Following plans to include Israel among the OECD countries, the US is considering downgrading Israel from the US Special 301 Priority Watch List of serious IP offenders. The change is, however, dependent on Israel amending its Patent Law to make it easier to obtain extensions for pharmaceutical patents.
The crux of the issue is Israel's burgeoning generic drug industry. Teva is the world's leading manufacturer of generic drugs and there are other major Israeli generic manufacturers including Unipharm, Perrigo and Rafa.
The inclusion of Israel on the Watch List is largely the result of the efforts of lobbyists, rather than a reflection of morals, and is a political embarrassment to both the US and to Israel.
"The international pharmaceutical companies have been applying serious pressure on the US Federal Trade Commission for years," claims Nir Kantor, head of the chemical, pharmaceutical and environmental quality branch of the Israel Manufacturers' Association. "The Israel pharmaceutical industry is being forced to pay the price in order for Israel to join the OECD."
Background
In 2006, Israel re-amended a poorly written amendment to the Patent Law from 2004 providing patent term extensions that allow local generic manufacturers to produce and export as soon as the main patent has expired in at least one of the other countries having patent term extensions.
The original amendment was somewhat ambiguous and former Deputy Commissioner of Patents, Israel Axelrod, interpreted it as allowing the applicant for the patent term extension to choose which country to base the application for extension on. The 2006 amendment was to clarify the legislators' intention, making Axelrod's interpretation impossible. The proposed agreement is intended to scale back the number of countries Israel may rely on.
It should be noted that Teva has a good track record of invalidating pharmaceutical patents in US courts. Such patents should never have been issued in the first place. In a number of cases the patentees were found guilty of fraud or other misconduct. Furthermore, Unipharm successfully invalidated half a dozen pharmaceutical patents in opposition proceedings before the Israel Patent Office last year.
Meanwhile US generic companies are challenging Teva's patents. On February 25 2010, Watson Laboratories filed for a declaratory judgment in the District Court of Nevada that Teva's patent for oral contraceptive Seasonique is invalid, and in 2008, Teva's blockbuster multiple sclerosis drug Copaxone came under attack from Novartis and Sandoz.
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