Who should pay for the independence of the Boards of Appeal? Why the users, of course!
Merpel thought that nothing at the European Patent Office could surprise her any more. How wrong she was. She has now received news of a draft of the latest proposal from the EPO administration to reform the EPO Boards of Appeal. The background is given in her previous post, second and third headings.
As she wrote before, the previous proposals from the EPO President to the Administrative Council for the reform of the Boards of Appeal were criticised since they conflated independence with efficiency and seemed fixated on moving the Boards to another physical location. The new proposal suffers from all the same defects, but now adds another one - the Boards are not sufficiently self-financing, according to Battistelli and his team.
Actually, Merpel should not have been surprised, because she had heard awhisker whisper that Battistelli had been observed to "note with interest" that the UPC is intended to be self-financing from Court fees, and he clearly had his beady eye on applying a similar idea to his own troublesome Boards of Appeal. He claimed that it was all very well for the Boards to wish for independence when someone else was paying for it, with the clear implication that proper independence means having your own source of funds.
But Merpel did not believe for one moment that the idea that the Boards should pay for themselves would survive any scrutiny. It is clear that the founders of the EPC did not consider that it was in any way appropriate for the Boards to be funded to any significant degree by appeal fees. In fact, that realisation is almost certainly why the compromise on the independence of the Boards in the EPC is the way that it is - they were going to be dependent on the rest of the Office for funding, and so could not be completely administratively independent of it; the EPC tried to achieve the maximum practical autonomy while keeping the inevitable financial link.
Now, to be fair, the current draft proposal for reform does not suggest that the Boards be completely self financing. But it does suggest that the "cost coverage" (ratio of fee income from appeal fees to calculated cost of the Boards of Appeal) be gradually increased from what is apparently 4.2% today to around 25%. This suggests, over time, something like a 5-fold increase in appeal fees. The proposal does of course suggest that the 25% figure could also be contributed to by efficiency improvements in the Boards. While some improvement in throughput of cases could be envisaged, the requirement for 3- or 5- person Boards for appeal cases, plus the serious responsibility that the Boards have that, in the case of a negative determination, they are the final arbiter, suggest to Merpel that any improvements in efficiency are likely to be modest or at the expense of a much reduced quality.
An increase of the appeal fee is suggested in the draft proposal, from the current level of €1880 to €2940 in 2017, and rising to €7350 by 2021.
Merpel thinks that this is completely outrageous.
Firstly, one reason for appeal is that a refusal by the Examining Division is wrong. As examiners are put under greater pressure for productivity, wrong refusals are expected to be more, not less, common. Applicants will be penalised by such a massive fee increase. There is a provision for refund of the appeal fee in the case of a substantial procedural violation, but it is perfectly possible for the examination to be shoddy without amounting to a substantial procedural violation.
Secondly, considering substantial procedural violations, are the Boards now going to be under pressure not to adjudicate that one has taken place, because it will reduce their funding? That would have the complete opposite of the alleged effect, to decrease their independence not increase it.
Thirdly, Merpel has seen no corresponding proposal to decrease other EPO procedural fees to offset the effect. She will be very surprised if one is forthcoming.
The EPO is not funded only by procedural fees. A major portion of its income is renewal fees, both those it charges directly on pending applications, and those that are remitted to it by national offices after grant (50% of the fees paid to those offices). Merpel thinks that she can suggest another, better way to make the funding of the Boards of Appeal less open to political interference from the President - benchmark it at a certain proportion of the renewal fee income. That would tie it, in an indirect way, to the work that the Office was doing, while not making the Boards dependent every year on the President agreeing to their financial requests.
This new focus on the cost coverage of the Boards of Appeal may suggest another reason for the Battistelli obsession to move them out of the Isar building (which they share with him). If they move to different, rented premises, their office costs will be easily identifiable, without giving rise to awkward questions about what the rest of the Isar building may be costing. Incidentally, the draft proposal suggests to juggle staff from PschorrHöfe to Isar, and then rent out some office space in PschorrHöfe. Is now the EPO to be expanding into the office rental business?
The next Administrative Council meeting is at the end of June. Merpel sincerely hopes that this mad proposal will be ditched before then, or rejected by the Administrative Council.
As she wrote before, the previous proposals from the EPO President to the Administrative Council for the reform of the Boards of Appeal were criticised since they conflated independence with efficiency and seemed fixated on moving the Boards to another physical location. The new proposal suffers from all the same defects, but now adds another one - the Boards are not sufficiently self-financing, according to Battistelli and his team.
Actually, Merpel should not have been surprised, because she had heard a
But Merpel did not believe for one moment that the idea that the Boards should pay for themselves would survive any scrutiny. It is clear that the founders of the EPC did not consider that it was in any way appropriate for the Boards to be funded to any significant degree by appeal fees. In fact, that realisation is almost certainly why the compromise on the independence of the Boards in the EPC is the way that it is - they were going to be dependent on the rest of the Office for funding, and so could not be completely administratively independent of it; the EPC tried to achieve the maximum practical autonomy while keeping the inevitable financial link.
Now, to be fair, the current draft proposal for reform does not suggest that the Boards be completely self financing. But it does suggest that the "cost coverage" (ratio of fee income from appeal fees to calculated cost of the Boards of Appeal) be gradually increased from what is apparently 4.2% today to around 25%. This suggests, over time, something like a 5-fold increase in appeal fees. The proposal does of course suggest that the 25% figure could also be contributed to by efficiency improvements in the Boards. While some improvement in throughput of cases could be envisaged, the requirement for 3- or 5- person Boards for appeal cases, plus the serious responsibility that the Boards have that, in the case of a negative determination, they are the final arbiter, suggest to Merpel that any improvements in efficiency are likely to be modest or at the expense of a much reduced quality.
An increase of the appeal fee is suggested in the draft proposal, from the current level of €1880 to €2940 in 2017, and rising to €7350 by 2021.
Merpel thinks that this is completely outrageous.
Firstly, one reason for appeal is that a refusal by the Examining Division is wrong. As examiners are put under greater pressure for productivity, wrong refusals are expected to be more, not less, common. Applicants will be penalised by such a massive fee increase. There is a provision for refund of the appeal fee in the case of a substantial procedural violation, but it is perfectly possible for the examination to be shoddy without amounting to a substantial procedural violation.
Secondly, considering substantial procedural violations, are the Boards now going to be under pressure not to adjudicate that one has taken place, because it will reduce their funding? That would have the complete opposite of the alleged effect, to decrease their independence not increase it.
Thirdly, Merpel has seen no corresponding proposal to decrease other EPO procedural fees to offset the effect. She will be very surprised if one is forthcoming.
The EPO is not funded only by procedural fees. A major portion of its income is renewal fees, both those it charges directly on pending applications, and those that are remitted to it by national offices after grant (50% of the fees paid to those offices). Merpel thinks that she can suggest another, better way to make the funding of the Boards of Appeal less open to political interference from the President - benchmark it at a certain proportion of the renewal fee income. That would tie it, in an indirect way, to the work that the Office was doing, while not making the Boards dependent every year on the President agreeing to their financial requests.
This new focus on the cost coverage of the Boards of Appeal may suggest another reason for the Battistelli obsession to move them out of the Isar building (which they share with him). If they move to different, rented premises, their office costs will be easily identifiable, without giving rise to awkward questions about what the rest of the Isar building may be costing. Incidentally, the draft proposal suggests to juggle staff from PschorrHöfe to Isar, and then rent out some office space in PschorrHöfe. Is now the EPO to be expanding into the office rental business?
The next Administrative Council meeting is at the end of June. Merpel sincerely hopes that this mad proposal will be ditched before then, or rejected by the Administrative Council.