The supposed benefits of the EU - part 2

Some time ago I posted on the effect that EU membership has had on intellectual property, my specialist field.  That post focussed on effect the EU's interventions had had on costs and timescales.  I promised a second post, looking at the detail.  Here it is...

First, let's rewind the clock and look at the original British system of registering trade marks, as set out in the Trade Marks Act 1938 and as in the early days of the Trade Marks Act 1994.  When you filed an application to register a new trade mark, the Registry looks through its records of earlier pending and registered marks.  If it finds any that are similar, it cites them against you as an objection.  Your application cannot proceed while that objection is there.  You must then either convince the Registry that there is no actual conflict in practice, or approach the earlier proprietor to seek their consent, or apply to revoke the earlier registration, or some combination of these.  Only when the Registry was happy that your proposed trade mark registration did not conflict with anyone else's would your application proceed.

Incidentally, a request for consent was always accompanied by an offer to pay the associated professional fees in advising the earlier proprietor (even if they subsequently refused consent). 

After the application was accepted by the Registry, it was published to let third parties "oppose" the application if they thought it whouldn't have been allowed.  As the Registry had already examined the application, this opposition process was only needed where the Registry had made a mistake or where the opponent had been using their mark but had never bothered to register it.

This system worked well from 1875 until 1996 (although I can only personally vouch for it after 1991…).  It is still the approach that is current in the US, Japanese, Chinese, Canadian, Brazilian, Australian, New Zealand, Indian and other Trade Marks Registries.  In other words, it is the accepted system among the non-EU developed economies of the world.

1996 brought us the EU Trade Marks Registry, which was originally going to work to the French/Italian model of allowing anyone to register anything and leaving it to the Courts to sort everything out afterwards.  We and the Germans resisted this and insisted on an opposition process and an examination for earlier marks; we succeeded in getting an opposition process but the examination as to earlier marks was limited to merely doing a search, telling the applicant what they had found, and telling the owners of the earlier marks that their mark had been cited.  The theory was that when shown an earlier registration of a similar mark, the later applicant would realise that proceeding with the application was pointless and would withdraw it.  In practice, most applicationts carry on anyway.  Faced with a steady stream of EU registrations that were effective in the UK and had not been examined for prior rights, the UK Registry eventually gave up examining and has now adopted the same process as the EU office. 

The EU IPO is currently trying to drop even this step of the process as (in its view) it just gets in the way of registering things quickly.

For the owner of the earlier mark, receiving one of these 'notice letters' is a warning that someone may be trying to adopt the same trade mark as they already own.  They need to look up the details of the later application, come to a view as to whether that is a problem, and (if so) contact the application to persuade them to withdraw.  If they do not withdraw, then an opposition will be needed.  The result has been an approximately tenfold increase in the rate at which applications are opposed, and (for some owners) a need to send a steady stream of opposition threats. Previously, this work was done for them, funded by the application fees charged to new applicants.

This was a deliberate decision at the political level to shift the burden of keeping the register 'clean' off the IP offices and new applicants, and onto the proprietors of the earlier marks.  The intention was that faster and cheaper application processes via a single EU Registry would outweigh the additional cost of forever having to defend the registration.  I would characterise the results against that criterion as “mixed” at best, and the level of understanding of IP application processes among the politicians who made this decision as “non-existent”.

This decision by the EU has had two effects, both of which were entirely predictable.  First, the owners of registered marks have to keep on defending them, incurring costs in the process.  They see the EU IPO taking hefty application fees off new applicants and running large surpluses, and frankly they (and I) do not understand why the EU IPO cannot therefore examine new applications properly instead of just passing the problem on to others.  Second, happy clients who have just been granted a registration ask whether that means they are the owners of the trade mark, free to use it in the EU?  I have to tell them that no, they are not - there could easily be a prior national right which both invalidates their EU registration and also means they cannot use the mark in that state.

The EU's involvement in the trade mark registration process has therefore been to devalue a registration and to place a new burden on trade mark owners, while raking in the cash (see my previous post).  They could have helped businesses, for example by creating a central registry holding searchable details of all the marks in all the EU countries, allowing us to clear new trade marks easily, cheaply and quickly; that would have been a genuinely valuable resource (but would not have been as profitable for the EU).  But instead, they just created another level of complexity for the system. 

And I haven't even got onto the real minutiae of class fee structures and specification drafting - two more areas where the EU's influence has again made life more difficult for businesses.

Suffice to say that I shall be disagreeing with the assumption by my professional institutes that we should vote to stay in.

A positive vision to leave

For decades now, I have argued with people who suggested that it wasn't worth voting.  Same sh*t, different faces was the essence of their argument.  With the Brexit vote looming, and the possibility that we might not vote to leave, I have realised tonight that those people had a point. 

Does it really matter who tells us to do what Brussels decides?  No.  Has Cameron stamped the imprint of distinctly Conservative policies on this nation?  No.  Has he changed the agenda from the liberal-left corporatist centrist lets-just-muddle-through-and-stay-in-power smile-for-the-camera machine politics that we have had since 1990?  No.  Does he even have the power to do that?  No, he's only the Prime Minister.  He doesn't have the authority to change the agenda, because he doesn't set it. 

So let's vote for something positive on the 23rd.

Let's vote to make our politics our own again.

Let's vote to make Westminster meaningful again, to give it the chance to rise to the opportunity.

Let's vote in favour of making voting worthwhile.  

Let's vote to leave the EU.

Before and After

Before:

Membership of the EU helps keep us safe from terrorism.

After:

It's 'not appropriate' to use the terror attacks to suggest Britain is safer outside the EU.

There you have it; a clear statement from our Prime Minister -the Prime Minister - that we should not allow facts to affect our decision on the EU.  

It is a simple and undeniable fact that free movement of people within the EU means that we must all subscribe to the standards of the weakest EU member state.  No matter what we do to improve our border security, we must allow in anyone who has been granted residence by another EU state.  Therefore, our standards are set by whichever is the easiest country to get into.

That made sense when the EU (/EEC) was a small group of close-knit nations with a similar culture and a similar outlook.  But those rules are being carried forward into an era when the EU has 28 countries ranging from the first country to industrialise its economy and the founder of capitalism all the way to a collection of ex-communist states.  On a per capita basis, their GDP is around half ours.  On the World Bank rankings for GDP, EU members span from the 4th largest economy to the 105th largest.  Cohesive?  Similar?  Don't be silly.

I think I'd rather take a leap into the dark and uncertain place occupied by the other 160 countries on the World Bank index.  The one occupied by six of the top ten and fourteen of the top twenty - both clear majorities... 

On the supposed benefits of the EU - part 1

As you may have noticed, I work in intellectual property - I act for clients in applying for patents and trade mark registrations.  That's an area where there has been a lot of European integration over the years, so in the light of the forthcoming referendum I'd like to offer my observations on the impact that has had on the UK and its businesses.  This is the first of two posts - in this post I'll look at timescales and costs, in part 2 I plan to look at some of the minutiae of EU trade mark practice to explain some of the effects of that on UK businesses that no-one ever highlights because no journalists or politicians really understand it.

Now, an unusual aspect of this field is that we do in fact have an interesting form of experiment.  In the field of patents, we have the European Patent Office ("EPO"), based in Munich but with offices in The Hague, Berlin and Vienna.  It is not an EU institution, but was created by nation states acting together to establish an international convention by which they chose to delegate authority to grant patents in their jurisdictions to a common body.  For Trade Marks (and registered designs), we have the soon-to-be-renamed Office for Harmonisation in the Internal Market (Trade Marks and Designs) (known as "OHIM") which acts a a central Trade Marks Registry covering the EU member states.  It is an EU body, created by a Commission Regulation.

Discussions as to setting up both offices started in the early 1970s.  The "European Patent Convention" was signed in 1973, and the EPO opened its doors to new applications in 1978.  From the start. the EU stated its intention to proceed more quickly by simply issuing a Regulation of its own that would get things off the ground long before a dedicated multilateral convention could be agreed.  OHIM was in fact set up in 1994, and opened to new applications in 1996.  So there is the first observable effect of the EU's involvement; a delay of 18 years.  In the time it took the EU to set up OHIM, I was conceived, born, educated (sort of), found a job, qualified as a patent attorney, and had almost become a partner in my business by the time I or anyone else was able to practice before the newly-formed OHIM.

So that deals with timescales, and the conclusion from the experiment is pretty clear - if you want something done quickly, do it yourself.  Don't ask the EU Commission to do it for you. 

So, onto costs (and related things).  The EPO is, in my professional view, a huge net benefit to applicants for patents.  As an organisation, it is by no means perfect and I have (from time to time) had some very sharp things to say about it and certain of its staff.  However, most of its staff are reasonable people who reach sensible decisions most of the time, and the cost of seeking patent protection across the European continent via the EPO is a tiny fraction of the cost of doing the same via the corresponding national systems.  The EPO's fees are on the high side (especially the renewal fees), but as it is an independent organisation, they lack any form of governmental subsidy and - when considered in relation to the standard of search and examination that they carry out - are generally reasonable and justifiable*.

OHIM, on the other hand, charge €900 for receiving an application online, looking at it and either (i) accepting it, waiting three months to see if anyone objects, and then issuing a certificate, or (ii) writing two letters to refuse it (both clearly based largely on standard templates).  By way of comparison, the UK Intellectual Property Office ("UKIPO") carries out a precisely equivalent process for £170.

I used to wonder why there was a difference.  In the EPO's case, the reason for the disparity between EPO and UKIPO fees is clear, as the EPO performs a much more thorough novelty search, has linguistics overheads that the UKIPO does not, and has a much more staff-intensive examination process so as to avoid national prejudices and ensure a more considered view of a patent application that is (metaphorically) carrying many more eggs in its basket than a single national application.  There is no obvious reason for this in OHIM's structure, though.  The budget surplus of nearly €300 million that OHIM had accumulated by 2008 did also suggest that its fees were unnecessarily high, too.

I've since realised why OHIM's fees are so high, and it's quite simple.  If OHIM charged (say) €250 for an application, who would ever file a national trade mark application?  Rather than just have a national right, if the cost was similar you'd get much better value by getting a right that covered the entire EU, wouldn't you?  Of course, then the national trade mark registries would all close as they would have nothing to do.  So OHIM's fees are a reflection of the fact that the EU's priority is in protecting civil service staff numbers - not helping business.  In every EU trade mark application they file, businesses are being charged a €650 tax to preserve civil service jobs.

This is a huge shame.  In OHIM, the EU had the opportunity to make a massive gift to businesses, allowing them to protect their brands at a fraction of the previous cost.  Yes, OHIM has made it cheaper and easier than it used to be before 1996, but much of the opportunity has been wasted.

If you want to look at it a different way, you could argue that the fee is set high so as to price out small businesses, forcing them to opt for narrower national rights, while allowing larger businesses to take EU-wide rights that are enforceable against those same small businesses.  Another way, then, that the cost and complexity brought by the EU's involvement discriminates in favour of the established large entities, against the SME businesses that might compete with them and disrupt their market, and contributes toward an inflexible, moribund European economy.

So, compared with the EPO, the EU's "help" in the field of trade mark protection succeeded in delaying the benefits of international cooperation by 18 years and then, when it came, denying much of the benefit  that it could have yielded and (instead) protecting civil service jobs and extracting as much cash as possible out of businesses.

So the conclusion on these issues is clear - we're better off out.  European countries can (and have) come together as nation states to set up the structures that we need, and doing it that way is quicker and better. 

*except maybe the renewal fees... they would ideally come down a bit, or be got rid of completely, I reckon.