OHIM and the Midas Touch: how can a EU agency stop making too much money?

New OHIM logo?

"The more the wealth, the more the worry". It is strange but true but affluence can bring as many headaches as poverty, both for individuals and, within the context of intellectual property, for institutions that administer IP rights.  In this context Katfriend, former MARQUES chair and current trade mark guru Tove Graulund has some pertinent comments to make about the problems facing the Office for Harmonisation in the Internal Market (OHIM), a body which has never been able to shake off the Midas Touch.  This is what she has to say:

"As many readers of this weblog will know, OHIM has too much money. This is as much a blessing as a curse. OHIM is a self-financed EU agency and, according to the basic Regulation, its fees must be fixed at a level that ensures that the agency's budget is balanced. Consequently, even if this is not explicitly stated, any surplus or deficit should be avoided.

Community trade mark *CTM) fees have been reduced twice (in 2005 and 2009), but to no avail. The money just keeps coming in and the reductions have not been enough to deal with the accumulated surplus. In order achieve a balanced budget, the focus has essentially been to accelerate consumption of reserves by increasing spending.

The problem is, and has been, that the setting of the fees is a political hot potato. The CTM fees will inevitably have an influence on the attractiveness of filing national trade mark applications in the EU. At present the CTM and registered Community design (RCD) fees are determined via the "comitology" procedure that involves the Council and the European Commission, based on input and proposals from OHIM's Administrative Board and Budget Committee (ABBC). Typically, the Member State representatives at the ABBC come from the national offices [at this point, Merpel's ears prick up. Does this mean that they are the same folk who sit on the Administrative Council of the European Patent Office and who are, she imagines, far too preoccupied with patent matters to spare too much thought for an organisation such as OHIM, which gives every impression of running fairly smoothly as well as profitably?].

Never mind the closed doors,
what about the closed ears?

At the moment the CTM Regulation and the Directive on approximation of national trade mark laws are under reform, and the negotiations have reached their final stages. The reform was initiated as a result of inabilities to reduce the accumulated surplus, and the same issue is one of the stumbling blocks to finalising the negotiations. The question of how the fees are set and who can propose and decide on the fees is crucial to the future of IP offices in Europe, and it is very likely that there is a bit of a power struggle going on behind closed doors between the Commission, the Parliament and the Council represented by national offices [the IPKat does wish that these struggles were not taking place behind closed doors. All of these people, without exception and however much they earn, are public servants or elected representatives who are answerable to him and his fellow EU citizens. These closed-door discussions are hardly about vital issues of national security, when all is said and done].

One proposal on how to deal with the OHIM surplus is to put in place a distribution of funds to national offices and other national bodies that deal with trade marks and designs, i.e. the courts and customs authorities. The question is whether this is legal. As one example, access to justice is free of charge at EU level. If fees are kept at a level where a surplus is generated and this surplus is partially aimed at financing EU courts, this could be viewed as the introduction of an appeal fee, which would constitute a discriminatory measure only affecting holders of EU trade marks and design rights.

On the other side of the spectrum, the user organisations have not been able to agree on or present a joint proposal of how to deal with the surplus. It is probably partly due to the fact that the CTM filing fees are generally thought of as reasonable, partly that some brand owners wish to strengthen the fight against counterfeiting and partly due to the fact that national offices are not perceived as being particularly receptive to ideas that might go against their interests.

The Graul-tiger was
a bravo cat ..."

One interesting document has just surfaced – almost a half year since it was presented to the European Parliament, this being a study conducted by Deloitte Consulting for the Parliament. The report presents the dilemmas in a way that is more open and direct than that which we normally see, which makes the reading all the more interesting. The report can be found here ["The income of fully self-financed Agencies and the EU budget", 82 pages, which focuses on OHIM and the Community Plant Varieties Office: remember, the European Patent Office is not an EU Agency.  The IPKat's not sure why EURid, the EU domain name registry, isn't looked at here, but he's sure there's a good reason]. Anyone in the mood to update themselves on the background can find all the relevant documents on the MARQUES website here.

After the expiry of the public consultation period, OHIM is working on its final proposal for the strategic plan 2015-2020, and it seems clear that the activities that are unrelated to its so-called core business (as EU trade marks and designs registrar) will continue to increase. One might suspect that some Commission activities are placed with OHIM because OHIM has money to cover the costs where the Commission has not. At the same time OHIM, will be obliged to cut staff expenses by 5% while it is expected that filings will grow by 5%. Perhaps this will all help to eat the accumulated surplus away bit by bit. Time will tell.

It is hoped that the negotiations on EU trade mark reform will be finalised before summer. Again, time will tell".

King Midas here; the Midas Touch here 
King Midas in Reverse here and (recommended for anyone who likes decent lyrics, 1960s harmonies and the closest the Hollies ever got to sounding like the Beatles) here