Why File in Israel?

Let’s start with some interesting statistics provided by the world intellectual property office (WIPO):

 

 

Israel ranks 17 in the world for patent filings in its national office. So perhaps the canny Israeli entrepeneur is responsible? Apparently not – the great majority of patents filed in the Israeli Patent Authorityare actually filed from abroad!! (96.6% in 2006 – see chart below).

 

 

More than 95% of the patent applications in Israel are filed by foreign applicants, indicating that something is convincing a large group of IP holders to file in Israel. So why are so many entities filing in Israel? Despite a healthy economy which actually puts Israel at #8 worldwide in terms of growth (chart below), the relatively tiny population precludes a large total GDP, which in total size ranks about #50 (IMF, World Bank, CIA factbook) behind such powerhouses as Algeria, Pakistan, Romania, Nigeria, and Bangladesh.  

 

 

Patenting in Israel thus apparently doesn’t have to do with sales in Israel. One basic reason has to do with protecting/preventing exports from Israel. For example, Israel’s Teva Pharmaceutical is the largest generic drug company in the world; Teva does not require an IL patent to sell in the US, but it does benefit from protection in Israel to manufacture in Israel.  This would prevent (for example) a rival from setting up shop across the road from Teva, hiring half of Teva’s workers for twice the pay, and churning out copies of Teva’s generics. Further, a Roche IL patent stake would prevent Teva from producing in Israel a Roche drug (for example) that’s still protected in the US, and then selling it everywhere in the world that Roche doesn’t hold patents – or more insidiously, from selling to parallel importers.  Similarly, due to Intel’s four design facilities and two fabrication plants in Israel, computer processor technologies are ostensibly heavily patented in Israel likewise. Other large exports include software, medical devices, and military hardware.

 

A short list of reasons to patent in Israel can be found in our last article regarding Cleantech in Israel.

 

One might suppose that another reason to patent in Israel is to prevent/protect IP development in Israel, which in addition to the aforementioned global-scale manufacturing plants, also has a significant R&D presence. This may well be the case, but the reasoning would appear to be compromised by the unusual breadth of the Israel research exemption, which shares with New Zealand alone the provision that any IP-protected matter whatsoever (not just pharmaceuticals) may be produced for research purposes.