Tuesday, 26 January 2016

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.