EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

10.30.19

EPO May be Financially Defrauding the Public and Its Employees

Posted in Deception, Europe, Finance, Fraud, Patents at 5:17 am by Dr. Roy Schestowitz

Time to revoke diplomatic immunity and hold people accountable (culprits in top management positions, falsifying vital information in the public interest)

Cheating

FFII President on EPO yesterday: “this entire body reshaped to fit a structure with accountability, checks and balances, separation of powers, rule of law etc. It certainly is not what we have at the moment and this is the primary reason EPO workers are protesting…”

Summary: Cheating of EPO staff and the European public must mean that the EPO lost its right to that controversial “above the law” status; it’s time for authorities to take swift action and tackle EPO corruption

TECHRIGHTS has covered EPO affairs for a very long time. It’s pretty amazing that nobody from the management of the EPO has yet been arrested. Nobody! There’s the (in)famous saying from Donald Trump about shooting someone in broad daylight; he bragged he would get away with it. Well, that’s like today’s EPO management.

“There’s the (in)famous saying from Donald Trump about shooting someone in broad daylight; he bragged he would get away with it. Well, that’s like today’s EPO management.”Earlier this month Konstanze Richter of JUVE relayed some EPO lies (SUEPO did not link to it). This reinforced the idea or the widespread perception that JUVE is a mouthpiece not of integrity but of the patent microcosm. Just consider the target audience, i.e. the source of income. Here are some portions:

The European Patent Office is facing a huge pension gap of several billion euros in the coming years. Initial proposals for savings also affect future salaries and pension entitlements. The latest EPO financial study has caused further unrest among the workforce.

[...]

Overall, say staff representatives, the newest EPO financial study is based on “unrealistic assumptions.” This applies, among other things, to the expected increase in salaries. Salaries are calculated at 0.5% above inflation in the long-term. Career progression adds another 1.74%.

“It seems very unlikely that the recent negative trend in career progression will turn any time soon,” says the CSC. Only a few employees would actually benefit from the new career system introduced under Battistelli. It is said salaries for new employees in particular have been significantly reduced.

The CSC is quoted, but the journalist also repeats lies from the EPO; isn’t the job of a journalist actually checking the facts rather than parroting the lie and refutation of it? Should they also quote deniers of climate science? In the name of ‘balance’?

“The whole thing has become an embarrassment not just to the EPO and France but also Germany and the EU as a whole.”One person ended up tweeting back to the editor of JUVE [1, 2, 3]:”Congrats, you have been fooled by the EPO! Quote: “a huge pension gap of several billion euros in the coming years”, really? How do they know? Based on what? Studies? These studies are a joke, we all know it. [...] Surprisingly Battistelli, the former EPO President by the way, had claimed the exact opposite at the end of his presidential term, and in doing so has pocketed a fat reward. It sounds like a bad comedy, right?”

Dr. Thorsten Bausch’s (Hoffmann Eitle) latest good article, “Three Myths Debunked,” says that “The EPO is not poor” (in a heading) and this has been mentioned in some circles. He has, for quite some time, watched and commented on the truly corrupt financial moves of Battistelli — moves that António Campinos did not challenge and media did not even mention! Here’s the more relevant part (to us at least):

2. The EPO is not poor

A similar myth that seems to pervade through the heads of the EPO management every other year is that the EPO’s finances are not in good shape and that, as the current Office President put it, “we might face a gap”.

We might indeed, who can deny that? But the relevant questions are (i) when and (ii) under which circumstances/assumptions?

[...]

So everything was in order and “brought under control” in 2018 (so that the past President earned his extra bonus (???)), but only one year later a new study is presented wherein doubts regarding sustainability in 20 years are expressed. (Can one claim the bonus back?)

With this, let us turn back to reality. According to the EPO’s most recent figures (page 9 of this PDFinance_Presentation), the Standardised Operating result in 2017 was a surplus of €366 million. In the year 2018 it was €390 million, a plus of about 6% (don’t ask me why these figures are slightly different from the ones published in the Battistelli report). The productivity of the examiners (Products per Examiner) has likewise increased from 95.5 (2017) to 99.8 (2018) products per headcount. Thus, it indeed seems that the EPO has become more effective (as it was planned by the Battistelli management – note that I am not talking about quality here) and made an operating profit that I would describe as pretty breathtaking.

On top of that, the EPO Treasury Investment Fund (EPOTIF) which was established and activated in 2018 under external asset management control has assets of €2,4 billion, that is 2.400.000.000 EUR. If my understanding is correct, most of this money has been invested on the stock market in shares and bonds. Whether this is right or wrong may be a matter of debate, but the net effect of this policy in the year 2019 was clearly positive: Namely, whereas general interest rates were about zero, both stocks and bonds had a pretty good year and (so far) increased by about 8% from 1 January. Which adds another approximately 200 million EUR to EPOTIF’s asset sheets. Sounds great – but is this sustainable?

I have argued before that I do not perceive it as the core objective of a patent office to make huge profits. In the end, a patent office is to serve the common good, i.e. promoting technological progress by thoroughly examining patent applications and granting patents to those inventions that deserve it. In contrast, it is not a patent office’s task to impose additional liabilities on applicants in the form of fees, just to put the excess earned by these fees on the stock or bond market. It goes without saying that the European Patent Office should be self-financing and receive the money it needs for operating its business and paying the agreed staff pensions to its retired employees, and I have no doubt that the Administrative Council will provide the office with those means by allowing it to raise the necessary fees at any time. (Whether the EPO needs much more than that, e.g. to pay its past President an appreciable extra premium in addition to his generous salary or to sponsor lavish inventor of the year ceremonies, is another matter on which I have commented earlier.)

In any case, I would summarize that it is a pure myth that EPO is “poor” and that active measures would therefore be necessary to cut costs, particularly staff costs and pensions. On the contrary, staff has demonstrably become more effective, so if anything, I would argue that they have rather deserved a reward.

On this basis, it is quite difficult to see a gap anywhere in the EPO’s figures which would justify immediate action. Predictions about the long-term future are notoriously difficult and highly dependent on the assumptions underlying them, which therefore need to be thoroughly scrutinized and discussed. If my understanding is correct, most of the scenarios under which a “gap” has been prognosed seem to assume a global economic recession and slump in the stock market (“decline in equity earnings”) within the next few years, followed by a slow increase. There is also an optimistic scenario under which there would be no predicted gap at all. All of this may or may not happen, I don’t know. With my limited economic understanding, I just wonder one thing: If EPO management seriously believes in any of the more gloomy-gap predictions and thinks it is appropriate to invest a large proportion of both its investment fund and its pension fund on the stock market, would it not be wise to shorten the stocks now, thus generating a buffer, and re-invest after the slump?

The Treasury in Germany’s EPO office (not Berlin but Munich) is lying and cheating; it’s defrauding the public regarding the finances. What does the German government have to say about it? What has the EU said about it? Nothing! Big fat nada.

There’s a bunch of interesting comments so far (on the above article). Here they are with some highlights added:

Thank you Thorsten for highlighting what I believe is an area where increased public engagement and scrutiny are vital, namely the financial dealings of the EPO.

Like you, I can make no sense of the predictions in the 2019 Financial Study. The EPO has HUGE cash reserves and has decided to play with a large portion of those reserves on the stock market. If the EPO is following models of good governance, then it will not be gambling with money that it cannot afford to lose. Thus, one can only conclude that the EPO currently has a significant cash pile that is effectively surplus to requirements.

If the predictions in the Financial Study are to be believed, then one would expect the EPO to: (a) provide robust justifications for the assumptions upon which those predictions are based; (b) identify the causes of the predicted losses; (c) consider a range of options for dealing with the underlying causes; (d) provide robust justifications for the chosen solutions; (e) stop playing on the stock market; and (e) target investments with potentially smaller (but guaranteed) returns.

It has been a while since I read the Financial Study, but my recollection is that it most certainly did not follow the logical approach set out above. Indeed, I recall that one of the most “interesting” predictions used in the Financial Study was an assumption of ZERO increases in EPO official fees for an astonishingly long period of time. Thus, given that the users of the European patent system pretty much expect to cope with regular fee increases, one wonders what the basis was for this rather unbelievable assumption.

Of course, if one were a cynic, one might speculate that the authors of the Financial Study were instructed to identify a set of assumptions that might generate predictions of a potentially perilous financial situation in the long term. The question is, why would anyone provide instructions aimed at achieving a predetermined result?

In situations like this, it is often helpful to ask a simple question: cui bono? Let us consider a number of possible candidates.

EPO staff: it is pretty clear that the EPO’s (non-senior) staff will be the victims of the Financial Study, and not its benefactors. Indeed, it seems that the proposed “cost savings” are to be made entirely at the expense of those staff.

Patent applicants: for this group, it is a mixed picture. On the one hand, they might benefit from a freeze in EPO official fees (though it remains to be seen whether the EPO follows through with such a strange policy). On the other hand, applicants will get much less “bang for their buck” in terms of QUALITY patent examination. That is, with the “production” of EPO examiners constantly being pushed (significantly) upwards, the amount of time that applicants can expect an examiner to dedicate to their case is constantly reducing. Whilst it is possible that a relatively small reduction in time per case can be achieved without a reduction in quality, it is frankly inconceivable that year-on-year cuts will not lead to a lowering of quality (especially in view of the cuts already implemented in recent years).

Fund managers for EPOTIF: this group will undoubtedly be a benefactor of the EPO’s recent policies, and also (it seems) of policies devised in the light of the Financial Study, where “savings” made at the expense of EPO staff will be invested into EPOTIF. The funds invested in EPOTIF are truly enormous. Presumably, therefore, the (private sector) fund managers for EPOTIF will reap large rewards in terms of their fees for managing that fund.

You will note that I have not considered whether EPO management (or AC delegates) are possible beneficiaries. This is because, upon the basis of publicly available information, it is impossible to determine one way or another whether they stand to either lose or gain from the rather strange policies that have been implemented. Nevertheless, I think that it is possible to make a pertinent observation. That is, the only reason that it is possible for the fund managers for EPOTIF to earn huge fees is that the policies implemented by the EPO’s management directed the creation of EPOTIF (as well as continued, significant investments into those funds). This observation may or may not be significant. However, when there are well reasoned doubts about the rationale for creating the fund in the first place (let alone the rationale for predicting a dire financial situation that requires more cash to be squirreled away into EPOTIF), it becomes painfully obvious that there are insufficient safeguards in place that might prevent (or even monitor for) key decision-makers at the EPO from receiving kick-backs from the beneficiaries of their largesse.

I must stress that this is all hypothetical, and that I have absolutely no evidence whatsoever of any wrongdoing on the part of anyone involved in this whole scenario. However, the reason for pointing out the POSSIBILITIES for abuse is that it highlights what I believe could be a very serious failing of transparency and accountability in connection with the governance of the EPO.

“An EPO examiner” then wrote:

Dear Mr Bausch,
many thanks for your well-written articles.
Regarding your 3rd point, it might be time to put the DPMA under scrutiny, too. If the tales of my former colleagues there are correct, the judges at the BPatG are appointed in peculiar ways. In electrical engineering, they are always recruited from G01R examiners, even though there are almost no cases from this class. And if someone is intended to become a judge, he will get this IPC to examine… This has gone on for quite some time, so there is no judge left who has experience with, e.g., electrical machines or some of the other EE specialties…
And in physics everyone knows who is slated to become one of the next judges. And it just pure coincidence that he is the son of a former H1-head and presidung judge…

Maybe we see a general problem with patent offices…
An EPO examiner
PS keep up your great work!

Another person (familiar person, patent attorney “MaxDrei”) said:

Well done VPP. Well done Thorsten Bausch. Well done Wikipedia. Well done Angela Merkel. Well done Bielefeld. And while we are about it, well done Henning Wehn.

It is said in England that Germans have no sense of humour. One more sad sign of parochial ignorance on the island. This particular English reader is heartily fed up with English banter, what passes for English “humour”, and would much prefer the gentle but supremely effective wit of intelligent people like Axel Hacke or Dieter Nuhr. Readers, does anybody know: who are their media counterparts in England?

https://en.wikipedia.org/wiki/Henning_Wehn

Having written many articles about this, I find none of this humourous as there seems to be profound corruption here; there needs to be an investigation, leading to potential arrests. But will that actually happen? Not likely. Where’s Campinos in all this? Covering the back of the thug who gave him this job. The whole thing has become an embarrassment not just to the EPO and France but also Germany and the EU as a whole.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Links 23/2/2020: PipeWire 0.3 and Osu!

    Links for the day



  2. FSF's Interim Co-President Alexandre Oliva on Being Cancelled

    It was reading this that I realized I’d been cancelled myself. In my case, I was painted misogynist and transphobic, and for a post in which I supported women but denounced a crowd of men twisting the feminist cause, that I share, to attack rms, as if he wasn’t a feminist himself; and in which I express curiosity as to what pronoun to use to refer to zero women to paint me as someone who disregards gender identities and their pronouns.



  3. Good People Need to Run for Free Software Foundation (FSF) Board Positions After an FSF Coup Threw in the Towel, Pushing Out the Founder

    "I have been hit, but not knocked out, and my campaign for free software is not over." --Richard Stallman, October 2019



  4. IRC Proceedings: Saturday, February 22, 2020

    IRC logs for Saturday, February 22, 2020



  5. Alexandre Oliva's Message About Cancel Culture at the FSF

    Being cancelled is no fun. In my case, it was for standing for a friend who got canceled for defending someone else from an accusation that was later proven false.



  6. Links 22/2/2020: Polish Government Increases GNU/Linux Use, Samza 1.3.1

    Links for the day



  7. Being Rich Does Not Imply Being Smart (Especially When One is Born Into Wealth)

    Presenting the 'genius' (college dropout, but that does not matter when the yardstick of wisdom is wealth alone), with his own predictions overlaid on top of his photo from the show of Bloomberg (another 'genius' whose supposed brilliance is measured using money alone)



  8. The Rise and Fall of Free Software

    "We simply need to make the movement less corporate, and more grassroots."



  9. Why You Should Adopt Debian 10, Not Vista 10 (Windows Vista With Microsoft's Latest Surveillance Add-ons)

    A little personal story and recommendation of Debian "Buster" (10) or Devuan (whose developers persist)



  10. Ethics by Exclusion

    It's the same old philosophical question; can excluding those who are perceived to be intolerant be seen as an act of tolerance?



  11. Even Worse Than Microsoft Inside the Board of the OSI

    The OSI has accepted people from companies that actively attack Software Freedom and there may be more on their way



  12. ZDNet Continues to Stuff Its 'Linux' Section With Proprietary Software of Microsoft

    The above is what the "Linux" section of ZDNet is going to look like throughout the weekend (and this is hardly unusual, either)



  13. IRC Proceedings: Friday, February 21, 2020

    IRC logs for Friday, February 21, 2020



  14. Links 21/2/2020: EasyOS 2.2.11 Released, Microsoft's Control of the Linux Foundation Increases and More Binary Blobs Arrive

    Links for the day



  15. IRC Proceedings: Thursday, February 20, 2020

    IRC logs for Thursday, February 20, 2020



  16. Video: LinuxWorld 1999, Torvalds and Stallman

    LinuxWorld 1999, Torvalds and Stallman



  17. GNU World Order is a Personal Sacrifice, LinuxWorld Just Business

    As the Linux Foundation shows, Linux is just business (and proprietary software) as usual, software patents included, whereas it’s GNU that continues the Free Software Movement’s battles



  18. Links 20/2/2020: Oracle Solaris 11.4 SRU18, Mesa 20, VirtualBox 6.1.4

    Links for the day



  19. Open Source Did Not Win, It Was Assimilated to and by Proprietary Software

    Don’t fall for the whole “Open Source has won!” spiel; You know we’ve lost the battle (and were in effect gradually conquered) at OSI and elsewhere when those who speak for the OSI are Michael Cheng (Facebook), Max Sills (Google), and Chris Aniszczyk (Linux Foundation); they say “Open Source Under Attack” (FOSDEM talk) but their employers are the ones attacking and they downplay openwashing



  20. Former Microsoft Employees Don't Like Talking About Past and Present Microsoft Back Doors (Designed for Spy Agencies)

    In a typical Microsoftian fashion, once they cannot defend the illusion/delusion that Microsoft values security the 'Softers' run away and block any further debate



  21. Techrights Warns Against Impending Extradition Efforts (Passage of Julian Assange to His Death in the United States)

    Imprisonment of journalists who are effective at exposing crimes (of the powerful, not petty crimes) must never be condoned



  22. Team UPC: Many Mouths and No Ears

    The mental condition of Team UPC gets more worrisome by the week



  23. Team UPC Insults Judges Because the UPC is Dead and UPC Lobbyists Have Nothing Left to Lose

    More judge-shaming tactics are in the mix; Team UPC seems to feel like there's nothing left to lose as the UPC is already dead (hope itself is next to die)



  24. IRC Proceedings: Wednesday, February 19, 2020

    IRC logs for Wednesday, February 19, 2020



  25. China Bashing is Grounded in Fear (That They Can Simply Do Better Than the West)

    The atmosphere of hate towards China — fuelled partly by a white supremacist in the White House — is unhelpful and insulting; dignity and understanding is the way to go



  26. IRC Proceedings: Tuesday, February 18, 2020

    IRC logs for Tuesday, February 18, 2020



  27. FFII Press Release: Germany Can No Longer Ratify the Unitary Patent Due to Brexit and the Established AETR Case-law, says FFII

    Germany cannot ratify the current Unitary Patent due to Brexit and the established AETR case-law. The ratification of the UPC (Unified Patent Court) by Germany would constitute a violation of the AETR case-law, which was used during the EPLA negotiations in 2006 to consider a deal with non-EU countries, such as Switzerland.



  28. DRM (Proprietary Software) Already Makes Mozilla Firefox Broken, Unreliable, Undependable (Dependent on Binary Blobs)

    More people are beginning to realise that Mozilla resorted to self-harming DRM and self-inflicted damage that impacts Firefox; can Mozilla (re)join the anti-DRM coalitions?



  29. EPO and Other Patent Updates Over RSS

    Site syndication (over RSS feeds or XML/Atom) is vastly better than what became popular in recent years (censored, centralised, discriminatory "Social Control Media"); here are some feeds of interest



  30. When It Comes to a Unitary Patent System, Bad (or Intentionally Dishonest) Legal Advice Has Become the Norm

    The Unified Patent Court and Unitary Patent (UPC and UP, respectively) reinforce the old saying about lawyers being liars, doing anything to attract clients (to take their money); the UPC is basically dead, but fiction, falsehoods and outrageous fantasies still find their way into Web sites of law firms


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

Recent Posts