Interview With EPO President Battistelli: Investigations, Unitary Patent And Global Change

The saga of fights between the President of the European Patent Office, Benoît Battistelli, and the trade union SUEPO goes on with a recent decision to fire two and degrade one member of the trade union. Demonstrations at both the Netherlands and the Munich sites of the EPO continue, and further divisions between the president and the EPO Administrative Council are being reported. Battistelli spoke with Monika Ermert for Intellectual Property Watch in January about his view of the fight and about what else he has on his plate as he had decided to continue for one more term in office.

INTELLECTUAL PROPERTY WATCH (IPW): Spyware installed for an internal investigation, what critics call an unusual number of suicides in the organisation, and a never-ending stream of newspaper stories on “toxic labour relations” – this is not what you expect from an European institution. Can you explain?

BENOIT BATTISTELLI: The situation is that the organisation has been for three years the victim of a defamation campaign orchestrated by some people inside the office and some outside the office, an extremely violent and nasty defamation campaign. It took a lot of time to identify the authors of this campaign. And once we had identified them, the rules are such that there is a complex and long procedure to finalise. That is why during all this time we were not in a position to answer questions, respecting the principle of innocence until proven guilty and respecting the rights of the defence. We have started a few months ago now to explain the situation.

EPO President Battistelli

I will try to explain the situation more generally. When I arrived five years ago in this organisation, I clearly proposed to implement an efficiency and quality strategy. The EPO was very well known for its excellent expertise. But at the same time also for its very high cost. The fact that it has been a monopoly controlling its own cost was a concern. My policy has been that we cannot proceed in the same way. We were working more like in the seventies [1970s] when we were created.

But now we have more and more patent offices increasing the capacity and quality of their work. If we wanted to continue to be one of the leading if not the leading office, the EPO had to adapt and reform itself to increase the quality of its services and at the same time control its cost.

First, we made studies from external sources, then shared this with stakeholders. We developed road maps on five key issues: human resources, quality, IT, cooperation and building. They have all unanimously been approved by the [EPO] Administrative Council and we have started to implement these.

IPW: I understand that the Council had withdrawn support from one part of the reform with regard to the reform of one element, the Board of Appeal, though….

BATTISTELLI: That is not correct. The Council has always adopted my proposals. This is a different matter.

We also have been transparent, you can look at the roadmap. Reforms, especially like the one represented in the high-level issue number one, of course can result in increased discussions. But the level of opposition has been much higher than it would have been in any other organisation for the simple reason that a trade union used its monopoly.

IPW: You are talking about SUEPO?

BATTISTELLI: Yes. This trade union, let me be straightforward – is not interested in negotiating deals or reasoning and finding compromises. It is not a trade union in the German sense which would enter into discussions to try to find a deal and stick to the deal. I tried that for the first three years. Let me give you one example. I wanted to create a home working scheme for the benefit of the staff. We discussed for one year with the trade union SUEPO in order to find an agreement on the modalities. I have integrated some of their proposals, but not all. And at the end I decided we have reached a level where I had to make a decision. Not only did the representatives not accept the compromise, but they made an appeal in front of the ILO [UN International Labour Organization dispute process]. And if this appeal is won it will result in the cancelling of the scheme from which 200 people at least are benefiting now.

IPW: The appeal is still pending, when will it be decided?

BATTISTELLI: The appeal was filed in 2013. You first go through our internal appeal system and then you go to the ILO. This takes time. So when you are the manager of such an organisation, you have two options. Either you say ok, the trade union disagrees with this, therefore I am not doing it. Or you say, I do consider their positions, they have a right to be heard. But I have the right to decide, in my responsibility as a president, because I have the support of the Administrative Council. The same happened for strike rights. There was a practice of strike without financial consequences, it was no formal right, though.

Would the EPO be treated like civil servants in Germany, they would not be allowed to strike at all. We have introduced the first recognised rights to strike. In 2015, we had no day of strike compared to 2014 when we had 22 days of strike. And I could go on with direct elections of staff representation in our internal bodies. SUEPO was nominating those representatives in a totally non-transparent way. Now we have a regulation in place which allows each staff member to choose its representative. We adapted to the legal and social framework of a 21 century organization.

On suicides, you talked about the suicides. What I cannot accept is the political instrumentalisation of these tragedies. Trying to blame the management for this, for which there is no proof, is for me a political instrumentalisation. We have clear signs instead that the families were happy with the support we have been giving to them. In any case, there is a responsibility when a human being takes his life. We have tried to treat each case matching the human dimension to a maximum and supported the families financially. In one case there had been a death in the family just before and the respective employee had only be permanent staff for two or three weeks.

IPW: So you reject that there is a link between more pressure through reforms and the suicides…

BATTISTELLI: I am really upset at the attempt to link this to the EPO in the situation where we are making big changes. They are necessary changes. Results have been impressive in all fields, for example we have a plus in terms of production. We have now transparent external quality indicators and then every year we check if we have reached our quality goals. And here too we are above the level of 2014.

IPW: What do you mean by quality and production level?

BATTISTELLI: It is to deliver a legally solid interpretation of the patentability criteria. Each patent we deliver must be legally solid. That is the global aim. The most important indicator here is the search. If one reference can be found for an invention it is not new. Then you cannot patent it. Comprehensive search is the most important part in processing the applications. We have fixed that patent examiners reach 95 percent correctness with regard to the files he has to treat.

Based on samples drawn, there will be a second search by a different person to see if they find new references. We have reached 97.5 percent for this. Meaning that in 2.5 percent, there were references found. Certainly such benchmarking and checking of one’s work could add pressure on the examiners, could it not?

Nobody ever said that it is easy to be a patent examiner. It is a difficult job and you are highly paid. For the production, we fix numbers in a managerial dialogue in small teams and with line managers individually. A new patent examiner gets different objectives than somebody who has been on the job for a while.

IPW: Is it also dependent on the complexity of the applications?

BATTISTELLI: It is individually adapted for each case, so they know what they have to do. There is also a check mid-year to assess where the examiners are and if there is need for changes or for more training.

You have to keep in mind, we are not subsidised by public money and have to reduce our cost. It is easy, you know, for a monopoly to set very high fees. But this is not my concept for the organisation. The reform is about bringing something positive for the open economy, the best quality-cost ratio.

IPW: You said it is not correct that the Administrative Council blocked one part of the overall structural reform, the one concerning the Boards of Appeal. But your proposal was not accepted in the December meeting, right?

BATTISTELLI: No that is not correct. When the European Patent Cooperation Treaty was signed, the founding fathers did not create a fully independent legal entity for appeals. The Board of Appeals now are an administrative department of the EPO. It was decided that the Board members would have to be independent when they take their decisions. But that does not mean they are independent in the institutional and financial sense.

The EPO lived with these appeals boards [Editor’s note: in total, there are 28 technical boards of appeal, the Legal Board of Appeal, the Enlarged Board of Appeal and the Disciplinary Board of Appeal] for forty years and year after year they built their reputation. But in 2014, the chairman of the Enlarged Board in charge of managing the Board of Appeals decided to withdraw because his impartiality could be questioned. He is at the same time is vice president of the EPO for the Board of Appeals.

This was a strange decision as there had never been questions under my predecessors. But we said that there is a perceived issue of partiality and we have to address it clearly.

To have fully independent Boards of Appeals, a structure which is separate like a court, you would need to modify the European Patent Convention. It would mean international negotiations between member states and national parliaments would have to ratify. Member states who sit in the Administrative Council did not want this option and asked me to make a proposal within the legal framework.

I am working on different options where, for instance, we would delegate the task of the President of the Board of Appeals to a new position. He or she would have the administrative and managerial responsibility for the Board of Appeals. We have created a new consultative body to the Board of Appeals Committee which shall assist the President and the Board of Appeals to fulfil their task. It is similar to other consultative bodies for Finance and Budget and the Patent Law Committee.

A third chapter of issues is linked to the conflict of interest policies. For example, people could be hired by a company or patent law firm just after they leave the office, it is because you are excellent. So we need some rules for this.

The last point is the issue of premises. There is a perceived issue about independence because of the fact that the appeal boards are in the same building. While you can separate offices, it could be considered a problem that they still are in the same building, meet for lunch with the people they have been working for. We think that it could be better for the reputation to move them outside.

We continue discussions on that. There are different options where to locate. We envisaged an option in Berlin, because we have premises in Berlin. But the Administrative Council was not in favour of this option, I wonder why. Another option would have been Vienna, where we also have premises. To choose Munich certainly has a cost. Because we will have empty square metres in our current buildings and at the same time will be forced to rent or build new square metres on top.

IPW: There have been calls that the Appeal Structure has to be even more independent than you have proposed and there seems to be support for that in the Administrative Council…

BATTISTELLI: If you want to create a new entity this implies to change the European Patent Convention. But if you do this, you will have to solve two issues: first the political feasibility of a new international agreement, and also who is going to pay for this Court. At the EPO Board of Appeals, you get very cheap justice. But the future UPC [Unified Patent Court] should be fully self-financed.

Certainly, if it is successful, the UPC can attract a part of the files, because it is a full court. It can fix damages. So we have to see. There is no clear answer to this question now, we will perhaps have one in ten years. So there is a level of uncertainty. In my view, the EPO Board of Appeals should improve itself, especially with regard to efficiency. Good justice is not only an independent, but also an efficient one. Unfortunately, we currently have a backlog of three years.

IPW: Can you briefly talk about the Memorandum of Understanding that you are trying to get with trade unions?

BATTISTELLI: Because the EPO does not fall under any national law, we had to fix some aspects of the legal framework. Trade unions were not covered in our legal framework, they had no existence. I initiated an open discussion with trade unions and SUEPO to propose to them to sign a MoU [memorandum of understanding] which will mean in legal terms to recognise them as a social partner. We have progressed with a small group of people, but SUEPO has refused to take part and said that those participating in the discussion had no right. Still, I hope that we will advance and be able to sign the MoU during the first quarter this year.

IPW: Who will be able to sign?

BATTISTELLI: It will be open for signature to every trade union, we could imagine that other trade unions might become interested. But this is not for me to decide.

IPW: Despite these efforts, more protests have been announced for 2016. You have been taking disciplinary procedures against staff members. What are the allegations and what is your reaction to the protests?

BATTISTELLI: We have shown that individual SUEPO leaders were participating in the defamation campaign against the EPO. Secondly, there is harassment against elected staff representatives that forced the elected individual to resign from his post and allow a SUEPO member to replace them. And, thirdly, there is the leakage of confidential information. I have launched three disciplinary procedures. After we have decided in our final hearing, the individuals concerned can file an appeal and then go to the International Labour Organisation in Geneva.

I have always considered that a strong representation from staff as partners is a good thing.

IPW: Have you ever considered to quit?

BATTISTELLI: No. What I am doing here, it has been very successful and am very proud and most of the staff is supportive. I have, against the recommendation of my wife, accepted to continue for three more years. July next year is the end of my five year term and I accepted a demand of the Administrative Council to serve for three more years to finish my work.

We live in an open, transparent society and when you have responsibility you can expect a certain level of criticism. But when there are personal attacks we cannot accept that and by the way, after the finalisation of the internal procedure we intend also to also defend ourselves in front of a German court.

IPW: A many-year project, the Unitary Patent System, now has advanced to final preparations. But you still lack the necessary ratification signatures, Germany, for example, has not yet ratified, and from the head of the German Patent Office we understand it will still take some time. Do you still hope to start applications this year?

BATTISTELLI: First, it is not the patent offices that make IP policy. Our colleague therefore has no special competency here, it is the Ministry of Justice. For 15 years, the German government has said they are in favour of the unitary patent and they will apply it. So I am in no doubt that they will ratify it. We need thirteen including France, Germany and the UK and currently we have eight including France. I understand four or five are very close to ratification. No doubt we will reach the threshold soon, I hope we will in 2016 deliver and receive our first patent applications in the interest of German companies and the important German patent office.

Because it will represent a huge simplification and also a huge reduction of cost. With German support we have fixed application fees to the four-country model, so for the combined cost of four big patent offices you get protection in 26 member states, this is a seventy percent reduction.

Now the system has been designed in such a way that we want to give a choice to the applicants. So when you have an invention, it is up to you to decide if you want to take a national route and be protected, for example in Germany only. Or you can decide to go to the European Patent Office and protect it in a bundle of countries…

IPW: The bundle patents….

BATTISTELLI: With a bundle of national patents, your EU patent receives protection for example in Germany, France, the UK and Switzerland. You have to pay administrative fees for five national patents. So, this is costly. The third choice is, you ask the EPO to be protected under the unitary patent system so your invention is granted for all 26 member states.

IPW: But you also have to enforce your patent there. How much do you expect the Unitary Patent to be a competitor to the bundle patent?

BATTISTELLI: It is not competition, it offers a choice of different tools depending on the IP strategy and policy of the applicant. The unitary patent will be an EU patent where the EPO will play the role of a national office. You can within one year decide if you want to extend a patent filed with a national patent office within one year after your filing.

Let’s also be clear, the granting process basically is an intensive search report. At the EPO, there are 4,300 patent examiners with a level of expertise which no national office can have. The French national office has very good experts, but they have only 1,000, we are four times more numerous. We don’t have a specialist for cars, we have specialists for brakes and specialists for the air conditioning in a car.

IPW: Given the complexity of technology, at an IP industry summit in Berlin recently there were certain concerns that the need for collaborative development and use of open source technology was needed, but then patenting became more of a problem. What is your reaction?

BATTISTELLI: Open source has been a topic for many years. But what happens is that we receive more and more applications. For the last 20 years, annual growth in applications was 3 to 4 percent regularly. This is not specific to Europe, but it is the same for the USPTO [US Patent and Trademark Office] or Japan, and it applies to all fields. Even companies from highly dynamic fields of technology like telecommunication continue to bring applications. For them, it is not done for funding. Companies like IBM file a thousand applications and at the same time open their portfolio and put technology in the public domain. Certain fields have standards for which you share your technology, patented, or you do not patent.

I think this depends on the approach one chooses, I never said that patenting is the only solution. Another path taken, for example, are trade secrets. Sometimes companies do not like the other side of patenting, the publication. They do not want that their competitors can see what they are researching. You certainly have to act in a very, very organised way with your clients and subcontractors, because as soon as you have leakage, protection is finished. So there is a choice of tools, what I can say macro-economically, the numbers of patent application rises steadily.

IPW: Can extensive patenting of rather small inventive steps be detrimental to innovation, too?

BATTISTELLI: Less than seven percent of the applications are granted with no change at all. We refuse to grant business methods, and also a lot of software. We have much more conservative system in that regard in Europe as compared to the US. Companies have very sophisticated strategies on advancing their IP. Patents can be used in very different ways, offensive, defensive, sometimes with other elements. Many use both patents and other forms to protect their IP.

EPO

I think we have reached a balance between interests of society and of the inventors who want to protect their intangible assets with patents. IP is the only legal tool for companies to protect the immaterial assets which have become a more and more important part in the knowledge economy. We know that stock exchange value of an entity depends on the strength of its patents. Some companies, when they reach the end of the patent term, their stock value falls. There is a very complex financial impact of IP.

The EPO is the known as the most sophisticated and rigorous patent office in the world. For 200,000 decisions annually and 65,000 patents granted we receive around 2,500 appeals.

IPW: There are quite some patents that are not used actively, what does that mean for innovation…

BATTISTELLI: Depending on the sector, patents sometimes are used to become part of a portfolio. In pharma, almost all new molecules find a market. I’m not sure of that for the telecom sector, where we grant around 2000 patents per year. But in pharma, companies have to invest 10 billion dollars to research for a new molecule and they depend on exclusive exploitation.

IPW: Where does work on global patent harmonisation stand?

We are advancing. The EPO is working creatively in the informal discussions of the IP5, where the EPO represents the EU and is thus a part of EU soft power legislation. The IP5 – the EPO and the patent offices of Japan, Korea, China and the US – together stand for 85 percent of the global patent protection system. We focus especially on making procedures more efficient and the EPO has a leading role. Most of the technical tools so far have been developed by the EPO. The EPO Search is now used by 40 to 45 percent of all patent offices worldwide. And then there is Patent Translate, which allows translation into 32 languages. Plus the Corporate Patent Classification, the CPC, originally developed by the EPO and the USPTO has progressed. Is fair to say we have a leading role.

IPW: Beside these reforms that aim to harmonise procedures what about substantive patent law harmonisation?

BATTISTELLI: It is also advancing, slowly.

IPW: As with other policy areas, global harmonisation in patent policy has been shifted into big bilateral or megaregional trade agreements. How does this influence policy development?

The TRIPS agreement [World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights] harmonises patent rules. I think the EU industry sees negotiations in the bilaterals as a way to get progress in multilateral fora. I see trade agreements are more covering copyright and design issues, less patent issues. We have our own specific channels for negotiating on patents, at the WTO, TRIPS and also in the IP5.

IPW: So you do not see an influence on patent legislation and patent enforcement from the bilaterals?

BATTISTELLI: It is marginal.

IPW: Finally, given the growth in patent numbers from China, could we see a change of trend, with China developing from being the pirate to us being sued as the pirate of their IP?

BATTISTELLI: We have not reached that stage yet. Certainly we see that more applications come from China. But IP-wise we still export more to China, as well as to the US and Korea, and even to Japan. Europe is still a hub for innovation and a place with major research centres. The EPO has to provide value through its patenting system, making it more attractive through quality and also cost efficiency.

End.

Image Credits: EPO