11.10.15

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New Reports Highlight Need to Crack Down on the European Patent Office and Microsoft

Posted in Europe, Microsoft, Patents at 12:36 pm by Dr. Roy Schestowitz

Van of police

Summary: Tax evasion loopholes, intervention in law-making (to authorise some abuses), so-called interrogation (allegedly illegal methods) and financial manipulations show commonality between the EPO and a seriously corrupt company (and special ally), Microsoft

ONLINE conversations about our most recent EPO coverage serve to show that these issues are being escalated (passed upwards) rather rapidly. Last night we wrote about pressure on the Dutch Prime Minister, which led to some prominent European voices talking about it [1, 2, 3]. One of them, Florian Müller, will “bring this up in a blog post soon,” he wrote, “re. UPC/Unitary Patent.”

“The EPO seriously needs to grasp that it is not above the law.”Müller said that “the UPC’s values will not be “technology based” but patent law-based…” (to maximise profit perhaps, but whose?)

Separately, on another occasion he wrote that “Blatterstelli has ZERO credibility with respect to SMEs, given his preferred (big) applicants scheme.”

Three days ago he said, “I usually don’t like such historical comparisons but the EPO is by far the most fascist entity in Munich since 1945.” He was referring to a fact many people (especially politicians) don’t really know — that EPO hired from CRG (“British Blackwater” or their equivalent for intelligence gathering), along with the “interrogation” background that we covered here earlier this month [1, 2, 3, 4, 5, 6, 7]. The EPO seriously needs to grasp that it is not above the law. If it is, then it’s likely just a temporary luxury due to some error in the way it was set up. International laws do apply and as long as the EPO is on planet Earth, there are rules it must obey, irrespective of its own convenience. It does not exist in a vacuum. It’s not another Guantánamo.

“International laws do apply and as long as the EPO is on planet Earth, there are rules it must obey, irrespective of its own convenience. It does not exist in a vacuum. It’s not another Guantánamo.”The President of the FFII, in the mean time, explained that “a Hungarian company party to patent litigation will face heavy costs compared to the present situation,” based on this UPC analysis which says: “Timing is everything, and a slim hope of winning a ‘grace period’ seems to have arisen in light of the UK referendum on EU membership. If the House of Lords approves the legislation, the referendum is expected to take place before the end of 2017. Of further interest is that, according to certain ad hoc legal advisers to the UK government in connection with the UPC Agreement, the treaty – which as it stands is a “political compromise” and is “not perfect” – is unlikely to be ratified before the referendum. Further, according to recent reports, speedy ratification of the UPC Agreement cannot be expected in Slovakia or the Czech Republic either.”

The above comes from boosters of the patent system and its biggest maximalists, patent lawyers. Unlike large corporations, they cannot ever suffer from patents, under any circumstances; they’re profiteers, like arms-manufacturing companies at times of war.

The threat that Europe might formally adopt software patents is greatly increased by the promotion of UPC, partly by the EPO itself (it is not supposed to be in the business of lobbying politicians and trying to change the law like that). The EPO is increasingly acting as though it’s preparing for class war and wealth passage (much like ‘trade’ deals). It militarises itself and attacks even its critics from the outside (recall legal bullying of UPC critics). According to IP Kat: “The EPO President has now decided to stay all proceedings before examination or opposition divisions where the outcome depends entirely on the answers that the Enlarged Board may give in G 1/15″ (we covered this earlier this month).

“The EPO is increasingly acting as though it’s preparing for class war and wealth passage (much like ‘trade’ deals).”How much abuse can the EPO be allowed to get away with? We’re still waiting to find out the answer. Severe action by member states (mostly European nations) is necessary. It’s well overdue.

Based on this explosive new piece from the German newspaper Spiegel, now we have financial manipulation using patents, as well. They call it “patent boxes.” To quote some of the relevant parts: “In order to attract as much corporate money as possible into the country, his officials played around with tax models like “hybrid financial instruments” and, especially, so-called “patent boxes.” Introduced in order to spur technological advancement, finance policy experts in Belgium, the Netherlands and Luxembourg led the pack in transforming tax advantages into an instrument allowing corporations to steer proceeds from patents or licenses to their Benelux subsidiaries in order to pay lower taxes there. Under the system, national subsidiaries of large corporations in countries with higher corporate tax rates would pay large patent and licensing fees to subsidiaries in lower tax countries. The system ensured that money got pumped into the government coffers of the Benelux countries, but it also put other EU countries at a disadvantage, in addition to the majority of small- and middle-sized businesses for whom such preferential treatment wouldn’t even be considered. [...] The documents seen by SPIEGEL reveal that what EU agencies have long been denying, is in fact mass-scale cheating with the help of the tax law. Internal EU documents show how companies took advantage of patent boxes to simply sign their licenses, copyrights, patents or marketing rights over to their subsidiaries in Luxembourg or The Hague, allowing them to cash in on sweetheart corporate tax deals in those countries. It didn’t matter whether the research had actually taken place in those nations, either. [...] Another consequence was that the patent box trick encouraged companies to cycle profits earned in other countries through Luxembourg or the Netherlands, a development that did not escape the notice of the working group. “Whereas low tax rates seem to influence the location of patents,” a Commission paper notes, there is no proof that they influence “the location of research and development activities.”

“One is the EPO and another is Microsoft. It should be surprising that these two are so close (a relationship almost incestuous in nature).”Creative avoidance of tax is something Microsoft has been renowned (or more appropriately notorious) for. The company has a long history of financial misconduct and silencing of whistleblowers who reveal financial fraud. Microsoft’s financial situation is therefore largely misunderstood.

To quote this new piece from the New York Times (titled “Microsoft’s Stock Math: Fewer Shares, Pricier Shares”), “in achieving its current share price, Microsoft has engaged in stock buybacks” (as it was doing in the past). “For years now,” the author reminds us, “Microsoft has been systematically buying back its shares” to artificially elevate the stock. Microsoft is just gaming the system to make it look as though things are OK. Our reader iophk told us: “Is this a way of repatriated money without tax?”

Microsoft’s financial situation was never quite what it seemed and there have been many dead products (we stopped keeping track a few years ago) in recent years. Here is the latest casualty. To quote the news, “Gabe Aul, of Microsoft’s Windows Insiders program, has confirmed on Twitter that Windows 10 will drop support for Windows Media Center due to a decline in usage. This is not surprising news as Microsoft has been deprecating the Media Center application for a while now. In Windows 8.x, the application required both the “Pro” SKU of the operating system, and then users needed to install an optional add-on above and beyond that. The Media Center Pack cost $10 over the price of Windows 8.x Pro unless you claimed a free license in the promotional period surrounding Windows 8′s launch.”

So, all in all what we are seeing here are two seemingly corrupt entities struggling for survival. One is the EPO and another is Microsoft. It should be surprising that these two are so close (a relationship almost incestuous in nature). The EPO’s inseparability from corporate power should be a massive concern all across this continent and beyond it.

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2 Comments

  1. Dr.Guinness said,

    November 10, 2015 at 4:01 pm

    Gravatar

    The role of the Administrative Council (AC) in the development of the problems in the European Paten Office is clear. The AC is not any longer controlling the president but in nearly all cases just following his wishes.

    Jesper Kongstad is Director General and CEO of the Danish Patent and Trademark Office and Chairman of the Administrative Council of the European Patent Organisation (EPO). When he started his function as a Chairman of the AC he was interviewed.

    The first question of the interview was:¨You have recently been elected Chairman of the AC of the European Patent Organisation. What are the most important aims and challenges for you in the upcoming years?

    In his answer: ¨A more personal goal for me is that working with the new President of the Office(Benoît Battistelli), we will be able to create a much closer cooperation between the AC and the management of the Office, between the AC and staff, and indirectly between management and staff, which is within the responsibility of the President. I see it as an important aim to reduce the level of conflict by means of transparency. Ultimately, by strengthening cooperation, the goal is to make the organisation better at addressing and solving the challenges facing our European users.¨

    This ¨more personal goal¨ he did not achieve at all. The much closer cooperation between the AC and the management of the Office was realized only partly and in a totally wrong way. Jesper Kongstad
    listens only to ¨his masters voice¨, Benoît Battistelli´s voice. They ‘re so close ¨you can see Molto’ s nose sticking out of Nico’ s bellybutton¨. They were and are too close. Further there is no sign of a closer cooperation between the AC and staff. This is also not possible because of the by the AC tolerated (Battistelli´s) Investigation Unit and the doubtful activities of Control Risks. The reduction of the level of conflict by means of transparency were and are only empty words. The EPO is in the worst state ever. The European users have never been asked.

    Jesper Kongstad is Director General and CEO of the Danish Patent and Trademark Office. When he ¨managed¨the staff of the Danish Patent and Trademark Office in the same way as Benoît Battistelli the staff of
    the EPO and acting in conflict with the European Convention on Human Rights, breaching of employee rights and having an Investigation Unit (Gestapo) and activities of Control Risks in the Danish Patent Office,
    Jesper should soon be in prison.

  2. Dr.Guinness said,

    November 17, 2015 at 6:36 pm

    Gravatar

    Dear Mr. Jesper Kongstad Chairman of the Administrative Council of the European Patent Organisation (EPO), Mr Derk-Jan DE GROOT, Director Netherlands Patent Office and AC-member, Alternate Representative:Mr Paul VAN BEUKERING, Unit ManagerMinistry of Economic Affairs
    The institution EPO for the governance of which you are legally responsible is teetering between malfunction and dysfunction. From being a highly praised and much-admired organisation it has become a hotbed of suspicion, rumour, allegations of corruption and insurgency, accusation and counter-accusation. It has lost the respect of a substantial number of users, employees and officers. Its public relations policy — if indeed it has one — has failed to engage with the issues that concern the intellectual property community and which form a large part of its current agenda. Its apparent inability to stem the exponential surge in staff disputes has all but brought the International Labour Organisation’s mechanisms for dispute resolution to a grinding halt. Its integrity has been increasingly questioned and its image has become a laughing stock and a byword for a dictatorial management style that has no place in an open, democratic Europe.
    You, as members of the Administrative Council, are responsible both for the approval and formation of EPO policy and for its execution. How many of you have sought and been given advice from your respective governments with regard to current events in Eponia? How many of you, in the light of your other commitments, have the time, the resources and the information to enable you to play an effective role within the Administrative Council? How many of you can honestly say that you are happy with the present state of affairs? And how many of you are simply too scared to be able to stand up to the EPO’s management?

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