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Patent Attorney Axel H Horns' Blog on Intellectual Property Law.

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Tuesday, June 12, 2007

Landslide, Tremor Or Quake?

Quake or tremor? is the headline of the main article on the cover of the recent print issuee of the

Intellectual Asset Management Magazine. It deals with the changing face of patent monetisation in the U.S. I must confess, however, that today quite different associations came to my mind when thinking of words like quake and tremor in the context of Intellectual property.

Seen from one side, today was quite a normal business day in a normal business week. Applicants from various fields of the industry continued to seek for patent coverage of their employee's inventions as ever, and Examiners in various Patent Offices issued Office Actions objecting to this and that. And, finally, a number of patents have been granted. However, if deliberately seen from some other side, I hardly can take today and other days earlier this month as normal and routine but I am tempted to feel that something very important is happening, gradually but steadily changing our business, not yet having decided to stand still some day or to culminate in some sort of a landslide, quake or tremor.

A few days ago I wrote

an article on a striking factual co-operation of a conference organisation

EUPACO having emerged out of a scenery around

FFII, on the one hand, and high-level IP attorneys from

IBM, on the other hand. Obviously the most important patent applicant on the globe, in terms of quality as well as in terms of quantity, shows some desire to sort things out which previously had been standing crosswise between patent critics and activists on one side and the industry on the other. To explain this, FFII has put on the Internet

a set of presentation slides from the

EUPACO-1 conference, the slides being authored by Mr Roger Burt and Mr Jonathan Sage of IBM Europe titled "Intellectual Property Strategy in the 21 Century - Balancing Open & Proprietary Innovation". Take alone this title - besides IBM it might not be quite usual in various quarters of the industry to admit - not to mention even to stress - that open and proprietary innovation might be genuine antagonists that need some sort of balancing. When glancing at the slides, it appears as if in IBM's view from 2007 onwards collaborative innovation is an important concept. They think that there is a common life cycle of innovation like the progress from discovery to adoption to application where proprietary innovation has its place, but a limited and confined one. In particular at later stages IBM sees benefits to discuss the exploitation of inventions in the framework of Commons. Of course, not everyone in the industry outside of IBM might be prepared to share such views but I do think that IBM might well be playing the role of a vanguard in researching and exercising new models of exploitation of innovation.

Meanwhile academia is continuing playing that well-known basso continuo of demanding fewer and narrower patents.

There is a new

Background Document for the STOA Workshop on Policy Options for the Improvement of the European Patent System addressing Members of the European Parliament, stating:

A rapidly increasing demand for patent rights is putting strain on the system and jeopardising patent quality. The main challenge is to prevent this from happening within the European patent system.
The high speed of introduction of new technologies makes it harder to determine the adequate scope of patents granted. The main challenge is to ensure that too broad patents are not granted within the European patent system.
Partly as a result of the growth of patents in complex technologies, a rise in defensive and strategic patenting behaviour has in some sectors resulted in 'patent thickets' where numerous and possibly overlapping patents exist making it difficult for new and small inventors to enter the market. The main challenge is to alleviate the effects of patent thickets within the European patent system.

More and more companies are patenting and spending greater time and effort on trading rights and licensing, thus diverting resources from actual innovation. The main challenge is to ensure that companies are not forced to deal excessively with patenting and licensing and are 'freed up' to concentrate more on innovation within the European system.
Increased interest in the patent system calls for greater transparency and the involvement of more experts, politicians and stakeholders in the future development of the system. The main challenge is to ensure that this occurs within the European patent system.

In particular, the authors demand:

Insertion of the economic mission of the patent system in the European Patent Convention;
Enhancing governance within the European Patent System;
Improving quality aspects in regard to patentability standards and patent grant procedures;
Dealing with emerging technologies;
Increasing access to patented inventions; and
Facilitating defensive publications.

The paper was coordinated by Mr Bjorn Bedsted, Project Manager, The Danish Board of Technology/ETAG, and prepared by:

Mr. Robin COWAN, Professor of economics, BETA, Universite Louis Pasteur and UNUMERIT, Universteit Maastricht, the Netherlands;
Mr. Wim Van der EIJK, Principal Director International Legal Affairs and Patent law, EPO, Munich, Germany;
Mr. Francesco LISSONI, Professor of Applied Economics, University of Brescia, Italy;
Mr. Peter LOTZ, Head of Department of Industrial Economics and Strategy, Copenhagen Business School, Denmark;
Mrs. Geertrui Van OVERWALLE, Professor of IP Law, University of Leuven, Belgium;
Mr. Jens SCHOVSBO, Professor, University of Copenhagen, Faculty of Law, Denmark; and
Mr. Matthew ELSMORE (rapporteur), Assistant professor, Aarhus Business School - University of Aarhus, Denmark

And, there is another paper

Patentschutz und Innovation commissioned by the German Minister of Economy and Technology and authored by a larger number of German heavyweights in economic research which, unfortunately, is available in German only. There also is a general tendency in this paper to limit the scope of the patent system albeiit the practical conclusions presented at the end of the document may differ from those of the STOA backgrounder as mentioned above.

Listening to the melody of IBM's sinfonia based on the melody of collaborative innovation over that basso continuo I suddenly feel very irritated by some cacophonic noise emerging from the inner gear of the

European Patent Office. FFII-related circles have managed somehow to unearth

Document CA/93/07 presented by the staff representation to the Administrative Council. The paper had been submitted by the staff representatives via the President of the European Patent Office in accordance with the Administrative Council's rules of procedure. The main headline says that the trust of the EPO Staff in its highest governing bodies, including the Administrative Council, is worryingly low. The paper stresses that staff perceives the attitude of the Council delegates towards staff as negative. Moreover, again according to that paper, when Staff Representatives mentioned certain alleged potential conflicts of interest in a recent Council meeting, some delegations reacted with irritation and even went so far as to threaten expulsion of the Staff Representatives from the Council if such allegations were made again. With other words: The atmosphere appears to be entirely poisoned. It surely is a grave situation but I am no sure as to if I would be prepared to go as far as Mr Joff Wild who, in his blog, reported the issue under the title

Civil war at EPO. According to

The Register, the EPO has confirmed that the Document is authentic, but could not offer any official comment on its findings at the time being. Furthermore, The Register was told the Document will be formally submitted to the Administrative Council only during the week commencing 25 June, after which perhaps some official comment might emerge. But still more interesting than the brawls in the framework of the European Patent Organisation are some concerns expressed in the staff paper that can directly be linked to the basso continuo mentioned earlier:

"[...] There is a strong belief amongst staff that the financial benefits to the Member States arising from the renewal fees motivate the Administrative Council, and consequently the EPO administration, to focus on the quantity rather than the quality of the granted patents. [...]"

It might well be desirable Member States of the EPC explaining publicly their position in this respect. If the Governments of EPC Member States should prove incapable of defusing the current spat this might, on the long run, well mature into a further nail in the coffin of the European Patent Organisation as an entity standing independently besides the legal framework of the European Union. However, Mr Pieter Hintjens seems to be a bit premature when

foreboding

"The EPO is collapsing, predictably."

And,

IPKat Blog comments on that pointing out that the term of Office for the current President of the EPO, Mr Pompidou, will terminate by June 30, 2007:

"[...] The IPKat sincerely hopes that the new president Alison Brimelow, who is due to start her job at the end of this month, can help in bringing some harmony back to the EPO and bring to an end to this bickering. It certainly doesn't look good to the outside world that such a large and important organisation as the EPO is apparently riven with conflict between the ordinary workers and the higher levels of the organisation.

Merpel points out that it's all about money really. The EPO is now such a cash cow that everyone is complaining, from the basis of pure self interest, that they don't get their fair share.[...]"

But some very interesting insights about the role of money in this debate are then provided by a comment made on IPKAT's Blog by Mr Jim Boff, a prominent Patent Attorney from the UK, pointing out that the EPO can alternatively be seen as a wealthty organisation or as a wreck near bankrupcy; compare also the information given so far in

epi information 04/2006:

"[...] The perception may be that the EPO is a cash cow, but the reality is somewhat different.

For many years the EPO has run on a cash accounting basis, which indeed makes it appear to be rolling in dosh. However, the EPO has now moved over to International Financial Reporting Standards [IFRS], which do not paint such a pretty picture.

Under IFRS future liabilities (such as pension provisions)have to be given a value in the accounts, whereas future uncertain assets (such as present value of future renewal fee income) cannot be put in the accounts, except as a note to the accounts. This makes the EPO appear to have a gaping wound in its finances.

There is thus a tension between:-

- those whose agenda is to close that apparent wound in finances[these tend to fear what might happen if the EPO went bust as Member States would then be liable for the shortfall];

- those who simply want a share in the dosh, by keeping fees down or otherwise.

As ever, the truth is somewhere in between [...]"

And, if all that were not enough stuff for a few days, another theme is sounded loud and clearly heralding further changes and instabilities for the world of IP. Just today the European Patent Office has published an on-line brochure

Scenarios for the future - How might IP regimes evolve by 2025? - What global legitimacy might such regimes have? Apparently the supply of strong meat continues:

"[...] Our analysis indicates that this vital system is one facing profound systemic change. This transition has happened so quickly that it has been hard for those within the hermetic world to grasp this and adapt to these changing conditions. The expanding stresses and strains within the patent system, caused in no small part by the need to cope with the growing demands of an ever-increasing number of global players, have created blockages, growing uncertainty for business and societal questioning. These tensions are being exacerbated by the driving forces pressuring on the system.

This is a world where conflict and the need for change co-exist; how these changes impact the system, moving it in the direction of one of these four scenarios, will depend on how the driving forces we have identified interact and play out. [...]"

And further:

"[...] The patent system increasingly relies on technology, and new forms of knowledge search and classifi cation emerge.

Traditionally, the world of patents has been viewed through the Market Rules lens. But it is unwise to take decisions on the basis of just one possible future. We believe that viewing the other three worlds - too often ignored by many - will enable the system and those within it to better respond to the multiple pressures of the future.

The patent system, evolved over centuries to protect industrial technologies within a relatively small number of nations, is likely to have to adapt - perhaps radically. Globalisation - global competition - encourages more innovation as new products are marketed and sold worldwide. It also means more exchanges of ideas and technology, resulting in a challenge: how will we develop harmonised means to deal with the growing number of such exchanges? This is the world of 'Market Rules'.

The system must also accommodate the multiple players and stakeholders from different cultures and with different worldviews who are working towards different goals within a global environment. The challenge here will be to find a way of meeting the specific developmental requirements of diverse nations at global level, because a system that blocks the access of poor people to essential drugs or food will impact the credibility of the system. This is the world of 'Whose Game?'

Civil society is increasingly engaged in the IP debate, and this interest is likely to significantly shape the agenda of the 'commons' debate. As questions around the public benefi ts of IP gain traction, we enter the world of 'Trees of Knowledge'.

The subject matter protected by the patent system is changing, too. Technologies become increasingly fast, interdisciplinary and cumulative, increasing the tensions on the patent system and leading us to 'Blue Skies'.

These four scenarios illustrate the different ways the world of patenting and intellectual property could evolve. Each of these four worlds represents a series of trade-offs that will be made, and each will have winners and losers, advantages and disadvantages. [...]"

Perhaps all these events of a few days in June 2007 should be seen in their interconnection. Doing so might, under some circumstances, make sense of all that.

[UPDATE 2007-06-13] The EPO has opened a

discussion forum concerning the Scenarios project.

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"Mr. Wim Van der EIJK, Principal Director International Legal Affairs and Patent law, EPO, Munich, Germany;"

Isn't it funny that an official bound by EPO staff obligations authors a report which makes recommendations about the future role of the EPO. From my perspective there is absolutely no reason to participate in STOA for EPO officials. Having regard that Mr. Van Eijk works under repressive conditions and the report is still highly critical despite the hostile interference of the EPO we mention how strong a basso continue can get.

As a European citizen I wonder what we would say if Mr. Erik Nooteboom participated in a European Parliament advisory board. But at the EPO they think it conforms the duty of their office. One reason more to put the kibosh on the EPO and finally install an EUPO. "Good governance" at the EPO? No, they interfere as much as they can and get political.

# posted by Anonymous : 20 June, 2007 12:39

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Tuesday, June 12, 2007

Landslide, Tremor Or Quake?

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