US embassy cable - 05TELAVIV6006

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 
------------------------- 
 
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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