SUEPO

In der Reihe der SUEPO-Interviews mit Experten nimmt Dr. Eugen Popp, langjähriger Präsident der Deutschen Patentanwaltskammer, kritisch Stellung zu aktuellen Entwicklungen im Europäischen Patentsystems - er berichtet über die Tendenz einiger Anmelder, wieder vermehrt Patentanmeldungen bei den nationalen Patentämtern in Erwägung zu ziehen, er spricht sich für mehr Transparenz in Bezug auf Entscheidungsfindungen im EPA aus, er plädiert für eine Umstrukturierung des Verwaltungsrates des EPA und für die Einstellung von mehr Personal in der europäischen Behörde.

Als Wunsch an den neuen Präsidenten des EPA, Benoit Battistelli formuliert Popp, dass eine Rückbesinnung auf die hoheitlichen Aufgaben des EPA stattfinden sollte und das EPA nicht mehr als Profit-Center angesehen werden sollte. In seinem Interview sagt er unter anderem: "Das Europäische Patentamt (EPA) war mit Sicherheit ein Riesenerfolg, das EPA war mit Sicherheit sehr nutzerfreundlich und das EPA ist aus diesem Grund wirklich akzeptiert worden. Die Art, wie mit den Nutzern umgegangen wurde, war perfekt. Aber das ändert sich langsam zu Ungunsten der Nutzer. Jetzt gibt es einen Wettbewerb in Europa mit den nationalen Ämtern. Es könnte sein, dass die nationalen Ämter zunehmend nutzerfreundlich und dadurch attraktiver für die Anmelder werden."

Bruno van Pottelsberghe's latest paper, "The Quality Factor in Patent Systems" puts forward a new methodology that aims at comparing quality across patent systems.

Quality is defined as the extent to which patent systems comply with their own patentability conditions in a transparent way. This definition makes it possible to gauge quality using a two-layer framework: the first layer is composed of the legal standards that describe the patentability conditions of a national patent system (subject-matter, novelty, inventiveness, fees). The second layer is characterised by the operational design put in place to meet those legal standards.

The staff representation has regularly criticised recruitment practice at the EPO. After numerous attempts to discuss the matter internally, last year the staff committee submitted a document (CA/174/09) on the employment conditions for external staff to the Administrative Council of the EPO. The document was ignored. Since then a number of complaints have been submitted to national courts. The press (Spiegel and SZ) has reported on these complaints.

In the mean-time an internal appeal filed 4 years ago has matured into a judgment: ILO-AT 2919. The Tribunal ruled that the EPO's General Advisory Committee (GAC), in which the staff representation holds half of the seats, should have been consulted on the Office's outsourcing policy. This is not the only recent judgment on recruitment procedures filed by staff representatives in which the Tribunal found in favour of the complainant, see ILO-AT 2819, ILO-AT 2762, ILO-AT 2919, ILO-AT 2791 and, in the same session ILO-AT 2920 and ILO-AT 2921.

It is noted, however, that the amount of damages and costs awarded to the complainants is diminishing. In the 2919 judgment the three complainants were awarded 300 Euros in costs, together. This represents about 1% of the real costs. The Tribunal further carefully avoided entering into the substance of the case. This means that if the EPO, after GAC consultation, decides to maintain the current practice a new appeal will have to be filed, on which a judgment can then be expected in 4 years.

The 3rd day continued with topics to be discussed in closed session, amongst which further nominations and the level of compensation awarded to delegates. A decision on the Vice-President posts is only expected in October. The open part of the session resumed with a discussion on "Fee reform and sustainable financing of the European patent system" as outlined in CA/91/10, CA/82/10, CA/39/10, CA/38/10, CA/36/10, CA/34/10 and CA/33/10. Interestingly, only the representative of epi was critical of the Office's implicit position that major problems are caused by a large proportion of applicants "gaming" the system.

The last day of the Council is traditionally the day on which staff matters are dealt with. True to form the proposal on reform of the financing of the sickness insurance, CA/66/10 Rev. 1 and Corr. 1, was the last item on the Council's 3-day agenda. The document was dealt with together with the Central Staff Committee's document CA/94/10 on the same topic. In a series of questions the Chairman of the Central Staff Committee highlighted the deficiencies of the proposal and the administration's failure to demonstrate clearly the need for such fundamental reform. Despite these interventions, 26 of the delegations, including France and Denmark, voted in favour, with 10 delegations abstaining and 1 voting against. With that the decision was passed.

The most important point of the second day of the 124th Council meeting was the election of the new Chairman of the Administrative Council. Mr. Kongstad (DK) was the only candidate. Mr. Kongstad has in the past expressed himself strongly in favour of decentralisation. His view of the European Patent Network was one wherein the EPO would serve as a "back-office" to the national patent offices.

Otherwise the meeting was largely uneventful. Amongst the documents on the agenda were CA/84/10 ("Progress report on the trilateral and IP5") submitted by the President and CA/93/10 ("Work-sharing from an examiner's perspective") submitted by the Central Staff Committee. Both were passed without a comment.

The day ended with the selection of a new VP1 and VP5 in closed session, i.e. without the usual observers from industry (BusinessEurope) and the patent profession (epi), and without the Staff Committee or other Office staff. At the time of writing the outcome was not yet known.

The first half day of the 124th meeting of the Administrative Council was relatively uneventful. The outgoing President, Ms. Brimelow, presented the 2009 activities report (CA/44/10). The efforts made by the Office to limit expenses and increase productivity have paid off. This has led to a positive operational result under IFRS and to a decrease in unit costs. In contrast positive results from the SPP project (Single Patent Process) would have to wait for her successor. The Office presented for the first time a document (CA/79/10 rev.1) on current trends of activity in the national patent offices and the EPO. The day ended with a discussion about the procedure for the upcoming selection of the Chairman and Vice-Chairman of the Administrative Council, itself scheduled for tomorrow. Most delegations intervened in favour of more transparency.

The Administrative Council of the EPO will meet from 28 to 30 June in Munich. The agenda (CA/71/10) numbers about 60 points and a roughly equal number of supporting documents. The election of a new Chairman of the Administrative Council and the appointments of new Vice-Presidents for DG1 (search and examination) and for DG5 (legal matters) are amongst the more important internal matters to be dealt with. Topics of interest for the external stakeholder include those concerned with fee reforms, and with co-operation at European and at global level.

The Staff Union of the EPO (SUEPO) has recently sent a letter to the Members of the European Parliament pleading for accession of the European Union to the European Patent Organisation.

Bruno van Pottelsberghe has just published a policy brief entitled "Europe should stop taxing innovation". In this paper he argues the 'enhanced' patent system proposed by the Competitiveness Council in December 2009 may actually weaken the patent system in Europe.

Richard Yung's views on the composition of the Administrative Council in the light of the recent Presidential election.

In December last year the EU Council has agreed on a number of conclusions on the main features of the Community Patent and the EU Patents Court. In the same month Jérôme Danguy and Bruno van Pottelsberghe published a working paper analysing the costs and benefits of the Community Patent. The main conclusion of the paper is that with a sensible level of fees the Community Patent should be beneficial for the business sector, the European Patent Office (EPO) and most of the National Patent Offices (NPOs), mainly due the abolition of translations and the avoidance of paralel litigations. Patent attorneys, lawyers specialised in patent litigation and translators would stand to lose part of their income, whereas both the EPO and the NPOs would risk to lose some of their power. According to the authors this provides an explanation for the observed resistance to the Community Patent.

For the previous (October) meeting of the Administrative Council, the Central Staff Committee had submitted a number of documents that were then not put on the agenda:

• - "Study by Bruno van Pottelsberghe" (CA/175/09)
• - "Representation of external staff in the EPO" (CA/174/09)
• - "Towards a Human Resource Policy for the EPO" (CA/180/09)
• - "From IFRS to IPSAS: making sense of the EPO's finances" (CA/159/09 rev1 and CA/159/09 add1)

This time the staff representation was allowed to present the documents. However, apart from CA/159/09, the documents elicited little reaction from the Administrative Council or from the Office.

New interview in our Suepo Interviews Section with Dr. Rob J. Aerts, research scientist in molecular biology and qualified European and Dutch patent attorney.

The Central Staff Committee has submitted the following documents for the meeting of the EPO Administrative Council that takes place in Munich from 27 to 29 October:

• - "From IFRS to IPSAS: making sense of the EPO's finances" (CA/159/09)
• - "Study by Bruno van Pottelsberghe" (CA/175/09)
• - "Representation of external staff in the EPO" (CA/174/09)
• - "Towards a Human Resource Policy for the EPO" (CA/180/09)

Despite their timely submission to the President, none of these documents are on the agenda of the Council. On the agenda there is, however, a document on "Social partnership" ( CA/145/09) that is written by the administration and to which the staff representation does not subscribe.

The 97th meeting of the Budget and Finance Committee of the Administrative Council of the EPO takes place from 6 to 8 October 2009 in Munich. For this meeting the Central Staff Committee has submitted a document entitled "From IFRS to IPSAS: making sense of the EPO's finances". The document is supported by an expert opinion drawn up by Prof. Andreas Bergmann, a Member of the IPSAS Board. The Central Staff Committee is of the opinion that the EPO's alleged equity crisis is merely an artifact of the IFRS' inability to account for the particular financing structure of a patent office, in particular for future income from renewal fees. Under a more appropriate accounting system, e.g. IPSAS, the EPO's books are balanced.

The final day of the Council was relatively uneventful, albeit with some important nominations. The Administrative Council made new nominations to its Board 28. In addition, the staff representation welcomed the nomination of Mr. Brian McGinley as the new Vice-President of Administration (VP4) at the EPO, whom we have got to know during his year as interim VP4 as calm and constructive.

In the afternoon the Central Staff Committee gave an introduction to its document CA/99/09, on the fees and financing of the European patent system. The essential demands of CA/99/09 are for the Organisation to take a look at the financing of the European patent system as a whole, rather than that of the EPO alone, and to involve the various stakeholders and experts (industry, the patent profession and experts) to a much greater extent than is currently the case.

The administration presented CA/100/09, allegedly on the same topic but limited to the financing of the EPO. The Central Staff Committee also commented on this document. CA/100/09 was greatly welcomed by the delegations. SUEPO finds it highly disconcerting that the praise and thanks for the staff's performance expressed earlier by the delegations only translate into further demands for increases in efficiency, cuts in the EPO budget and cuts in staff benefits.

After the Council meeting a SUEPO General Assembly of the EPO staff in Munich took place. Staff expressed its discontent about the lack of progress in the "social partnership" talks, in particular for the lack of consideration of any issues raised by the Staff Committee, and the prospect of measures as outlined in CA/100/09 as a "reward" for their good performance. Staff is of the opinion that such measures are not justified by the financial situation of the Office. Industrial actions are being considered. Staff in Munich may thus join their colleagues in The Hague and Berlin who have been on action for quite some time now in protest at the breaking of earlier promises made by the President.

On the second day of the 118th meeting of the Administrative Council the chairman, Mr Battistelli, opened agenda point "Procedure to elect the next President of the Office" (CA/103/09), with the announcement that, in order to be free to decide on a possible candidature, he would abstain from chairing the matter and from taking part in the discussion. He therefore handed over to the vice-chairman, Mr. Kongstad, who in turn rejected the chair because he is also officially considering standing as a candidate. In accordance with the rules of procedure of the Administrative Council, the most senior member of the Administrative Council must then take over the chair. Currently this is Mr Grossenbacher, the previous chairman, who in turn announced his candidature and was thus also unable to chair the point.

The problems caused by the candidacy of 3 senior members of the Council are not limited to the chairing of this point of the agenda. Anticipating this situation, the Central Staff Committee sent an open letter to the Council via Mr. Battistelli (FR, EN) last week asking him how he would assure the proper functioning of the Council. We have not yet received an answer.

In the afternoon the Staff Committee presented its document on social partnership, CA/94/09, demanding the recognition of fundamental rights for permanent EPO staff and the representation rights awarded by national law for external EPO staff. In an intervention (DE, EN) the Central Chairman of the Staff Committee explained the background to the document. Some of the delegations showed understanding for the situation. The Office committed, without further discussion in the Council, to look into the matter as number one priority once the "structures for new partnership are in place" and address the question of legal redress and representation rights.

The first day of the 118th meeting of the EPO Administrative Council was relatively uneventful. Ms. Brimelow presented the activities report of the President of the EPO, CA/44/09. What followed was a lengthy exchange of information about the filing trends in the national patent offices of the Member States and at IP5 level. These ranged from significant decrease (-25% for Denmark) to significant increases (PCT filings + 40% in Finland). Mr. Gurry, Head of WIPO, who was present as a guest, stated that also he was at a loss to understand what was going on. Concerning the future of the PCT (CA/96/09) and the IP5 cooperation projects (CA/89/09) most delegations expressed themselves in favour of a harmonization at PCT level, but nevertheless wish to maintain the freedom to engage in bilateral and/or multilateral agreements with other patent offices outside the PCT framework.

New interview in our Suepo Interviews Section with Ruud J. Peters CEO of Philips Intellectual Property & Standards Executive Vice President of Philips International BV

The President of the EPO, Ms. Brimelow, considers "balancing the budget" and "social partnership" to be her first and second priorities for 2009. See also Ms. Brimelow's latest YouTube interview. Staff recently experienced to what extent "balancing the budget" takes priority over "social partnership" when 18 agency staff working at the EPO in Munich were told on the 7th of April (i.e. in the week before Easter) that their employment would be discontinued at the end of the month. Shocked and disgusted by this short notice, which does not in any way seem justified by the financial situation of the Organisation, SUEPO organised a collection to support the staff concerned financially and with legal advice. EPO staff donated thousands of Euros, making the collection an overwhelming success. The Office administration has not commented thus far.

On 24 March 2009 the Administrative Council of the EPO adopted during the first day of its 117th meeting the decision proposed in CA/05/09, in particular point 3, thereby giving itself an operative as well as a governance mandate for the so-called European patent network. The staff representation of the EPO questioned this proposal in an open letter (English translation) to the President of the Council and again in an intervention in the Council. Its reservations were, however, ignored.

On the second day of its 117th meeting, the Admin. Council continued with a wide-ranging debate on "Fee reform and sustainable financing of the European patent system". Many delegations seemed to favour further increases in the efficiency of the Office as a solution to the EPO's alleged financial problems. In an intervention (English translation), referring to CA/53/09 submitted by the Central Staff Committee, the staff representation explained that as far as the work pressure on staff is concerned, the limits have been reached. The discussion will be continued in June.

On substantive patent matters the Council adopted the decisions proposed in CA/145/08 rev. 2 on the handling of divisional applications and in CA/29/09 with measures aimed at "raising the bar". The Council also appointed a new Vice-Chairman, Mr. Jesper Kongstad. Mr. Kongstad is Head of the Danish delegation and Head of the Danish Patent and Trademark Office (DKTPO). The Danish view of the future European patent system was eloquently painted in its 2006 annual report: "The basic idea of the vision is a new division of work where the EPO functions as the back office of the system while the national offices constitute EPO's front office." Maybe as a consequence of its overly optimistic expectations for the development of this vision, the DKPTO had to lay off 35 staff the end of last year (compared with a total examining workforce of about 100).

After the action of the first two days, the third and final day of the Council meeting passed relatively uneventfully.

During the coming meeting of the EPO Administrative Council taking place from 24-26 March in Munich the debate about the fees and financing of the European Patent system will continue. Thus far the debate has focused on the EPO. A wider focus would, however, seem appropriate given that the finances of the EPO and the national patent offices (NPOs) are linked, and changes in the EPO fee system are likely to have an impact also on the NPOs.

As a contribution to the debate SUEPO has therefore attempted to determine for a sample of NPOs which part of their income is derived from patents examined and granted by the EPO, and what these NPOs charge for their searches. We have chosen to look at the search fees because at least for the major offices these searches should be comparable as "products". The results are given in the table below.

	50 % renewal fee share from EP granted patents (m€)*	NPO reported fee income from EP granted patents (m€)**	Total income (m€)**	Share of income derived from EP granted patents (%)	Search fees (€)***
Austria	19,4	19,9	32,6	61	50
Belgium	7,4			NA	300###
Switzerland	7,7	7,6	25,2	30	305
Germany	96,8		266,7	36	250
Denmark****	6,7		23,8	28	942
Spain*****	12,9		58,2	22	665
Finland****#	2,8		19,7	14	945
France	37,4		191,4	20	500###
United Kingdom	36,8	36,7	91,1	40	144
Ireland	3,8		10,4	37	361
Italy	4,6			NA	200
Netherlands##	22,7		27,7	82	794###
Sweden	9,9		31,4	32	945
Unless otherwise indicated 2007 data have been used. * source CA/27/08, the above indicated amounts have been received by EPO as renewal fee payment under Article 39 EPC ** amounts stated in annual reports of NPOs *** for the EPO the search fee is presently set at 1050€(including a preliminary opinion) **** 2006 data ***** estimation based on allocated budget # Income of NBPR's 'Enterprises and Corporations Line' (trade register) €19.2m was deducted ## the income indicated is only derived from patents income form other IP rights is not included, this is the case for many other NPOs ### for these offices the EPO performs the searches Conversion rates assumed for 2007 or 2006:
1 € =	1,640 CHF
	7,460 DKK
	0,695 GBP
	9,300 SEK

We must, however, stress that these results are preliminary: the income statements of the NPOs as found in their annual reports are not always easy to interpret. Income from patent fees and trademark fees is often not separated. The fee structures are furthermore different. We therefore welcome any comments and corrections which could help clarify and interpret the situation.

Nevertheless the conclusion that most NPOs derive a very substantial part of their income from patents granted by the EPO seems justified. We furthermore note more than 20-fold difference in the fees charged for an international type search. This difference is not related to the relative size of the national markets. The question whether this amounts to a distortion of the competition seems justified. For the same reason, a further raise of the EPO's procedural fees (the so-called "front-loading") would not seem desirable as a means to raise the EPO's income.

After a period of serious social conflict, the President of the EPO has declared "social partnership" her no. 1 priority for 2009. A first joint meeting between the Management Committee and the Central Staff Committee will take place on 19 March. Preparatory talks will be taking place beforehand. The President expects the talks to be finalised in June of this year. Some concerns and expectations of the Central Staff Committee were expressed in the Paper "Social partnership in the EPO", published to staff in December 2008.

The EPO staff are trying to make their voice heard by a series of actions against the undermining of the European Patent Organisation by its own governing body (see below).

On 22/10/2008, some 500 staff took part in a demonstration during a meeting of the Administrative Council, symbolically showering delegates with chocolate coins to signify that the member states are solely interested in milking the organisation as a cash cow.

On 18/9/2008, during one of the strikes of EPO staff at all four sites of employment, over 250 travelled to Brussels to take part in a demonstration (photos...). The demonstration route went from Square Frère Orban to the Berlaymont, the seat of the European Commission. A petition was delivered to the German, British and French embassies. At the Berlaymont, the seat of European Commission, speeches were held by the SUEPO chairmen as well as by Sylvie Jacobs, Vice-President of USF. On 19/9/2008, a SUEPO delegation was further invited to discuss their concerns with the European Commission.

IAM Magazine, and in particular Mr. Joff Wild, have repeatedly challenged the SUEPO views behind these actions as unfounded and disingenious. In a letter to Mr. Wild SUEPO provided as much evidence as our duty of discretion allows. Follow the link to also find Mr. Wild's response.

Some of the many other reports in the media are as follows:

Heise: Prüfer am Europäischen Patentamt rebellieren (22/10/08).

VDI Nachrichten: Streit im Europäischen Patentamt - Reproduced with kind permission(2/10/08).

USF - Agora: No to an anti-European Management (09/08).

The Register: EPO staff strike over patent quality, Accuse office directors of profiteering (25/09/08).

EU Observer: Europe handing out patents like candy, strikers say (24/09/08).

Slashdot: EU Patent Staff Go On Strike (23/09/08).

Stop Software Patents Blog - "Alison demission" shout EPO examiners in Brussels (23/09/08).

IAM:: European patent examiners need to level with us, not hide behind dubious stats (16/09/08).

PatentFools.com: Patent Demonstration and Workforce Strike (13/09/08).

Heise: Mitarbeiter des Europäischen Patentamts wollen für Reformen demonstrieren (12/09/08).

IAM: Union calls European patent examiners out on strike (08/09/08).

Stop Software Patents Blog - Examiners to demonstrate against broken governance of the EPO next 18th September in Brussels (08/09/08).

On 17th-19th September 2008, the management team of the EPO once again met en masse (this time in Brussels) to discuss "Strategic Renewal". Strategic renewal is the banner under which a change process is being pursued in order to re-analyse and redefine the European Patent System and the role of the EPO in the future.

As far as we are aware the EPO has not published much information on "Strategic Renewal" itself. However, some information on the underlying concept of a global or "European Patent Network" and the related "Utilisation Pilot Project" (UPP) is provided.

Further details can be found in the following:

Heise: Großbritannien strebt grundlegende Änderung des EU-Patentwesens an (24/09/08).

SUEPO: Making EPO fit for the future (SUEPO solutions) or avoiding global warming (13/02/08).

McKinsey on Finance: Why accounting rules shouldn't drive strategy (Winter 2007).

IP::Jur: News From EPO Transforming Itself (EPO 2.0) (03/10/07).

SUEPO: Strategic renewal - Mis(s)Leading the EPO? (01/10/07).

IP::Jur: European Patent Network EPN - The Unknown Entity? (29/09/07).

It would appear that despite claims that nothing is pre-cooked, firm ideas already existed before any consultation as to the direction that the Office and Organisation should take:

IAM: A European perspective on global patent workload - by Ciarán McGinley (April/May 2007).

Denmark openly campaigned for the EPO to take a more background role already in 2006.

As reported below, EPO staff recently registered their continued severe lack of trust in management, and extreme dissatisfaction with the EPO as an employer:

FT: Europas Patentprüfer meutern (13/06/08).

Heise: Unzufriedenheit im Europäischen Patentamt wächst (09/06/08).

Spiegel: Personalumfrage, Tausende Patentamt-Mitarbeiter sind genervt von Chefetage (07/06/08).

Staff have been voicing their concerns for the last few years and have become increasingly frustrated at the lack of any acceptable progress. At all levels from the Administrative Council through to the President and reflected by the attitudes and approach of upper management, there has been a damaging focus on quantity and efficiency at the expense of quality. This is not unique to the EPO and, in 2007, an international coalition of patent examiners' unions registered their dissatisfaction by sending an open letter to respective political leaders and heads of patent offices, which SUEPO handed to German Chancellor Angela Merkel with a cover letter. (more info)

At the EPO, staff are particularly concerned that the members of the Administrative Council are prevented from acting in the true interests of the European patent system and organisation due to the financial consequences of their decisions for their own national patent offices. In 2007, EPO staff held demonstrations in both Munich and Bern against the inappropriate governance structure and submitted a document to the council outlining their concerns. In May 2008, SUEPO sent a letter to the French President of the European Council, Mr. Sarkozy, appealing to him to address the matter (English translation, German translation). Mr. Sarkozy took note of the letter.

Alison Brimelow, the EPO president, is currently on a mission to paint a picture of financial and workload crisis at the EPO, often referring to "global patent warming". Some recent interviews and comments in the press can be found as follows:

Heise: Europäisches Patentamt warnt vor einem "Global Patent Warming" (11/09/09).

IAM: Senior EPO official warns of tougher patentabiliy standards and higher fees (28/07/08).

WIPO: World Patent Report: A Statistical Review (2008) contradicts assertions of drastically increased filings at the EPO (see "highlights").

ITExaminer.com: Inventors upset over patent delays (19/06/08).

IPKat: Patents delayed, Alison Brimelow "worried" (19/06/08).

IAM: More mutual recognition talk as patent harmonisation efforts intensify (19/06/08).

BBC: Patent delays frustrate inventors (19/06/08).

TMPDF: EPO Future Workload Study; document CA 144/07 – Comments by TMPDF (05/08).

EPO Future Workload Study, prepared by the Board 28 and endorsed by the Administrative Council in December 2007.

Mutual recognition raises its head as EPO boss says backlog won't be mastered (08/05/08).

Der Standard.at: Europäische Patentorganisation versinkt im Schuldensumpf (15/01/08).

AFP: Europäisches Patentamt warnt vor Bearbeitungsstau (12/01/08).

Heise: Europäisches Patentamt angeblich knapp bei Kasse (3/12/07).

IAM: EPO faces deficit crisis, Brimelow reveals (27/11/07).

Blog Blawg Austria: Ein effektives Patent-System und seine Kosten (27/11/07).

FT.com: The true cost of a system that is patently outmoded (23/11/07).

EPO staff are currently fighting a number of battles with regard to their working conditions and basic rights. The following article appeared recently:

Agora: EPO management goes against fundamental rights of its staff (06/07).