Times where a lot is written about matters of constitutional law are not necessarily good times. When the wheels of a state or state-like organization engage smoothly with each other and when separation of powers, rule of law and checks and balances are considered as self-evident and given, there is no particular need to spend much thought on the inner workings of a written or unwritten constitution.
I am lucky to live in a country (Germany) where the constitution, our Grundgesetz (Basic Law), and our constitutional court (the Bundesverfassungsgericht) enjoy very high respect. This does of course not exclude occasional critique of the court and political or academic debates about some of the more important decisions, but on the whole, the vast majority of Germans and I are very happy about the independence and competence of this court. The FAZ reported in 2012:
Since the middle of the last decade, confidence in the court has continued to rise from an already high level, from 66 to 75 percent. No other political institution enjoys as much trust as the Basic Law and its guardians. The Federal President (Bundespräsident) enjoys great confidence with 63 percent, about 40 percent trust the Bundesrat and the Bundestag, and only 22 percent trust the European Commission. The parties are at the bottom of the league with 17 percent.
Most importantly, the Bundesverfassungsgericht has so far mostly managed to stay above the political trench warfares and is remarkably little politicized, even though many of its decisions have political implications and repercussions. This may be helped by the peculiar mode on how its judges are appointed, which (in the final stage) requires a 2/3 majority in the Bundestag or Bundesrat (each of which elects 4 judges per Senate; there are two Senates each composed of eight judges). Compare that with the way Supreme Court judges are appointed in the USA with very small partisan majorities, and you see the obvious advantages of a system driven by the desire and need to compromise and balance.
Another thing of which no one would dare accuse the Bundesverfassungsgericht is undue haste with its decisions. The most beloved topic on this blog, i.e. the constitutional complaint against the UPC, has meanwhile aged well over two years and is very unlikely to be decided this year. I would expect that the Bundesverfassungsgericht will first decide on the compatibility of the EAPP (Expanded Asset Purchase Programme) with the Basic Law, as it held oral proceedings about this case in July. Which of the other “big” cases pending before the competent department of Prof. Huber will be next is a matter of conjecture. The Court has a choice between the constitutional complaints against insufficient legal protection against decisions of the EPO Boards of Appeal (four cases pending since 2010 (!), 2013, 2015 and 2016), constitutional complaints against CETA (the free trade agreement between the EU and Canada, pending since 2016), a referral decision by the Administrative Court of Bremen whether the Bremen state law prohibiting the transhipment of nuclear fuel in Bremen ports, is incompatible with Article 71, Article 73 (1) No. 14 of the Basic Law and the principle of federal loyalty (pending since 2015), municipal constitutional complaints whether certain obligations of cities and municipalities enshrined in a federal law are compatible with the right to local self-government guaranteed by the Basic Law (pending since 2012), and, last but not least, Dr. Stjerna’s constitutional complaint against the UPCA which was filed in 2017 and thus is a comparatively recent case, though (the only) one where the Bundesverfassungsgericht asked the President not to sign a ratification law passed by Parliament.
Why do these cases take so long, you may ask? Well, first of all, the Bundesverfassungsgericht receives about 6000 constitutional complaints per year, and every single one must at least be briefly reviewed. Secondly, the cases put on the official agenda of the Bundesverfassungsgericht published on the internet, which are only the tip of the iceberg, are of formidable complexity and must be decided by at least three, and often all eight judges of the competent senate. Thirdly, this court is proud of its thoroughness and autonomy in determining its own time schedule.
But decisions of utmost constitutional importance do not always have to take years, at least not in other countries. A shining example of a well-reasoned decision with a huge impact on constitutional law is the most recent decision by the UK Supreme Court in the cases of Gina Miller and Joanna Cherry MP and others against the UK Prime Minister who attempted to “prorogue” (suspend) Parliament for five weeks. It is reasonably short, beautifully written without too much legalese, and all in all a highly recommendable read.
As this is a patent blog, I will refrain from an in-depth discussion of this case at this stage and refer the interested reader to real experts, e.g. here. I would just like to present two central paragraphs of this decision because both of them make, at least in my view, points of fundamental importance. The first is about the relationship between the legislative and executive powers, separation of powers and the risk of executive overreach:
55. Let us remind ourselves of the foundations of our constitution. We live in a representative democracy. The House of Commons exists because the people have elected its members. The Government is not directly elected by the people (unlike the position in some other democracies). The Government exists because it has the confidence of the House of Commons. It has no democratic legitimacy other than that. This means that it is accountable to the House of Commons – and indeed to the House of Lords – for its actions, remembering always that the actual task of governing is for the executive and not for Parliament or the courts. The first question, therefore, is whether the Prime Minister’s action had the effect of frustrating or preventing the constitutional role of Parliament in holding the Government to account.
The second deals more specifically with the Supreme Court’s role in securing the rule of law against unlawful acts by the excutive:
69. This court is not, therefore, precluded by article 9 or by any wider Parliamentary privilege from considering the validity of the prorogation itself. The logical approach to that question is to start at the beginning, with the advice that led to it. That advice was unlawful. It was outside the powers of the Prime Minister to give it. This means that it was null and of no effect: see, if authority were needed, R (UNISON) v Lord Chancellor [2017] UKSC 51, para 119. It led to the Order in Council which, being founded on unlawful advice, was likewise unlawful, null and of no effect and should be quashed. This led to the actual prorogation, which was as if the Commissioners had walked into Parliament with a blank piece of paper. It too was unlawful, null and of no effect.
We will see which, if any, effect this decision will have on the UK government’s plan to “get Brexit done”, and what the circumstances will be under which the UK will actually leave the European Union, if it does. One thing appears clear to me: If there is no withdrawal agreement in place at that time, it goes without saying that this would be a highly unstable, shambolic state with potentially massive effects on trade and supply of essential goods in the UK, which means that negotiations about the future relationship between the UK and the EU must follow very soon. These may then also encompass the UPCA some day, but the EU’s priorities will clearly lie on other fields (citizens rights, UK budgetary obligations, no hard border in Northern Ireland). Thus, at least in my opinion, it would be completely delusional to assume that the UK could join or stay in the UPCA before these essential points have been addressed and agreed upon. This is probably the meaning behind the cautious diplomatic words by Germany’s Ministry of Justice that “The real and legal implications of withdrawing must be examined with regard to the Agreement and agreed at European level. This opinion forming is currently not finalized, not least because significant factors of the expected exit are not yet known”, as reported here.
With that, let me add a few thoughts about the ‘constitutional order’ of the European Patent Organisation.
The problem is, there is very little of it.
So what, might you ask. Why on earth should a patent office need its own state-like constitutional order with separation of power between a legislative body, an executive body, and, above all, independent courts?
The answer is that any normal patent office does indeed not need this, because it is firmly embedded in the constitutional and legal order of the state in which it is domiciled and for which it performs its official functions.
But what is the constitutional order of the European Patent Organisation? Article 4 EPC stipulates the following:
(1) A European Patent Organisation, hereinafter referred to as the Organisation, is established by this Convention. It shall have administrative and financial autonomy.
(2) The organs of the Organisation shall be:
(a) the European Patent Office;
(b) the Administrative Council.
(3) The task of the Organisation shall be to grant European patents. This shall be carried out by the European Patent Office supervised by the Administrative Council.
This is not much, and in particular the European Patent Organisation has no court to guard whether the EPO and its President observe the European Patent Convention and its by-laws. Moreover, and importantly, the EPO and its President enjoy far-reaching immunities as enshrined in Art 8 EPC and the Protocol on Privileges and Immunities.
I am of course aware of Art 13 EPC stipulating that employees and former employees of the European Patent Office or their successors in title may apply to the Administrative Tribunal of the International Labour Organization in the case of disputes with the European Patent Organisation, and I have written about the Boards of Appeal and the problem of their independence before. However, even if legal protection by the Administrative Tribunal of the ILO were perfect (which it is not for several practical and legal reasons – in particular the AT-ILO is not an independent instance of fact) and if the Boards of Appeal were indeed completely independent of the Office President (which they are not), there would still be a lacuna, because the AT-ILO only hears cases in labor law, whereas the Boards of Appeal substantially only hear patent cases, with the exception of the Enlarged Board of Appeal, which also has the competence under Art 23 EPC to propose the removal of an Appeal board member from office if there are serious grounds for such removal, but so far the Enlarged Board never made such a proposal. This leaves most areas of law substantially court-less. It would then be for the Administrative Council to exercise its disciplinary authority over senior EPO employees, which it has under Art 11(4) EPC.
However, there are at least two problems with this oversight function of the Administrative Council (AC). The first is that the AC is ill-equipped to actually perform the function of an independent supervisory body. It consists of two envoyees of each of the EPO member states, who are mostly heads of their national patent office and/or ministry officials. To my knowledge, they have very few expert staff of their own and are as such not well suited to independently check e.g. the EPO’s financial accounts independently or form an informed opinion of whether e.g. the move of a part of the office to Haar makes sense from a financial or organisational point of view, or whether HR matters are managed well within the EPO. On top of that, they are also not really independent of the management of the EPO. Quite on the contrary, they tend to elect the EPO President and Vice Presidents from among themselves. While this may be acceptable in a constitutional system that includes independent courts as a control instance, it is very problematic where there is no such independent third power and where members of the AC who want to improve their own financial situation via an attractive position in the EPO management may be lured into not being too critical with the Office.
Let me give you two (of course, completely hypothetical) examples of the difference between a national patent office and the Eponia world. Assume the President of a national patent office received a bill or a fine due to some personal wrongdoing, such as, e.g. misbehaving in the public under the influence of alcohol or other drugs. Assume, furthermore, that this President would then submit the bill to the accounting department of his/her patent office, requesting them to pay it. What would happen? I assume that a President of a national patent office would not get very far with such a request, and if they were, they might encounter pretty serious problems later, if and when the payment is uncovered. In Germany, such a President might even have to face an action for embezzlement and abuse of trust (Sec. 266 DE Penal Code).
But what would happen in the EPO? Would the Administrative Council even be informed of such a request? And even if so, how would they react?
Or, to imagine another hypothetical example, assume the HR boss of your patent office starts disciplinary measures against three staff representatives on the same day, but for entirely different and independent reasons. Assume further that these measures were in fact of a political nature and that key facts used for their substantiation were simply made up. (Just an assumption to make my point, not an assertion of fact, to be clear!). The question is, where is an independent instance of fact to which the staff representatives so affected might turn to set the record straight? Are the EPO’s internal Staff Committees and Appeal Committees sufficiently independent to enjoy the trust of both parties? Or does the EPO rather act here both as executive organ and judge at the same time? At least in Mr. Corcoran’s case, the AT-ILO criticized this point and quashed the EPO’s decision.
I will not take these hypothetical examples any further, but reiterate, as a ceterum censeo, that a reorganisation of the European Patent Organisation and the establishment of a truly independent and effective judiciary inside the EPOrg for all patent and non-patent matters would appear highly desirable – and perhaps even necessary, if fundamental constitutional principles such as the separation of powers and the rule of law are to be lived and honored. And such a reform could then also dispose of the causes of the four pending constitutional complaints before the German Bundesverfassungsgericht.
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Excellent post, Thorsten. When one reflects on the immunity vs impunity point urged on us by one commentator here, the current antics of Johnson in London and Trump in Washington DC, the outrageous effrontery of the immediate past-President of the EPO, the spineless behaviour of the AC, and the public opinion pollings that suggest that both Trump and Johnson would get re-elected if they were to stand today for re-election in a General Election, one wonders about the capabilities of ordinary voters in any representative democracy to comprehend even the most simple aspects of what you have written.
In this age of social media and instant gratification and an attention span of not more than 10 seconds, is our precious representative democracy (separation of powers, Rule of Law) more or less, sooner or later, doomed to be etched away to nothing?
Congratulations to Mr Bausch for making the points in which the EPO lacks proper basis for separation of powers so crystal clear.
The “stories” about the president being fined for alcohol abuse in public and sending the bill to his administration, or the head of HR getting on a personal vendetta against staff representatives by making up charges, are, as is regularly stated at the beginning or the end of movies, purely hypothetical and bear no resemblance with existing people or people having existed. What a wonderful statement of the type tongue in cheek.
The founders of the EPC have given a lot of prerogatives and freedom to the management of the Office, and especially to its president. As long as the heads of the EPO have behaved more or less correctly, those points did not really matter.
The president always had the last word, but he rarely pushed its advantage to the brim. The situation has clearly degraded from 2010 onwards with at the helm of the EPO a person whose arrogance and cynicism have never been reached in any supranational organisation, be it in Europe or outside.
Any action against the EPO was barred by the alleged immunity, so that the EPO cannot be brought I front of a national court, but the past president and one of the vice-presidents did not hesitate to go before a Bavarian court when they considered it appropriate in their own private interest.
Most of the actions of the past president were apparently legal, but certainly not according to the spirit the EPC and the way its relations with staff were originally conceived. Immunity does not mean impunity, and there should be a truly independent instance in which questions could be debated in a calm and sensible manner.
One can only agree that the Boards of Appeal are anything but independent, as their members can only be renewed if they reach some performance criteria which are as public as the (true) health bulletin of a head of state.
The Boards used to be able to decide their rules of procedure. They are at present merely heard as the decision is now taken by a BOAC which is composed of people outside the Boards, even if some of its members are national judges. The story about Art 11 NRPBA is quite revealing for this lack of independence.
The best example of lack of independence is what happened with Mr Corcoran. Whatever he might have done or not, separation of power has been disregarded, and the head of the EPO and the AC wanted the Enlarged Board to rubber stamp an illegal decision.
That Art 53, b) needs adapting to society is one thing, but then it should be done properly, and not by amending R 28 EPC and referring some questions which boil down to twist the arm of the Enlarged Board.
The ILO-AT is only a pale judicial forum as it only checks whether the applicable rules have been correctly applied, but would never dare declare that the rule is as such not acceptable. That is what is expected from a court, not a mere check on the application of rules which might be totally against staff.
The Administrative Council has been a puppet in the hand of the president, which could obtain any vote he wanted by increasing and decreasing money given to the smaller member states.
It with this way of acting that the past president obtained a de facto shutting down of all shared bodies, be it the Staff committee or the appeal committee. They are not even any longer independent on the paper. Hurdles have been put in place to bar people to get justice done. In spite of what he has said up to now, the new president seems to go along the same track.
In the AC all decisions should be taken with a qualified majority. This would avoid small member states giving their vote in exchange of favours from the EPO.
Not only it is a scandal that the Boards have been exiled to Haar, but that the EPO is pumping 45 million € in the rented building whereby a whole building is empty at Hackerbrücke and another should be sold on the other side of Bayerstrasse.
I do not call this management but simply throwing money up the chimney. And at the end such mismanagement is awarded a big bonus. In any normal company the upper management would have been sent out in the sticks for less than this.
What is interesting to notice is that under the past president people flocked in from the French patent office, now they come from Alicante. One wonders why, but here again, it is pure coincidence. The EPO has not been created to give cushy jobs to the president minions.
The German Federal Constitutional Court has important issues to deal with before it can deal with the EPO and the UPC. It seems manifest that a decision about the UPC should only be taken after a decision about the independence of the Boards has been issued. After all the UP is a patent granted by the EPO and its Boards of Appeal.
What is suggested in the article is a new EPO with proper checks and balances and above all some limits to the actions of the president and the upper management. I doubt we will ever see this in our lifetime or that of our children.
But hope dies last.
Techrights: FINGERS OFF!!! Directly or indirectly, even by a mere link as done recently
EPO is not responsible in front of a court for its acts, this is not compliant with the rule of law principle.
This is one of the pending constitutional complaint in Germany, where EPO examiners preferred going to watch the football world cup instead of doing their job.
The mention of the incident which led to R 19/12 is not very helpful in the present circumstances. R 19/12 showed nevertheless that there was a problem with the independence of the Boards.
This problem has not been resolved with the installation of the Board of Appeal Committee and the nomination of the President of the Boards of Appeal, and certainly not with their exile to Haar. As long as the Boards will not have a budget which is separate from the general budget of the EPO, they will only be independent on the paper for this reason alone.
As such the EPO is immune in his actions and cannot be cited before a national court. It is a totally different matter to decide whether or not the Boards of Appeal are truly independent or not.
That is what has to be decided by the Federal Constitutional Court, not whether the members of an opposition division were more interested in a football match or in doing their job.
In its decision T 2097/10, the Board noted that
– the conduct of the oral proceedings cannot be described as unreservedly satisfactory,
– the reasons for the decision to admit D18 and D19 could have been more detailed
– since the inventive step was also questioned on the basis of a new line of attack (based on D7), it would have been reasonable for the Opposition Division to ask the patentee whether, in this new situation, it wished to submit the already announced amendments to the patent prior to the examination of the inventive step. The fact that this did not happen is regrettable, but not fundamentally flawed.
That the behaviour of the opposition could have been better, is one thing, the Board decided nevertheless that the opposition division had not committed a substantial procedural violation. But as said, this is not what has to be decided by the Federal Constitutional Court.
Techrights: FINGERS OFF!!! Directly or indirectly, even by a mere link as done recently
Let’s be honest, the checks and balances in the EPC are woefully inadequate.
Firstly, without wishing to pre-empt the decision of the BVerfG, it appears to me that Article 11(3) EPC is fundamentally incompatible with the principle of judicial independence. Also, in the light of the Corcoran case, it seems that Article 23(1) EPC is highly suspect too (with regard to the involvement of the Administrative Council in disciplinary matters).
Indeed, one wonders how any members of the Boards of Appeal can ever be perceived by the objective observer to have the necessary independence in connection with matters where the President or, particularly, the Administrative Council have expressed strong opinions. In this respect, I take my hat off to the Technical Board that decided the Pepper case. One can only hope that the Enlarged Board demonstrates similar dedication to the preservation of their independence.
Secondly, it is beyond a joke that the EPO is able to offer “assistance” (or “perks”, including cushy jobs) to members of the Administrative Council. The ways in which an unscrupulous President might exploit this possibility for personal, financial gain (by effectively “buying off” his or her overseers) are too numerous to mention … especially when one remembers that there is no independent audit of the EPO’s finances. I am not saying that the EPO’s lack of transparency and accountability is being exploited to provide cover for corruption … just that it is impossible to rule out this possibility. Given the immense funds at the EPO’s disposal, it is frankly unacceptable that applicants have to take it on trust that the EPO is not misusing those funds.
None of this would be acceptable under national laws of EU Member States, where judicial independence, transparency, accountability and democratic control would be enforced by national and EU laws (as would basic rights covered by the ECHR and the European Charter of Fundamental Rights … but that is another topic entirely). So why should it be acceptable in connection with an international organisation whose job it is to examine and grant patents on behalf of those states (and others)?
It is blindingly obvious that reform of the systems of governance at the EPO is necessary (and long overdue). The question is, will the Contracting States agree before it is too late (ie before a BVerfG decision makes them sit up and take notice)? Perhaps this will never happen. Nevertheless, it is heartening to see this topic starting to attract the attention that it deserves.
Good thoughts from Concerned Observer. One thing though: who (other than the judges of the BVerfG) cares?
In particular, you write optimistically that a decision of the BVerfG will force the EPC Contracting States to “sit up and take notice”. Really? I don’t believe that for one second. They couldn’t care less.
In these populist times, they all have better things to do, pandering cravenly to voters who have been whipped up by irresponsible rabble-rousers who give them the message that it’s quite OK to ignore anything that an expert has to say on their area of speciality.
The depth of the hole we are in is evidenced by the irresponsible behaviour (and dereliction of their duty to educate and inform) of venerable public TV channels (including the BBC) that depend for maintenance of their funding stream on decisions by politicians..
Max, a BVerfG ruling that the EPC is incompatible with the Basic Law of Germany would surely catch the attention of even the most complacent politicians and civil servants. However, despite the manifest and numerous ways in which the EPC departs from the minimum standards demanded by Germany’s Basic Law, it is not clear whether the BVerfG will be comfortable with reaching the only logical conclusion – namely that Germany must either withdraw from the EPC or ensure that the EPC is amended in a manner that addresses its fundamental flaws. We shall just have to wait and see.
Dear Concerned observer,
In the spring of 2018, the same Chamber of the GFCC having to decide upon the EPO has decided that judges could be appointed for a given period of time, but under two conditions:
1) They have to be life time civil servants
2) They cannot be re-appointed after their time of service as judges.
Let’s hope that the GFCC will remember this when they decide about the EPO.
On the other hand, the judges at the CJEU are also appointed for 6 years, but they are not re-appointed. I do not know what the situation is at EUIPO. The Chairman is designated by the Council of Ministers and the members of the Boards of Appeal by the AC of the EUIPO. I guess they cannot be re-appointed, but I am not sure.
Not only the members of the BA can be re-appointed, but the conditions for re-appointment, a given performance, are not public.
I hope that the judges at the GFCC will not be afraid of the consequences of what they could decide.
In 2004/2005 the EPO suggested an amendment to the EPC by which the Boards could become truly independent, but the contracting states did not see the necessity for this change. They missed an opportunity.
Techrights: FINGERS OFF
When it comes to checks and balances, there is another point to keep in mind. The upper management of the EPO has enough to do at the home front, to start with improving the quality of the work delivered.
It might be nice for one‘s miles and more account, but is it really the job of the EPO to seek validation of patents in countries far away of the home ground? Does it really help the countries at stake, and especially the SMEs in those countries? I have strong doubts to remain polite.
That the AC tolerates such escapades shows once more that it is not up to his job. The tail has been wagging the dog in the recent past, and not much has changed in this respect.
What strikes me however is the eloquent silence of organs meant to represent the profession, I mean the epi. Beside a handful individuals, to start with the present writer of this blog, I have never heard the profession complain about all the money wasted by the EPO on various events and actions. After all it is the money of the people they represent.
It is certainly good if some genuinely concerned individuals say something, but I would expect more from the profession when it comes to checks and balances at the EPO. In the Bible it was for a plate of lentils that some rights have been given up, at the EPO it is for a mere shindig. What is clear is that the profession is cutting the branch it is sitting on by tacitly consenting to the misbehavior of EPO‘s upper management.
Whilst one cannot any longer advise a young scientist to seek a career (?) at the EPO, I feel we are not far from the moment where the same will apply to a job of representative.
I might be too pessimistic, but I cannot refrain my gut feelings.
Let‘s hope the German FCC will make an end to this misbehavior, at least as far the Boards of Appeal are concerned. From then on the hole governance will have to be reviewed. And then the EPO will revert to the success story it was in its early days. I dare think what the EPO would have become should it have started with the last two presidents.
Techrights: FINGERS OFF!!! Directly or indirectly, you know what I mean.
Thanks for sharing, William
And it is out: The new President published a set of measures aimed to ensure financial stability of the EPO. Those measures follow the Financial Study (a copy is available here: https://www.epo.org/modules/epoweb/acdocument/epoweb2/377/en/CA-46-19_en.pdf)
Said study has been commented on already, also on this blog. Various issues have been raised, like the lack of regularly adjusting the fees to inflation over the 20 years. Now something new popped up: the discount rates relied upon. You may wish to take a look at pages 38 and 44.In all scenarios, the discount rate starts at 2% and increases quite slowly. A low discount rate means that you need a lot of money now to cover future obligations.Page 44 indicates a strong effect of the discount rate.
We also received news from the actuaries calculating the money needed to fund the pensions. Those actuaries also use a discount rate. They relied on a discount rate of 3.25%, lowered from 3.50% compared to the study a few years ago.
Strange that the EPO relies on two different discount rates to assess its financial situation. The professionals of the trade, the actuaries, use a higher discount rate than the financial study. Speaking only for myself, I get the strong impression that thje EPO on purpose uses an unrealistically low discount rate, with the aim to fool the readers (apologies).
I would be very suprised if the BVerfG dealt with any issue other than whether the vote in parliament was constitutionally correct.
What is at stake here is not the complaint about the UPC, but the complaints about the independence of the Boards of Appeal.
Those complaints are older than the complaint about the UPC, and the question here is not whether the vote in the Parliament was constitutionally correct or not.