17 Members of the European Parliament raise questions about human rights situation at the EPO

As I reported last week, the human rights conflict at the European Patent Office continues and certain national governments acknowledge that there is an issue (or, more precisely, a host of issues). Political pressure on the EPO leadership, including the Administrative Council (which has so far done a better job at being part of the problem than at being part of the solution), is coming from more and more sides.

For example, 82 members of the Parliamentary Assembly of the Council of Europe (PACE) have signed a written declaration expressing concern over a "rollback of fundamental rights at the European Patent Office." Its signatories include leaders of parliamentary groups and members from all five major political groups in the PACE.

The Council of Europe is not an EU institution. It's a separate diplomatic organization whose members also include major non-EU member states such as Russia. Its focus is on human rights issues. That fact makes a declaration by many of its members relevant. Also, all those signatories are also members of their national parliaments.

But unlike the PACE, the European Parliament--which is an EU institution--has real decision-making power as a European-level co-legislator. While the EPO is formally not an EU institution, the EU has decided to put it in charge of granting the future European "Unitary Patent" and it has furthermore allowed essentially the same group of national government officials who run the EPO to control the future Unified Patent Court. The EU can't turn a blind eye to what's going on at the EPO. If the EU truly were as principled a watchdog of human rights and the rule of law as it claims when dealing with countries like Russia and China, it would rule out working with the EPO and would instead set up an EU patent office. However, despite the great work it does in certain areas, there are contexts in which the EU uses double standards.

17 Members of the European Parliament (MEPs)--2 from the libertarian Alliance of Liberals and Democrats for Europe and 15 from the Confederal Group of the European United Left - Nordic Green Left (a far-left but still democratic group)--have recently submitted official questions to the European Commission concerning the human rights situation at the EPO. The Commission has an obligation to respond, though its answers are typically evasive on any delicate issue. Here, the Commission could respond by denying responsibility for the EPO situation, since it only has observer status and no voting rights on the Administrative Council, but the truth is that the EPO will soon be by far and away the biggest service provider to the EU.

I just wanted to publish those two parliamentary questions here (also to make it easier to find them on Google) without further comment.

Question for written answer E-009256/2015
to the Commission
Rule 130

Fernando Maura Barandiarán (ALDE) and Javier Nart (ALDE)

Subject: Situation concerning the fundamental rights of EPO employees

The administrative council of the European Patent Office (EPO) introduced a new quality and efficiency strategy in 2010, aimed at improving quality and lowering costs. Most of the measures put in place under this new strategy do not appear to respect the fundamental rights of employees under the European Union Charter. The case was taken to the Dutch courts, which ruled that the EPO was violating the right of collective bargaining, the right to strike and the right to freedom of expression and information. Staff at the EPO have also spoken out on a number of occasions against the repressive, authoritarian system of management that has been introduced there, which is being used as a way to drastically restrict their rights.

Is the Commission aware of the situation concerning the rights of those employed by this international organisation, which has its headquarters within EU territory?

Has it undertaken, or is it considering undertaking, any kind of investigation into whether the EPO has violated Articles 11, 12 and 28 of the EU Charter of Fundamental Rights?

Question for written answer E-008382/2015
to the Commission
Rule 130

Kostadinka Kuneva (GUE/NGL), Lynn Boylan (GUE/NGL), Martina Anderson (GUE/NGL), Pablo Iglesias (GUE/NGL), Lola Sánchez Caldentey (GUE/NGL), Stelios Kouloglou (GUE/NGL), Paloma López Bermejo (GUE/NGL), Barbara Spinelli (GUE/NGL), Fabio De Masi (GUE/NGL), Tania González Peñas (GUE/NGL), Helmut Scholz (GUE/NGL), Neoklis Sylikiotis (GUE/NGL), Kostas Chrysogonos (GUE/NGL), Matt Carthy (GUE/NGL) and Miloslav Ransdorf (GUE/NGL)

Subject: Violation of labour and trade union rights in the European Patent Organisation (EPO)

The Dutch appeal court recently ruled (case number 200.141.812 / 01 / 17-2-2015) that the European Patent Organisation (EPO) violated workers' labour rights deriving from the EU Treaties and the EU Charter of Fundamental Rights. Consequently the Dutch court, exceptionally, has not accepted the immunity EPO enjoys as an international organisation, since this immunity cannot allow for human rights violations. Nevertheless EPO declared it would ignore the ruling pleading execution immunity.

• Does the Commission agree with this ruling, according to which, as regards guaranteeing fundamental rights, the EU Treaties and the EU Charter of Fundamental Rights prevail over bilateral and multilateral agreements, including those providing immunity to organisations such as the EPO?

• If so, what does it intend to do to prevent the abuse of immunity rights and defend the EU citizens' and employees' rights and the community acquis in organisations such as EPO which while exercising judicial functions is at the same time breaching the European legal order rules?

• How does the Commission scrutinise that the positions EU Member States' representatives take in the administration of EPO are compatible with the rights enshrined in the EU Treaties and the EU Charter of Fundamental Rights – taking into account that the EU Member States constitute the majority in the organisation?

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Promise of union recognition insufficient to solve conflict at European Patent Office: new protests

By promising (after approximately four decades) formal recognition of EPO staff unions, the Administrative Council of the European Patent Organisation extended an olive branch, presumably due to a combination of political (with some key member states increasingly hesitant to support EPO president Battistelli) and legal (Dutch court decision) dynamics. Last week the kick-off of the "renewed social dialog" took place. According to SUEPO (Staff Union of the European Patent Office, which published a report on the meeting (PDF), "[t]he atmosphere was such that some frank exchanges about the situation in the Office could take place." But staff representatives still appear to be skeptical of whether any meaningful change will result from all of this.

It's clear that formal union recognition won't solve any problem. It can be seen as a gesture of goodwill, and indirectly it could have positive effects if the talks helped build a consensus, but for now there are no signs of the situation actually improving. In the most critical respects it seems to be "business as usual", with certain reforms being implemented at any rate.

It could be that the Administrative Council hoped staff representatives (particularly, but not only, SUEPO) would soften their stance on the actual issues because of the potential benefits to their organizations from formal recognition. Should that have been the plan, it doesn't appear to have worked out: SUEPO organized a march today from one of the EPO's Munich buildings to the Dutch consulate (PDF flyer).

Again, I don't know whether the Administrative Council overestimated the impact of the promise of formal recognition and the invitation to talks, but in any event the representatives of the EPOrg's member states should consider that they are not dealing with "your average trade union" such as in a traditional manufacturing industry, where there may sometimes be a disconnect between union leaders (and their personal interests) and most of the people they speak for. EPO examiners are very educated people who can tell the difference between window dressing and real change.

The day before yesterday SUEPO published another flyer, which explains some key underlying issues (this post continues below the document):

15-04-28 SUEPO Flyer Brave New EPO by Florian Mueller

There are three key things that this flyer explains:

• The stated reasons for certain reform measures are based on the nonsensical notion that the EPO "competes" with the USPTO, JPO, SIPO and other non-European patent offices. If it competes with anyone, it's with national patent offices, but national patent systems control the EPO through the Administrative Council and milk it (through high renewal fees that have an almost 100% gross margin for national patent systems).

• Increased productivity pressures on staff require and inevitable result in a lowering of patentability standards, particularly with a view to the inventive step. Ultimately, this is a very problematic development that can have negative economic effects (except for the EPO and, especially, the national patent systems controlling it).

• While the EPO is highly profitable, with a budget surplus of €364 million in 2014 and a likely higher one in 2015, it still doesn't lower its fees. Instead, the EPO leadership argues that more (not better) patents must be granted. The question of how many patents Europe needs (or, as SUEPO asks now, how many it can tolerate) came up before. SUEPO now also pointso ut that it would be a fallacy to assume that more EPO patents mean more European innovation or growth:

  "Two-thirds of the applications filed at the EPO are not of European origin and thus are more likely to hinder European industry than benefit it. A flood of badly examined patents could affect in particular the small and medium-sized enterprises that cannot afford expensive litigation."

I agree with SUEPO on all of that. There's only one thing that SUEPO has said in connection with today's protest (in a PDF flyer published on SUEPO's website) that I disagree with:

"Last week Mr Battistelli informed us that the Dutch government will join the EPO in its attempt to overturn the judgment in the next instance ('cassation'). If so then the Dutch government makes itself complicit in violating fundamental rights."

(emphasis in original)

In my opinion, the Dutch government is in its right to express its position on the legal question of EPO immunity, and if it agrees with the EPO on this one, then that's legit, even if staff representatives don't like it. I view the Dutch government's role as, practically, an amicus curiae as not objectionable at all, but it should accept the final outcome even if the previous judgment is affirmed, meaning that a final judgment in SUEPO's favor should also be enforced.

Also, the Dutch government should play a more constructive role on the Administrative Council to ensure that EPO staff have certain human rights. In one of the related contexts the IPKat blog pointed out an interesting fact:

"People who work for the World Intellectual Property Organization (WIPO), the Office for Harmonisation in the Internal Market (OHIM) and the Community Plant Variety Office (CPVO), the Benelux Office for Intellectual Property (BOIP) and the good folk whose job it is in the European Commission to make life difficult for us by thinking up new IP policies, must all have the occasional health issue too, and presumably WIPO, OHIM, the CPVO, BOIP and the Commission must have schemes that govern the health and welfare of their own employees -- none of whom, so far as Merpel is aware, have publicly complained about the health provisions that apply to them."

The EPO situation indeed appears to be unique.

I'd also like to point to this IPKat post on a subsequently-withdrawn European Commission statement (a pretty bad propaganda piece) on the proposed fees for the single European patent. I'll talk about this issue on some other occasion. I know there's a lot of unhappiness about this one in industry and in the legal community.

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European Patent Office pays for health insurance of members of its oversight body, staff union says

As a follow-up to yesterday's post on a continuing strike by European Patent Office examiners, I went to watch today's Munich demonstration. I figured I'd see a few hundred (of the EPO's 3,800 Munich-based) employees demonstrate, but the organizers announced a crowd of 1,100 at the beginning of their protest march from an EPO building to the Palace of Justice, and of 1,300 toward the end after other protesters, including members of technical boards of appeal (i.e., in-house judges), had joined. According to the organizers from SUEPO, the EPO staff union, this made today's Munich demonstration "the largest event in the history of the EPO."

While I know that organizers like to overstate such figures, both numbers appeared very credible to me. The protest march was impressively long (even more so when considering temperatures just slightly above freezing and the light rain)--so long that it was impossible to have the whole crowd on a single picture, even at the destination where a few short speeches were given.

This picture shows a limited part of the initial gathering:

From there, the crowd marched to today's destination, the Palace of Justice. First the protesters had to cross Hackerbruecke, a bridge that is similarly crowded only during Oktoberfest (it's the closest local train station to Theresienwiese, the Oktoberfest venue):

I took the next picture a little later:

You can find a couple of other photos, and measured commentary expressing a certain degree of concern, on the IPKat blog. A Bavarian broadcasting company (probably radio, maybe TV) was also present, and even before today's protest, Frankfurter Allgemeine Zeitung reported (the article, along with English and French translations, is available here) about "strange things going on" in Munich.

The FAZ article notes that the European Patent Organization (EPOrg) is run as a state within the state, an issue I mentioned yesterday. It's an autocracy that is above the law. The SUEPO activist leading the march said today that whenever EPO employees try to raise human rights issues in judicial proceedings, the EPO's lawyers routinely argue the EPOrg is an international organization that is not a signatory of the European Convention on Human Rights, thus its employees (though they are all nationals and residents of member states of the Council of Europe, another non-EU body) don't enjoy the protection that goes with the European human rights charta. SUEPO proposes accession of the EPOrg to the Council of Europe as a solution to several (though not all) fundamental problems affecting EPO staff.

Wherever there is a lack or near-absence of checks and balances, two things inevitably happen:

1. Whatever little may exist in the form of checks and balances will be further marginalized or eliminated. Case in point, the EPOrg abolished an independent audit committee in 2011. EPO president Battistelli said in a 2012 interview (in French) that in his entire political career he'd never enjoyed so much freedom, not having to worry about parliaments or governments. "It's us who sets the rules, discusses them, and negotiates them." (It's unclear whether "us" refers to him and the Administrative Council, or just to himself in the form of a pluralis maiestatis).

2. Such a deficient structure furthermore makes it all too tempting to create conflicts of interest for those who are meant to oversee the agency's dealings: the national public servants representing the governments of the EPO contracting states on the EPOrg's Administrative Council. One of the speakers at today's demonstration in front of the Palace of Justice said that the EPO recently started to pay for the health insurance of the national delegates to the Administrative Council.

   That should actually be a big-time political scandal in Europe. I heard that Administrative Council meetings are a boon for some Munich-based doctors, particularly dentists, as national delegates (presumably from, relatively speaking, poorer European countries) go to see them while they are here. I also heard from a multiplicity of reliable sources that the president of the EPO can easily silence critics on the Administrative Council by either offering lucrative cooperation projects to their national patent offices if they support him or by threatening to withdraw funding for such projects if they don't.

This labor dispute is, as I already explained yesterday, not about money but about fundamental rights. One protester held a sign that said "No intellectual property rights without civil rights" and that makes sense. Others warned against a lawless space on European (or, specifically, Bavarian) soil.

The only issue that was mentioned by the speakers in connection with compensation was that SUEPO opposes the idea of a performance bonus for examiners that could create a conflict of interest as examiners should be honest brokers between an inventor and the general public--an attitude that I like very much. As an alternative, SUEPO appears to prefer accelerated career paths based on the quality of someone's work.

Toward the end, the deeply-rooted lack of faith of many EPO employees in the current president was expressed loud and clear as significant parts of the crowd chanted, in French, "Battistelli démission." There are some indications that EPO governance has never been more problematic than under the current president, but as long as the underlying structural issues are not addressed, there's no guarantee that a different president wouldn't be worse. Overly close ties between members of the Administrative Council and the EPO president (whoever that president may be at any given point in time) are a particularly important part of the problem.

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European Patent Office: examiners continue strike and take to the streets over human rights issues

While the average labor conflict is just about money, and occasionally about narrowly-defined working conditions, something remarkable is going on at the European Patent Office (EPO). An ongoing strike and related demonstrations are meant to "underline staff's claims to respect of the Rule of Law, Freedom of Association and to good faith negotiation of ongoing reforms."

There are reasonably credible complaints about the current EPO president ruling with an iron fist and denying affected staff representatives, after being fired for defending the rights of others, access to justice for the next ten years. I heard a horrible story of a French EPO examiner who (based on what I heard) committed no wrongdoing other than being active in the Staff Union of the European Patent Office (SUEPO) and was "suspended" for that reason. Payments to him (a father of three if my sources are right) were frozen with immediate effect--at least significant parts of his salary. This would be unthinkable in Europe, where workers' rights are reasonably strong, including in Germany, where this incident occurred, if the EPO didn't enjoy "immunity" by virtue of being an international organization. It's an autocracy that operates its own internal jurisprudence, and it appears that EPO employees currently don't have (at least not in practical terms) access to a reasonably swift adjudication of labor disputes. The only recourse they have against the EPO's president is the International Labor Organization's Administrative Tribunal, which is so clogged it takes about ten years to reach a decision (counting from the filing of a complaint).

Facing the risk of being left without some of their pay overnight and not having a realistic chance of reclaiming any of it in a decade, and having seen how someone else was escorted out of the building by security personnel before an announcement that he left "by mutual agreement," EPO staff is intimidated and allegedly subject to repression. Under these circumstances, the momentum behind the ongoing strike and the related protests is even more significant than it would normally be. Even the EPO itself acknowledges that, about two weeks ago, "2,538 staff representing 36.7% of the workforce" participated in the strike.

Recently 700 EPO employees took to the streets of Munich. That number was given by SUEPO, and a local newspaper, Süddeutsche Zeitung, also estimated a crowd of in the hundreds (German online article, German print article with English translation further below). Tomorrow (Tuesday), demonstrations will take place in front of the French and Danish embassies in The Hague in support of two EPO employees "facing disciplinary procedures for their work as staff representatives." One of those employees is French (at a recent protest, there were signs that said "Hands off Aurélien"), and the other Danish. The demonstrations additionally take place in front of those countries' embassies because the European Patent Organisation (which runs the EPO) is led by a Frenchman, its apparently-controversial president Benoît Battistelli , and a Dane, Administrative Council chairman Jesper Kongstad. More protest will be expressed today in the form of a march from one of the EPO buildings in Munich, the city in which more than half of its nearly 7,000 employees work, to the local Palace of Justice.

At the heart of the issue is the leadership style of the EPO's recently-reelected president. To quote Wikipedia, Mr. Battistelli "is perceived by staff as being unduly autocratic and unsuited to a European intergovernmental body such as the EPO," and his management style has also been criticized in the Dutch newspaper De Telegraaf, and by Philip Cordery, member of the French National Assembly). I've also found this statement by a French senator (in French) on another (English-language) blog I hadn't been aware of before today.

Here in the Munich area, one can hear all sorts of stories about Mr. Battistelli, involving tax-saving strategies and favors the EPO is allegedly doing the members of the Administrative Council (public servants of the EPO's contracting states; they reelected Mr. Battistelli unanimously). Those are hard to verify. But what's apparent is that the EPO's governance structures have traditionally suffered from a severe lack or the near-total absence of checks and balances. The worst story of this kind doesn't even involve Mr. Battistelli but one of his predecessors from a long time ago. According to an email (published on the Internet back then) from an EPO employee to non-governmental organization FFII, a SUEPO leader was kicked in the stomach by the then-president of the EPO. The female victim was hospitalized. The Munich police was not authorized to enter the EPO building because it's on diplomatic territory, so the culprit, protected by diplomatic immunity, couldn't be prosecuted for causing this bodily harm. Again, this was long before Mr. Battistelli's presidency, but it shows a structural problem.

To be clear, the EPO is not an agency of the European Union. Its contracting states include non-EU members such as Switzerland, and it's an international organization that was set up separately from what was then called the European Economic Community (about 40 years ago). However, the European Commission has observer status on the EPO's Administrative Council and has entrusted the EPO with examining and granting the future EU-wide Unitary Patent. As far as examiners' qualifications are concerned, the EU made the right choice. However, if the ongoing labor conflict over human rights issues such as freedom of association and the rule of law escalates further, it can become an institutional issue for Brussels, too, given its ever closer ties with the EPO. For example, critical questions might be raised by members of the European Parliament at some point.

Another unusual aspect of the ongoing strike is that a German patent law firm, Zimmermann  & Partner, expresses its support for EPO examiners "in their legitimate request for fundamental rights" on the firm's landing page and, in greater detail, on a dedicated page. The firm states clearly, among other things, that it finds "management decisions against European human rights inacceptable." On this blog, Zimmermann has been mentioned a few times because of its representation of Samsung in its German Apple lawsuits (Apple was unable to defend a single patent claim here). I've also been able to research work of that firm on behalf of various suppliers to the automotive industry, Medtronic (the world leader in medical devices), and Kimberly-Clark. It's probably unprecedented for a firm to take sides in an internal dispute of a patent office. (It's also the first time for me to write about this kind of subject.)

The EPO appears to attribute all of the staff's activism to resistance against necessary reforms. There may indeed be a need for reform, but the number one item on the reform agenda should probably be governance and the rule of law.

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Draft rules for European patent court: injunctive relief an automatic remedy for infringement

When then-U.S. Secretary of Defense Donald Rumsfeld made a distinction between the "Old Europe" and the "New Europe" (including countries like Poland), there was a lot of (understandable) outrage. Unfortunately, some of the people shaping Europe's patent policy are now pushing for a Stone Age approach that makes patent injunctions a given in any case in which an infringement is identified, more than eight years after the eBay v. MercExchange ruling by the U.S. Supreme Court and also running completely counter to the tradition of several European jurisdictions (such as the UK and the Netherlands) in which judges have enjoyed significant discretion concerning patent remedies.

At a time when U.S. case law has upped the ante for patent trolls in limited but useful respects and U.S. lawmakers (now that the Republican Party holds a majority in both houses of Congress) are preparing more anti-troll reform legislation for 2015 (which President Obama will almost certainly sign), Europe is going in the completely opposite direction. And while this was not enough, there had at least been some temporary improvement in the spring: the 16th draft rules (the draft before the latest one) at least contained some language reminiscent of the balance-of-harms eBay factor.

While I'm not involved with the related lobbying efforts (I haven't done any lobbying in more than seven years), I strongly suspect that companies with a failed or declining operating business in the ITC space like Nokia and Ericsson are responsible for this. I've also heard through the grapevine that a German official (from the Ministry of Justice, not a judge to be clear) has been a key proponent of troll-friendly rules.

I'm very surprised that the industry coalition that first raised concerns 14 months ago and reinforced its message earlier this year hasn't spoken out yet on the latest (17th) draft rules of procedure for the UPC, but it also appeare a bit slow in the past, though maybe it will still get something done in time for next Wednesday's official hearing in the German city of Trier.

Considering that the previous draft represented at least a step in the right direction, I was like shell-shocked when I read the following passage from the official explanatory notes for the latest draft:

"Where the Court finds an infringement of a patent it will under Article 63 of the Agreement give order of injunctive relief. Only under very exceptional circumstances it will use its discretion and not give such an order."

That's part of the explanation of the deletion of Rule 118.2, which referred to eBay-like considerations. So the intention is that all infringements will result in inunctions except "under very exceptional circumstances." Even "exceptional" would mean "very rarely," but "very exceptional" means "hardly ever."

There are cases in which injunctive relief is the most appropriate remedy for patent infringement. But many of today's technology products are so multifunctional that unlimited access to injunctive relief will give patent holders undue leverage. For example, if Mercedes, BWM or Audi had to stop manufacturing and distributing an entire car only because of a need to work around a patent covering a very minor feature of the navigation system, the cost of complying with a court order would far exceed the true value of the asserted patent. That discrepancy invites arbitrage by trolls.

Those who favor such rules don't work to protect innovation or to strengthen law enforcement. They may mean well (at least for their profession, though I'm not sure they even have the best in mind for the economy at large), but at the end of the day they pave the way for rampant abuse with disastrous economic consequences.

Europe has an innovation problem--Nokia is a good example. If Europe now tries to just strengthen patent enforcement for the losers in the marketplace (Nokia being the most extreme example), the net effect is not going to be more innovation. Instead, even more European innovators will emigrate to Silicon Valley.

While the deletion of Rule 118.2 (which should not only have been kept but even strengthened) is disconcerting, there is now some (but still very insufficient) progress in a related context--bifurcation. Rule 40 now says that if an infringement hearing is scheduled and an infringement case is not stayed despite an ongoing revocation action, "the judge-rapporteur of the panel of the central division shall endeavour to set a date for the oral hearing on the revocation action prior to the date of the oral hearing of the infringement action."

Obviously, "shall endeavour" is pretty weak, and the explanatory notes make this even clearer:

"New Rule 40(b) will not to acceleration in all cases where counterclaims for revocation are referred to the central division -- only cases where the parallel infringement action is not stayed will be accelerated; in practice, the synchronisation of the calendars remains within the discretion of the judge-rapporteur ('shall endeavour')."

(emphasis of "all" and "not" in original)

This is a step in the right direction but still unacceptable because it means parties to a dispute will have to negotiate a settlement without the defendant knowing for sure that the invalidity defense will be adjudicated before an injunction issues. The "injunction gap" is a real issue as I showed in my study of the final and preliminary outcomes of 222 smartphone patent assertions: there was not even one situation in all the German cases among the lawsuits I analyzed in which an infringement proceeding was stayed and a patent later upheld, but there were multiple cases in which a patent later invalidated by the Federal Patent Court of Germany was enforced for an extended period of time in each case (for example, Motorola got to enforce a synchronization patent against Apple for 19 months).

My analysis was smartphone-focused, but other studies with a broader focus have also shown that most European patents are actually invalidated or narrowed when they come to judgment in the Federal Patent Court of Germany. Last month I blogged about a study by a leading German IP law firm that raised the question of whether patents are merely "paper tigers." A few days ago an English translation of that study was published on the Bardehle firm's website.

In closing I'd just like to clarify that I'm not fundamentally opposed to the UPC or the Unitary Patent. In fact, my app development company filed three PCT applications this year and would love to choose "Unitary Patent" as a target jurisdiction for each of them at the end of the EPO process following the 31-month international phase. And apart from whether the Unitary Patent legislation will be ratified in time or not, I will want those patents to be enforceable Europe-wide. But true innovators need a fair chance to defend themselves against meritless assertions. I'd rather have to convince a court that an infringement causes irreparable harm to my business and that the covered feature is not just a minor feature of a multifunctional product, and wait for the outcome of a revocation proceeding before I obtain injunctive relief, than have to negotiate with countless patent trolls against the background of an unbalanced, backwards-oriented framework.

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