11.27.19

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Just About Everything the EPO Tells Stakeholders, Media and Even Its Own Workers is the Opposite of What’s True

Posted in Europe, Patents at 1:29 pm by Dr. Roy Schestowitz

Who does the EPO even serve?

Back In My Day... The EPO was European and was accountable to those who fund it

Summary: The EPO continues to lie to everybody in order to defraud the public (with public money) and pour money into few pockets that love to gamble with that money (for personal gain)

BEHIND the lies and the fraud of the European Patent Office (EPO) we have the likes of António Campinos making rounds of smiles and photo-ops, just like Battistelli (except that ENA sociopath lacks the capacity to smile).

“Behind all those smiles there’s a very dark agenda.”People or stakeholders are expected to think everything is nowadays rosy because the EPO says (warning: epo.org link) “EPO and INPI Brazil launch technical and strategic partnership”; well, the EPO President can have a chat in Portuguese about it, but that won’t change the fact that it’s little but another photo-op stunt. The EPO has published a selected photo-op in tweets, too.

What’s the actual substance behind it? Nothing new; just renewal of some old and mundane MoU. To quote: “The European Patent Office (EPO) and the National Institute of Industrial Property of Brazil (INPI) have signed a Memorandum of Understanding on a Reinforced Technical and Strategic Partnership to enhance co-operation between Europe and Brazil in the area of patents.”

Behind all those smiles there’s a very dark agenda.

The EPO’s examiners lack time and capacity to do their job, say the EPO’s examiners themselves. They’re pressured to grant illegal software patents in Europe where it’s against the law (in effect granting fake patents!). With quality of granted patents rapidly declining (as is their eligibility as seen by courts) someone will need to start flagging the loads of fake ones. European Patents cannot be presumed valid anymore. It’s a crisis in the making. This data which the EPO brags about may prove to be more harm than good. What the EPO nowadays calls “hey hi” (AI) typically refers to software patents and the EPO has just said: “Artificial intelligence: is the IP world ready for it? We summarised what experts had to say at our Patenting AI conference…”

They’re doing it all over again. They’ve also just asked: “Interested in the EPO’s #patent search strategies & techniques?”

This links to this page that starts with: (warning: epo.org link) “This year’s Search Matters conference aims to deliver workshops and lectures with a special focus on disruptive technologies such as 3D printing and AI.”

“Hey hi” again. No honesty, just buzzwords and nice-sounding hype waves.

Earlier this week the EPO again “tweeted” some “SME” nonsense, such as: “How do SMEs with diverse profiles leverage European #patents to sustain growth in Europe?”

That links to the EPO-commissioned propaganda, as usual, inverting what’s true with complete fabrication to suit the misleading narrative. Hours ago the EPO tweeted: “Are you a startup? At this seminar in Ljubljana we’ll explain what SMEs should have in their basic IP toolkit…”

They pull this kind of stunt every day, lying to SMEs about their role in the EPO’s eyes.

Remember what the EPO said about its financial situation. SUEPO Central calls it a "hoax" (that’s an understatement, it’s a scam — an elaborate one too) and it has just published this “Letter to EPO AC Chairman re Financial Study from Chairman Association of EPO Pensioners” [PDF] (sent to a lot of people).

From the introduction:

The Association of EPO Pensioners has continued to analyse to Financial study. The findings of the Association have been issued as a new letter for the Administrative Council, since the Association’s request to be allowed as an observer at the meeting when the study is discussed has been refused.

From the underlying document (as HTML)

Der Vorsitzende
The Chairman
Le President
De Voorzitter

26th November 2019
Mr Josef Kratochvil (per email)
President of the Industrial Property Office of the Czech Republic
Chairman of the Administrative Council of the EPO

cc: All Heads of delegations on the Administrative Council of the EPO (per email)

President of the EPO (per email)
Central Staff Committee (per email)

Dear Mr Kratochvil

I respectfully request that this letter is added to the agenda when documents CN83/19 and CA84/19 are discussed at the meeting of the Administrative Council th is December.

I also reiterate my earlier request that the Association should be allowed to take part as an observer when this point on the agenda is being discussed.

The Association of EPO Pensioners of course agrees that the EPO needs to plan its financial future prudently. It is however important that such planning is based on realistic assumptions and not on merely speculative elements as explained below. This has resulted in a calculated financial gap which is largely overestimated.

1. Decision Basis for Selection of Scenario

The EPO has chosen the Base 2 scenario in the Financial Study resulting in a calculated financial gap of 3.8 BN€ and then added to this a further 53% or 2.0 BN€ as a safety buffer, resulting in a total financial gap of 5.8 BN€.

The Association of EPO Pensioners having made an in-depth analysis of the study calls into question the calculation and selection of the Base 2 Scenario as well as the financial gap(s) arrived at.

a) The Base 2 Scenario is not based on an economic forecast but on a theoretical stress test scenario performed by the European Systemic Risk Board (ESRB). The Association is of course not calling the results of the stress test into question, but wishes to point out that the ESRB itself states as a disclaimer for its scenario that the “Scenario presented is not a forecast. It should not be interpreted as the ESRB’s expectations about future economic and financial developments.”

b) In the Financial Study the Base 2 Scenario is based on a global recession. However, the stress test scenario of the ESRB which has been used is nothing but a financial crisis scenario with a 30% drop in equity values assumed in 2021.

c) The Base 1 Scenario on the contrary is based on proper economic and financial forecasts performed by OECD, the World Bank and the International Monetary Fund.


The Association finds that it would therefore have been appropriate to select the Base 1 Scenario for the discussions about the financial gap and how to close it and NOT to select the Base 2 Scenario, which is based on a theoretical “what if’ scenario. To then add another 2.0 BN€ safety buffer for which the only justification is a speculative assumption that the present low interest environment will persist for another 20 year is not plausible.

2. Closing the Financial Gap in Base 1 Scenario

The financial gap in the Base 1 Scenario is calculated as 1.6 SN€. This financial gap can effortlessly be more than covered by two measures entirely under the control of EPO management. These measures are:

~ To digitise the Patent Grant Process (PGP) end-to-end (Measure 13).
~ To invest 60% of cash surpluses in EPOTIF (Measure 15).

In CA/83/ 19 and CA/84/19 the positive financial impact of digitising PGP end-to-end is calculated by the Office to bring savings of 1.2 SN€. Despite the fact that the financial study includes spending of over 1.0 SN€ on various building projects, investing 60% of remaining surpluses in EPOTIF is calculated by the consultants to still have a positive financial impact of 1.0 SN€. The table below summarises the result in Base 1 Scenario applying these two measures:

Value
Base 1 Calculated Financial Gap -1.6BN€
Diqitisinq PGP end-to-end (Measure 13) + 1.2 BN€
Invest 60% of cash surplus in EPOTIF (Measure 15) + 1.0 SN€
Net Result + 0.6 BN€

The Association of EPO Pensioners, for the reasons given above, is of the opinion that Base 1 Scenario should form the basis for any measures to be taken to close the financial gap. As shown above the financial gap is more than closed by the proposed two measures identified in the Study which are entirely under the control of EPO management.

3. Closing the Financial Gap in Base 2 Scenario

For the sake of completeness, this analysis will show that also the calculated financial gap in the Base 2 Scenario and Base 2 + Buffer Scenario can equally be closed without resorting to measures having a serious negative impact on present and future members of the Association of EPO Pensioners.

There is already a proposal for decision by the Administrative Council at its December 2019 meeting to increase contributions to the Pension scheme by 3.3% from 2020 onwards. This corresponds to measure 10 in the Financial Study where it is given the monetary value of 0.3 SN€.

It is worthwhile to recall that in the Financial Study salary expenditure for the next 20 years has been calculated based on an annual salary adjustment of inflation +0.5%. For the same period only one single fee adjustment of +4% has been included in the revenue calculations, whereas the Administrative Council has adopted a policy of biennial inflation based fee adjustments. In document CA/80/19, presented for decision by the Administrative Council at its December 2019 meeting, the President of the Office advocates the necessity to continue to pursue this policy of biennial inflation based fee adjustments. The continued consistent implementation of this policy (Measures 11 and 12) would improve the financial result with a further +1.3 BN€.

Page 2 of 4


The table below summarises the result in the Base 2 scenario applying all of the above:

Value
Base 2 Calculated Financial Gap - 3.8 BN€
Diqitise PGP end-to-end (Measure 13) + 1.2 BN€
Invest 60% of cash surplus in EPOTIF (Measure 15) + 1.0 BN€
Increase contribution to Pension Fund (Measure 10) + 0.3 BN€
Biennial inflation based fee adjustments (Measures 11 and 12) + 1.3 SN€
Net Result +/- 0 BN€

As can be seen from the table above, the financial gap of 3.8 BN€ resulting from using a scenario based on a financial crisis, is also covered. As already stated, the Association of EPO Pensioners is of the opinion that Scenario 1 is the only one that constitutes a realistic basis for discussion of any measures to be taken.

Should the Administrative Council, after deliberations and taking into account our in-depth analysis, decide that the Base 2 Scenario is to be used, it is reassuring to note that even the case of a Financial Gap in this scenario, which is calculated on the basis of a financial crisis, can be completely addressed by applying five measures (Measures 10, 11, 12, 13 and 15) already planned or proposed the President of the Office.

4. Closing the Financial Gap in Base 2 + Buffer Scenario

The Association of EPO Pensioners is of the firm opinion that the gap now presented to be 5.8 SN€ by the addition of a further 2.0 SN€ as safety buffer to Base 2 Scenario is not based on real facts. The only justification for adding 2.0 BN€ to a scenario based not on a forecast but on a financial crisis seems to be an assumption that the present low interest environment will remain for the next 20 years.

The Association wishes to draw the attention of the Administrative Council to the fact that the 2008-20 18 long- term annualised performance of the RFPSS was 7.9%, thereby exceeding the annualised long-term objective for the Fund by 2.9%. Moreover, this performance has been achieved in spite of very volatile financial markets and a continuous low interest environment!

In their calculations before applying the safety buffer of 2.0 SN€, the consultants have already indirectly introduced a further safety buffer of about 2.6 SN€ by reducing the expected net return on investments made by the Reserve Funds for Pensions and Social Security (RFPSS) to 2.1% above inflation. This is in clear contradiction to the Strategic Asset Allocation (SAA) unanimously agreed by the Supervisory Board of the RFPSS (SBRFPSS) on which also the Office is an important stakeholder with voting rights. This SAA is expected to give a net return of 3.5% above inflation. The much lower return on investment used in the Financial Study results in the above-mentioned further safety buffer with a net return which is about 2.6 SN€ less than the net return to be achieved using the SAA agreed by the SBRFPSS.

Since this further safety buffer of about 2.6 SN€ has already been incorporated in the calculations made by the consultants by their use of a much lower return on investment by the RFPSS than agreed by the SBRFPSS, it is impossible to understand why a safety buffer of another 2.0 SN€ has been added to a financial crisis Base 2 scenario in which financial losses have already been accounted for.

Page 3 of 4


5. Conclusion and Request

The analysis performed by the Association of EPO Pensioners and presented here in this letter, highlights several questionable assumptions made in the Financial Study, amongst others, the basis for selection of Scenarios and also putting into question the validity of the financial gap(s) presented.

To avoid serious consequences and impact on present and future members by implementation of Measures which are not needed, the Association therefore requests that the Administrative Council mandates the Office to revisit and reanalyse the Scenarios and the financial gap(s) to enable further discussion in the Supervisory Bodies of the Organisation before returning with concrete proposals, if any are needed, to be adopted by the Administrative Council.

Curt Edfjall
Chairman, Association of EPO Pensioners
Page 4 of 4

We’ve omitted the E-mail address of Curt Edfjall to reduce charge of spamming. The fact remains, however, that such a letter deserves broader audience. How many people out there are aware of the EPO’s abuses against its own staff? At the expense of Europe? The EPO likes to present itself as beneficial to the European economy, but that too is a fat lie, i.e. the usual.

As one attorney put it today: “Unfortunately I can’t interact with the EPO in my language. It would REALLY simplify my life.”

The EPO’s management shamelessly fosters a system that facilitates just loads and loads of litigation, irrespective of the impact on the European economy as a whole.

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