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12.12.14

US Patent Reform (on Trolls Only) More or Less Buried or Ineffective

Posted in America, Law, Patents at 6:55 am by Dr. Roy Schestowitz

Not much in terms of changes except the public face

Michelle Lee
Photo from Asian Pacific Fund

Summary: An update on efforts to reform the patent system in the United States, including the possibly imminent appointment of Michelle Lee to USPTO leadership role

OUR friends over at IP Troll Tracker argue with proponents of patent trolls, including those who try to classify the world’s biggest trolls (firms like Intellectual Ventures) as something else. Apparently, trying to say who qualifies as a patent troll is a controversial issue among those who are in this business and this is why there was hardly any substantial progress on eradication of patent trolls. The de facto definition of “troll” these days is “small actor that uses patents”. It’s about scale, not scope. If you are a massive corporation like IBM and Microsoft, then you somehow can’t qualify as “troll” even when you engage in the very same tactics on a much larger scale.

“If you are a massive corporation like IBM and Microsoft, then you somehow can’t qualify as “troll” even when you engage in the very same tactics on a much larger scale.”This new article from TechDirt speaks of the fight for patent reform by the likes of Newegg, correctly noting that “the company became a leader in fighting back against ridiculous patent lawsuits, going toe-to-toe with some of the biggest trolls around. The company’s Chief Legal Officer, Lee Cheng, has vowed to never settle with a patent troll, and so far has never lost an appeal on a patent claim.”

Another older article from TechDirt cites Professor Bessen and reminds us that Free software projects are directly being harmed and even eliminated by patent trolls (we gave some examples before). To quote the article, via James Bessen, “we [now] learn of how a patent trolling operation by StreamScale has resulted in an open source project completely shutting down, despite the fact that the patent in question (US Patent 8,683,296 for an “Accelerated erasure coding system and method”) is almost certainly ineligible for patent protection as an abstract idea, following the Supreme Court’s Alice ruling and plenty of prior art. Erasure codes are used regularly today in cloud computing data storage and are considered to be rather important. Not surprisingly, companies and lawyers are starting to pop out of the woodwork to claim patents on key pieces. I won’t pretend to understand the fundamental details of erasure codes, but the link above provides all the details. It goes through the specific claims in the patents, breaking down what they actually say (basically an erasure code on a computer using SIMD instructions), and how that’s clearly an abstract idea and thus not patent-eligible.”

See this page about the patent: “The Accelerated erasure coding system and method software patent was filed by StreamScale, a patent holding company, and granted by the US patent office in march 2014 (filed july 2013). It claims to own the idea to use SIMD instructions to speed up the computation of Erasure Code. It is a patent-ineligible abstract idea and can be ignored.”

Well, it may be a patent-ineligible abstract idea, but proving in in Court can be costly, especially for a Free software project.

It is being reported right now that Michelle Lee, formerly of Google, is en route to becoming the next head of the USPTO (the pro-software patents sites exploit this to try to promote stronger policy in favour of software patents). “There were no big surprises,” writes Patent Progress, “on Michelle Lee’s nomination as head of the USPTO. The Committee went fairly easy on her with their questions, with the possible exception of Senator Durbin, who admits that he knows nothing about patents or patent law, but seems convinced by his Illinois constituents that there is no patent troll problem.”

Durbin and the likes of him seem to be talking based on (mis)information from lobbyists and funders, not facts. It’s the big corporations talking. Either way, while it’s clear that there is a patent troll problem, there is also a patent scope problem and that’s what trolls tend to exploit. It’s not a surprise that a site like Patent Progress only focuses on patent trolls; see who funds the site by proxy (certain type of big corporations). Another new post from this site states that “Commissioner Brill’s main point was that we shouldn’t wait for the study to be concluded before pursuing legislation against PAEs. There’s no question that the PAE problem exists and is getting worse; she made clear that the new Congress should act immediately after taking office.”

PAE is just a euphemism for troll or shark.

As readers may recall, the Republicans (GOP) spoke about 'reform' on patents roughly one month ago, but nothing was really going to change. Mike Masnick from TechDirt recently published this update that says: “Back in May, we wrote about how, despite pretty much everyone agreeing on a (decent, if not amazing) patent reform bill in the Senate, the whole thing got shot down at the last minute. That was when the trial lawyers called Senator Harry Reid, asking him to kill the whole thing, which he did by telling Senator Patrick Leahy that he wouldn’t allow the bill to go to the floor for a vote. This came after months of detailed negotiations, getting nearly everyone into agreement on the bill, which would have made life at least somewhat more difficult for patent trolls. About a week after that, we pointed out that it seemed likely that the patent trolls had miscalculated badly, because it was widely expected that the Republicans would take control of the Senate in the fall (as they did), and they were more gungho on real patent reform and (obviously) not concerned with what trial lawyers think (mocking trial lawyers being a hobby of Republican politicians).”

To make a long story short, there is still no sign of reform on patents and even if there’s reform some time in the near future, it won’t actually address the problem of patent scope; it only targets “small trolls”, not “big trolls” like Microsoft and Apple, which still can use software patents to imitimate or extort Free software projects, including Android and Linux.

11.16.14

The GOP’s Patent Reform Plan Not Effective Enough to Stop Massive Patent Trolls Like Microsoft/Nokia

Posted in Law, Microsoft, Patents at 5:35 am by Dr. Roy Schestowitz

GOP

Summary: The corporations-serving GOP says that it wants a patent reform, but another reminder is needed of the futility of the suggested changes

THE WALL STREET JOURNAL, a GOP-leaning News Corp-owned paper, says that “Leading GOP Senator Says More Patent Reform on the Horizon”, but as we explained before, this is not an effective reform. Being on the GOP’s agenda, one can expect it to serve large corporations rather than public interests (which GOP is neither sympathetic nor apathetic towards because public interests often conflict with business/rich people’s interests). “The bill,” says the paper, “will likely add new responsibilities on plaintiffs filing patent-infringement suits. Among the possible additions: a provision requiring plaintiffs who lose their infringement lawsuits to pay the defendants’ litigation costs.”

This would be effective in preventing poor people or small businesses from suing, irrespective of their nature (e.g. trolls, startups, individuals). It hardly deters large corporations with a large budget; for them, legal costs are typically slush funds.

“It hardly deters large corporations with a large budget; for them, legal costs are typically slush funds.”This is of course better than no amendments to existing laws, but does it go far enough? It might not be enough to discourage big trolls like Nokia, which the paper above indicates is likely to use software patents for profit (article behind paywall). Nokia is already patent-trolling, with Microsoft’s help, by proxy, e.g. through MOSAID (now renamed “Conversant” because of its bad reputation). The European authorities have already been made aware of this and they warned Nokia.

Nokia seems to be following the footsteps of companies like Qualcomm, which got the attention of some pro-software patents the other day.

11.15.14

Patent Lawyers Worry About Section 101 in ‘Alice’ (and Other Patent News)

Posted in Apple, Law, Patents at 6:35 am by Dr. Roy Schestowitz

Summary: A quick roundup of news of interest regarding software patents

THE SO-CALLED ‘Alice’ case has proven to be much more effective than Bilski because although In Re Bilski was sometimes used to eliminate a software patent here and there (examples exist) it happened nowhere as often as after ‘Alice’.

Dozens of law firms threw pieces of misinformation at the media shortly after the ‘Alice’ determination (we covered a large number of examples at the time), trying to deny that it had any impact on software patents. These were attempts at a self-fulfilling prophecy, but they were proven wrong. Now that ‘Alice’ is cited and used — successfully — in elimination of software patents in the United States the lawyers’ sites take another defensive approach such as this or that. Being lawyers’ sites, the headline “Section 101 Attack” (implying that the attackers are those who are against monopoly on algorithms) is not too shocking. They are trying to advise patent lawyers how to circumvent the new restrictions, with an introduction such as the following: “On November 3, 2014, in Cal. Inst. Of Tech. v. Hughes Communications., 2014 U.S.. Dist. LEXIS 156763 (C.D. Cal. 2014), Judge Mariana Pfaelzer penned the most thorough defense of software claims attacked under s. 101 that I have seen since State Street Bank. The opinion is also useful since it both continuously cites – and often distinguishes or explains Mayo—and because it is very critical of the analytical framework employed by the same court in McRO (Planet Blue) v Namco, a September decision on which I posted earlier. (A copy of this decision can be found at the end of this post.)”

If you are against software patents, then the patent lawyers view you as “attacking” them. Yes, it’s not those who monopolise and sue who are the attackers, but those who are trying to defend themselves. This wording is found in some of the highest tier legal papers, which probably shows just what level of contempt patent lawyers have for society at large.

Here is another legal publication writing not only about patenting software but also copyrighting it (applicable by default). It refers specifically to India, en ever-growing software giant where imperialistic lawyers (whose clients are rich multinationals) would just love to impose monopolies nf software (it’s usually non-Indian companies that can afford to file for patents and file lawsuits there, obviously against Indian people and businesses). India will hopefully never follow the trajectory of the US by embracing patents on algorithms.

Pay attention to this new Apple patent on a trivial software idea:

Apple has a new patent granted today by the USPTO (via AppleInsider) that details a method by which it can detect and keep track of mobile network dead zones via crowdsourced information. The technology is designed to give device makers and network operators a way to easily identify and counter low signal zones, by building out their network where it needs the most work.

Apple is increasingly becoming a software patents-wielding parasite, not a producing company. Thankfully, the US seems to be tackling the practice of patent trolling right now and Steph just got “a tip from an anonymous source that a certain company received a request from an NPE to permit disclosure of a license agreement to the FTC.”

We do not really believe that the FTC will be effective at tackling patent trolls, but at least it’s trying. There are signs of improvement and it’s not too delusional to allege or predict a wide-ranging patent reform, even with GOP majority.

11.10.14

Patent Reform Subversion After Republican (GOP) ‘Win’ in US Senate

Posted in Law, Patents at 4:55 pm by Dr. Roy Schestowitz

GOP logo

Summary: The Grand Corporations Party, or the political party which serves large businesses that are funding it, continues to just focus on a mirage of a ‘reform’ rather than tackle the real issues where culprits include very large businesses such as Microsoft and Apple

THE GRAND CORPORATIONS Party (GOP), which is more pro-corporations than the Democrats, would have us believe that it will make the patent system better. Well, better for who exactly? Large corporations? It’s obvious that patent trolls harm large corporations, but what about the interests of individual people and what about massive corporations that are patent parasites? We have written so much about this subject for years and we nearly got sick of it when the corporate press only ever spoke about patent trolls as the issue but never about patent scope.

Here we have a new example of corporations that manufacture drugs that they sell at about a thousand times the production cost, having pretended to have done so much to deserve this while asking governments for protectionism. Here is the good find from TechDirt, which got a snapshot of the evidence before it vanished:

Yesterday afternoon, the twitter feed for “LillyPad,” which is Eli Lilly’s “policy” blog and Twitter feed, excitedly tweeted out a quote from Stefan Oschmann, an executive at pharmaceutical competitor Merck, who was just elected as the new head of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) — basically, the big pro-pharma lobbying group. The tweet is no longer there, because LillyPad deleted it, but here’s a screenshot I took apparently seconds before it disappeared…

[...]

But it appears that Eli Lilly (and IFPMA) have no interest in being intellectually honest or having such a discussion. No, they’ve decided to stick to the ridiculous and bogus corporate line that patents are all butterflies and roses, and do no harm at all. What a wasted opportunity — even if it helped show the true colors of the current leadership of the pharmaceutical industry.

See the comments in there as well. Patents on drugs are probably some of the patents that are even more nasty and evil (they kill people) than software patents.

The Grand Corporations Party (“Republican”) is now shaping the USPTO and patent law to better suit large corporations, based on numerous reports such as these:

A Republican takeover of the U.S. Senate has brightened prospects for an effort to fight frivolous patent litigation, although the path to success is far from clear, sources close to the lobbying effort said on Wednesday.

The House of Representatives easily passed a bill in December to cut down on abusive litigation brought by patent assertion entities, or “patent trolls”: companies that buy or license patents, then aggressively pursue licensing fees or file infringement lawsuits.

That legislation, backed by technology companies like Cisco Systems Inc and Google Inc, stalled in the Senate amid opposition from drug companies and, crucially, lack of backing from Democratic Senate Majority Leader Harry Reid.

A centerpiece of the effort was a provision that encouraged judges hearing patent cases to award fees to the winners of infringement lawsuits.

Stop talking about “patent trolls” and talk more about patent scope. Here is another relevant report:

On the plus side for tech, with the GOP taking over the U.S. Senate, patent reform efforts received new life, as Mike Allen of Politico noted this morning.

“Now we’ll find out if Washington can move on patent reform, drone use and other big issues,” says the business press of News Corp. (owned by a billionaire to serve his and GOP-leaning agenda and Wall Street’s interests, i.e. the very top of the top 1% of earners). What kind of patent reform? All they ever talk about is “patent trolls”. They seem to mind the problem with patents only when theose benefiting are not funding (i.e. bribing) Senate/Congress.

Microsoft-Armed Patent Troll MOSAID (Now Conversant) Wants to Sweep up More Patents for Litigation

Posted in Law, Microsoft, Patents at 4:38 pm by Dr. Roy Schestowitz

Summary: Reports about patent trolls and scope of patents serve to show what the foes of Free software are up to right now

WE HAVE spent almost half a year covering analyses of the Alive case because it may signal the demise of software patents in the United States (home of software patents). Lawyers were consistently denying it would have an impact on granting/rulings, but facing the real facts they must now admit that they were wrong. One patent-wielding parasite, a law firm called Barnes & Thornburg LLP, wrote an article in a few sites of lawyers, concluding: “For patent litigation, the data are not as clear as the USPTO data, but data suggest that § 101 challenges to issued patents are becoming more common—as well as more likely to succeed. New patent litigation filed in September 2014 (329 cases) was a 40% reduction compared to September 2013 (549 cases).7 Over the past few years, new patent litigation cases are reduced over the summer but increase again in September. However, a post-summer increase did not happen this year. Although correlation does not equal causation, the Alice decision may make patent holders hesitant to file new litigation due to not wanting to proceed with possible invalid claims under § 101. However, Alice is not the only factor. The America Invents Act provided an alternative pathway to challenge patents–2003 inter partes reviews (IPRs) and 240 covered business method reviews (CBMs) have been requested since September 16, 2012.8 In the first two years, the PTAB has found all challenged claims invalid in 65% of the 126 final decisions. Thereby, there are most likely several contributing factors leading to the decrease in patent litigation, whereby Alice is probably one of several factors.”

What’s nice about this analysis is that it very much contradicts what many law firms foresaw or turned into what was their failed self-fulfilling prophecy. Things are not working out too well for them now. The incentive to patent software is now decreasing and based on this new analysis, even the government is now trying to stop the parasites:

Scanner Patent Troll Slapped On The Wrist By FTC; Told To Stop Misleading Behavior.

For a few years now, the FTC has talked about taking on patent trolls. In 2011, 2012 and 2013, we heard stories about the FTC putting patent trolls “on notice” and getting ready to crack down on them for deceptive practices. Last year, it finally “launched an investigation” into certain patent trolls, starting with notoriously crazy patent troll MPHJ, famous for its rather aggressive form of trolling, using a questionable patent on “scan-to-email” technology, sending out thousands of demand letters from a range of shell companies, telling lots of small businesses that they had to pay between $900 to $1200 per employee if they had a scanner with the “scan-to-email” function (most modern scanners).

Another troll and parasite, the Microsoft-connected MOSAID, is now mentioned in the site of one of the few patent lawyers who early on warned — correctly to his credit — that Alice would do a lot to harm software patents. Check out this part:

John Lindgren, President and CEO of Conversant (formerly MOSAID Technologies), was also on the first panel. He concurred that “the calculus has changed.” He and others on the panel recognized what everyone in the industry has been speaking about, namely that the market for acquiring patents is dead, at least from the point of view of the patentees. The agreement on the panel was that well run non-practicing entities are in a particularly good position to start accumulating patents at a steep discount. Lindgren also predicted that we will see consolidation of the industry both with respect to private and public companies in the NPE or patent monetization space. I concur completely. Recently I wrote about the inevitable rise of super trolls, or super patent trolls. The market is not going away and the actions of Congress and the Supreme Court, which have made individual patents worth far less, and portfolios likewise worth far less, will ultimately work to create the monster that all of this anti-patent activity was intended to prevent. But that is always what happens when politicians attempt to regulate an industry that they don’t understand and Judges are more interested in playing the part of super legislators.

Notice that they have renamed. Conversant is probably an attempt to dodge the bad publicity.

MOSAID is of interest to us because Microsoft has been trying to use it as a proxy, a bit like SCO. Microsoft arranged for MOSAID to receive many of Nokia’s patents, whose optimal and expected target would of course be Android/Linux. Our goal should be to eliminate such patents, not only such nasty trolls, as we are already seeing, as pointed out in the previous post, how protectionism is pursued in the courts, especially corrupt ones like CAFC.

11.05.14

Ridiculous Patents at the USPTO, Trolls as ‘NPEs’, and an Update on Microsoft-Connected Patent Trolls

Posted in Law, Patents at 6:18 am by Dr. Roy Schestowitz

Summary: A roundup of patent news and in particular news pertaining to software patents, trolls that threaten Free software, and media bias

EVERY NOW and then Techrights covers examples of patents — not necessarily software patents — which show how ridiculous the patent system has become, especially the USPTO.

Some days ago the EFF wrote about a patent on how to film a yoga class — a patent similar in some sense to Amazon’s patent on photographing objects with a white background at the back.

EFF recently learned about a patent that covered a method of filming a yoga class. We reviewed the patent and discovered that it was just as ridiculous as it sounded. Despite our familiarity with absurd patents and our concerns about cursory review at the Patent and Trademark Office (PTO), we were still surprised that this one issued. It seemed the so-called “invention” wasn’t the kind of thing that should be patented at all—or at the very least, was not something novel or nonobvious. Yet another stupid patent, and winner of our October accolades.

Another new article from the EFF says that a “patent troll [was] hit with double fee award”. “Lumen View is a typical patent troll,” says the EFF. “Armed with a vague patent on “facilitating bilateral and multilateral decision-making,” it sent out aggressive letters demanding payment. It refused to explain how its targets actually infringed its patent. Instead, it made shakedown offers it knew would be less than the cost of defending a lawsuit. When startup FindTheBest spoke up about Lumen View’s tactics, the troll asked for a gag order. Thankfully, Judge Denise Cote of the Southern District of New York refused the troll’s censorship demand.”

Now everyone is against patent trolls. The plutocrats’ paper, Forbes, calls them “Non-Practicing Entities” in this “interview Shawn Ambawni the COO of Unified Patents.” (not to be confused with the proposed European Unified Patent Court)

“Unified Patents” issued some numbers on decrease in patent litigation although its numbers where not quite as encouraging as those from Lex Machina and they tried to paint it as a troll issue, not a patent scope issue. Here is the original spin with the “NPE” euphemism for trolls.

Instead of chastising the real patent aggressors, corporate media likes to pick on companies like Google (because Google stopped pursing real reform). It’s just too popular to pick on Google and not companies that are aggressive with patents and use them against Google, e.g. Apple, Oracle, and Microsoft.

The corporate media, USA Today for example, continues to reveal its support for abusive litigation with patents by big companies and trolls (referring to trolls as “NPEs”) and a patent maximalists’ Web site writes about Wi-LAN, a very notorious troll, as though it’s an “NPE” too:

Japan’s ROHM Semiconductor has entered into an agreement with Wi-LAN which will see it transfer a portfolio of patents to the Canadian firm. This is the latest deal in which a Japanese technology company – traditionally a very conservative bunch when it comes to aggressive IP monetisation – has teamed up with an NPE in an effort to improve returns from its patents.

From the same patent maximalists’ site comes an interview where Lemley says: “The tech industry is not monolithic – Apple and IBM, and increasingly Microsoft, are actually now fairly vocal proponents of patents as they become sort of more mature companies and see their market share being taken away by others. My guess is that if you asked engineers in the software world they would say, maybe not universally, but almost to a person, we’re on a roll lets just get rid of them.”

In other news about trolls, Acacia has just been defeated and here is an interesting observation about Intellectual Ventures (both are Microsoft-connected):

How can they have more subsidiaries than IV? Or rather, how can their fewer-than-IV-subsidiaries have filed more lawsuits than IV’s? It’s possible and highly likely because Joe’s a very thorough guy and wouldn’t say that if it weren’t true. It’s just surprising that I didn’t know that because I pride myself on knowing all the things about all the trolls.

One sure thing is, patent trolls and big trolls such as Microsoft continue to be defended by some of the largest (and corporations-run) media, leaving everyone in a state of anxiety and disarray. The patent system as it stands at the moment serves virtually nobody except the richest people and richest corporations. It’s a system of protectionism.

The Corrupt Judge Rader (of CAFC) Still Pursuing Bad (More Aggressive) Patent System in the US

Posted in America, Law, Patents at 5:23 am by Dr. Roy Schestowitz

Randall R. Rader
Photo from Reuters

Summary: Randall R. Rader, the disgraced judge from the Court of Appeals for the Federal Circuit (CAFC), is still trying to impose his patent agenda on the United States, despite the Supreme Court (SCOTUS) repeatedly throwing away his rulings

Amdocs, a very surveillance-oriented company (although not advertised as such), has just lost an important case. Dennis Crouch wrote about it in “Software as an Abstract Idea”. “In yet another case,” wrote Crouch, “a district court has invalidated a set of software patents as unduly abstract under Alice Corp., Mayo, and 35 U.S.C. 101. In this case, E.D. Va. Judge Brinkema issued a judgment-on-the-pleadings that all of the asserted claims of the four Amdocs patents were invalid as patent-ineligible. The Decision.”

Here again we are seeing the impact of the Alice case on software patents in the United States. “Alice Corp. Oral Argument Goes to the Dogs” is a new post from Matt Levy that’s basically a comical video. It has been widely agreed by now (except by the more delusional patent lawyers) that software patents are severely affected by the ruling in the Alice case on software patents in the United States.

Meanwhile, the CAFC‘s corrupt trolls apologist and software patents proponent Rader reportedly says that “The law makes no sense any more” because SCOTUS, ruling in the Alice case, has struck down many software patents (if not all). The site (source) is vigorously preventing copy/paste (we’ve tried many browsers and even page source), but it basically shows that Rader continues his zealous pursuit in the maximalists’ agenda (he himself has a serious conflict of interest, which is why he was ousted).

10.31.14

The EPO Is More Corrupt Under Battistelli Than Under Alison Brimelow: Part VIII

Posted in Europe, Law, Patents at 6:22 am by Dr. Roy Schestowitz

The huge scandal that the corporate media seemingly refuses to cover

Alison Brimelow

Summary: After Brimelow (shown above), with all her flaws and her scandals, an even worse President is installed who then abolishes oversight and seemingly brings his old friends to the EPO, creating a sort of subculture that is impenetrable to outsiders

THE EPO is no stranger to scandals (including some involving Alison Brimelow, as we noted before). We have covered them for years, but these days we are stunned by the degree of inherent corruption inside the EPO (this is the eighth part among many). The chin drops to the floor when one realises the lack of oversight. With no oversight comes great abuse, as revelations about the CIA and NSA, for example, serve to show.

Weeks ago we showed how EPO oversight got dismantled (related original documents are here) and below again is a quick walk-through (original documents):

  • CA-140-08-EN – 2008 – Audit Committee: possible models
  • CA-32-09-EN – 2009 – EPO Audit Committee: draft terms of reference
  • CA-33-09-EN – 2009 – Draft decision setting up an Audit Committee
  • CA-D9-09-EN – 2009 – Establishing an Audit Committee of the Administrative Council
  • CA-100-11-EN – 2011 – Internal appeal against CA/D 4/11
  • CA-D4-11-EN – 2011 – Decision of the Administrative Council
  • CA-55-11-EN – 2011 – Disbanding the Audit Committee

Today we would like to tell the much longer story of the EPO’s Audit Committee. “In 2008,” tells us an anonymous source, “possible models for an “Audit Committee” were discussed in the proposal document CA/140/08 presented to the Administrative Council.”

Quoting the relevant document: “The present document follows on from the governance workshop in Ljubljana on 7-8 May 2008, the results of which were summarised in CA/62/08 dated 30.05.08.

One of the priorities emerging from the workshop was “Audit Committee and independence of Internal Audit”. The present document outlines in detail the compelling case for an Audit Committee. Three models are analysed and assessed. The Budget and Finance Committee and the Administrative Council are requested to give their opinion. Thereafter the Office will submit a proposal for the terms of reference of the Audit Committee.”

That was quite a long while back.

CA/140/08, as above, noted the following problems with the existing “Internal Audit” (emphasis added):

B. PROBLEMS RELATED TO INTERNAL AUDIT

a) Independence of IA

22. At the EPO, the internal audit function is separated from operational areas.

IA reports directly to the President and should remain a tool in the hands of the President.

This notwithstanding, an independent mechanism (such as an audit committee) would provide further assurance of the correct functioning of IA, particularly in view of the fact that even at the highest management level situations can occur that call for the independence of IA.

Such an independent mechanism should exist:

• to ensure that IA is equipped with a sufficient budget and resources for the adequate performance of the audit work;

• to prevent any undue limitation of the status of IA within the framework of its audit mission;

• to prevent any unjustified deletion of the proposed audit plan;

• to review the appointment, transfer and dismissal of the head of internal audit and internal auditors;

to ensure that the supervision of IA does not rely entirely on the President.

As we have shown in previous parts, the President, Battistelli, seems to have gone out of control and is now acting like a tyrant with executive orders, potentially also appointing friends of his for positions of power.

“In June 2009,” explained our source, “the then-EPO President Alison Brimelow (former Director of the UK-IPO) presented the AC with the proposal documents CA/32/09 (“EPO Audit Committee: draft terms of reference”) and CA/33/09 (“Draft decision setting up an Audit Committee”).”

CA/33/09 (available above) proposed the establishment of an Audit Committee as a subsidiary body of the Administrative Council and said:

The present document is based on consultations between the Office and the Board of Auditors and presents a draft decision based on the outlines of the terms of reference for an EPO Audit Committee (cf. CA/32/09) as a subsidiary body of the Administrative Council pursuant to Article 14 of the Rules of Procedure of the Administrative Council of the European Patent Organisation.

CA/33/09 was approved by the AC in June 2009 as decision CA/D9/09.

Now, here is the best bit. At that point in time, Battistelli, Director of the French INPI, was the Chairman of the AC. Yes, no kidding. In July 2010, Battistelli was appointed to succeed Alison Brimelow as EPO President!

In May 2011, in his new role as EPO President he submitted a proposal to the AC to abolish the Audit Committee “for reasons of efficiency”. See CA/55/11, “Disbanding the Audit Committee”, which says: “The present document proposes that the Administrative Council’s June 2009 decision establishing an Audit Committee (CA/D 9/09) be repealed for reasons of efficiency.”

CA/55/11 was approved by the AC in June 2011 as decision CA/D4/11. The decision of the AC to abolish its Audit Committee was appealed by EPO staff representatives (see CA/100/11) and this appeal is currently pending before the Administrative Tribunal of the ILO (ILO-AT) in Geneva.

The letter from the Chairman of the Audit Committee is worth reading. CA/100/11, in pages 13 and 14, states (emphasis added): “The role of the Audit Committee is not an overlap with the internal and external audit but a key component of a balanced auditing and governance structure of the Office as it is in most international organisations.

What a colossal mess.

A further parallel “thread” to this story concerns the EPO’s external audit mechanism, the so-called “Board of Auditors” which is established under Article 49 EPC. According to Article 49(1) EPC: “The income and expenditure account and a balance sheet of the Organisation shall be examined by auditors whose independence is beyond doubt, appointed by the Administrative Council for a period of five years, which shall be renewable or extensible.”

Again, what an utter joke!

The most-recently appointed member of the EPO’s three-man “Board of Auditors” is Mr. Frederic Angermann.

To quote this page from the EPO (under Munich, 13 December 2013, the 138th meeting of the Administrative Council of the European Patent Organisation):

The Council appointed Frédéric Angermann, Senior Auditor at the French Court of Auditors, as member of the Board of Auditors, with effect from 1 January 2014. Mr Angermann will succeed Michel Camoin, to whom the Council paid tribute.

Under the heading Legal and International Affairs, the Council heard the status report on latest developments concerning the Unitary patent, given by the Head of the Lithuanian delegation, representing the country holding the EU presidency for the second half of 2013. The chairman of the Select Committee (set up by the 25 EPC contracting states participating in the enhanced co-operation on unitary patent protection to supervise the EPO’s activities related to the tasks entrusted to it in the context of unitary protection) reported then on the committee’s 5th and 6th meetings (see Communiqué on the 6th meeting of the Select Committee, to be published shortly on this website). The Council thereby noted that a number of EPC contracting states not taking part in the enhanced co-operation had been granted observer status on the Select Committee. Other EPC contracting states not taking part in the enhanced co-operation will henceforth also be automatically granted observer status upon request.

What the EPO communique doesn’t tell us is that Angermann was previously a senior official at the French INPI. Battistelli must know him. This cannot be treated as merely a coincidence. In other words, he previously worked under Battistelli who was the Director of the French INPI, just prior to his EPO appointment.

Now refer back to Article 49(1) EPC: “auditors whose independence is beyond doubt

Everyone can see the problem here. It doesn’t take a genius to see that Battistelli may be bringing in cronies.

In summary, the Audit Committee which was established in 2009 as an independent subsidiary body of the EPO’s Administrative Council (and thus independent from the EPO President) was subsequently abolished in 2011 “for reasons of efficiency” (by Battistelli) after barely two years of existence.

The Audit Committee was established by the AC under Battistelli’s chairmanship of that body and the proposal for abolition came from Battistelli in his new role as EPO President (where he would have been subject to the oversight of the Audit Committee).

The consequence of this abolition was to return to the “status quo” prior to CA/140/08: Internal Audit at the EPO is once again completely under the control of the EPO President (i.e. in the hands of one person).

Apart from this, one of the EPO’s external auditors appointed under Article 49 EPC has a previous close professional connection to Battistelli.

All of this indicates that there is no effective independent internal audit mechanism at the EPO. Battistelli killed it.

Furthermore, the integrity of the external audit mechanism under Article 49 EPC has been compromised by Battistelli’s cronyism.

When you consider that the annual budget of the organisation is around 2 billion euros, that should be a cause for public concern. There is no excess of money in Europe right now (Britain is furious this month over demands for a payment of an extra £1.7 billion to the EU) while staff at the EPO is grossly overpaid with virtually no oversight, as we showed in previous parts and demonstrated with strong exhibits of authority.

As readers can see, especially if they follow European media, this is another story that the mainstream media has completely ignored. Unbelievable perhaps, but more likely there is fear of covering it, if not some certain complicity (depending on the media owners).

Once again, German journalists have been fully informed about these matters but haven’t written a single line about them despite the fact that according to the German Press Codex [PDF], “accurate informing of the public” is supposed to be one of the overriding principles of the Press (see preamble to Section 1). Perhaps the German media is preoccupied with other agenda.

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