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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Filed Under: bonus, epo, eu, incentives, patent office, patents


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  1. identicon
    Anonymous Coward, 15 Feb 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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