Jesper Kongstad. Photo from the Nordic Patent Institute.

Summary: Amid unrest and suspicion of misconduct in the EPO's management (ongoing for months if not years), Transparency International steps in, but the EPO's management completely ignores Transparency International, refusing to collaborate; the PR chief of the EPO is apparently being pushed out in the mean time

KONGSTAD was the subject of our coverage before. We mentioned him in previous parts of exclusive EPO scandal stories. Mr Jesper Kongstad had already been mentioned in several past posts because he's suspected to have played a role in an inadequate appointment, potentially motivated by nepotism. The suspicion is not a one-man whisper campaign. Staff at the EPO too seems to be concerned. The EPO is not new to scandals.

As we showed some weeks ago, the EPO's management had oversight dismantled (related original documents are to be found here) and later on we were told about a letter to Kongstad from Cobus de Swardtz [PDF], the Managing Director of Transparency International (TI), which calls itself a "global coalition against corruption".

There was a lot more to come, but we chose to sit aside for a while, letting things take their natural course without publicising anything in particular. The silence needed to be broken when the letter was circulated internally. The following document was published some weeks ago, which basically means that its contents are freely available to quite a lot of people. We too received a copy. At the time, Transparency International had already waited a few weeks (after it sent a letter to the Chairman of the Administrative Council) and the Administrative Council did not respond. As far as we know, Kongstad never responded. Administrative Council seems to prefer to just keep quiet about it. The interesting thing is that Transparency International was invited by the EPO staff representatives to examine the governance of the EPO. This is public knowledge. Kongstad must either be very arrogant or he has something to hide.

In the future, in order to facilitate public pressure on the Administrative Council, we are going to reveal for our European readers some contact details so that they contact their national representatives on the Administrative Council in relation to the various issues concerning EPO governance. Details of the national delegates can be found in the EPO's Web site. They are mostly the heads of national patent offices who are subject to instructions from the competent government Ministry. Any kind of public campaign should also target the corresponding government Ministries and/or Prime Ministers as that is where the buck really stops at a national level.

The following is a portion from a letter we got hold of. The letter provides some background and contains references:

EPO & Transparency

Summary

Transparency International (TI) critically examines how national political systems all around the world address corruption risks and foster integrity. They publish and encourage best practice in integrity and expose the effects of conflicts of interest and lack of transparency. Recently, TI also assessed how the EU institutions deal with ethics, how they ensure transparency and accountability, and how they ultimately prevent corruption. The Central Staff Committee suggested to the EPO Administrative Council that a similar study be done for the EPO. TI has signaled its interest in the matter. But until now the Council cloaks itself in silence.

The governance of the EPO

The EPO still has the governance system that it was created with. Oversight is in the hands of the Administrative Council. The Heads of the national delegations in the Administrative Council are almost without exception heads of national patent offices. The delegates are in a situation of conflict of interests since the EPO is at the same time the main competitor and a major source of income for the national patent offices. The meetings of the Administrative Council and the majority of its documents are not open to the public. Maybe significantly the Office has started to publish the salaries of its staff, but the salary and benefits of the President are not disclosed, not even to the Administrative Council.

The European Patent Organisation sets its own financial regulations, independent from national or European law¹. Adherence to these rules is controlled by a Board of Auditors of consisting of three individuals who are appointed by and reporting to the Administrative Council, on 5-year renewable contracts. Their reports (CA/20/yy) tend to be rather mild and the (few) critical comments are routinely ignored by the Office. The most recently appointed auditor is a close co-worker of Mr Battistelli from his time in the French patent office. Maybe not surprisingly, the most recent Audit report (CA/20/14) is even milder than usual. An attempt by the Brimelow administration to strengthen the audit system through the creation of an Audit Committee² was supported by Mr Battistelli in his function of Chairman of the Council, but annulled by him as soon as he became President of the Office³. Note that the Organisation’s immunity blocks third parties from effectively challenging its financial decisions. The Staff Committee challenged the decision of the Office to use a direct placement procedure in favour of an external consultancy. The Board of Auditors even agreed that an invitation to tender would have been justified. Even if clearly justified, the complaint was recently dismissed by ILO-AT as irreceivable⁴.

______ ¹ Article 50 EPC ² Bossung, Otto. "The Return of European Patent Law in the European Union". IIC 27 (3/1996). Retrieved June 30, 2012. ³ CA/140/08 €«Audit Committee: possible models€», resp. CA/55/11, €«Disbanding the audit committee€»

---

Immunity, or impunity?

The lack of transparency and the lack of truly independent financial and political control would seem to pose a serious risk for the integrity of the EPO and consequently for the European patent system. This is particularly worrying at a time that the EPO is to be given the additional responsibilities for the Unitary Patent. The staff representation has repeatedly requested a discussion on, and a modernisation of, the governance of the Organisation⁵, thus far to no avail.

Transparency International

Transparency International is a global civil society organization that aims at stopping corruption and promoting transparency, accountability and integrity at all levels and across all sectors of society⁶. TI has developed a methodology to assess how well national governments ensure the integrity of their institutions. The beauty of the methodology is that it is systemic. It does not rely on leaks and/or scandals but assesses whether the necessary legislation and mechanisms are in place to prevent, detect and combat corruption, and abuse of power. They check how well these mechanisms function in practice. An adapted version of this methodology has been used to assess various EU institutions. For the EU institutions Transparency International found that the EU has done a lot to put their house in order in recent years, but that strong foundations are being undermined by complex rules, complacency, and a lack of follow-up⁷.

What is the Council waiting for?

With a letter dated 6 June 2014⁸ the Central Staff Committee (CSC) again raised the issue with the Chairman of the Administrative Council. The CSC drew the attention of the Council to the report of Transparency International on the EU Institutions and suggested that a similar study be done for the EPO. We note that the EU institutions cooperated with the Transparency study. Transparency International has reacted to the letter of the CSC⁹. It has offered its support and experience in promoting a culture of integrity and good governance in the EPOrg. Just recently Transparency International sent a reminder of its letter to the Council.

[...]

_____ ⁴ ILO-AT 3343 ⁵ CA/93/07 €«Governance of the EPO: a staff perspective€», ⁶ http://www.transparency.org/whatwedo?gclid=CJWu5eC5tsACFa7KtAodXRoA2A ⁷ http://www.transparencyinternational.eu/wp-content/uploads/2014/04/EUIS_press_release.pdf ⁸ http://www.epostaff.org/archive/sc14139cl.pdf ⁹ see annex

The Transparency International story has been reported via another channel. The investigation was ignored. To quote WIPR: "A staff committee at the European Patent Office (EPO) has said its requests for the office’s governance to be assessed by a corruption specialist have been ignored, WIPR can reveal.

"The office’s central staff committee (CSC) said it had recommended to its supervisory body that anti-corruption organisation Transparency International (TI) carry out a study on the everyday running of the office, to ensure accountability.

"The CSC said its own attempts at convincing the Administrative Council (AC) were ignored, and has revealed that a letter sent directly to AC chairman Jesper Kongstad from TI has also yet to receive a response.

"TI’s letter, seen by WIPR, was sent in July this year and said the EPO’s governance has at times come under criticism."

That basically sums up how the EPO's management behaves; the modus operandi is to ignore or destroy any regulatory apparatus or oversight, External ones are ignored, internal ones are brutally (but almost silently) squashed.

There is probably no harm in waiting for while as there may be a follow-up by Transparency International. For the time being the situation is clear; an external audit is being ignored by the Administrative Council. Jesper Kongstad doesn't appear to have made any response.

"For the time being the situation is clear; an external audit is being ignored by the Administrative Council."Curiously enough, as also reported by WIPR just a few weeks later, there was a "[m]ysterious departure for EPO communications chief" (i.e. PR). "According to sources," says the article, "a recently uncovered trademark application at the German Patent and Trademark Office in Schröder’s name bearing the words “f**k the US” may have been a contributing factor."

A source tells us a slightly different story however. Some believe that Battistelli is planning to maneuver another French "crony" (Vincent Bénard, formerly of Airbus) into this key PR position, meaning that the previous occupant of the position, Oswald Schroeder, had to be "eliminated". Whether he was set up or fell into a trap due to his own stupidity one cannot say for sure. "Oswald Schröder left “by mutual consent” on October 10," says the article. It seems like he got pushed out. One just need to put some of the details found within the article together.

Battistelli's regime can now tighten its grip and surround itself with more cronies that can perhaps push out challenges, such as Transparency International's. ⬆