Digital Majority

"The day when I, as the owner of a tiny software company, seek to buy patents like I buy domain names and trademarks, will be the day that the patent system has finally made the jump from the age of steel to the age of brains."

"The day when i can buy patent licenses (note the slight but deciding difference) for whatever purpose i nee them would be the the total opposite. The current problem of the patent system is to some extent the difficulty to get a license to a reasonable price, and its further mode undoable because its hard to decide or even know which patents you will need."

Buying patents or licenses in standardized and anonymous transactions at low transactions costs is the business model of a new website at rated-patent.com. The slight but deciding difference of this website to other tools is that the seeker can make the first move anonymously and proactively and controls disclosure of his identity and publication of his transaction. The model leverages patent databases and the services of the EPO as well as a community of professionals. Maybe by using some of the new possibilities of the Internet, not only a sustainable patent system may emerge, but also a system wherein IP is a commodity which can be traded and used much like in other more advaced markets thriving today.

Rated Patent Exchange is an interesting concept and not without merit. However it is an unworkable proposition because it does not address the real and growing problems in the patent market (my list of emerging trends). Unless and until these trends are fixed, the patents that RPE will be attempting to trade will be largely worthless. EPO patents are junk patents, and trading them is pointless.

RPE is one of those interesting products that a proper - sustainable - patent system could support. There are many. The online world provides all kinds of opportunity for automation that the old paper days (when the EPC was signed) did not.

Pieter, I wonder why exactly you have such a hatred of the European Patent Office? Why do you insist in calling it a "for-profit" organisation? For whose profit? As I see it, only the member states' governments get a profit, and if you proposed governments anywhere, not just in Europe, to stop treating patent offices as profit centers, most patent offices (starting with the EPO) would certainly agree.

Also, you seem to be quite agitated about the EPO putting its own version of events to politicians and the public. Well, until a few months ago I used to be an EPO examiner, and one of the reasons I quit was also that I found that the EPO was actually not active enough in defending the reputation of its examiners' work against slander. For instance, where does the FFII get its "30000 invalid patents" claim from?

The EPO delivers "junk patents"? Excuse me if I take this personally, but I take pride in my work. Certainly none of those I granted were junk, and I can say for the many colleagues I knew that they also took great pain in doing their job right. My duty of reserve as an examiner didn't allow me to say this before, but I can say it now: there are 6000 motivated and highly skilled people working at the EPO to ensure the best standards in granted patents. Every time you groundlessly attack their work you slander them gravely.

I also can't understand why you keep focussing your campaigns on the EPO: junk patents are routinely being granted in Europe, just not by the EPO. Many European countries, like Belgium, issue patents without examination. Why don't you attack that?

Rodrigo Calvo de Nó

Rodrigo,

you adressed Pieter, but as a supporter of the FFII and staunch critic of the EPO I also felt struck by your critic of the FFII's critic.

I would like to make clear, that I certainly do not want to slander the patent examiner's work. And I have not read anything yet from the FFII that, in my understanding, personally attacks patent examiners and their work.

There are certainly many patent examiners who do a good job - examining patents according to the rules, policy and standards set by the EPO. And it is impressing to me how they currently fight to be able to do a thorough and good job in the future. It is the standards, policies and rules and the way they are set - to a large part by the EPO and it's lobbying - that I strongly disagree with and that badly need change. And in my view it is those standards - and not the work of the examiners - that lead to "junk" software patents.

By "Junk" I understand "worthless" to me as a software developer, they don't disclose anything useful and not in a useful way. They pose a potential threat to me and the work I take pride in, nothing else. And also "worthless" in a macroeconomic sense, useless, even harmful to society.

Would the EPO lobby not to be treated as a profit center, would it leave decisions about what should be patentable and what not to politics and be content with simply implementing these policies - instead of lobbying for more power and a wider scope of patentability -, and would it focus more on how to support patent examiners in doing high quality work, I could not agree more.

A.

Rodrigo,

I'm sorry that my analysis of the patent system obliges me to attack the EPO's role. I have nothing but respect for the patent system in principle, and patent examiners as a profession, despite the joke that the patent system has gone downhill since Einstein left it.

However, individually honest and hard-working individuals can collectively do the most terrible things when the economic incentives are back-to-front, and there are no laws to stop such behaviour.

The EPO's patents are junk because they are unbalanced and because they violate the letter of the EPC on a massive scale. They are junk because the good patents are overwhelmed by the obscure, the obvious, the flawed, and the greedy patents. I have seen first hand the damage that software patents can do to an industry, because of the high presumption of validity, and the cost to society to challenge patents. Even simple opposition is beyond the means of most medium-sized firms, let alone the small and micro-sized ones.

A patent system that produces such dangerous instruments, on such a scale, and then lobbies like a business for more power and consolidation of this system deserves to be criticised.

I'd like to see an honest patent system, one that I can trust, use, and see the benefits of. One that promotes the common good, and one that supports the weak and poor above the powerful and the rich. What I see today is not that. And I see an EPO that instead of putting its house in order, lobbies for more power to distort the market and create more of what I consider entirely inappropriate forms of "property". When the EPO violates the EPC, what does it do? It pushes for the power to create its own courts and to "fix" the EPC to bring it into line with its practice.

Where is the profit motive? Perhaps simply in power, tax-free salaries and savings, immunity from prosecution, pension funds, an easy slide into profitable sidelines in the patent business, cosy relations with large firms who treat ethics as a liability.

I will first reply to Anonymous, then to Pieter:

Anonymous, as a patent examiner, I had to base all of my decisions on the European Patent Convention, the Guidelines for Examination, and the Internal Instructions, by that order of priority. The Guidelines are edited by the Practice and Procedure Committee (a committee of experts) to bring the practice of the Office in line with the decisions of its Boards of Appeal. The Internal Instructions relate to questions of detail such as how to insert manual amendments in the text of patent applications and prosaic stuff like that.

Now, the Boards of Appeal have been much criticised, and even I can raise an eyebrow at some of their decisions. However, those decisions are always reasoned in great detail, and the least than their critics should do is to reason their criticism just as thoroughly. Moreover, the Boards are scrupulously independent from the management of the EPO. Their independence is clearly anchored in the EPC, and they defend it jealously.

The FFII and Mr. Hintjens imply in their criticism that the decisions of the Boards of Appeal going in the sense of broadening what is patentable are grounded in "the EPO's" greed and desire to expand. This overlooks the fact that the biggest problem that the EPO's management has been facing for the last ten years or so is too many patent applications, and that the backlog of applications keeps increasing. If anything, the EPO's managers would be glad if the Boards of Appeal took a more restrictive view and this discouraged applicants at least for a while. Unfortunately for the managers, the Boards of Appeal will never base their decisions on the operational requirements of the EPO…

The EPO will never (openly) campaign against being used as a profit center, for the simple reason that it must answer to its Administrative Council, which is formed by the heads of the national patent offices (the EPO's natural competition) in representation of their government. It is to those national patent offices that all the "profit" goes. About this subject, I suggest you read the last paragraph in your link. By its relentless targeting of the EPO, rather than the national patent authorities, the FFII strengthens the hand of the Administrative Council, which can only worsen the situation even further.

Now to you, Pieter,

I find it curious, to say the least, that at the beginning of your post you claim that you have nothing but respect for patent examiners as a profession, yet, only a few lines further you claim that "the EPO's patents […] violate the letter of the EPC on a massive scale". A patent examiner at the EPO certifies, when issuing his intention to grant, that, to the best of his knowledge, the patent being granted conforms to the requisites of the EPC. If you insist in saying that those same patents violate the letter of the EPC, you are accusing those same patent examiners, thousands of them, of breach of legal duty, which is a serious crime (and certainly a ground for dismissal at the EPO). Such a massive accusation requires some evidence, and you just don't provide any. I call that slander.

You also claim that an opposition is out of the reach of SMEs, and I've read the FFII's estimate of 30000-50000 euros. You must be aware that the opposition fee is a mere 635 euros. Certainly, organising a successful opposition can be a lot more expensive, if a lot of research is needed to find relevant prior art and a lot of work by a patent attorney to organise solid arguments. Yet, if a patent is clearly obvious or too broad, that should not be necessary. An opposition need only be expensive only if the patent is in fact difficult to be proven invalid!

I'd also like to see an improved patent system, which would be clearer and more accessible. That is a laudable aim. It could be useful, for instance, to have "peer-to-patent" systems in a "Devil's Advocate" role, so that the examiner isn't only exposed to the arguments presented by the applicant in favour of grant. For this it would also be necessary to be able to present patents more clearly, so that non-patent-specialists could also understand what the real scope of protection claimed by the patent (it annoys me to no end to see people judge the content of patents by their abstract, or worse, their title…) But I can't really say that your and your organisations arguments and proposals are really helpful in that sense.

I'd also like to see a patent system with uniform case law, where courts, at least within Europe, came to consistent decisions, and where patentees as well as alleged infringers didn't have to go through the lottery of dozens of different jurisdictions. I can't say either that your campaign against the Community patent first, and the EPLA (which you've bizarrely seen as "the EPO" pushing for the power to create its own courts) afterwards, have been very positive in that sense.

However, I don't want a patent system "that supports the weak and poor above the powerful and the rich". I want an impartial patent system that treats all equally.

As for the profit motives you cite, I'm afraid you must be thinking of some MEPs you frequent. EPO employees do have tax-free salaries, but their pensions are taxable everywhere except in Austria. Only the President has diplomatic immunity (not extensible to traffic offenses). And as for "an easy slide into profitable sidelines in the patent business" and "cosy relations with large firms who treat ethics as a liability"…I wish my own experience had been that lucrative, but I had to accept a large cut in income when leaving the EPO for one of those sidelines in the patent system…

And even those tax-free salaries are hardly a "profit motive", considering that EPO civil servants get them paid pretty much independently of their contribution to the increase in the numbers of granted patents. I think you should reckon that last paragraph in your post was pretty low for someone who "has nothing but respect for patent examiners".

Rodrigo,

yes, I guess it is Boards of Appeals decisions that finally lead to software "junk" patents. Since the Boards of Appeals is part of the EPO, the EPO is the right adress for critics. Their interpretation of the EPC appears to me quite questionable, to say the least. I don't blame the examiners for following the questionable guidelines that result from these decisions.

Now, as to the independence of the Boards of Appeals: I grant that they are a little independent.
But with some grave flaws: the President of the EPO proposes to the Administrative Council who will sit in the Boards of Appeals, and they must be re-appointed every five years (again after consulting the President of the EPO). They are paid by the EPO, they are employees of the EPO, there are close personal links, the whole organisational setting and background is the same. With the current EPLA draft, this would be similar. Independence should mean complete organisational independence and control.

Also, the EPO is lobbying to extend the scope of patentabilty. Take the misnamed 2005
"Computerimplemented Inventions and Patents - Law and Practice at the European Patent Office"
brochure. Given the questionable Boards of Appeals decisions and the resulting practice, it actually would be a good idea to explain in detail what is patentable and what not. But instead,
the brochure starts with praise "Patents for computer-implemented inventions – how does society benefit?". One misses a section about the dangers and how someone creating software can avoid unknowingly violating patents all the time and still be productive without risking one's neck. And this brochure was issued at a time when the Software-Patent directive was hotly debated. EPO representatives even went into the parliament to campaign for this position. In summary, the EPO lobbied heavily for the Commission's version of the directive, instead of being impartial. And the same is happening with the EPLA again.

When I read the Press Release "EPO and EU join forces to promote innovation" (3rd page) I can only infer Mr. Pompidou wants more patents. When I read European Patent Owners May Have Found Their Champion, he is acting as a politician, lobbying for more power.

You may be right in that the EPOrg (including the Administrative Council) should be criticized and not only the EPOffice.

So, in summary, it appears to me when the EPO is criticized, you as a (former) examiners should not feel blamed but the judges that make highly questionable decisions, lobbying managers, an Administrative Council with misleading incentives and links, and an organisational structure that allows all this.

A.

Rodrigo,

How would you react to the statement of Prof. Hans Raible?

Contrary decisions of a Swedish court and a TBA of the EPO must be referred to the EBA. However, in practice this does not happen. This is so because the EBA rarely confirms the decision below, and the judges of the TBAs think this reflects badly on their work.

Raible is saying the judges don't follow the EPC because it "reflects badly on their work", is he not? If not, what is he saying? Is he not saying that EPO judges are not independent? Recalling that EPLA judges are reappointed (an unheard of principle in any democracy), one may wonder where that idea comes from in the first place…

Have you ever heard any EPO official comment on accusations that EPO has a self interest? It would be interesting to see a reference to anything that could be interpreted as EPO is taking public concerns seriously.

I'll reply in turn, again.

A., if you want to lobby in favour of giving the Boards of Appeal complete institutional independence from the EPO, I think they'd actually (privately) cheer the proposal. However, I don't think for a minute that such institutional independence would change anything in their decisions concerning scope of patentability. Again, the EPO, right now, has its hands more than full with the current backlog of applications. Independently of whether it could be successful or not, its management has little motivation for pressuring the Boards of Appeal into opening the floodgates.

The CII Directive was utterly necessary. There's currently a grey area as to what is patentable and what is not that, far from "defending the weak from the poweful" only favours those with deep pockets and the best lawyers and patent attorneys. A clear line should be drawn, the debate was about where to draw it. The Commission's proposal wasn't great. The Parliament's proposal was a trainwreck of contradictory amendments. At the end, both the business software MEPs and the anti "software patent" lobby voted the final Council proposal out. The FFII presented this as a victory for them. It wasn't: it just preserved a messy status quo that certainly doesn't make independent software developers' lives (whether they like patents or not) any easier.

Mr. Pompidou was only appointed for three years. He's over 65 and should be standing down to Ms. Allison Brimelow next year, so I don't think that power is his motivation there. He just happens to be an inventor who knows first-hand how complicated and costly it is to obtain a patent throughout Europe, and appears to have a sincere interest in solving that.

As for the danger of unknowingly infringing a patent, this is not something restricted to software. It has always been a drawback of the patent system and is, if anything, a bigger danger for heavy industry than for software development. After all, dumping a production line is usually rather more costly than dumping lines of code. Industry has nevertheless managed to cope with it, even when it wasn't yet possible to search patents via Esp@cenet or Google.

Now, to Pieter's questions:

Pr. Raible is indeed saying that the members of the Technical Boards of Appeal (who aren't judges, although they'd certainly appreciate your thought) don't follow the EPC because it "reflects badly on their work". After a good look at the case in question and Art. 112 EPC, I just don't agree with him. But he is not saying anything about their independence, unless my reading skills are going downhill.

Now, why do I disagree with him about T1002/92 (which he doesn't seem to have bothered reading) and Art. 112 EPC?

Well, Art. 112 EPC says:

"1) In order to ensure uniform application of the law, or if an important point of law arises:

(a) the Board of Appeal shall, during proceedings on a case and either of its own motion or following a request from a party to the appeal, refer any question to the Enlarged Board of Appeal if it considers that a decision is required for the above purposes. If the Board of Appeal rejects the request, it shall give the reasons in its final decision;

(b) the President of the European Patent Office may refer a point of law to the Enlarged Board of Appeal where two Boards of Appeal have given different decisions on that question.

(2) In the cases covered by paragraph 1(a) the parties to the appeal proceedings shall be parties to the proceedings before the Enlarged Board of Appeal.

(3) The decision of the Enlarged Board of Appeal referred to in paragraph 1(a) shall be binding on the Board of Appeal in respect of the appeal in question. "

Parsing T 1002/92, it does not appear that any of the parties requested such a referral. The TBA could have referred of its own motion, but felt no reason for doing so. It does explain why in point 2.7, in particular in the following two paragraphs:

"Since the issue of these decisions in Sweden between 1983 and 1987, the case law of the Boards of Appeal concerning the interpretation of Article 52 EPC has been developed, and has been matched by corresponding development of the law in Sweden, as shown in the judgment of the Supreme Administrative Court issued on 13 June 1990 in a case concerning an application by N. V. Philips Gloeilampenfabrieken. This judgment indicates that earlier Swedish case law, at the time of
the above-identified decisions on the corresponding Swedish application, had deviated from the EPO case law.

Having regard to what is now established case law within the Boards of Appeal, and for the reasons set out in detail above, the Board does not agree with the reasoning which led to the rejection of the corresponding Swedish application."

In short, since their original decision, Swedish courts had moved towards the TBA's interpretation of the EPC, so there was no disagreement left to refer. Besides that, it must be noted that the TBA must base its decisions on the EPC and its case law, not Swedish law: the apellant can still have the patent invalidated in a Swedish court, if he thinks that it does still not conform with Swedish law.

As for reference to anything that could be interpreted as the EPO taking public concerns seriously, there's that brochure A. just linked to, isn't it?

Rodrigo,

institutional Independence of Boards of Appeal: it may be as you say, that the fact that they are embedded into the institutional framework of the EPO had no or little effect on their decisions. But with the current situation one just has to wonder about how they arrive at their decisions and if they are truly independent. In my opinion, this is reason enough for institutional independence.

The CII Directive was utterly necessary. [..] A clear line should be drawn, the debate was about where to draw it.

Agreed. But why on earth did the EPO lobby heavily for the "pro-software-patent" (call it pro-CII, if you like) position, instead of being impartial?

Mr. Pompidou was only appointed for three years. He's over 65 and should be standing down to Ms. Allison Brimelow next year, so I don't think that power is his motivation there. He just happens > to be an inventor who knows first-hand how complicated and costly it is to obtain a patent throughout Europe, and appears to have a sincere interest in solving that.

May be you are right, may be not. It may be a good thing if he draws the attention to what he truly perceives as problems of the EPO, but he should leave the lobbying to others, see above. I don't know his personal motives. But the economic study of bureaucracy (for an overview see e.g. here or here) gives lots of good reason why the EPO might want to extend it's competences. And it also hints that the less public control there is over a public institution, the worse it will likely get. The EPO, controlled basically by representatives from other patent institutions, is a good example. Interestingly, it is often suggested as a remedy for these problems to have competing agencies. I see EPLA partly as a step into the other direction.

As for the danger of unknowingly infringing a patent, this is not something restricted to software. It has always been a drawback of the patent system and is, if anything, a bigger danger for heavy industry than for software development. After all, dumping a production line is usually rather more costly than dumping lines of code. Industry has nevertheless managed to cope with it, even when it wasn't yet possible to search patents via Esp@cenet or Google.

Now, this is the core issue. The problem is not the cost of patenting but avoiding patent infringements, not protection by patents but protection from patents. What may work in one economic sector does not in another. Software is completely different from heavy industry. I could go into a lot of detail here, but I think we can leave it at that at this point.

We agree that there was a debate where to draw the line of patentability. Do we also agree that there are tradeoffs, that there are many good arguments for drawing a close line?
When there is such a debate, the EPO just should not lobby for one side (or the other).

Now, when it comes to EPLA, I just don't see that EPO takes the ensuing problems seriously. Mr Pompidou may be concerned about the cost of patenting, but he shows very little, if any, concern about the cost of protection from patents (I leave the question aside in what and how many cases patenting really would become cheaper). There is again the argument of "legal certainty" (because of harmonisation of jurisdiction), but no mention that this would mean harmonisation along the lines of the EPO jurisdiction, with the problems of e.g. the software sector not being solved but only aggravated. I don't see how they take the problem of institutional independence for the new Court seriously. If the workload is truly a concern for Mr. Pompidou, why does he want to attract even more patent applications by lowering the overall costs before haveing solved the backlog?

In your reply to Pieter:

As for reference to anything that could be interpreted as the EPO taking public concerns seriously, there's that brochure A. just linked to, isn't it?

On the contrary, it is an excellent example how the EPO is taking problems of the patent system created through it's jurisdiction not seriously, but blatantly lobbying to codify it in an EU directive.

So again, while not criticizing the single examiner, I see every reason to harshly critize the EPO and demand that it be more closely controlled instead of being given even more power.