One of the deepest insights in moral philosophy is provided by Erich Kästner’s short rhyme „Es gibt nichts Gutes. Außer man tut es.“ (There’s nothing good. Unless you do it.), which became one of the most cited proverbs in German. Mind Kästner’s original punctuation. In the first sentence, he expressed fundamental skepticism that there is an absolute good. But then he allowed for the one, single exception: if you do it.
With that, let me turn straight to the European Patent Office. It has called for comments on its strategic plan. It seeks a dialogue with the public on quality and wants to receive direct feedback from every stakeholder so that it can improve its quality processes by reacting to clearly identified and real needs. Its President seeks to listen to its staff and pledged to renew social dialogue and ease tensions in his letter of motivation to the Administrative Council before he was elected. There are news on the financial side. And, finally, the EPO has recently published the Annual Report on the Boards of Appeal 2018, which also gives cause for a few comments.
Let us take things in turn – and sorry for the length of this blog. It will cover a lot.
In response to its calls for comments on the “Strategic Plan 2023”, the EPO has already received many weighty comments from stakeholders, including very sensible proposals from Tobias Kaufmann (Bardehle Pagenberg) and a comprehensive open letter from its Central Staff Committee, which I recommend readers to study carefully in order to better appreciate the perspective of the EPO staff, which in the end must bear most of the burden of implementing its management’s strategic objectives. It concludes with the following paragraphs:
5.1.1. The greatest asset of the EPO is its staff. It is not enough for management to just acknowledge this; they must live it, and not manage solely by judging staff members by unrealistic and inflationary performance targets. Staff members need working conditions allowing them to respect the provisions of the European Patent Convention.
5.1.2. Staff must be motivated by positive measures encouraging them to work at, perform well at, develop at, and stay at the EPO. Staff should not be persecuted, threatened and put under continuous pressure and/or treated under the “Challenging People” doctrine.
5.1.3. Continuation of current practice is simply not an option as it will expose the EPO to existential problems and annihilate the little trust that remains in the system.
5.1.4. Instead, sound, comprehensive long-term policy reduces risk for the EPO and Contracting States alike. Our reputation, and the future quality of our granted patents, will depend on these fundamental choices.
As I have blogged extensively about the EPO’s current vision and mission last year, I think there is no point in writing another lengthy theoretical article about this subject. What matters in the end is what the EPO actually does. Collecting stakeholders’ views is well and good, but if these views are of no consequence and EPO management continues as before, it will ultimately be a futile exercise. There is nothing good, unless you do it. As far as I am concerned, I would be fully content and more than happy if the EPO lived up to its current vision and mission. It does not necessarily need any new or further strategic plan beyond this. Make the EPO good again!
Evidently, the fundamental wisdom provided by Erich Kästner also applies to the subject of quality. While the new President displays much more openness to input from stakeholders on this subject than his predecessor, actions would speak louder than words. On the whole, I wish I had something more substantial and tangible to report here.
I and many others have extensively argued that quality of EPO products (e.g. searches and decisions to grant or refuse an application) must and will suffer if unrealistic production targets are set and are made the key parameter against which staff performance is measured. The VPP (the German Association of Intellectual Property Experts) discussed quality in its recent Spring Meeting in Bamberg and invited me to elaborate a bit further on this topic. My slides are available here (in German). They may give readers some insights into where I see a particular risk of quality erosion and which counter-measures I would suggest the EPO take. As always, I will welcome any comments and critique.
There was a lively discussion at the end of my lecture, during which a former EPO examiner stood up and explained to the audience how lengthy and cumbersome the process towards a decision of refusal is, compared to allowing the application to proceed to grant. Not only that, but you also make yourself unpopular by drawing two more of your colleagues into this struggle. I agree, but would add that a lack of adequate time may occasionally also lead to errors or misjudgments to the detriment of the applicant, e.g. if Art 123(2) is applied too photographically, or if the examiner introduces errors in the Druckexemplar at the Rule 71(3) stage.
Mr. Niclas Morey, the EPO’s Principal Director of Quality, held the next lecture after mine. Contrary to my view, he was very adamant that speed is part of quality. While I appreciate that stakeholders expect the EPO to act timely and that even a very good official action is not particularly useful if the first one only comes after 10 or more years, I do not see the point in mixing the categories of quality (in content) and speed. For sake of intellectual precision and for very practical reasons, I think that a narrower understanding of quality would be more appropriate. Quality essentially describes the properties of a product and measures it against expectations in categories of good-bad, rather than in quantitative categories (fast-slow or high-low speed or turnover). A distinction between the two also helps to better understand and accept the inevitable trade-off between quality and speed: the more you produce within a certain period of time (with the same resources, as the EPO has done for the last 5 years), the more errors will occur and the more quality will suffer, unless something specific or magic is done to lower the error rate. It is true, though, that (good) quality is only one element of customer satisfaction, the others being timeliness, adequate pricing, and achievement of the desired result (grant vs. rejection).
The EPO President himself seems to be a bit ambiguous on this point. On the one hand, he blogged on 8 October 2018 that timeliness is an essential part of the quality of a product.
On the other hand, he also wrote the following on 26 July 2018:
This [efficiency] has been a strategic focus at the EPO before – and I firmly believe we have to continue on this path. But it increasingly appears that the issue of efficiency is actually just one in a triangle of three closely-linked factors that will keep our organisation on track. The other two are quality and long-term sustainability. All three depend on each other and I’m convinced that the EPO’s optimum performance is located between all three. So we’ll be making further assessments of this organisation, such as audits, and forecasts, to help us determine exactly where we should be located between quality, efficiency and long-term sustainability.
In my humble view, speed rather belongs into the category of efficiency (output per time) and is indeed one of the factors that influence the EPO’s performance, which in the end is measured by e.g. customer satisfaction surveys. If so, however, speed cannot be part of “quality” at the same time. I would be very much interested in readers’ views on this question. Am I on the wrong track here? I readily concede that I am not an expert on quality measurement and optimization. I am also aware that the term “quality” has no single, generally accepted meaning. Nonetheless, there is quite some literature on the subject of patent quality and, to the extent I have read it, my impression is that most scholars tend to be on my side rather than on the EPO’s.
Just as an example, I would recommend for your reading the fine article “Irrational Ignorance at the Patent Office” by Michael D. Frakes and Melissa F. Wasserman, which is available online. It mainly concerns the USPTO, but there is a lesson to be learned for all patent offices. I will only quote two paragraphs from this extensive paper:
Providing more systematic support, our prior empirical work tested the extent to which patent examiner time allocations are causing examiners to grant invalid patents and found that examiners were indeed granting patents of dubious quality because they are not given sufficient time to review patent applications.
And (page 110)
We found that as an examiner is given less time to review an application—as identified by these time-reducing promotions—the less active she becomes in searching for prior art, the less likely she becomes to make time-intensive rejections, and the more likely she becomes to grant the patent. The magnitude of the result is quite striking.
These findings of the US scholars seem pretty plausible to me. What is more, they are, as I argued in my lecture, also backed up by evidence and/or at least indicia from the EPO.
Be that as it may, Mr. Morey made it abundantly clear to the VPP audience that the current EPO definition of “quality” includes speed. I wonder whether it follows from this understanding that the more examiners produce per unit time, the better their “timeliness” and, consequently, their overall “quality” will be? This may be something to take up with the EPO in the future. As a practical matter, Mr. Morey announced that by the end of this year further internal and external consultations with users will follow to determine a common understanding of the term “quality” .
All well and good, but the inconvenient truth remains: there is nothing good, unless you do it. Do we have half a year to discuss with users what quality is, or should we rather do something to improve it in the meantime? –-
One silver lining in so far, however, was Mr Morey’s message that the EPO’s production targets for this year will be (slightly) reduced relative to the 2018 targets. Okay. Every big journey starts with a small step.
Same here. The latest news on this front is an open letter sent by the Central Bureau of the Staff Union of the EPO to the EPO President and the members of the Administrative Committee. This letter goes to show how difficult it is to resume a genuine dialogue without a minimum of trust-building actions to begin with, such as settling the previous administration’s sanctions against several prominent SUEPO leaders. SUEPO consider these sanctions unlawful and feel supported by three decisions of the Administrative Tribunal of the ILO.
Whatever the merits of SUEPO’s position may be, this letter somehow prompted me to check Wikipedia for the keyword „amnesty“. This proved to be a very interesting and educational reading, providing a lot of food for thought. For example, I learned (from the German version) that there was a time when it was customary for incoming French presidents to proclaim an amnesty for certain kinds of prisoners, mostly those who had been found guilty of lesser offenses, or political prisoners. The same tradition existed in England upon coronation festivities and other solemn occasions. I also learned that an amnesty may generally be extended when the authority decides that bringing citizens into compliance with a law or policy is more important than punishing them for past offenses. The general purpose of amnesty is to help end a conflict.
I do not really know what exactly the SUEPO leaders are accused of and whether they did anything wrong. Considering the EPO’s history during the Battistelli era, I have my doubts (based on verifiable facts, as the Corcoran story shows) that the severe sanctions against the SUEPO leaders were justified. But even if they were, would it not now be an excellent time for the new president to make peace with the staff union and settle the sanctions against its leaders? At least I would interpret this as a sign of prudence. It would help to foster the important objective of regaining the trust of the staff, enhance their motivation and ultimately promote quality. I would argue that quality can only be sustainably kept or increased, if those who are to deliver it feel motivated, rather than threatened and placed under pressure.
Mr Campinos has now been in power for almost one year. He has proclaimed that he is interested in restoring the social dialogue in the EPO. Now would be a good time to put actions to words.
There was a discussion on this blog about a year ago on whether it would be appropriate for the EPO to entrust a private asset management firm with bringing at least part of the EPO’s assets, the so-called “EPO Treasury Investment Fund” or EPOTIF on the stock and derivatives market. EPOTIF comprises an impressive approximate 2.5 billion (no typo!) Euros. I make no secret of the fact that I was and still am very skeptical about this project, in particular in view of the associated risk and the price tag which has been said to come with it. But who am I? The EPO apparently did it anyway.
A blog by some resurrected cat who seems to have some EPO insider information has now published the following:
A few days ago, the financial status report was published. Within that report, the following gem was found:
In 2018 the Office transferred its legacy bonds portfolio to the EPO Treasury Investment Fund (EPOTIF) which holds the funds in line with the Strategic Asset Allocation approved by the BFC. As at the end of 2018 the total value of EPOTIF units was € 2 460m, which includes a revaluation loss for the year of € 97m.
Just after two days that sentence was redacted, it now reads:
In 2018 the Office transferred its legacy bonds portfolio to the EPO Treasury Investment Fund (EPOTIF) which holds the funds in line with the Strategic Asset Allocation approved by the BFC. As at the end of 2018 the total value of EPOTIF units was € 2 460m.
I leave it there. Read the original article for more details and the cat’s take of this redaction. At the risk of stating the obvious, can I remind everyone that putting money on the stock market involves a considerable risk. The MSCI AC world stock market index was at 584 points on 1.7.2018, but had fallen to 532 by 31.12.2018. What does this mean? Well, for example if you had invested € 1 billion in MSCI shares on 1st of July, you would have lost € 89 million by 31.12.2018. Is this what the EPO asset fund managers have done?
If so, the only good news is that the MSCI was at 593 on 15.5.2019; thus the EPO would have made a small profit until now anyway (unless this profit margin is eaten up by its (private) asset managers).
I wonder whether the Administrative Council is really aware of this (risky) strategy? Would any of the AC heads of the national patent offices be allowed to run his/her patent office like this? Should the EPO be run like a private company? Is this part of the Strategic Plan 2023? And who pays if something goes seriously wrong and there is a crash on the stock markets when the EPOTIF money is needed to pay out staff pensions?
I think it is legitimate to ask these questions. And should the underlying facts be inaccurate, I would be happy to publish a correction. Transparency for the public in this area is unfortunately quite limited.
Boards of Appeal
Finally, a few words on the Boards of Appeal who recently published their Annual Report 2018 which is downloadable here. I recommend reading it in full and will not repeat much of what it says here. Just two points:
The Report mentions the ambitious goal to settle 90% of cases within 30 months of receipt and to reduce the number of pending cases to less than 7 000 by 2023. This is planned to be accomplished by (i) increasing the efficiency/productivity of the Boards of Appeal by 32% as from 1st January 2017 and (ii) the allocation of additional resources “for a limited period of time”. I am 100% happy with (ii) and the fact that finally (!!!) all vacant posts for technically qualified members have been filled up and the Administrative Council has even approved 23 additional technically qualified member posts for the 2019 budget, and has positively noted the request for another 16 of such posts for the 2020 budget. This is definitely a big step into the right direction, and I just wonder (a) why this should only be for a limited period of time and (b) why the objective is set at 30 months? From the parties’ perspective, the appeal time should be significantly shorter. Somewhere between 12 and 18 months would be desirable.
The Report is commendably honest by acknowledging that despite the above objective of 30 months, backlog and pendency will nevertheless continue to grow in the short term, due to a large increase in incoming cases (which in turn is the paradoxical result of the EPO’s myopic “production über alles” doctrine of the past few years).
However, I am a bit concerned about point (i) “increasing the efficiency/productivity” by 32%. This is not to say that I am against conducting appeal proceedings with maximum efficiency – on the contrary, this is a desirable objective. But there is a fine line between “cutting slack” and putting people under pressure. The Boards have already increased their productivity by 18% since January 2017. Whether much more will be achievable, e.g. by the planned new Rules of Procedure, and, if so, whether this will be perceived positively by users and BoA members, remains to be seen. I must confess that I am a bit in two minds on this front. On the one hand, I want appeal proceedings to be faster, but on the other hand, I am not prepared to sacrifice thoroughness and quality of the decision for speed. BoA decisions are too important for that. To give just one example, a decision that rules on all points in material dispute seems to me preferable over a decision where a significant number of the requests of a party or prior art references are not being considered for procedural reasons.
Section 4 of the Annual Report contains further food for thought. It draws attention to the fact that the reappointment of a member or chairperson is subject to a positive opinion and performance evaluation by the President of the Boards of Appeal (PBoA), who may also recommend Board members for promotion. This President is in turn appointed by the Administrative Council on a joint proposal made by the BoA Committee and the President of the European Patent Office (Rule 12a (1) EPC), i.e. not completely independent from the EPO management.
The PBoA has apparently set up a comprehensive performance evaluation system for members and chairpersons of the Boards of Appeal, which entered into force on 1 January 2018. The report states:
While both qualitative and quantitative indicators are used to ensure that a comprehensive assessment can be made, the focus is on quality.
Well and good, but the question again is whether “quality” is to include criteria such as timeliness, which is intrinsically related to speed and productivity? Moreover, how will the PBoA exercise his good judgment in the case of BoA members who write decisions of good quality, but are a bit on the slow side of the distribution curve? Will such members have to fear that they may lose their jobs (if they were previously national judges) or be re-assigned to a post in the Office if they were an EPO employee before joining the BoA?
And is this system compatible with security of tenure and thus with judicial independence? The Bundesverfassungsgericht (Federal Constitutional Court of Germany) was recently quite critical in regard to civil servants who are appointed as administrative judges for a certain period of time. Here is what the BVerfG wrote:
7. Verfassungsrechtlich nicht zu rechtfertigen wäre allerdings die Möglichkeit der wiederholten Ernennung eines Beamten zum Richter auf Zeit. Könnte nach Ablauf der Amtszeit über die Wiederernennung für eine weitere Amtszeit entschieden werden, so würde die Fortführung der richterlichen Tätigkeit dem kontrollierenden Zugriff der Exekutive geöffnet; das zum Schutz der richterlichen Unabhängigkeit geltende Verbot der Entlassung, Absetzung oder Versetzung von Richtern (Art. 97 Abs. 2 Satz 1 GG) könnte umgangen werden. § 18 VwGO ist deshalb verfassungskonform dahin auszulegen, dass die erneute Bestellung eines Richters auf Zeit nach dem Ablauf seiner Amtszeit ausgeschlossen ist.
In my translation: “However, the possibility of a repeated appointment of a civil servant as a temporary judge would not be justifiable under constitutional law. If, after the expiry of the term of office, a decision could be taken on the reappointment for a further term of office, the continuation of the judicial activity would be subject to the controlling access of the executive branch; the prohibition of the dismissal, dismissal or transfer of judges (Article 97.2 sentence 1 of the Basic Law), which serves the protection of judicial independence, could be circumvented. § 18 of the Code of Administrative Procedure must therefore be interpreted in conformity with the constitution as meaning that the renewed appointment of a temporary judge after the expiry of his term of office is excluded.”
And let us further remind ourselves what the CJEU recently had to say about judicial independence:
44 The concept of independence presupposes, in particular, that the body concerned exercises its judicial functions wholly autonomously, without being subject to any hierarchical constraint or subordinated to any other body and without taking orders or instructions from any source whatsoever, and that it is thus protected against external interventions or pressure liable to impair the independent judgment of its members and to influence their decisions (see, to that effect, judgments of 19 September 2006, Wilson, C 506/04, EU:C:2006:587, paragraph 51, and of 16 February 2017, Margarit Panicello, C 503/15, EU:C:2017:126, paragraph 37 and the case-law cited).
Of course, I know that BVerfG and CJEU jurisprudence are not directly applicable in the EPO, but I doubt that the EPO would take the position that Board of Appeal members do not need to satisfy this standard. I am no insider, but I would strongly assume that arguments along these lines will also play a role in the pending four constitutional complaints, wherein the key argument is that redress before a proper court should be available against decisions by the European Patent Office, and that the Boards of Appeal do not satisfy the constitutional requirements that an independent court must meet.
Yet another issue in this regard might arise from the fact that the new technical members of the Boards of Appeal will not be put into new Boards, but will be assigned to the existing Boards. This helps to save costs, as there will be fewer chair posts relative to the overall number of BoA members. However, a side effect of this change will be that the individual boards will be (much) larger than previously. It is to be expected that many hearings will not be conducted under the chair of the Board’s regular chairperson, but of his/her deputy chairperson.
This raises another question under German constitutional law, i.e. the question whether it is sufficiently clear ab initio which Board member will be assigned to which case. Art 101 of the German Basic Law stipulates succinctly:
(1) Extraordinary courts shall not be allowed. No one may be removed from the jurisdiction of his lawful judge.
Who is the “lawful judge” according to this Article? This has already been subject of quite a number of decisions by the Bundesverfassungsgericht. In one case, reported in BVerfGE 95, 322, it even came to an en banc decision of the Bundesverfassungsgericht, which is an extremely rare event. The full panel of the constitutional judges interpreted Art. 101 Basic Law as follows (decisions omitted):
Mit der Garantie des gesetzlichen Richters will Art. 101 Abs. 1 Satz 2 GG der Gefahr vorbeugen, daß die Justiz durch eine Manipulation der rechtsprechenden Organe sachfremden Einflüssen ausgesetzt wird. Es soll vermieden werden, daß durch eine auf den Einzelfall bezogene Auswahl der zur Entscheidung berufenen Richter das Ergebnis der Entscheidung beeinflußt werden kann, gleichgültig, von welcher Seite eine solche Manipulation ausgeht. Damit soll die Unabhängigkeit der Rechtsprechung gewahrt und das Vertrauen der Rechtsuchenden und der Öffentlichkeit in die Unparteilichkeit und Sachlichkeit der Gerichte gesichert werden. Dieses Vertrauen nähme Schaden, müßte der rechtsuchende Bürger befürchten, sich einem Richter gegenüberzusehen, der mit Blick auf seinen Fall und seine Person bestellt worden ist.
Aus diesem Zweck des Art. 101 Abs. 1 Satz 2 GG folgt, daß im einzelnen bestimmt werden muß, wer im Sinne dieser Vorschrift “gesetzlicher” Richter ist. Art. 101 Abs. 1 Satz 2 GG enthält also nicht nur das Verbot, von Regelungen, die der Bestimmung des gesetzlichen Richters dienen, abzuweichen. Die Forderung nach dem “gesetzlichen” Richter setzt vielmehr einen Bestand von Rechtssätzen voraus, die für jeden Streitfall den Richter bezeichnen, der für die Entscheidung zuständig ist. Art. 101 Abs. 1 Satz 2 GG verpflichtet demnach auch dazu, Regelungen zu treffen, aus denen sich der gesetzliche Richter ergibt.
By the guarantee of the lawful judge, Article 101 (1) sentence 2 of the Basic Law wants to prevent the risk that the judiciary is exposed to inappropriate influences through manipulation of the judicial organs. It is to be avoided that the result of the decision can be influenced by a selection of the judges appointed to render the decision in an individual case, no matter from which side such manipulation originates. This is intended to safeguard the independence of the judiciary and the confidence of the citizen seeking justice and the public in the impartiality and objectivity of the courts. This confidence would be damaged if the citizen seeking justice had to fear facing a judge appointed with regard to his case and his person.
It follows from this purpose of Article 101.1 sentence 2 of the Basic Law that it must be determined in detail who is the “lawful” judge within the meaning of this provision. Article 101.1 sentence 2 of the Basic Law therefore contains not only the prohibition to deviate from regulations which serve the purpose of determining the lawful judge. The demand for the “lawful” judge rather presupposes the existence of legal principles which designate for each dispute the judge who is competent for the decision. Article 101 (1) sentence 2 of the Basic Law thus also obliges the court to make provisions from which the lawful judge can be derived.
While the EPO’s Boards of Appeal do have a business distribution scheme allocating individual cases to individual boards based on abstract principles (IPC classes), I do not know whether individual boards also have internal case distribution schemes that determine the individual Board members allocated to an individual case a priori and based on abstract principles. I have heard that there were at least times when the cases were individually allocated par ordre du mufti, i.e. simply by an ad hoc decision of the chairman/chairwomen of the Board. If so, and provided that my understanding of the BVerfG jurisprudence cited above is correct, then a word of caution may be appropriate here: German constitutional principles would not allow such a practice. And if the Boards of Appeal want to be seen as court-like independent judicial body by the Bundesverfassungsgericht in the four pending constitutional appeals, it may be prudent to take such principles into due account.
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Thank you for this contribution on the users’ perspective what is going on in the EPO.
Some additional comments:
The EPO does not get weary of emphasizing how important quality is. However, defining quality as a component of quality makes the user suspicious because quality and quantity are potentially conflicting aims. As long as the aim is not to find a proper balance between quality and quantity, the strategy is not the right one. This has to be considered in the framework of quality control but also in the assessment of staff performance. As long as an examiner merely exceeding his target of settled cases is better off than an examiner who spends time to deliver complete searches, to look at clarity of the claims and a proper level of inventive step, an end of the quality discussion cannot be expected. In this respect, the EPO has not yet revealed how quality is assessed: Are only parameters on timeliness, number of communications and so forth collected from databases or is quality evaluated? Are the results of ex parte appeal proceedings and validity proceedings (oppositions and court cases) used for an assessment whether something went wrong in grant proceedings?
As to the boards of appeal, it is good to hear that open posts for technical members are filled and new ones will be created. However, no new chairmen will be appointed, as you have mentioned, and there will be no posts for new legal members. The effects on the working methods in the boards are foreseeable. It will be the same as in first instance proceedings. The role of the rapporteur will become more important because for the chairman and the legal member an intensive preparation of oral proceedings and full cooperation in drafting communications and in the decision-making process will no longer be possible because of lack of time. This is not a true collegiate system in which all members share the same responsibility for the outcome of the proceedings. The argument for confining additional staff to technical members is that this is intended as an interim measure for reducing the backlog. This cannot convince. Considering that the backlog increased in 2018 although the number of settled cases increased, reducing the backlog can only be considered as a medium-term goal. Since Board members are closer to retirement age than other staff, a reduction of board members by fluctuation is sufficient for the necessary flexibility.
Whether the German Constitutional Court (BVerfG) will apply the concept of the “lawful judge” (gesetzlicher Richter) to its assessment whether the boards of appeal qualify as independent judiciary seems doubtful. International courts cannot fulfil the constitutional requirements of all the member states establishing the court. This is why the BVerfG decided in Eurocontrol II (BVerfGE 59, 63) that an international court has to comply with a standard corresponding to commonly accepted standards developed in legal systems respecting the rule of law. The German constitutional requirement that the judge deciding a case must be identifiable at the moment the case becomes pending appears not to belong to an internationally accepted standard. Another question is whether the required security of tenure is safeguarded in a system in which promotion and reappointment is based on a performance report. In this respect, the BVerfG has established very strict standards directly derivable from the rule of law.
1) Quality vs. quantity
To start with, degrading the work of examiners by calling their output “products” reveals the disdain that upper management of the EPO has for the people actually bringing in the money, i.e. the examiners.
The job of an examiner is not output products, or to make points, but is to take reasoned decisions. The points/products are the consequence of the decisions taken, and not the finality of the job of an examiner.
By talking about products, the value of a patent is completely neglected. Patents are an economic asset for their holders, not a piece of paper to put on the wall in the entrance hall of companies. The tragedy is that examiners are less and less aware of this economic aspect. A former president of the EPO has said that a patent is an insurance in case of success. But this insurance is of no value when a patent is revoked or nullified on the basis of prior art which should have been found during search or grant.
Patents can be challenged, and if after the challenge the patent is revoked or nullified, all the money spent during the grant procedure and later in litigation was for nothing. While a large company can make up more or less easily for such a loss, this can bring in dramatic consequences for a SME. According to a former president, whose legacy will eventually be disastrous, the European patent system, and its crowning the UPC, is there to allegedly help the SME. It makes you ill when you hear such nonsense in view of the policy decided.
In order to have a high output, you first need a good training for new examiners. Here the problem starts, when one thinks that the training time has been continuously reduced over the years. Training time used to be of the order to 2-3 years, for search or examination. Introducing BEST has been taken as pretext to reduce training for both search and examination to 3 years in total. This was already nibbling at the quality of training. With a good training, having a high quantitative output is not contrary to a high quality. With a bad training, a high quantity ends up fatally in a lower quality.
Now the training time is 2 years. I do not think that the present newcomers are more intelligent than the previous ones, and that modern training methods allow such a drastic reduction of training time. But having less training, and this training being aimed at pushing the production of searches and opinions, the consequences are visible. A newcomer has to produce of the order 70-80% of the production of an experienced examiner. How can they then correctly learn the job?
It takes actually more than 2 years to train an examiner, but when you only offer a 5 year contract to start with, you cannot accept that more than the half of this time is spent on training. If an examiner leaves after 5 years for whatever reason, the whole investment in training was for nothing. At least the pseudo managers at the head of the office show a certain coherence in their wish to kill the quality of the work done at the EPO.
That substantial procedural violations are on the rise is a direct result of an incomplete training. As the examiner wants to get read of the case in order to get his point, any means to achieve that aim is welcome. The examiner is cutting corners, which is sometimes possible, but in order to cut corners in an intelligent way you need to have a good knowledge of the procedure. Otherwise cutting corners resumes itself in tossing a coin, hoping that it will fall on the right side.
To a certain extent the examiners are also accomplices of the degradation of quality. The rat race for production is a game all examiners happily play, and have played for a long time. The system put in place by the upper management in the recent years that if you do not produce enough you are incompetent and you deserve to be sacked, does certainly play a role. But it has not always be like that, and yet the rat race existed.
To a certain extent, the profession of representatives is also an accomplice, by accepting a grant which look dodgy on the face of it, they also contribute to the degradation of quality. When for instance, a patent is later revoked or nullified due to added subject-matter, this should not happen if the representative, does his part of the work properly. It is clear that a representative wants to please his client by getting a patent granted, but what if this patent has a built-in deadly device, which just waits to be fused by a third party.
By granting masses of patents very quickly, the contracting states are also very happy, as they will cash in renewal fees much earlier. They have thus no interest in slowing down the quest for production. They are thus also to an extent accomplices of the degradation of quality. This was a good tactical move of the previous president which allowed him to literally buy the votes in the administrative council.
Only 5% of granted patents are opposed. And in some technical areas there are hardly any oppositions, so that oppositions are not necessarily a measure of the overall quality. But when you see patents revoked after opposition due to lack of novelty with respect of a document which was in the search file, one wonders why. The same if a patent is revoked for a problem of added subject-matter which was manifest at the moment of grant, but which was happily endorsed by the representative. When it comes to sufficiency, the matter is more delicate and not so straightforward, but sometimes it is flagrant, and yet a grant is accepted.
User satisfaction surveys are one thing, but it also depends on the nature of the question and the way the question is formulated. Opinion polls are a good example. A nice example is the way the results have been presented by WTW. The company carrying out a poll does not necessarily want to displease its client by bad results. The result of the user quality surveys should thus be taken with precaution.
When on the other hand, the internal quality measurement shows a degradation so that a quarter of the products delivered are defective one way or the other, then there is manifestly a problem. Examining is an intellectual exercise and anything above 90% of true quality is not achievable. But going as low as 75% for the whole office is alarming. It means that in some areas the % of bad “products” must be even higher. This was in the past the case of clusters having a very high production, but ending up with an appalling quality. Now it is the whole Office which goes down the ladder.
Wanting then to disband the department making the quality audit, shows how perverse the upper management is acting or plans to act. If there is only a thermometer giving “nice” results and if the quest for production shows that the figures are high, then everything is honky dory. The role of a patent office is not to produce any patent at a minimum cost, but after all to defend the interests of society by refusing to grant monopolies which have no reason d’être. Has the recent upper management of the EPO and the Administrative Council ever been aware of this? I have strong doubts.
Techrights: FINGERS OFF!!!
Dear Mr Bausch,
with regards to your legitimate and balanced point above (“I do not really know what exactly the SUEPO leaders are accused of and whether they did anything wrong. Considering the EPO’s history during the Battistelli era, I have my doubts (based on verifiable facts, as the Corcoran story shows) that the severe sanctions against the SUEPO leaders were justified. “), I would like to bring to your attention as well as that of your readers, the following link :
As to “quality”, I will assess my new car for its “quality” in terms of its fitness for purpose, in use. How long it took to advance down the production line in its assembly plant is not within my definition of “quality” of the “product”.
As an investor in society, I would see speed of the production line as something relevant to the “quality” of the management of the production plant.
As a patent attorney, I think that the pendency of the patent application has nothing at all to do with the “quality” of the respective issued patent.
One of our last official meetings touched on “quality”. In line with what Thorsten reports, the official stance really is that “quality” as defined by EPO management has three pillars: EPC compliance, timeliness and user satisfaction. It seems that each pillar has equal weight. In concrete terms, EPC compliance can at most define 33% of “quality”.
The numbers of internal audit – compliance rate around 75%, meaning 1 out of 4 patents should not have been granted the way it was – are therefore not an issue, as long as timeliness and user satisfaction are high enough. Our director, consequently, did not speak about “quality” but about “perception of quality”. Any resemblence to “perception of independence” is of course just coincidence.
Concerning the numbers of patents/searches, be informed that the average examiner has additional tasks. One of those tasks is classification of published patent documents. In spite of all efforts, even the newest search engines provide decent (not very good) results only when relying on intellectual, human classification. Machine classification and machine search without human input are definitely not good enough. They will likely not be in the foreseeable future, because technology develops too fast to provide enough data of similar nature for training of the algorithms. This is a huge difference to medical diagnosis: the human body does not change that fast.
Classification does not generate patents or income. It has been neglected under Batistelli, with a corresponding impact on search quality. Also, the classification schemes (like CPC or IPC) need to be updated over time. This has also been neglected. Briefly, the number of not classified documents is high and the schemes are outdated. There is now massive pressure to reduce the classification backlog, while the number of patents to be granted has dropped only slightly. In concrete terms, the average examiner does not have more time than the last years for dealing with files.
How much time the EPO foresees is laid down in “corridors”, depending on grade (aka salary) and technical area. These “corridors” are used for target setting, reporting, step advancement and I do not know what else. They have never been discussed with staff and never been officially published. I believe the patent community should know how much time the EPO foresees. Thorsten, that could be a point for you: ask VP1 to put those corridors (for search, examination and opposition) on the EPO website. The Boards of Appeal should do the same.
The staff survey results were a disaster for higher management, starting on director level. The concrete actions I hear and see: the team managers (one level below director) are now tasked with getting their teams together and identify areas of improvement. We have been assured that “work goes on on all levels”. Whatever that work might be (I personally doubt there is any work going on), it does definitely not include to meet with staff on the working level to get first hand impressions and provide direct replies.
All things considered, I have the impression that the staff survey was done to have some glossy paper. It was and it is not intended to change anything. I’d love to be proven wrong here.
The latest financial study is out. In a nutshell, the consultants managed to show that the EPO will be broke once again in 2038. Looks like all Battistelli measures – sacking staff representation, breaking the law, interfering with the Boards of Appeal, drop in quality (EPC compliance) – have been useless. Take a look at the details, if you get your hands on the study.
The consultants, maybe based on EPO suggestions, assumed an increase of expenses, mostly salary, a bit above inflation every year, while the fees shall be increased only in 2020 and then remain stable. Expenses increase exponentially, while income is stagnant. Clearly, with these assumptions, everybody will be broke in 20 years. I wonder why the EPO bothered doing the study in the first place.
The EPO will not disappear because someone did a shady financial study. But it may help to understand why staff has no respect and trust at all in management. It also shows the responsibility of the Administrative Council. They simply cannot trust anything even the new President, Campinos, puts on the table.
Thanks to Thorsten for his views and for the opportunity we are given to share views on quality. I am going to refer to an article I had published in epi information 2/2008 titled « Quality of patents : a matter of information inputs ».
In this article, I pointed out that a granted patent is the result of a multi-step process involving the applicant, his representative if any, and the patent office, and possibly third parties when observations or oppositions are filed. The quality is the combined result of the quality of the individual step, which implies a shared responsibility between the applicant and the patent office. Each step is performed on the basis of information inputs. The quality of a patent thus depends on the value of these information inputs.
The prior art search is obviously a critical input (as common wisdom puts it, patent examination is only as good as the prior art search). In addition to being critical for the examination process, it is of prime significance for third parties once it is published. The applicant also brings a significant contribution by citing in the application the prior art he is aware of. Third party observations may helpfully complement the search by the EPO. It has been a positive initiative from the EPO to promote the filing of observations
In this article, I stressed the importance of the indexing of upcoming documents to be carried out by examiners, and I fully concur here with « Experienced Examiner ». Here is what I wrote :
« The EPO should keep its quality standard by making it clear to examiners the importance of documentation tasks such as the indexing of upcoming documents, so that these tasks continue to be given a suitable priority and do not risk being sacrificed on the altar of productivity ».
The EPO may have a lower production target as a whole, but also a reduction in headcount of Examiners is foreseen (due to workforce moving into pension age).
Therefore the average number of products expected from individual examiners has risen again, and is expected by management to continue to rise according to similar levels as realized the last few years (see financial study).
Which means for many Examiners who did achieve a higher production, the evaluation in the “reporting excercise” nevertheless degraded, as they did not achieve a rise in the production as expected.
EPOTIF is not related to pensions. Pensions are covered by the RFPSS – which too saw short term losses. Short term losses are normal for any pension fund.
What was not normal in the past, was the way such losses used to be hidden in EPO accounts by using a “corridor” approach which only required reporting gains and losses if they fell outside a range of outcomes. The yearly gains and losses are now visible, which is good for transparency, but apparently bad for the nerves.
“It also shows the responsibility of the Administrative Council. They simply cannot trust anything even the new President, Campinos, puts on the table.”
Does that mean that they will be employing food-tasters at the upcoming Inventor of the Year Sommerfest in Vienna?
2) Social dialogue
As far social dialogue is concerned, it is certainly noticeable that the new president met staff members individually and in groups, contrary to his predecessor who was very quick to even stop the general Christmas meetings with staff, but that is not what one can call social dialogue.
Social dialogue starts with showing respect to staff, and not by more or less blaming staff to be a bunch of incapable people only at the EPO to cash in a lot of money and doing nothing, so that that they have to be pushed all the time.
That the complacency which established itself over the years should stop is one thing. But the, not giving people a fair chance to defend themselves is certainly going too far. The postulate that staff are only scroungers which need to be bashed at any rate should be abandoned.
If the new president was willing to show that social dialogue matters, he should start by declaring that the immunity the EPO has with respect to national legislation is not synonym of impunity. He could also announce that he will respect, unless there are imperative policy reasons to be made open, decisions of joint bodies, and for instance not set aside such decisions and decide on its own.
What has happened to joint bodies under his predecessor was a farce, be it for their composition and the respect to the decisions they proposed. This could have a positive influence, as the ILO-AT merely checks that the statutory way has been respected and the final decision is not tantamount of an abuse of procedure.
Social dialogue starts also by giving realistic targets, and not increasing them year after year as it is still happening.
There is a legacy left by the predecessor which has to be get read as soon as possible, if the word social dialogue should still have a meaning at the EPO.
There are lots of things which need urgently to be solved, and decisions to that effect should be taken urgently.
The first thing, and this should have happened a long time ago, is to push aside a quite nasty person put in place by the former head of the EPO. As long as this person will remain in charge of the personal department no relation of confidence can be established with staff.
At the same time pushing aside her husband is also a necessity. It is amazing that a couple coming from France in the baggage of the former president could acquire such an influence at the EPO. They occupy two key positions at the EPO, and once their protector has gone, they should go as well.
But as far as nepotism is concerned, it might remain a wish, when one sees how the new VP 4 was introduced in the EPO by the new president. This does not bode well for the future and for any solution.
Techrights: FINGERS OFF!
3) Financial sustainability
The rant about financial sustainability really started with Ms Brimelow. For her the EPO was on the verge of bankruptcy and things had to change. It is sickening to continuously hear this.
With or without IFRS, the EPO was always financially sound, but there was one aspect which could become a problem were the pensions of staff. If you recruit staff which then cut off all links with their previous national security and pension systems, the EPO as an organisation takes over a great responsibility, as well as duty of care.
If EPOTIF is not for the pensions, then one wonders why the AC accepts that the EPO has so much money at its disposal. Why on Earth should the EPO be allowed to hoard huge amounts of money if it is not in order to minimise the financial risk of the pension scheme.
That any company/institution need some money to run everyday business is clear, but for this purpose much less than € 2 460m are necessary. There are no big investments in buildings foreseen (with the exception of the hired premises in Haar), so that the position of Mr Boff is difficult to follow.
That the EPO had a Pension Reserve Fund is to put to the benefit of the first president of the EPO, who realised early enough, that should the office not wanting to become dependent upon contributions of the member states as foreseen in Art 37, c) EPC, something needed to be done. This pension fund is now in jeopardy, and one can only support Mr Bausch in its views.
Some crazy ideas were uttered before, for instance the level of fees could be maintained, but any loss in this respect could be compensated by taking money out of the pension reserve fund. Thank god at the time the AC did not accept this idea. I would not put my hand in the fire nowadays.
There are actually two different pension schemes at the EPO. One for people having started before 2009, and for those having started later. For the first category, there is in principle a definite benefit, i.e. a definite sum guaranteed, for the second category, the pension will primarily depend on the performance of the fund. So the situation is even worse as one can imagine.
It is therefore abundantly clear that, as long as the member states will have a guarantee that they will not be asked to contribute to the budget of the EPO, especially as far pensions are concerned, they will accept any proposal made by the management, be it as crazy as it might be. One cannot expect miracles from the AC, and in this respect, the tail will continue to wriggle the dog.
The recruitment policy the EPO was for a long time, i.e. to mainly recruit people coming from university, which is very young people, means that that should people stay, the pensions rights accrued will be much higher as for people coming in after having had a previous career in industry.
The Office should have tried to have a more balanced recruitment scheme, with at least 1/3 of people with previous experience, 5 years onwards, but this would have entailed more efforts. It is a bit like the products: there was a recruitment target to be achieved, and it does not matter how this target is achieved. The “plan” is fulfilled. We all know where planned economies led to.
With the new system of 5 years contracts, the office has cut off this source of recruitment. Who will leave his home country, severe the links with the national security schemes they have, to take the risk to be fired after 5 years and be left with very little, but a bug hole in one’s CV.
Any potential recruit with a family to feed will never do this. If people leave before ten years they will get a lump sum, but there again the pension fund will not have a great benefit from such contributions. That life time guarantee for a job is something which does not longer exists nowadays, but this coupled with the severance of any links with a national security or pension scheme is something totally different.
That civil servants from member states, might be interested to come for a few years might be a possibility, as they have a guarantee of return, is not a solution or an example. The figures involved are too low to have an effect.
Working at the EPO is not like working for a contract, for instance building a bridge or a factory, were people know what they come for, and that the contract has an end. I do not know many people having worked as representative leaving the profession after 5 years.
It might look like look like modern management to hire people for 5 years, at least in the eye of some circles of the upper management of the EPO, but this is not practicable in an organisation like the EPO. But the AC has swallowed it.
Have the dear members of the AC realised, the perverse effects of such a recruitment policy has for a lasting institution like the EPO. Financial sustainability starts with recruitment.
Techrights: FINGERS OFF!!
– In the new contracts, only after a first renewal for 5 more years, is a permanent appointment possible. The new examiners have a 10 year limited contract.
An engineer would better be advised to do sth more useful with their time and knowledge.
4) Boards of Appeal
The problem of the Boards of Appeal is a big problem of independence.
We have first to look at the doings of the preceding head of the EPO. First he withheld a member of the boards to enter the EPO premises, so that he could not carry out his duties, i.e. blatantly disregarded the separation of powers. Then he wanted the EBA to simply rubber stamp this decision which was retroactively approved by the AC.
When we see how the new president wants to twist the arm of the EBA in the “pepper” discussion, the situation has not really changed. The only correct way is to amend Art 53, b), but this seems too long and too difficult, so that it appears simpler to put pressure on the body in charge of the interpretation of the EPC. Here again, the separation of powers is trampled upon.
That the backlog situation of the Boards has degraded so badly is another legacy of the former head of the EPO. The forecast of an increase of production of 32% is only possible with more recruitment of Board members, and hence it might take a long time until the Boards come to a reasonable level of latency of cases.
The fact that the re-appointment of Board members will depend on an appraisal of performance is another notch in their independence. This is the more so since the performance criterions are not even public. What will be the means of redress of a Board member if he is not reappointed? The AC and then Geneva. I understand something different under independence.
Another problem of independence is that nowadays the Boards cannot decide themselves on their rules of procedure. They are merely heard, but the rules of procedure are presented to the AC by the newly created Boards of Appeal committee. As this body comprises three members of the AC, this does not look to me as the Boards are truly independent. This BAC also comprises three external judges, and if one sees how the new version of Art 11 RPBA has been pushed by the external members, it does help to improve the perception of their independence.
It might be true that the German Federal Constitutional Court has dismissed an action against an international organisation, i.e. the famous Eurocontrol II decision, but this is first a very old decision, and secondly I doubt there was a Board of appeal at Eurocontrol, having such a potentially important influence on the assets of a user of the system. Case law of the BVerG has evolved, as society has evolved.
Without going as far as to guarantee the requirement that the judge deciding a case must be identifiable at the moment the case becomes pending, there plenty of possibilities to decide that that the Boards are not truly independent.
Last but not least, as long as the Boards will not have the possibility to submit their budget directly to the AC, but have to go through the President of the EPO, independence will only be on the paper but not in reality. Giving the possibility of the Boards to have their own budget would clearly “improve the perception of independence of the Boards”, and not by a mere relocation of the boards in a suburb of Munich. This action was nothing more than the private retaliation of a so-called manager who could not accept any form of resistance to his dictatorial behaviour.
It is sad to see that a well-functioning organisation has been degraded to become the playground of pseudo managers which do everything possible to run it into the wall, and do in the end work against the interests of the users of the system and society alike.
The “Anmelderfreundlichkeit” which was promoted by the people at the helm of the EPO at its beginning has given place to the”Plannungsfreundlichkeit” of the present managers.
What is needed are good patents, and not patents which are not even worth the paper they are printed on as the number of those disappearing after they are challenged, be it in opposition or in litigation, collapse like a house of cards.
Techrigts: FINGERS OFF!!!!
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