Intellectual Property Protection

The Government of Israel has approved legislation amending the patent law to allow local companies who are not patent owners or licensees to manufacture patented material prior to patent expiry in order to submit registration data to health authorities in Israel and elsewhere. The changes would also allow manufacture of patented material within the framework of a compulsory license. The bill was introduced in the Parliament in 1997, and passed into law early in 1998.

Implementation of this law allows Israeli manufacturers who do not have any rights to the patent to conduct large-scale manufacturing in Israel during the life of the originator's patent. The new law will permit the manufacture and export of tons of patented product before patent expiry.

As effective patent life in Israel averages only about eight years, this change to Israel's law further undercuts patent term in Israel. Moreover, the European Union has recently filed a request for a dispute settlement panel regarding Canada's very similar law..

Another potential trade barrier to American investment is the threat of parallel imports. Despite a tight system of price controls, Israel is threatening the use of parallel imports as a cost containment mechanism.

Potential Exports/Foreign Sales

It is not possible to provide a reliable current estimate of the potential market size for PhRMA member companies in Israel, if current deficiencies there were to be rectified. However, a number of PhRMA member companies report that these developments are having a chilling effect on plans for future investment.