Interview: EPO's Battistelli on reforms, the Boards of Appeal and the Unitary Patent

We last interviewed EPO president Benoît Battistelli in depth in December 2014. Since then the Office has come under attack from some bloggers and news sites, and its offices have seen protests and demonstrations. For some of the criticisms, see the TechRights and the IPKat blogs, and the website of SUEPO (the EPO examiners union). The criticisms focus on: changes being introduced by the president; what is perceived as a heavy-handed management style; measures taken against specific staff members; concerns about the independence of the Boards of Appeal; and perceived attempts to restrain freedom of speech.

Last week the EPO Administrative Council met in Munich, and a number of organisations (including epi, the Dutch group of AIPPI and CIPA) sent letters expressing their concerns about recent developments. It is understood there were also further protests by EPO staff.

In the light of the latest developments, we asked Battistelli to respond to some questions regarding his reforms and the attacks on them; the plans regarding the Boards of Appeal; and the progress on the Unitary Patent, which will be administered by the EPO. Ahead of the interview, we also asked our 17,000 Twitter followers what questions they would like asked.

The interview was conducted by telephone on the afternoon of December 21, and lasted about an hour. This is the full, unabridged, transcript. A few comments and links have been added in square brackets by Managing IP.

We've talked in the past about the reforms and the roadmap. What progress are you making? Are you happy with the way they are going?

I would like to give you a broad picture before more specific issues.

The broad picture is: when I arrived five and a half years ago my mandate and my intention were very clear. We are living in a more and more competitive world and the EPO cannot stay as it was created in the 1970s. There are more PCT authorities, and more offices have increased their capacity and the quality of their products and services. If the EPO wants to maintain its leading role, it must also adapt and modernise itself to continue to provide the best services. 

This is what I called with support of the Council the efficiency quality strategy. We wanted to develop our quality and increase our efficiency. For that we have two main grounds. The first one is no more increase in global staff number in spite of the fact that each year we receive 3% or 4% more applications. The second is no increase in fees: for seven years, our fees have only increased with inflation, which is very low.

If you have no increase in resources, and an increase in input, you have to increase efficiency and control costs. This is what we have done. In terms of production, we have increased capacity by 20% since 2010. We have recruited almost 600 new examiners without increasing our global staff level, which means by replacing people leaving or retiring and by redeploying people from support functions to the core activities. 

To achieve these positive results, you need to make a lot of reforms. I would like to give a few examples of reforms which have been very fruitful. One of the most important was the career and promotion reform. In the past, promotions were based only on seniority so people received a promotion every few months or years. We have replaced this with a system based on performance and merit, this has been introduced in 2015 and it is a cultural change. Now each examiner has yearly objectives in terms of production and quality and if he meets these at the end of the year he will be rewarded. If he does not, there will be a discussion with the line manager to understand why and take some corrective measures. 

Are examiners incentivised to grant patents or does the performance recognise also work that may lead to patents not being granted?

They are incentivised to treat the applications they receive, whatever the outcome. We have not changed our grant rate: 25% of patents are granted without significant changes, 25% are granted with major modifications, especially to narrow the scope, and 50% do not become a patent. Examiners are not rewarded for granting more or less patents. We check quality during the process and also a posteriori, especially have you failed to mention a reference which could have been found? The issue is not how many more patents we grant, but how many applications are we able to deal with in order to respect our timeliness and if possible reduce pendency?

Two conclusions from these facts: you don't obtain such results with staff who are angry, demotivated and against their management. You can only achieve such results if people are fully dedicated to what they are doing. Second, such major changes generate tensions and some resistance. We have a very specific situation at the EPO in that we don't have a trade union in the sense of many European countries. We have an organisation that opposes any reform whatever the proposals. Two examples: in 2011, after one year of discussions with the trade union, I proposed a part-time homeworking scheme. The union opposed this and made an appeal. It was very popular and now 25% of staff benefit from this part-time homeworking scheme. The second example is I obtained from the Council last year a review of the salary formula, which is based on macroeconomic indicators. This proposal was opposed by the trade union. If they win the appeal, this indexation will be cancelled.

These two examples show that the trade union does not try to make a better deal for the staff, but want to oppose any reform because they want to maintain control of the organisation. They are using unacceptable methods, which is why we have the suspensions.

What do you make of the protests and demonstrations in Munich and other offices by a large number of staff, who say they don't agree with what you're doing?

The number of people demonstrating are much lower than the figures which are circulating. In any professional entity, if you want to oppose anything you organise a strike. But this year there has not been a single day of strikes, compared to 22 days last year under the same rules. It is because SUEPO knows strikes will not be supported by a significant part of the staff. They prefer to organise demonstrations because it doesn't cost anything: you walk for half an hour in the street, you attract media attention and that's it.

Do you think you have the support of the majority of staff for what you are doing?

Yes, I am convinced I have the support of the majority of staff, and the results we are obtaining would not be achieved by staff which are not fully behind this policy.

Do you have any formal interaction discussion or consultation with SUEPO or do you not take them seriously as representatives of the staff? 

There are two levels. First, we have consultative processes at the EPO through elected staff representatives, most of whom belong to SUEPO. We discuss our proposals through local staff committees.

Then you have a trade union recognised as a social partner - this is not in our legal framework. I think this is a weakness and that's why I have initiated discussions in order to recognise trade unions legally speaking as a social partner in order to discuss issues like salary, promotion, pensions, health system and so on - all the main issues which interest trade unions. I hope at the beginning of 2016 we will be able to sign an MoU in 2016 and recognise the union as a social partner at the EPO.

Many people are concerned about staff being suspended or investigated, many of them involved in the union, and that they have been targeted. Can you respond to those allegations?

These allegations are groundless. We have placed no limits on freedom of expression. SUEPO and the leaders have full possibility to express themselves. We have space on our intranet where they can publish whatever they want with no level of control. We allow information meetings on the premises, and distribution of information.

What is at stake is you have a limited number of individuals utilising methods such as blackmail, threats, insults, defamation, that kind of behaviour, which are not acceptable and which breach our laws. So we have launched a few disciplinary procedures in full respect of the presumption of innocence and the interest of the people concerned and I cannot comment more because these processes are not finalised yet. We have a disciplinary committee composed of staff and management representatives. I am expecting their opinion in the next days or weeks and then I will take a decision. I will recommend the decisions when they are taken.

One must not confuse on one side that trade unions are an essential part of the EPO and it is necessary that we have credible, representative and professional social partners. On the other side, there are some individual behaviours which are not acceptable and which need to be sanctioned, such as harassment cases. It is not legitimate to harass somebody because you are a staff representative.

You mentioned freedom of expression. Some people have expressed concerns that certain websites are blocked, and that the EPO has taken action against bloggers and others to suppress freedom of expression. How do you respond to that?

This is pure propaganda, totally groundless. When staff members are personally attacked, I have a duty of care to defend them. I have never attacked anyone including those who are excessive in their attacks against me.

I'm talking about personal attacks on staff members. When that is the case, we look with our lawyers at how we can defend the integrity and honour of staff members under attack. We have a few cases of racist aggression, and that cannot be accepted.

Given the publicity around the demonstrations at the EPO, do you worry that the reputation of the EPO is being damaged?

It is true that this organised defamation campaign organised by a small group of people within the EPO, with unfortunately SUEPO leaders personally involved, has damaged the reputation of the EPO. This is obvious. That's why it is necessary that we can provide in full transparency the facts. I have increased the transparency of the organisation. I have published a report with full details of salaries, the social package etc. For the first time this year we are going to publish our budget. We intend also to publish a green report every year. So I am trying to provide facts so people can make their own judgment about the EPO.

I also see that the confidence of the users have never been so high. Independent surveys regularly rank the EPO as top in quality. But it is true that politically this campaign has had some impact, we have to be realistic about that, and because of our protective roles we couldn't indicate what was at stake. We will be able in the near future to inform the public on the kinds of attacks and behaviour we have been victims of.

Do you plan to change the emphasis of the reforms, or the relations with the staff or the public? Can you do things better or are you resolutely sticking to the path you are on?

When we have formally recognised the unions, I hope it will be possible to enter into normal negotiations with the trade unions. Secondly, I hope people will recognise the EPO has been the victim of an organised defamation campaign which was groundless.

Thirdly, I am not making reforms for the sake of reforms. They are necessary to build the future of the organisation, We are fully self-financed, including for long-term social liabilities such as pensions and if we are not able to generate resources to fulfil our commitments then we have a problem. What we have done these last five years has reinforced the solidity of the EPO and this is for the best for the European economy because we are building the future of the organisation.

There have been allegations that the EPO favours large companies over smaller ones. What's your response to that?

This has been launched by a blog [see this post] that is known to be anti-patent, and have tried to create this controversy which is totally groundless. What we have done is the contrary. We have a fast track which is becoming more and more popular, and which unlike other offices is free. So we have had a few big companies who have put all their applications into fast track, and clearly you need to increase your capacity, so we have discussed with these companies how to prioritise their own applications to leave enough time and resources to deal with fast-track applications from small entities. [The EPO has separately clarified to us that companies were simply asked to identify which of their applications they wanted dealt with first, and were not given any priority treatment as such.]

Personally, I have been fighting for more than 15 years to decide some incentives for SMEs. At the French office, I created reduced fees for SMEs so I don't think I can be accused of not doing all that we can to facilitate access to good and strong protection for SMEs. Listen to the facts not the propaganda!

We understand that you and the Administrative Council believe that the efficiency of the Board needs to increase, and the independence needs to be assured. Can you reassure people about that in the long-term but also in the short term, given concerns about the number of members of the Boards?

The first thing to bear in mind is that when the EPC was discussed, signed and ratified the member states decided not to create a judiciary body that would be separate from the EPO. They decided to create an administrative unit within the EPO with the task of reviewing EPO decisions on granting or not granting a patent. It is recognised there is some ambiguity there but this was the choice made at the time. There have been several attempts over the past 40 years to change the situation, and they have never succeeded. 

So the situation is we have an administrative unit, composed mainly of former patent examiners, who are independent in the decisions they make but not in their legal nature. In spite of the ambiguity during the past 40 years, the Boards of Appeal have built strong reputations for independence and expertise and have fulfilled their roles to everybody's satisfaction.

In the last years we have had two issues which have become more preoccupying. The first is that the Boards are unable to deal in a timely manner with all the demands they receive. When I arrived at the EPO in 2010, the backlog was about 6,500 cases which represented 2.5 years of backlog. I decided to increase the number of Board members and created a new Board. We increased the number of Board members from 157 persons to 163 persons. In spite of that, during this period the backlog has increased: in 2015 we have a backlog of more than three years. This figure is despite the fact that the number of appeals has been reduced by more than 11% so there are fewer appeals and in 2013 we modified our reimbursement modalities to facilitate withdrawals. This has been extremely efficient and the number of withdrawals has increased by 40% since 2013. We have less appeals, more withdrawals, more people and an increasing backlog. If you look at the facts, you see we have an issue of efficiency with the system. 

Second, on independence, this has never been questioned. None of my predecessors or myself have interfered in any specific case. But there was a decision of the EBA [R2/14] that said because of the links there was a risk of partiality. This decision obliged us to reconsider the links between the Boards of Appeal in general and the Office, so we started to reflect on a situation where we could increase the independence and the efficiency. I made some proposals to the Council, one of them to create a fully separate organisation, but this would imply a change to the EPC. The Council clearly indicated they cannot consider this option and asked me to make some proposals within the framework of the EPC.

It's not easy because the EPC clearly gives the responsibility for the management of the Boards to the president of the Office. How can the president delegate this authority to someone else? We looked at creating a person with a new function of president of the Boards of Appeal, who would be the highest authority but also in charge of administration, like in many national courts. Somebody has to manage the Boards, and it cannot be the president of the Office as this would be understood as interference in their functioning. It's legally not easy because it has to be compliant with the EPC.

We are also proposing to help the Council fulfil its duties by creating a subsidiary body composed of members of the Council and high level judicial people. This body will be consultative and will help the Council to fulfil its duties for the Boards of Appeal. 

I'm confident that we could make some proposals in the first months of 2016 in order to go forward.

Do you feel you have the support of the members of the Boards in tackling these problems as you've described them?

I think there is a mixed feeling here. We have Board members who do not support such an analysis. But we must try to find a solution in the interest of the European patent system. The issue is not to preserve specific interests. In a few years or less we will have the Unified Patent Court, and we have to take that into consideration to help the Boards of Appeal to be in a situation to fulfil their duties.

What you've described as inefficiency, in less diplomatic language does that mean the members are not working hard enough?

I've not described inefficiency. We have an issue that somebody has to manage the Boards of Appeal. It cannot be down to the goodwill of each member. They cannot manage themselves.

All that has a cost, and the cost is borne by the Office. Here also figures are important: appeals cost the EPO more than €70 million each year, and they are self-financed only 4%. I note that the member states decided that the UPC will be fully self-financed, which means very high fees. There is a balance between 100% and 4%.

We have about 2,500 appeals per year compared to 160,000 applications so it's less than 2%. There's no reason why 98% of users of the European patent system should finance 2% of people who make appeals. I'm not saying it should be self-financed 100% but something more reasonable around 20% or 25% could be envisaged. 

It is a system that should be changed and somebody has to be responsible for that, and I prefer that we give this task to a new position.

Do you think the EPO president should have any role at all regarding the Boards of Appeal?

I refer to the EPC. The EPC is clear about the relation between the president and the Boards, and no one wants to change that. This has to be our common rules. But I have said I am ready to delegate this responsibility to a new president who is appointed directly by the Council. I think we must work on this possibility.

There have been some bodies recently such as epi, the Dutch group of AIPPI and CIPA, who seem to feel there is a concern that there are vacancies in the Boards that need to be filled. What is your response?

I think it is very short-sighted to consider that the problems and the backlog have been created in the past few months due to some positions not being replaced. The backlog was already very high five years ago and it has been a permanent feature of the Boards of Appeal. We have increased the number of members and it has not changed the backlog. Unfortunately, the issue is more complicated than just increasing the number of members. 

I am ready to look at this issue early in 2016 and if there are some nominations to be made we will propose them. But the issue is more complicated than increasing the number. It is to change the way the Boards are managed. Otherwise you are increasing the cost without changing the outcome.

Does it matter where the Boards of Appeal are physically located?

It is a kind of shadow on their independence to be located in the same premises as the rest of the Office. I can understand people doubt their independence if they have regular contact with the people whose decisions they have to control. In other parts of the world the court is not in the same premises as the administration. In Munich, for example, when they located the Bundespatentgericht, it was decided to locate it elsewhere than at the German Patent Office.

So for me the issue is not so much the city but to locate to the Boards of Appeal for the sake of their perceived independence outside of the EPO premises. If it's possible to find a solution in Munich, why not?

But there is another mistake people make. People think independence is independence of the president of the Office. But it is wider than that: it is independence from any kind of influence. Independence from the president is only one part. Here we have another issue to address which is possible conflicts of interest. If you have a board member who retires and is immediately hired by a law firm, that creates an issue as people may think it is a way to buy influence or thank them for a decision taken. I'm not saying it is the case, let's be clear, but we should have rules. We have no rules at all at the moment, so we are also working on this aspect to build a solid basis for the independence of the Boards of Appeal.

You expect to have revised proposals early in 2016?

We expect to make proposals, with all the consultations needed. We have started this process with user consultations on our website, with working groups. It is a complex process but we expect to be in a position to make proposals in the first semester in 2016.

And ultimately the Admin Council will make the decision?

Of course, the Council is the legislative body so they have to take the decisions. We can make the comparison that the president is the executive and the Council is the legislature. Most of those decisions have to be taken with a three-quarter majority. It means we have to build large consensus on our proposal, and this is what we are working on.

You were reappointed by the Council last year. Given everything that has happened since then, do you still feel you have the support of the Council and the member states?

I not only feel that, but the facts are there. Last week the budget was unanimously supported by the Council. There is no more important issue in any organisation than the budget. Any government would be pleased to have its budget unanimously supported by the legislative body.

Can you provide an update on the EPO's readiness. I understand the Office will be ready as soon as the new system starts?

Absolutely. Let me underline that 2015 has been extremely positive for the Unitary Patent. Not only in May did we get the endorsement of the framework for the Unitary Patent, with the EPO given responsibility. Then in September we had the decision of Italy to join the scheme, which was very important. And then last week we were able to finalise all the preparatory work for the Unitary Patent. So all member states have confirmed the implementing rules, the fees and the distribution key.

When I said this would all be achieved in 2015, very few people believed it would be possible. I'm happy it has been possible and thankful to the member states who have taken decisions on our proposals.

We are legally, technically and operationally ready. We are waiting for two events: the first one is the opening of the Court, which I understand could take place by the end of 2016, and for the ratification process. We have already eight countries that have ratified, including France, and we need 13 including UK and Germany. I'm confident we will have the 13 in the first semester of 2016 and Germany will be the one missing. I hope Germany will be able to ratify as soon as possible. If Germany ratifies quickly enough, it will be possible to deliver the first Unitary Patent before the end of 2016. I believe that is possible.

Do you have any insight into what is happening in Germany?

All the information I have from Germany is that there is no political issue. There is agreement that this treaty should be ratified. There is a process but I am convinced Germany will ratify. I hope it will be as soon as possible so we can deliver the first Unitary Patent as there is a high expectation among users.