IRC: #techbytes @ Techrights IRC Network: Wednesday, September 13, 2023

-TechBytesBot/#techbytes-patentblog.kluweriplaw.com | EPO Propaganda Master Class – or: How to Justify Higher Fees for Lower Quality Work - Kluwer Patent Blog

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This article may be of interest:

https://www.patentlitigation.ch/productivity-vs-quality-at-the-epo-a-rare-glimpse-behind-the-curtain-thats-worrying/

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Sustainability (financially only) is the key. No changes are to be expected after the latest ILOAT judgments. The new career system will remain in place whatever the consequences are.

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Sharing concerns

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September 10, 2023 at 9:13 pm

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Simplification of the fee structure? The proposal seems overly complicated, and the result even more… It does not seem to be a “simplification” at all…

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what a bunch of......*

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September 11, 2023 at 1:11 pm

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Thanks to Mr Bausch for an entertaining but revealing paper on the doings of the EPO.

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The EPO has indeed become a master in propaganda and most of its publications have to be taken, not with a pinch of salt, but a whole vat of it. Just look at the very verbose Quality Charter published a year ago. If all what is described therein would correspond to reality, there would be no need for the users of the system to complain about the quality of the work delivered by the EPO, cf. IPQC.

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The same applies to the Quality report 2022. Whilst on page 38 it is clear that searches without any finding have gone down about 10% from 2021 (92,3%) to 2022 (82,6%), there is no explanation found about this lowering of the quality of searches. In the diagram on page 38, there is a heading “quality improvement” which increased from 3,3% in 2021 to 9,7% in 2022. The corresponding explanation, granularity of the extended search audi

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t, is anything but convincing. This does not hinder the EPO to claim “that the overall very high level of quality of search reports was maintained”

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The same applies to the quality of examination, see page 46 of the QR 2022. It has changed from 75,4% in 2021to 76,6% in 2022, in spite of all the measures having allegedly been taken to improve quality of examination.

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It does thus not come as a surprise the non-paper at stake here, is of the same kind: hiding reality behind smoke screens.

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Before going into more details, it should be reminded that it was Mrs Brimelow which decided that the financial situation should be dealt with according to the IFRS financial rules. This meant that the procedural fees like search, examination, opposition and the like, whilst on the EPO accounts, should not be counted as income, unless the work was carried out. This was not a bad move, as it allowed to clarify the financial situation of

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the EPO, which by the way has never been bad.

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‘When deciding to reduce salaries and benefits for staff, the actual tenant of the 10th floor decided that the annual fees revenues should not be taken into account, and even went as far as to consider that for the years 2018 to 2038, the income would not increase and remain constant, whereas the salaries and pensions will grow at a rate of 2,24% above inflation. I speak here about the famous 2019 Mercer and Wyman study.

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In 2019, the Central Staff Committee commented as follows:

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– between 2018 and 2038 the EPO will not raise its procedural and renewal fees except once, by 4%, in 2020. For the remaining period the fees are assumed to remain constant (page 115). A correction for inflation is not foreseen.

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– between 2018 and 2038 the national renewal fees on patents granted by the Office will remain constant (page 116). A correction for inflation is not foreseen.

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in sharp contrast during the same period EPO salaries are assumed to increase at a rate of 2.24% above inflation (page 119).

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– without providing any underlying data, the study assumes that the costs of pensions and other post-employment benefits (incl. tax compensation) will almost triple over the next 20 years (pages 66-67, page 123).

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– The study foresees no further transfer of operational surpluses to the RFPSS, although with a 4.8% return above inflation over the last 20 years (6.3% over the last 5 years) the money would be well placed (RFPSS/SB 41/19, page 2, Fig. 3).

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the study assumes that operational surpluses will not be transferred to the EPOTIF either (page 63). The EPOTIF was recently created with the very purpose of shielding EPO capital from inflation and is expected to deliver a return of 4% above inflation (CA/F 10/18 para.10).

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– instead expected operational surpluses are assumed to be parked as “other financial assets” with an average annual return of between – 0.03% and 0.78%, i.e. well below the level of inflation2.

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– as indicated above, over the last 20 years the RFPSS had a real return of 4.8%. The actuaries who evaluate the RFPSS assume a long-term return of 3.5%. The Financial Study assumes a return above inflation of only 2.1% (FAQs). This transforms today’s 104% coverage (CA/61/17 point 79) into a 2 billion euro gap in 2038.

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The 2019 EPO Financial Study by Mercer and Oliver Wyman assumes that:

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‘”Although the EPO’s currently makes a budget surplus of about €400m /year (20% of the budget), Mercer and Wyman predict an overall €3.8bn deficit by 2038 and endorse the President’s suggestion to add a €1.9-2bn “buffer” when closing the alleged gap. The principal means planned to fill the alleged gap will be a reform of the annual adjustment method for the staff’s salaries and pensions.”

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‘SUPO asked Ernst and Young to check the Mercer and Wyman study, with the following result:

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Ernst & Young estimated what they called the “illustrative impact” of those highly conservative assumptions. Their main findings are the following:

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– more realistic assumptions (in line with those of the RFPPS actuaries) for the contribution levels to the RFPSS and the EPOTIF reduce the alleged gap by €2.3bn

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– more realistic assumptions of the return on the RFPPS and EPOTIF assets in line with other EPO documents reduce the gap by €4.0bn,

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– taking into account expected future income from patents existing in 2038 (omitted in the 2019 study) reduces the alleged gap by €4.7bn,

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– assuming that EPO internal fees will rise with inflation (rather than stay constant until 2038) reduces the gap by €1.6bn.

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– Ernst & Young further pointed out a methodological error in the 2019 study that inflates the gap by €1.3bn.

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If now allegedly there are problems, it seems that the upper management has, in spite of its very “conservative” approach, manifestly failed and completely misjudged the situation.

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I would therefore expect that not only the IRFs will be increased, but the next attack on salaries and pensions is programmed. The last salary increase resulting from the “new adjustment method”, which was clearly not favourable for staff, was so high that some delegations in the AC chocked on it.

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SMEs are the fig leaf behind which the proponents of the UPC have been hiding to push it through. As it worked so well for the UPC, it does not come as a surprise that the upper management of the EPO has jumped on this train.

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The package is so well presented that a reader with normal attention will not realise what is going on. It is thanks to people like Mr Bausch that we are made aware of the truth behind all this waffling prose. I would therefore be inclined to share Mr Bausch’s suspicion: there are problems, most probably linked with EPOTIF due to the gambling with the money of this fund, as the RFPSS is much more controlled.

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* Fill in the gap!

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Concerned observer

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September 11, 2023 at 1:27 pm

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Is the EPO’s financial position really so precarious that they have no choice but to increase (by huge percentages) fees paid by essentially all applicants?

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Even though the last financial study was based upon an assumption of no fee increases whatsoever that study did not predict financial doom for the EPO in all scenarios. Since that study was completed, the EPO’s financial performance (relative to predictions) will no doubt have been boosted by:

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(a) at least two rounds of increases, including an exceptional, out-of-turn increase to account for an unexpectedly high rate of inflation; and

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(b) steps taken by the EPO to reduce (increases in) their wage bill, for example by reducing examiner / formality officer numbers, and greatly limiting salary increases / rewards for the majority of employees.

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Indeed, if I am not mistaken, has the EPO not made very substantial surpluses each year since the last financial study … so much so that they have been able to transfer huge sums to (relatively) “risky” investment portfolios?

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Of course, there is no independent, external audit of the EPO’s finances, and so it is difficult to know precisely what is going on behind the scenes. Nevertheless, the EPO’s pronouncements on the reasons for the proposed increases are impossible to square with a few facts that can be established. To me, this disconnect between reality and the EPO’s pronouncements makes the latter not so much a masterclass in propaganda as tour de

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force in gaslighting.

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Old good days

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September 11, 2023 at 2:26 pm

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Mr Bausch you have no idea how much we older examiners admire you for digging out the sh!t under the shiny surface carefully built by our incompetent leaders.

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It reminds us of the good old times when we actually had the time to do our work and dig out the same material from applications, which now result almost immediately in very shiny, smelly, worthless – and as you just discovered – more expensive and less profitable granted patents.

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Sorry but now it is not the right time to disturb us: this week there will be an apotheosis of BS events at the office. Have a look in the Internet, maybe you’ll find them as well.

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Simona Fonzi

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September 11, 2023 at 7:29 pm

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EPO and UPC are self-financed institutions, which feed themselves on the number of granted patents and number of litigated patents respectively. What could go wrong? Are they still public institutions we can trust?

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Furthermore, they are govern by law makers which have a strong conflict of interests, as they receive renewal fees from those granted patents.

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law sniffer

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September 11, 2023 at 10:56 pm

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I find it normal that if you get a grant in shorter time and you pay less fees because of this an increase of fees per year be taken in consideration, it would be only fair and of common sense. At the same quality of course! I personally doubt that the internal auditing department of the EPO is consistent, reliable and has a better quality understanding than the rest of the examiners, in industry it is usually only a different career op

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portunity which is very often quite detached from the real work. Quality can be determined only by studying real cases with respect to past cases and this can be done only together among applicants and EPO experts by analyzing specific cases, all the rest is only fresh air, still waiting for the jointly agreed publication of a striking case that exemplarily describes a quality deterioration …

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-TechBytesBot/#techbytes-www.patentlitigation.ch | Productivity vs Quality at the EPO: A rare glimpse behind the curtain that's worrying | FPC Review

x https://qz.com/why-the-gates-foundation-is-hopeful-in-the-face-of-a-gl-1850827862

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# bill sez

-TechBytesBot/#techbytes-qz.com | Why the Gates Foundation is hopeful in the face of a global backslide in maternal mortality

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quartz/qz not only re-runs ap

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but also sells billg

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maybe time to treat it like 'guardian'

x https://futurism.com/the-byte/bill-gates-elon-musk-reasoning-mars-electric-cars-flawed

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Sep 13 08:53

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# bill sez

Sep 13 08:53

-TechBytesBot/#techbytes-futurism.com | Bill Gates Says Elon Musk's Reasoning on Mars and Electric Cars Is Flawed

Sep 13 08:53

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*Now talking on #techbytes

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