted in March 2005.
(Note: The marketing exclusivity legislation was opposed by
local generic manufacturers because it impeded their ability
to rely on confidential test data submitted by research-based
companies for production of generics for the Israeli market.
The limited marketing exclusivity law still allows generics
to rely on the test data for export purposes. End Note.) The
official explanation for the legislation offered by Ministry
of Justice chief drafter Howard Poliner, is that it is
intended to "clarify the existing patent term extension law."
The need for such a clarification was created after Deputy
Patent Commissioner wrote an opinion in July 2004 that would
allow companies to seek the longest term of patent extension
offered in the rest of the world, and not limit the Patent
Office to providing only the shortest term of protection.
Poliner explained to EconOff that he had drafted the law to
reduce the "commercial uncertainty in the market" resulting
from this opinion.

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UPDATE ON THE LEGISLATION
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4. (C) Changes to the original government decision of
September 2004 have made the legislation more draconian. The
changes include:
-The law appears to require (based on local industry
analysis) that a company submit and receive PTE in another
country before even applying for an extension in Israel;
-Once PTE is granted in Israel companies are required to
notify the GOI if they receive PTE in any other country
within 60 days;
The current draft of the legislation removes the discretion
of the Israeli Patent Examiner to receive an application more
than 90 days after marketing exclusivity has been granted to
a product (and ignores the complications that pre-grant
opposition in Israel can cause for patent holders). The main
objective of the legislation has not changed: to ensure that
Israel provides patent term extension coverage for innovative
pharmaceutical companies at the lowest possible level offered
in the rest of the world.

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REQUEST FOR WASHINGTON ACTION
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5. Action request: Embassy Tel Aviv recommends the
Department in conjunction with USTR consider engaging in
immediate consultations with the GOI to delay passage of the
PTE legislation. Septel reports results of Ambassador's
October 6 discussion of this issue with PM Office Director
General Ilan Cohen.

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