"While the IP world keeps its focus on the implications of the US budgetary crisis on the IP system (see eg Katposts here and here), another country, certainly smaller in size yet still of importance in world politics -- Austria -- has also seen important political changes. At the end of September Austria went to polls. The single biggest winner of the elections to Parliament was the FPO, the Freedom Party of Austria, which Wikipedia cites as a ‘right wing populist party’.This weblog has numerous readers from Austria, including private practitioners and students. It would be good to learn what they feel about their office: is it in need of improvement and an overhaul, or is okay as far as it goes? Do let us know!
While most Austrians expect the new Government to be the old one again, namely a ‘big coalition’ between the country’s socialist party, SPOE, and the conservatives, OEVP, the results of the elections give reason to ask some questions on its implications for the country’s IP system.
IP in Austria suffers from a lack of awareness. Obviously, IP was not a vote winner for any of the parties, except for the Pirate Party. So far, Austria does not have a National IP Strategy, its overarching innovation strategy is not linked to IP, there is no IP-focused economist in the country and the important role that IP plays for business is primarily touched upon by one subunit of a semi-government agency. The President of the Austrian Patent Office, Friedrich Roedler is said to be close to the FPO, the party once headed by Joerg Haider. Mr Roedler, who presented himself as a FPO candidate to the municipal elections of the city of Vienna in 2005, has been running the Austrian Patent Office since 2005. Without wishing to delve deeper into the variety of issues that emerged under his leadership (an explanation of the range of litigation and counter-litigation before the courts is beyond the scope of this note), I did take an interest in the performance of the Austrian Patent Office (APO). In that context the study of Oxfirst, a boutique consultancy specialized in IP, reveals interesting insights. The Oxfirst study, which is free to download on the website of the Austrian Council for Research and Technology Development, compared the performance of the Austrian Patent Office with that of the UK Intellectual Property Office, the Danish and German Patent Offices.
Here are some of the main findings:
• The financial position of the Austrian Patent Office is in a critical condition. This stands in contrast with the excellent financial performance of the UK, Danish and German Patent Offices.Against the results of recent elections, one wonders to what extent we will see any of the much-needed changes in Austria’s IP system. After all, it lies in the nature of politics to be political. But then again, public policy that ignores the important implications of IP on national prosperity is public policy that deprives the public of the means to generate wealth and create jobs in the knowledge economy".
• Contrary to its counterparts in Denmark, the U.K. and Germany, the APO scarcely commits itself to IP Outreach Programmes that would help business, academia or individual inventors to grasp the economic role of IP.
• Substantive patent examination in the APO is hampered by inadequate access to databases. This may have an impact on patent quality.
Unlike France for example, the APO has been reluctant to outsource substantive examination to the EPO.
Austria's Patent Office: time to improve?
Reviewed by Jeremy
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Sunday, October 13, 2013
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Reviewed by Jeremy
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Sunday, October 13, 2013
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Substantive patent examination in the APO is hampered by inadequate access to databases. This may have an impact on patent quality.
ReplyDeleteThat's a pretty scary finding (albeit unsurprising, for those in the know): not only is the APO an International Search Authority, but it also is one of the privileged ones for which the EPO does not require a supplementary European search report upon entry into the European regional phase.
Maybe somebody should ask the Administrative Council of the EPO on which basis the APO enjoys this privilege: at least the Spanish Patent and Trademark Office had to go through a lengthy vetting process before gaining this prize, but, as far as I know, neither the Austrian nor the Swedish Patent Offices ever had to go through a similar process...
First comments. More will follow.
ReplyDeleteRegarding the finances of the AT PO, there is an aspect that is neither addressed in your study nor in the Rechnungshof's (Austrian Audit Court or GAO) report.
From the casual observation of the legal status of EP patents in the EPO register, I perceive the current validation rate of EP patents (which has a direct effect on NPO income) in Austria as being very low. I can't however readily find statistics on the EPO web site, and backing this affirmation with solid numbers of my own would require some hours of programming.
One possible explanation could be in the fact that Austria is not a party to the London Agreement. A translation must therefore be specially commissioned just for validating there the majority of EP patents. This step is otherwise superfluous for all other German speaking countries, making the cost of proportion disproportionally high for a market roughly one tenth the size of the German one.
If this wasn't enough, the annual renewal fees are roughly at par with Germany's, which makes the price protection in AT again appear disproportionally high in relationship with its potential value. I have prepared a plot comparing annual renewal fees for some EPC states. The red line represents AT, and the yellow one DE. FR (blue) and GB (purple, converted at 1.178 EUR to the Pound) are closely matched, and the level of those fees are less than half than those of either DE or AT.
Can't comment on Austria as a searcher, but the Examining bit isn't bad, in my experience (applicants for patents in Singapore often encounter the APO, as it is one of the offices (along with the Hungarian and Danish)to which the IPOS subcontracts substantive examination. The really off-putting thing about Austria is those renewal fees (ouch!!!)
ReplyDeleteTo Anonymous at 8:46:
ReplyDelete"the Swedish Patent Offices ever had to go through a similar process"
The Swedish Office had been doing searches for the Nordic countries for a very long time - indeed, if memory serves me correctly, at one point Nordic PCT applicants could choose a search by the Swedes, rather than the former IIB at The Hague. Austria was never in such a position.
Given the remarks made above about the comparative sizes of the markets, the database access problems, and the common language, is there any good reason why the APO could not develop a shared services agreement (or even an outsourcing agreement) for some or all of its functions, starting perhaps with the search, with the (German) DPMA?
ReplyDeleteWhat a strange article. What is the point in referring to Mr. Roedler's political ideas ? And to the outcome of the recent elections ? I suspect the author of beating around the bush. If the article is a political statement on the value of FPÖ policies (as applied to IP, or more generally speaking), it would have been intellectually more honest to have said so.
ReplyDeleteYou wrote:
ReplyDeleteThe financial position of the Austrian Patent Office is in a critical condition.
I find it difficult to address this question separately from the persistent controversies surrounding Mr. Rödler's management style, which you preferred not to go into. I will.
Many years ago, as Austria's representative to the Administrative Council made very disparaging remarks on the EPO and its staff, I wondered who this person was, and came across a short report titled "Patente Seilschaften" published 13.03.2003 in the Volksstimme ("The People's Voice", a German language cousin of the Morning Star), regarding the transfer of the Patentamt from its location in central Vienna to the suburbs, which was organised by Rödler when he still belonged to the Ministry of Infrastructure. (The article is no longer available online, but I have kept a copy of it on my hard disk).
If one believes the journalist, if anyone stood to make a financial gain from this operation, it wasn't the government. The rent for the new, but smaller, premises was said to be higher than for the old ones. The owner of the office block had noticeable shades of a fashionable political hue (Haider "blue", which some deficient eyes see as "brown"), and other amigos had designs on the prime real estate left behind by the civil servants. Passages from internal documents prepared by the ÖPA staff representation were given as sources.
More recently, Green MP Gabriela Moser filed a complaint in January 2013 against Friedrich Rödler, basing herself on the conclusions of the above mentioned GAO report, which suggested that he had speculated with ÖPA operating funds on risky currency investments (and lost), and also awarded himself a second salary for heading the serv.ip quango. Rödler promptly countersued, claiming defamation.
Mrs. Moser has been on Mr. Rödler's heels for a while. An parliamentary enquiry addressed to the government in 2009 questioned in its preamble Mr. Rödler's actions concerning a number of subjects, including hiring practices, his attitude towards the EPO, the business of "serv.ip", and more. The official answers to the many questions are disappointing, as could be expected.
(To be continued)
Anonymous: is there any good reason why the APO could not develop a shared services agreement (or even an outsourcing agreement) for some or all of its functions, starting perhaps with the search, with the (German) DPMA?
ReplyDeleteAhem... You want a "reason"? How about "history"?
In the period from 1938 to 1945 the Austrian patent office became the "German Imperial Office/Vienna Branch", as can be seen on the cover page of the documents of that period, e.g., AT160901. (Applicant: IG Farben; subject: synfuel production. A rather symbolic patent).
It isn't exactly clear to me what the arrangement was after the "Anschluss".
There is something special about the date 14.05.1938 (a Saturday!), on which more than 600 applications of German origin were filed in Vienna, mostly without claiming priority. This seems to have been a kind of "last call" date, as new AT applications dropped to nothing after that.
My unproven hypothesis derived from observations in Espacenet is as follows: The AT patent office activities were wound up, with the work limited to examining the accumulated backlog, which seems to have been vanquished by 1944. Patents filed and issued in Berlin after the cutover date also had a legal effect in the so-called "Ostmark" district. There was a transitional possibility for Germans to reapply for patents in AT even if the priority year had lapsed, explaining the build-up in applications until 14.05.1938.
(There is a certain resemblance in this scenario with what happened in 1990 with East-German patents).
Against that background, and the stench of the current political atmosphere in Austria, I would doubt that any form of outsourcing could take place between EP member states without considerable debate. Furthermore, any such activities would go against the spirit of the Protocol on the Centralisation of the European Patent System. Granted, section III of this legally binding agreement is already flouted... That's what the EPO was made for!
Suggestions of mutualising work between DE and AT are much older. An essay entitled "Das Weltpatent" (The World Patent), by one A. du Bois-Reymond was published in 1909 in honour ("Festschrift") of Josef Kohler, a German contemporary of Oliver Wendell Holmes. Worldwide mutual recognition of patents was suggested. One of the reasons put forward was that examination was something of a random process, and that differences between national laws were more formal than real. Starting on page 479 (PDF: 16/20) Austria and Germany are given as examples as to how this could be made to work.
I love the conclusion (too lazy to translate):
Allerdings, wenn man liest, wie heute noch amerikanische Richter sich mit vielem Vorbehalt und unter umständlicher Begründung darüber Rechenschaft zu geben suchen, ob das Ding, das die Deutschen ein Patent nennen, dasselbe oder etwas anderes ist, wie das Ding, das in Amerika so heißt, dann wird man die Prognose stellen, daß noch viel Wasser den Niagara hinunter muß, ehe unsere Vettern jenseits der Atlantik die Vollwertigkeit dieser ausländischen Ware anerkennen. Aber wenn wir uns rühmen dürfen, daß wir mehr Verständnis für ausländisches Recht besitzen, als die Angelsachsen, so müssen wir ihnen darin die Palme lassen, daß sie schneller als wir gewichtige Entschlüsse fassen, wenn sie dabei einen wirtschaftlichen Vorteil sehen.
(to be continued)
When it comes to new brooms sweeping clean, an election result can dash hopes of reform, or serve as a catalyst to disclosure/discovery.
ReplyDeleteFor example, remember Jonathan Aitken's fight with The Guardian, his "sword of truth" and the issue of flight tickets to Paris. General election, Tories out, Labour in, and suddenly BA feels constrained to cough up the tickets to the court. Now, in Germany, we have the case of the Bishop of Limburg and his EUR 31 million new home, details of which just happen to emerge soon after ultra-frugal Pope Francis supersedes ultra-cautious Pope Benedict.
http://www.theguardian.com/world/2013/oct/14/german-bishop-limburg-pope-francis
Who watches the watchers of Austria, I wonder.
Please see the attached statement of Dr Hannes Androsch on the state of the Austrian Patent Office (in German)after he read the Oxfirst Study. Dr Androsch is well known public figure in Autria and currently providing leadership in R&D
ReplyDeletehttp://www.androsch.com/media/news/13.03.invent.pdf
Unlike France for example, the APO has been reluctant to outsource substantive examination to the EPO.
ReplyDeleteI'm afraid I'll have to correct some misconceptions.
The only outsourcing of substantive examination by any EPC member state is through EP patents.
No decision on whether a national patent should be granted or not is taken by the EPO.
HOWEVER, France, as well as many other countries with registration systems, has entrusted since 1947 the IIB with a prior art search. This arrangement was continued when the IIB was absorbed into the EPO in 1977.
The prior art search is intended to allow the patent proprietor and the public to make their own estimates regarding the scope and validity of the patent. This question is ultimately settled before a tribunal. French patents only have claims since 1968!
The procedure before the INPI has essentially the character of a registration. Some formal checks upon filing are made, on which a negative decision can be taken, but no decision to refuse can be made by the INPI on the basis of the EPO search report. The applicant is allowed an opportunity to comment the report and amend the description and claims, but the report is really just there for information.
For the last 8-10 years the search report is accompanied by a written opinion on patentability. It's really just there to provide the applicant with a foretaste of what awaits him if he decides to make a second EP or PCT filing based on the FR priority. The EPO examiner prepares this document but never hears about again as far as the French application is concerned. Observations must be made in a generic fashion, without citing any legal disposition, whether French, EP or PCT, or any reference to case law or guidelines.
The EPO examiner reuses and completes this document when the a second EP or PCT second filing is made.
Real substantive examination only occurs when the patent is litigated. It sometimes happens that the FR proceedings are stayed when the judge notices that there is a parallel EP application still pending. If the EP patent is granted it replaces the FR patent. Otherwise, if there is a refusal or revokation before the EPO the problem in France just resolved itself.
Many other countries (IT, BE, NL) now get patentability opinions prepared for their national searches, with similar arrangements as with France.
(to be continued)
You wrote: This stands in contrast with the excellent financial performance of the UK, Danish and German Patent Offices.
ReplyDeleteI'm not sure where you got this notion of "excellent financial performance".
AFAIK, all NPOs live off validated EP renewal fees. Some less, some more.
For the UK I will quote from the Gowers Review :
UK patents do not cover their costs
6.19 The Patent Office trade mark and design operations generally break even and provide a return on capital employed. However, at present, patent operations do not. The Patent Office charges small initial fees at the patent grant stage. It recoups costs principally via renewal fees. UK renewal fees are payable each year from the first year after being granted. Currently the break-even point on domestically granted patents at the UK Patent Office is fourteen years. A UK patent that expires before this period effectively has its registration and administration costs subsidised by the Patent Office. The current average life for a UK patent is between ten and eleven years. Consequently, domestic patents operations do not cover their costs.
6.20 Domestic patents are currently subsidised by European patents designating in the UK. The Patent Office currently retains half of the renewal fees from European patents designating the UK. However, the EPO Administrative Council could change this division at any time and as such, this stream of revenue is unpredictable.
This was written in 2006. I don't see how the situation could have fundamentally improved since. Patents are (fortunately) still examined by human beings with qualifications which need time (yes, really) to understand the application and who would very much like to be paid.
The Rechnungshof report hints at the impending crisis should the community patent become a success. A goal of that patent is to reduce the cost of a validated patent - drastically. I cannot see how this could be done without choking NPOs or affecting EPO income. Money WILL be missing somewhere.
I have not seen yet any discussion about this issue. (If there were, I would appreciate being given pointers).
There is also this in the RH Report on p. 533:
Die Einnahmen des hoheitlichen Bereichs des Patentamts aus den Europäischen Patentgebühren sollten nicht mehr in dessen Haushalt einfließen. Für deren Verwaltung könnte dem hoheitlichen Bereich des Patentamts jährlich eine Abgeltung in Höhe der anfallenden Verwaltungskosten zugerechnet werden. (TZ 13)
The RH suggests that EP renewal fees shouldn't be automatically be versed into the ÖPA's budget, but that the ÖPA should be compensated for the actual costs incurred in administrating European Patents. My translation: cross-subsidisation between EP and national patents should be abolished. I predict revolution should this comes to pass and propagates to other EPC states.
The first comment mentioned: "not only is the APO an International Search Authority, but it also is one of the privileged ones for which the EPO does not require a supplementary European search report upon entry into the European regional phase."
ReplyDeleteCorrect me if I am wrong but the requirement of a supplementary search report is nowadays (it used to be different) only dispensed with if the EPO was the ISA.
The fee for the supplementary search report is reduced in cases where the Austrian or Swedish Patent Offices were ISA.
I note with no small irony that some will use the words "sword of truth" while not wanting any such swords to be wielded in blog discussions.
ReplyDelete"Language is meant to be rough - how else are we to wrestle with what we really mean?"
Hi Roufousse
ReplyDeleteAs you rightly say the Gowers report is from 2006, our study is from 2012. It is an official Government Document and a fact check was done of the paper by the Austrian Patent Office itself, by the British and by the Danish Patent Office. Only Germany did not comment. Since many senior officials in these respective institutions checked if prior to publication and since it was also circulated among all major IP policy players in Austria, I trust the information is accurate. Certainly, the very short three bullet points I put on the blog seem somewhat reduced, but the entire report is comprehensive and the content is correct.
Best
Roya
With respect to the financial position of the UK Office - the finances are somewhat strange, as the Office gets paid for things it does (eg searches and exams), gets paid for things it doesn't do (eg EP renewal fees) and doesn't get paid for things it does do (eg policy and outreach work). Whether this is really the best system is of course a matter of debate. But looking at the money it does have under the present system, it has had a good financial performance for most recent years, barring a hiccup when the financial crisis struck.
ReplyDeleteWell, when I interviewed the Colleagues in the UKIPO, they also told me a couple of amusing stories regarding finance. But I don't want to publicly comment on that. Fact of the matter, they are in a very strong position. In my view it is a very good office. Its involved in IP strategy, does IP related research, helps raise awareness among SMEs and others on IP, is original in its approach (i.e. uses Wallace and Gromit to bring IP closer to students) and is an active player in IP policy.
ReplyDeleteA role model really.
Roya
I would like to thank the IP community for their valuable comments and input. This has been a great learning experience for me. I had never thought of the IP implications of Austria's Anschluss in 1938. As I said before, the study is an official government document. I just wonder to what extent things will change under the new/old Government. It will be worthwhile watching.
ReplyDeleteDear Roya,
ReplyDeleteFact of the matter, they are in a very strong position.
I beg to differ.
The 2006 Gowers Review's observations are still entirely valid. I never doubted it, but I checked to make sure.
Section 6.5, table 20 on page 48 of your report appears to be adapted from the one on page 35 (40/68 in PDF) of the latest (2011/12) UKIPO annual report, with the title "Analysis of operating income by classification and activity". [Annotations of mine are in green]
(BTW, one rather odd thing is that the amounts seem to have been converted at a Sterling exchange rate of about 2.07 Euros, which is way out of the 1.15-1.30 band within which it evolved during the last two years. The numbers are also presented with three more significant digits than the source data.)
If you ONLY consider that page, your opinion would be justified. Who wouldn't be proud of a 31% profit margin?
But you seem to have overlooked the very next page of the UKIPO annual report, which provides a breakdown of the sources of income.
The picture suddenly looks a lot less rosy.
Procedural and renewal fees collected for GB national patents only cover 38% of the expenditures they incur. This kind of result is more typical of an opera or a state theater...
Luckily, the situation is saved in the third row, with the money accruing from renewal fees for the patents granted by the rich but despised uncle in Munich.
Is this "income"? The cheques are cashed by the UKIPO, but what services were rendered in exchange? If this money wasn't there, the British Treasury would have to make up the shortfall. Instead, the UKIPO pays a "dividend" to the government.
If renewal fees are considered as deferred fees for services rendered, then the income for EP patents shouldn't be used to cross-subsidise GB patents.
If renewal fees are a form of tax, then the results from GB patent operations should be reported in a transparent manner, and show its losses. Tax revenues from EP patents are sent on to the treasury, minus the part locally kept as a subsidy to make the national patent system work.
(to be continued)
Moreover, around 2007 the AC (including GB) go the EPO to replace "GAAP" financial reporting with new accounting rules called "IFRS".
ReplyDeleteIn a nutshell, according to the IFRS religion (IAS 38), the Net Present Value of future renewal fees must be ZERO, as their payment by applicants/proprietors is facultative and therefore of a too "volatile" nature. Since one can't be sure that the fee will be paid next year, then you can't assign it a value. Or so the thinking goes.
Since the costs of future examination are marked down in the book as debts at the moment the requests are filed, all of a sudden, your organisation looks like it's drowning in red ink.
To wit, the above-linked ministerial answer to Mrs. Moser's enquiry contained the following statement:
Die Europäische Patentorganisation weist ein negatives Eigenkapital von 1,8 Mrd. € mit entsprechend ungünstigen finanziellen Auswirkungen auf die Budgets der insgesamt 36 Mitgliedstaaten, darunter auch Österreich (50 Mill. €), auf.
In English: "The EPOrg has a negative working capital of 1800 millions EUR". Subtext: Mr. Rödler (and friends) is justified in villainising the EPO and its staff in particular.
But this gaping hole is virtual, the result from the blind application of IFRS. The EPO doesn't owe anyone 1,8 GEUR, nor will member states about to be anytime soon forced to rescue the EPO financially.
GAAP had its problems, but IFRS doesn't seem to provide a useful or truthful picture of the EPO's financial situation either.
I think I should make an offer to the EPO, and buy their renewal fees receivables at the NPV they set it at... Why does this proposition sounds ridiculous?
So why was IFRS imposed anyway?
My feeling is that it was imposed precisely because it painted the EPO in an unfavourable light, providing a convenient narrative for undermining working conditions for the staff. There is currently at the EPO an ongoing all-out attack on pensions, salaries, performance reporting, careers, health insurance, and just about anything you can think of.
Today, on this 40th anniversary of the EPC, the EPO staff was on strike. That's a subject in its own right.
Now, what's good for the goose is good for the gander, as the saying goes. UKIPO has now also adopted IFRS beginning 1.1.2013 (why?). The footnotes at the end of the report are all reassuring, but is this optimism justified? UKIPO is even more dependent than the EPO on renewal fees for its operation.
(to be continued later)
I have read with great interest the paper and the comments, particularly those of 'Roufousse'. I must say, I find 'Roufousse' comments rather disappointing. Here there is someone trying to bring new wind to Austria's IP policy and instead of seeking to help to innovate this very tool that is supposed to promote innovation, namely IP, 'Roufousse' does nothing, than to prevent this direly needed process from happening. This is a pity and very disappointing. Certainly, his comments on the 3rd Reich and the interplay of Austria's IP context at the time are interesting, but his more recent comments on the role of a Patent Office are really outdated.
ReplyDelete1) He constantly keeps referring to the Gowers Review. This is outdated. In the U.K., the name of the game is the Heargraves Review and that does not look at the UKIPO in the way the Gowers Review does. Times move fast and to systematically refer to an old document is kind of irrelevant.
2) 'Roufousse' also states that substantive patent search only happens in litigation and not at the patent office. Well, that is what is being sought to be changed right now. It is scandalous that billions are spent on litigation over patents that did not enjoy proper prior art search in the first place. The America Invents Act, the most recent IP strategy of the U.S., seeks to address this by improving prior art search and patent quality.
3)In order to discredit the work, 'Roufousse' also makes reference to the functioning of the European Patent Office. I have read the paper and the EPO is not subject of analysis of the paper. I therefore don't understand why he talks about it. It has nothing to do with the scope of the paper.
Against this background, I hope that 'Roufousse' will be open minded enough to question the assumptions he is basing his critique on.