European Patent Office Gives Staff Bonus For Issuing Bumper Crop Of Patents: What Could Possibly Go Wrong?

from the perverse-incentives dept

The European Patent Office (EPO) is a curious body. Despite its name, it is not the patent office for the European Union (EU) in the same way that the USPTO handles patents in the US. As its history page explains:

In addition to all 27 EU member states, Albania, Croatia, Iceland, Liechtenstein, the Former Yugoslav Republic of Macedonia, Monaco, Norway, San Marino, Serbia, Switzerland and Turkey belong to the European Patent Organisation.
This gives it an independence from the European Union that is problematic for patent law there. For example, back in 2005, the European Parliament voted definitively not to allow software patents in Europe. And yet as an excellent analysis published on the IPKat site explains, the EPO has continued to move steadily towards granting more and broader software patents in Europe.

Given the largely uncontrolled way the EPO has been issuing patents, this story in Intellectual Property Watch is noteworthy:

The European Patent Office Administrative Council in December agreed to award a controversial bonus of tens of millions of euros to EPO staff at the end of 2012, with 24 positive votes and 8 negative votes. Several stakeholders had protested the proposal and encouraged contracting states in the Administrative Council to vote against the measure.
The reason for the bonus? Because of all the extra money the EPO had made recently as the result of granting so many patents. But as a letter written to representatives of the 38 EPO contracting states in the Administration Council, and obtained by Intellectual Property Watch, pointed out (doc):
[The bonus] contributes to adverse incentive structures and conflicts of interest for the employees of the EPO. In linking the staff's wallet to the Office's surplus, it undermines the efforts to raise the bar in patent examination and fosters a mentality to increase fee revenues for the EPO by granting applications of low quality.
The bonus is effectively rewarding the fact that the EPO's employees issued a particularly large number of patents in 2011. Human nature being what it is, the danger is that this will encourage them to issue even more patents in the hope of receiving another similar bonus.

As the letter goes on:

The EPO should not celebrate increases in patent filing rates as a success story but react to the worldwide critique of a global overheating of the patent system jeopardizing innovation and the proper functioning of the social contract with society upon which the patent system rests.
That is, rather than implicitly making the false equation that more patents automatically mean more innovation -- something that Techdirt has written about several times -- the EPO should strive to reduce the number, but increase the quality, and maybe offer bonuses for those who achieve that.

Sadly, it's in the EPO's interests to have more patents issued, regardless of their quality, since this will encourage yet more companies to apply for patents so as not to get "left behind" in the Great Patent Race. And that will produce yet more surpluses for the EPO, and presumably more bonuses for its staff. Everyone wins -- except, of course European businesses and citizens who have to suffer the knock-on effects of yet more unjustified intellectual monopolies.

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Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Jeroen Hellingman, Feb 15th, 2013 @ 1:13am

    To get rid of the surpluses at the EPO, just introduce product liability. If they issue a patent against the rules, and this is found out later, they will need to pay all the damages it caused on society, including but not limited to license fees paid.

    Of course this is intended as a stop-gap measure until we can find enough people with courage to abolish to utterly broken patent system altogether.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 1:43am

    Why don't they just issue the bonus based on the number of patents processed (including turned dowed ones), instead of the number granted? While still not perfect, it would be a step forward.

     

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  3.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 1:43am

    Why don't they just issue the bonus based on the number of patents processed (including turned dowed ones), instead of the number granted? While still not perfect, it would be a step forward.

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 1:57am

    Damn, if only I was doing the sort of thing we do in our downtime -- running a Twitter search for the term "infringement."

     

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  5.  
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    Ninja (profile), Feb 15th, 2013 @ 2:09am

    Re:

    That. Have my insightful vote. Works like Wall Street crashing the financial system and getting away with fat bonuses. It will happen again.

     

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  6.  
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    Fairglow, Feb 15th, 2013 @ 3:09am

    Response to: Anonymous Coward on Feb 15th, 2013 @ 1:43am

    I think the incentive should be to deny the patent applications, to make sure the examiners make a thorough job at analyzing the claims and finding prior art. That would give better quality in both applications and approved parents.

    Give them bonus for the number of denied applications! Of course the denial must be properly motivated

     

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  7.  
    identicon
    Fairglow, Feb 15th, 2013 @ 3:09am

    Response to: Anonymous Coward on Feb 15th, 2013 @ 1:43am

    I think the incentive should be to deny the patent applications, to make sure the examiners make a thorough job at analyzing the claims and finding prior art. That would give better quality in both applications and approved parents.

    Give them bonus for the number of denied applications! Of course the denial must be properly motivated

     

    reply to this | link to this | view in thread ]

  8.  
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    Anonymous Coward, Feb 15th, 2013 @ 3:13am

    Re:

    Politicians (and bureaucrats) think that patents issued equals innovation, therefore a bonus for issued patents will increase the amount of innovation taking place.
    /s

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 3:16am

    Patents seem like a giant ponzi scheme where only the lawyers get rich. This is maddness.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 3:32am

    Re:

    The patent system is not broken in its foundation, it just needs a completely reset since it has moved so far away from the foundation that it cannot see it any more...

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 3:42am

    Re:

    I think that is where it has been moving towards for the past 10-15 years.
    The number of cases going to court increses as the number of wrongfully accepted patents increse. It has been more and more of a trend that the issuer does not show as due dilligence anymore since it has absolutely no consequenses not to and this incentive structure is making the system a lot worse in that direction. Quality is getting severely undermined when quantity increases and it is not as a result of externalities. It is a philosophical inevitability and the blindness from politicians is worrying beyond belief!

     

    reply to this | link to this | view in thread ]

  12.  
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    Anonymous Coward, Feb 15th, 2013 @ 3:47am

    surely the only thing that could go wrong are the cheques bouncing!

     

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  13.  
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    Anonymous Coward, Feb 15th, 2013 @ 3:52am

    Re: Re:

    So it's kind of like a comics reboot, such as the Crisis series of events by DC.

     

    reply to this | link to this | view in thread ]

  14.  
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    Zakida Paul (profile), Feb 15th, 2013 @ 4:15am

    Re: Re:

    Ah, Capitalism. A system that rewards people for their complete failure that results in untold hardship for 99% of the population.

     

    reply to this | link to this | view in thread ]

  15.  
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    Ninja (profile), Feb 15th, 2013 @ 4:17am

    Re: Response to: Anonymous Coward on Feb 15th, 2013 @ 1:43am

    There should be bonuses for properly given patents and severe punishments for bad ones. Cover both sides.

    But the real issue is the patent system itself, this would be just some band-aid solution.

     

    reply to this | link to this | view in thread ]

  16.  
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    Anonymous Coward, Feb 15th, 2013 @ 5:27am

    Hey I don't see a problem, I do something like that all the time at the safety company I work for!

    Someone comes in with designs for a structurally unstable bridge that can't hold more then 2 cars at once without collapsing into the lake below, and I approve it to help get me a bonus for approving so many things in a year!

    BP gives me designs for an oil platform in the gulf with insufficient safety protections to stop a giant oil spill, and I say "no problem, looks good to me".

    As long as I never drive over any bridges I approved, or near any bodies of water with oil platforms then I'm perfectly safe, and much richer then before!

     

    reply to this | link to this | view in thread ]

  17.  
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    bawd, Feb 15th, 2013 @ 8:34am

    A little perspective amongst the mouth foaming comment

    Some fact correction in relation to the article itself.

    First, the EPO is not curious. It has never pretended to be an EU institution and just because it includes the word "European" in the title doesn't imply an association with the EU. Look at a map. The EU has 27 (soon 28) member states. Europe includes plenty of countries which are not EU member states. If you can't get your head around that then consider the European Court of Human Rights - not an EU institution, the "Eurozone" - 17 out of 27 EU members, the European Econonic Area - EU + Norway and Switzerland. There are plenty of institutions that are called "European" that we don't immediately assume are synonymous and coextensive with EU membership.

    Second, the European Parliament does not have (and never has had) sovereignty over member states property rights, whether intellectual or real so the vote was a political sham. Anyone who bought it doesn't understand the law and is likely to be one of the mouth foaming community posting here.

    Third, the EPO approach to software patentability has been consistent for almost 10 years now since the COMVIK and Hitachi decisions. As an aside here, why shouldn't an innovative software developer be rewarded for his intellectual output? If that developer writes a programme that is used on an engine management system that, say, doubles fuel efficiency they rightly get awarded a patent. If that same developer writes a programme that causes a computer to consume less power, why should they not get protection for that invention? The effect is the same, the only difference is the machine which the software is operating.

    Fourth, the EPO has not made "extra money" granting patent applications. The reason for the surplus is a combination of increases in official fees for applications and a deadline on the filing of divisional applications which encouraged a temporary increrase in filings in 2010/11.

    Fifth, the letter was signed by anti-GM and open source special interest groups only.

    Sixth, it contains a fundamental error that the bonus is linked to number of granted patents. It is not - it is linked to a fee surplus which arose temporarily for the reasons set out above, not due to an increase in grants.

    Now there is a serious question as to whether or not the bonus should have been paid but it has nothing whatsoever to do with that set out above. It is this - the EPO is effectively insolvent - its liabilities way outstrip its assets. The fee regime introduced by the last President (Alison Brimelow) was intended to plug that gap, not to be given to the very examiners who had created the asset gap in the first place by failing to process applications in an efficient manner. To take the surplus generated and just hand it out to the existing examining staff will do nothing to address the major issue with the EP system - long pendency times. They should have hired more examining staff. Most of the hue and cry around software cases are down to the long period of time between filing and grant. A feature is invented, it is applied for as a patent and the long delay before grant means that the feature feels as though it has been around "forever" by the time it gets litigated. But that is the nature of patents - you have to consider a technological snapshot at the filing date, not what has become well known years later.

     

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  18.  
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    nasch (profile), Feb 15th, 2013 @ 9:59am

    Re: A little perspective amongst the mouth foaming comment

    As an aside here, why shouldn't an innovative software developer be rewarded for his intellectual output?

    I'm a software developer, and I get rewarded for my output, and I don't need patents for that.

    If that developer writes a programme that is used on an engine management system that, say, doubles fuel efficiency they rightly get awarded a patent.

    He should only be awarded a patent if he wouldn't have made the program without one. Otherwise the patent system isn't serving its purpose.

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 5:36pm

    Re: A little perspective amongst the mouth foaming comment

    First: EU, EMU, EIS... I would also call it EU in most situations, no matter where you draw the lines. Since the basic construction of EPO was thought out on account of EU, it is even more irrelevant to attack this nomenclature.

    Second: Sham or not, it is a vote of confidence and having 6 vote against is a sign of some dissention.

    Third: You are severely diluted in the understanding of software patents. Look around and see what the basis for the programming is and understand that the development on software is too small a change to the foundation that it should be shot down for lack of innovation hight no matter what! That it isn't, is proposterous and severely degrading to those countries with actual laws against software patents. Saying that they give: "non-obvious "technical contribution" or solves a "technical problem" in a non-obvious way" is degrading to anyone.

    Fourth: So the specific reasoning is increased costs of applying for the patents and some deadlines? Goodness gracious. My disapproval of the money-sharing just skyrocketed to foaming levels...

    Fifth: When I read through the list I see several people who I would not call anti-gm. You make them: "Just the enemy" instead of taking what they write as a protest. Keep digging your trenches and see if people will keep accepting EPO when the new structure of EU patents start to wear you down...

    Sixth: First sensible conclusion, but why isn't it contained in third point? You are just making up specifics to keep putting numbered disagreement up?

    The rest needs a violin for how bad EPO is treated and how long a patent application is "in the mail". Maybe, just maybe, EPO and other patent offices should take a look at their fundamental existence and ask how they can improve in both quality and spend less time reviewing. A hint is: Having people in the fields help, might be better than crappy patent lawyers thinking "Whatever, we can always take it in court if we screw it up"...

     

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  20.  
    identicon
    Anonymous Coward, Feb 28th, 2013 @ 5:42am

    Response to: Anonymous Coward on Feb 15th, 2013 @ 1:43am

    Bonus was based on number of days worked. My mum passed away and I got a reduction in the bonus.
    Anyhow your proposal introduces great disparity. Certain areas of basic mechanics "porocess" 150 products/year (products do include refusal) whilst areas of biochem process less than 50.
    No bonus for production makes sense to me as civil sevant. In any case I donated most to kika (kinderen met kanker).

     

    reply to this | link to this | view in thread ]


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