06.01.16

Crazed Battistelli is Trying Plan B to Demolish the Boards of Appeal (Quality Control), Praesidium/Association of Members Strikes Back

Posted in Europe, Patents at 5:00 am by Dr. Roy Schestowitz

Mutiny against the man who thinks he’s King [1, 2]

Summary: The feud between the independent (in principle) boards and the man who believes he’s King/Caesar of Eponia escalates, as new details emerge about the latest attack from the ‘King’ against these independent boards whose role is to assure quality at the EPO

THE EPO‘s current President is not a change agent but a demolition agent. Ask Board 28 what they think about this. They recently called it a "crisis".

Things are heating up for ‘Sun King’ (megalomaniac President with a God complex) as leaks have reached The Register which show the latest pushback. In the author’s own words:

Undeterred by staff cutting his brakes, president of the European Patent Office (EPO), Benoit Battistelli, has now enraged his organization’s Boards of Appeal.

In a letter [PDF] leaked to The Register, the boards – which act as the EPO’s judicial body – make a series of severe criticisms of Battistelli’s proposed structural reforms that would in effect make him King.

Noting that the aim of the reform was to increase the autonomy of the boards, the association that represents all 28 global boards complains in a letter sent earlier this month that it would in fact “decrease the level of autonomy and independence.”

The Association of the Members of the Boards of Appeal (AMBA) also points out that the proposed reforms do not follow “the main internationally recognized principles of judicial independence.”

As with an agreement that the EPO management has been trying to force on worker unions – leading to a series of strikes – one of the biggest complaints that AMBA has is that the new agreement gives the EPO President the ability to completely change the system at a future date.

[...]

As to how such changes ended up in the proposal without being challenged, well that’s because Battistelli and his team didn’t consult with the boards that it was seeking to reform. From the letter: “The Boards have been given little or no opportunity to comment on central aspects of the current proposal. Many of them have not been presented to the Boards at all.”

The boards did make suggestions and proposals, but so far they have gone precisely nowhere. “The vast majority of our proposals, comments and concerns have not been taken into account in the proposed rules and are not reflected in any other way, for example in the explanatory notes or in the ‘Alternatives’ section, which is conspicuous by its absence.”

In short, it’s not just the EPO staff that the wildly unpopular president is trying to become king of, he’s also trying to take over the very independent processes that are supposed to hold his organization’s decisions to account.

All hail King Battistelli!

The above does not merit further comment. We have covered these affairs for years and based on this exclusive new post from Merpel, having failed to send the boards to exile (due to some resistance from the Administrative Council), ENA graduate Sun King is trying a new strategy that can destroy the boards by reducing workload/demand (same tactics which Conservatives in the UK employ against the NHS). It’s all about astronomical price hikes that would make the boards’ reviews too financially prohibitive for most parties. To quote Merpel:

Merpel thought that nothing at the European Patent Office could surprise her any more. How wrong she was. She has now received news of a draft of the latest proposal from the EPO administration to reform the EPO Boards of Appeal. The background is given in her previous post, second and third headings.

As she wrote before, the previous proposals from the EPO President to the Administrative Council for the reform of the Boards of Appeal were criticised since they conflated independence with efficiency and seemed fixated on moving the Boards to another physical location. The new proposal suffers from all the same defects, but now adds another one – the Boards are not sufficiently self-financing, according to Battistelli and his team.

[...]

An increase of the appeal fee is suggested in the draft proposal, from the current level of €1880 to €2940 in 2017, and rising to €7350 by 2021.

Merpel thinks that this is completely outrageous.

Firstly, one reason for appeal is that a refusal by the Examining Division is wrong. As examiners are put under greater pressure for productivity, wrong refusals are expected to be more, not less, common. Applicants will be penalised by such a massive fee increase. There is a provision for refund of the appeal fee in the case of a substantial procedural violation, but it is perfectly possible for the examination to be shoddy without amounting to a substantial procedural violation.

Secondly, considering substantial procedural violations, are the Boards now going to be under pressure not to adjudicate that one has taken place, because it will reduce their funding? That would have the complete opposite of the alleged effect, to decrease their independence not increase it.

Thirdly, Merpel has seen no corresponding proposal to decrease other EPO procedural fees to offset the effect. She will be very surprised if one is forthcoming.

[...]

The next Administrative Council meeting is at the end of June. Merpel sincerely hopes that this mad proposal will be ditched before then, or rejected by the Administrative Council.

This post has attracted insightful comments pretty quickly, presumably from EPO staff and lawyers/attorneys based on the nature of the comments. Here is why Battistelli should be sacked this month:

This is another example of how Batistelli’s changes result in exactly the opposite of what the AC told him to do and how they go completely against the interests and criticisms of the users.

Here is some discussion about the bogus economics:

More analysis needs to be done on the costs of the boards.

An applicant who appeals a decision refusing the application generates a massive annuity windfall for the office. For an applcation refused after ten years experiencing a four year appeal procedure, the extra annuity payments which the office receives would be €6,000 odd. Similarly, a proprietor in an opposition appeal against a decision revoking the patent effectively generates cash for the EPO thorugh the national renewal fees. Once these have been factored in, I am sure the 4% figure would rise to around the 25% mark

And more on the costs:

CA/90/13 (point 31) seems to indicate that the recent increase in appeal fees from €1240 to €1860 would result in a “cost coverage per appeal” of about 6%. Was this found to be overly optimistic or is 4.2% an outdated figure? One assumes that the further increase from €1860 to €1880 did not make much difference. Presumably, neither the 4.2% nor the 6% figures include any renewal fees. This seems unfair since it would seem that a significant portion of those renewal fees result from applications that would be refused (or granted, resulting in shared fees) without the appeal, such that the fees would not reach the office if the appeal was not filed.

The following comment echoes what we have warned about for many years (almost a decade), using the USPTO as a warming sign/testament. Having doubled the number of granted patents there, the USPTO is not much different anymore from a registration/filing system (92% of applications wind up being accepted to be granted). Here is the comment in full:

I think that Merpel has got this right apart from one glaring error. The increasing productivity demands on examiners are far more likely to lead to an increase in “wrong grants” rather than “wrong refusals.” The purpose of the the productivity increases is to raise renewal fee revenue and there are no renewal fees for refusals. The whole system is set up to pressure examiners to grant more patent, so from a production point of view, it is still far easier for an examining division to grant a patent than to refuse it. The German Federal Patents Court and English Patents Courts both revoke the vast majority of hi-tech patents that come before them. Of the ones that survive, it is rare for the claims to survive in the form in which they were granted. That would appear to suggest that the EPO examination is becoming redundant.

My guess would be that in the future, the EPO will be refusing very few patent applications. They may even stop examining (or pretending to examine) them at all. So, let’s not worry too much about the BoAs. They will probably redundant in a few years anyway.

More comments on this take into account renewal fees:

As others have commented here, if the Office really wants to fund the Boards differently, then it would seem equitable to credit the Boards with at least a proportion of the renewal fees earned while a case is under appeal.

On the other hand, since the Office is obliged by TRIPS to provide recourse to a court/board of appeal, one could instead say that the Office should just suck it up and pay for what is a necessary running cost (part of the “deal” that it has to grant EP patents).

Here is another interesting comment which is probably too much for neoliberal ENA graduates to digest considering the financial bubbles and crises they repeatedly led to for decades:

As far as I understand, presently EPO appeals are funded similarly to a car or health insurance.
For example, in case of car insurance, everybody pays a small amount every month to cover a very rare/expensive case of a car accident.

The same, I guess, happens with an EPO appeal fee.

I.e., everybody pays various fees during patent prosecution. In each of those fees, a small percentage (%) is reserved for a relatively rare case of appeal. In this way, a high one-time appeal payment is avoided by paying it in parts with various ‘office actions’.

A proposed increase of appeal fees would mean decrease of all other EPO fees, respectively?

Putting the costs in perspective:

The suggestion of a five fold increase to cover the costs strikes me as being spin to hide the real intentions behind the suggestion. Raising the appeal fee to such a punitive level will dissuade parties from filing appeals except in the most important of cases. The net result will be a reduction in workload and a corresponding shrinkage in the BoAs. A punishment, therefore, for having dared to say boo to the President.

In response to this we have:

Comparing filing, search, examination, designation and a few year’s renewal fees with the proposed level of appeal fee, the phrase “double or quits” springs to mind.

And here comes a tongue-in-cheek remark:

For the EPO president, the quality of the search and the examination at the European patent Office is the best of the world.
For obscure motivations, a small group of applicants (a minority) is challenging this excellent quality, and are lodging appeals to the BoA.
It is logic that such bad behaviour can not be encouraged. A way to improve the system, is to increase the fees of the appeals.

The obligatory FIFA comparisons:

How is it that, at the AC, a large number of the smaller EPC Member States support BB? Does it not remind you of the support Mr Blatter could count on, within FIFA? Could it be that BB (from his palace on the top floor of the Isar building) just like cunning old Seppie, pays these Member States each year an ever-bigger dividend? At the EPO, how might he do that? Here are some possibilities:

1. Shrug off the costs of DG3 (but keep the filing, prosecution, opposition and annuity fees high).

2. Hold annuity fee income high by giving Applicants the possibility to defer patent grant more or less for ever. Take care though to provide, for those few who want it, a quick and dirty grant (and the huge burden of multiple national annuities that goes with it).

3. Squeeze ever more output from ever fewer highly paid employees. “Never mind the quality, feel the width” as the cynical old saying goes.

Seen through that lens, everything BB does makes sense. Sad isn’t it?

Another reminder that the EPO harms Europeans SMEs and discriminates against them:

I do not know why sloppier examination (i.e. more grants) would reduce the number of appeals. It will certainly cause an increase in the number of oppositions and since the number of oppositions is more or less proportional to the number of appeals with an increase of oppositions also the amount of appeals will increase.

It would be illogical (and indeed I agree with Merpel) injust to ncrease the appeal fees to credit the balance of the costs of DG3. If that would be the case also the fee for opposition should be increased in the same way (but I probably should not raise this, because it might give BB some ideas). Anyhow, the idea to only raise the fees for appeals seems to be very biased.

High costs of appeals indeed would seem very harsh in appeals from decisions of the Receiving Section and/or the Examining Division. But how about appeals in disciplinary cases: do our EQE candidates who want to protest about the decisions of the Exam committees need to suffer by paying an appeal fee that they hardly can afford? Or can we see a reduction scheme? Maybe also some reductions for the poor SMEs?

I would suggest to allocate the budget that is needed for the inventor-of-the-year festival (which can easily be discarded with) to DG3. In any case that will already make up for a large part of the current deficit.

Then comes defeatism:

It is the attitude of the member states that I do not understand. Inside the Office, almost everybody would agree that we are heading against the wall – and still speeding up. Now I can understand that the President and his friends favor short term profits; most likely, he will not be in charge any more when the bubble bursts. But the member states should have long term interests in maintaining the European patent system (and their most cherished unitary patent, which is built on it) alive. Why would they let the President kill the goose that lays the golden eggs and even applaud? I really do not get it. They are either extremely naive (but normally they are not when their national interest is involved) or strangely apathetic. Even the Albanian representative who hardly knows what a patent looks like must understand that his country will get less money once people realize that a German patent might be better value than a European one, must he not?

I am afraid we get the world we deserve.

Waste and abuse is then brought up:

Millipede rightly suggests to allocate the budget that is needed for the inventor-of-the-year festival (which can easily be discarded with) to DG3, which would make up for a large part of the current deficit.
The same applies to the budgets for media “partnerships”, body guards, investigators, “technical” cooperation with members states, “medical care” for AC representatives, incompetent VP´s and secret remuneration of the president and many more. As a result the appeal fee could be dispensed with entirely.

Regarding the above-mentioned “inventor-of-the-year festival”, we will soon publish details about the costs associated with it. In order to help our research, may we suggest that people send E-mails or call up “media partners” of the EPO to figure out the financial arrangements?

People have also just noticed the aforementioned report from The Register:

The Presidium and AMBA have commented on the proposed reforms of the BoAs:

https://regmedia.co.uk/2016/05/31/amba-epo-reform.pdf

as reported by The Register:

http://www.theregister.co.uk/2016/06/01/epos_boards_of_appeal_rail_against_king_battistelli/

We have got a lot to publish about the EPO today, so stay tuned and please send any relevant/additional material to us (e.g. regarding yesterday’s session in the Bavarian Parliament, which grew worried about the EPO). Things are getting hot on Battistelli’s seat ahead of the Administrative Council’s meeting later this month. As one new comment put it: “So who has the power to fire this guy?” Some compare him to Donald Trump over at The Register. One person responded with: “And more importantly, who has the power to fire the guy who has the power to fire this guy, because he clearly hasn’t been doing his job by not firing this guy, so he’s undeniably either dirty or incompetent, and needs to go along with Mr. Kingie. I’d rather not wait until the guy who has the power to fire the guy who has the power to fire this guy needs firing too for the same offence…”

The problem is, Mr. Kongstad, who is able to get rid of Battistelli, not only fails to do so but also keeps his contracts secret, which makes him rather complicit. █

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