12.12.19

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At the EPO Money — Not Quality — is King

Posted in Europe, Patents at 4:12 am by Dr. Roy Schestowitz

EPO FLIERNo. 50

The EPO-FLIER wants to provide staff with uncensored, independent information at times of social conflict

Part 2: Financiers are ruining quality

 

“’I know this would take a lot of planning, but the alternative of rushing the build is far riskier,’ the manager wrote. […] However, Boeing did not slow its rate of production.”1

About 20 years ago, journalist Jerry Useem wrote that “Boeing has always been less a business than an association of engineers devoted to building amazing flying machines.2 In 2015, Boeing nominated a financier as its CEO. Unfortunately, financiers often focus on short-term profits and tend to loot the corporations they run. The Boeing engineers lost power to the financier, who increased prices, laid off workers, reduced quality and spent cash buying back stock – while the company lost its ability to make safe airplanes.

There are many parallels between Boeing and the EPO. A former colleague observed a few years ago that scientists and engineers are always more efficiently led by scientists and engineers3. But the EPO, a public administration whose priorities were once set by the European Patent Convention and implemented by qualified and motivated engineers and scientists, is now in the thrall of bean counters.

The Battistelli administration introduced an anti-career system which generated enormous regular surpluses by reducing salaries and other staff benefits. But these measures ruined the quality of our services. The surpluses have been transferred to the dubious EPOTIF4 investment fund. President Campinos presented a fudged and heavily biased Financial Study to justify the implementation of further cuts in staff benefits.

Similar to the executive team at Boeing, our top management may be quite skilled at generating cash but they seem to understand little about running a public administration. In the past, our activities were focused on delivering high quality search reports and valid patents, now all that matters is increasing output. Production numbers count, not quality.

“’You have a systemic problem in your company. You’re driving profit. You’re not driving quality [...]’” the California Democrat John Garamendi told the Boeing chief executive1.

The EPO is not a company and its budgetary responsibility is not that of a company. Its mission is not to pile up mountains of cash but to serve the public. But the Administrative Council rewards top managers for EPO productivity increases with higher bonuses. The new career system translates these false incentives for managers into false incentives for staff. It has reduced the share of fair pensionable rewards for good work. Now, only (very) high individual output is rewarded – no matter what the quality is. False incentives reward cheating on quality while demotivating everybody who tries to serve the public. As a result, a public service organisation has been turned into a cash-generating machine.

The new career system is not working. It has increased the gap between rewards given to the top producers and the many others who do a good job. Since there is no positive motivation for the majority of staff, the most powerful means left to motivate them is intimidation. The new career system and management by fear have split the staff and destroyed teamwork. Measure 5, as proposed in the EPO’s recently published Financial Measures, would further reduce the share of staff who receive a pensionable reward from 60% to 40%5. These planned additional cuts in benefits will further deteriorate the attractiveness of the EPO as an employer and the quality we deliver to the users of the patent system.

Boeing obtained permission from its regulators to partially certify the safety of its own airplanes. The drive for efficiency led to less safety, which is the major quality aspect of an airplane. At the EPO, the quality of granted patents is measured by the Department Quality Audit (DQA) which reports directly to the president6. In other words, the quality the president is responsible for is certified by himself. And it is the Office which decides who can carry out surveys on applicant satisfaction. Manipulation of the results is easy under the conditions.

Patent applicants have few real alternatives to filing their patent applications with the EPO. That’s why cash continues flowing in. But there is a problem. We are losing our ability to deliver valid patents. If we were in genuine competition, we would lose market share. And if we were to build airplanes, our planes would fall from the sky.

In 2014, when Mr Battistelli led the Office, a former member of our organisation put it like this:

‘”We used to have the spirit of the M.I.T., now we have that of Lehman Brothers”’3

Unfortunately, under President Campinos, the situation continues to deteriorate.

________

3 EPO-FLIER No. 26 Moral compass and management’s loss of it (13.06.2016)

4 From patent office to investment bank? (07.12.2017)

SUEPO proposals on the New Career System (SUEPO Munich, 26.11.2019)

Internal Audit: A New Quality” (CSC, 30.08.2019)

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