What’s going on at the EPO?

The New President of the European Patent Office is Alison Brimelow, former Comptroller of the UK Patent Office (now renamed the UK Intellectual Property Office). Her headline vision for the EPO is “What we need is not more patents, but more good patents” – an ambiguous statement, and one that raises the question “is the EPO raising the bar on patentability?”

Statistics show a rising number of patent applications being filed year on year. Does the EPO have the political will and the ability to grant more patents in pace with the rising demand? The number of patents granted in 2007 actually fell by 8,100, a fall of 13%, but this may well be a temporary dip and output still may increase while maintaining a high standard of examination.

The EPO allowance rate1 has fallen over the last ten years, from nearly 70% in 1996 to about 55% in 2006.
Factors that may account for a falling allowance rate include:

A.    poorer quality of patent applications (e.g. more patent applications chasing the same number of inventions and/or briefer descriptions that leave room for fewer compromises);

B.    raising of the bar at the EPO (for inventive step, sufficiency of disclosure and prohibition on added matter).
In the meantime, a factor that may account for the 2007 drop in total patents granted may be:

C.    A growing backlog of applications awaiting oral proceedings.
A particular question to be explored is whether B and C are related.
Poorer Quality of Applications?

The huge increase in numbers of patent applications filed at the USPTO and other offices around the world, and the corresponding increase of PCT applications, begs a number of questions.

Is there a corresponding rise in inventing?

We can suppose that the rate of inventing somewhat outpaces the world economic or population growth rate, and reflects the higher rate of growth of the knowledge economy, but the increased rate of filing of patent applications also has a bandwagon factor, with many countries and sectors of the world economy having “woken up” to the power of patents. If research groups around the world are chasing the same goals, it may be that there are ever more cases of runners-up who think they have something new but find that someone else got there first.

Are applicants cutting corners in preparation and filing of applications?

We hear of more and more schemes for bringing down the cost of patent drafting. These include various outsourcing initiatives such as competitive online tendering for drafting, and outsourcing to countries like India. Outsourcing has the tendency to put another layer between the inventor and the draftsman. This can lead to second-hand analysis of what it is that the inventor believes he or she has invented. This in turn can lead to an “all-or-nothing” patent application or, worse, a misdirected patent application.  By “all or nothing”, we mean an application that presupposes a certain state of the art, and is vulnerable to the search results, especially to “accidental” anticipation – i.e. anticipation by some prior document that is related only by virtue of the words chosen by the draftsman.

The EPO perceives an opposite trend - to “voluminous” applications.

The Board of the Administrative Council of the EPO has published a study of anticipated workload, in which it considers the efficiency of the examination process. A complaint expressed is that the EPO has to “spend a lot of resources on the search and examination of voluminous applications or applications which include a great number of claims.” We see no reason to suppose that this is a new or significantly worsening phenomenon. It is true that the PCT system is increasingly popular and carries no penalty for large numbers of claims, and it is also true that a greater proportion of EP applications each year come from this route, but numbers of direct EP applications have also risen. In percentage terms, the trend towards the PCT route is minor.
For those that choose the PCT route, there is an opportunity to amend the PCT application upon entry into the European phase, but on cost grounds or for fear of inadvertently adding subject matter under Article 123(2) EPC (see below), this opportunity is often passed over. Many applications enter the Examining Divisions without any review by a European Patent Attorney. The EPO has addressed this head-on with its more than four-fold increase in the claims fees. Each claim over 15 now costs an extra EU 200, creating an enormous incentive to cut the claims down upon European phase entry, a task preferably done by the European patent attorney familiar with the pitfalls of Article 123(2). At the same time, the European patent attorney can add reference numerals as required, which assist the examiner.

Raising the Bar?

There seems little doubt that when the President of the EPO makes reference to “quality” she is not merely referring to thoroughness of searching and examination, but she is also referring to perceived inventiveness. This is clear from the Administrative Council’s study, which discusses quality under the heading “Raising the bar – Challenges and Strategic Direction”, saying:

The pressure on the patent system has given rise to concerns about its capability to maintain high quality standards. These concerns have been addressed in the notes on the patenting situation in Europe by the DE, DK and NL delegations. The general support expressed by the Council and the Patent Law Committee for the reflections laid down in this document on the need for maintaining a high quality patent system indicate that there is a clear European view in this respect, a view which is shared by many users of the patent system.

The Board is of the view that there is a need to ascertain clearly what is
expected from the patent system in terms of the quality of patents and to reflect on ways to meet the expectations. The general goal is to ensure that the European patent system will continue to fulfil its main objective, the promotion of innovation, by granting exclusive rights only for innovations with sufficient inventive merit. merit.

The study mentions that the level of inventive step is “perceived in a certain number of quarters as being too low” and suggests further study into measures that may be taken within the existing legal framework to “raise quality standards” such as “reinforcing the importance of the problem and solution approach in the assessment of inventive step”. Other changes such as redefining the definition of “a person skilled in the art” would require changes in the legislation and should only be undertaken if there is a “compelling case.”

Has the EPO raised the bar for inventive step?

Even before the “Big Five” patent offices meeting in Hawaii in May 2007, we have suspected an internal policy of raising the bar on inventive step. The press announcement from the meeting said “the five heads agreed that the quality levels and standards should be raised, and that quality should be given priority over application filing figures”. The EPO view is that KSR v Teleflex raised the bar in the United States, and we have heard comments direct from one EPO Examining Division chairman that the KSR decision is prompting a further raising of the bar at the EPO. This would be an irony. In our view, KSR brings the bar up to the level of the EPO but no further. It is difficult to point to specific cases that represent a change in the legal standard. Decision T301/90 is perhaps one such case, in which it was stated that an application may be rejected on the basis of the “mental furniture” of the skilled person, which may never be in writing.

In the particular field of business methods and computer systems that implement novel (and indeed inventive) business or administrative practices the bar has been unashamedly raised to the point where any amount of ex post facto analysis of the business problem is permitted, leaving only the “technical” aspects of the software implementation to be scrutinized for inventive step.

Has the EPO raised the bar for sufficiency of disclosure?

Aside from the specific area of genes, and the need to describe a credible function, we cannot point to any increase in refusals on the grounds that it does not sufficiently disclose at least one embodiment of the invention. On the other hand, we do observe more objections on the grounds of claims missing essential features – effectively insufficiency on the grounds of overbroad claiming. Often the objection can be overcome by argument, and if necessary it can be cured by amendment (adding the missing feature to the claims). Only occasionally is lack of an essential feature ultimately fatal to an application.

Has the EPO raised the bar for prohibition on added matter?

Undoubtedly. There was a time when examiners would give the benefit of the doubt over added subject matter. In the early years of the EPO, it was policy that added subject matter was the concern of the applicant. That changed some years ago. Now it seems examiners could not be more strict. Any deviation from the exact words of the original patent application is scrutinized with suspicion. If an examiner believes there is the slightest doubt as to whether the new wording does not mean the same as the original description, objection is raised. The book Case Law of the Boards of Appeal published by the EPO supports this stance. E.g. Decisions T383/88 and T581/91 state that a rigorous standard of proof is required, equivalent to “beyond reasonable doubt”.

Jenkins hearings at the EPO

EPO Prosecutions

EPO Growth Scenarios

Caseload per Examiner

A growing backlog?

It is enshrined in the European Patent Convention that an applicant has a right to a hearing before a patent application is refused. This is problematic for the EPO because applicants almost invariably maintain this right at the early stages of prosecution of applications. It means in practice that the EPO cannot refuse the application until oral proceedings have been appointed and either the hearing goes ahead or the applicant agrees to proceed in writing. Convening a hearing is not a simple matter. All three members of the Examining Division must be available as well as a hearing room. We are constantly told that there is pressure on booking hearing rooms, and that this is one of the bottlenecks in the system. Generally a whole day needs to be set aside for a hearing, however we recently have received summonses to hearings set for the afternoon only. Therefore it now seems that hearing rooms are being booked for two hearings per day.

A growing backlog of applications waiting for oral proceedings might distort the grant figures. If easy cases are being granted and difficult cases are stacking up waiting for oral proceedings, the true situation may be worse than the headline grant rate.
In the last two years, examiners have been encouraged or directed to call a hearing at an earlier stage in proceedings, where objections have been raised but the examiner is still unable to envisage granting a patent from the applicant’s response. This is intended to bring proceedings to an earlier conclusion, and avoid drawn-out written correspondence.
Summonses to Oral Proceedings increased markedly in 2006 following an internal EPO directive. Almost half of Jenkins cases are concluded (amended or withdrawn) in the month before the hearing.

Our statistics indicate that in about half of cases where a summons issues, a hearing is unnecessary. After final written submissions, the procedure continues in writing because an allowable amendment is put forward, or the application is withdrawn (or the request for a hearing is withdrawn for an appealable decision to issue in writing). In these cases, the effect of the summons is merely to compress the final prosecution into the remaining time between the summons and the hearing – a burden more on the applicant than on the examiner. The other half proceed to oral proceedings, tying up the three-man division for most of one day.

2007 saw a slight rise in the grant rate but a fall in numbers granted – i.e. an even greater fall in numbers refused or withdrawn. Does this indicate that the tactic of calling more oral proceedings is clogging up the system?

We took a look at work for a large client from the electronics industry having a steady-state situation of annual filings, and we did not find a mismatch between numbers of first office actions and number of allowances, i.e. no evidence of a build-up of cases awaiting oral proceedings.  For this particular sample, we noted an average of about 1.5 office actions per allowance. The sample size was 578 and only about 1-2% required Oral Proceedings.
In the software field, the picture is somewhat different.

Our evidence against a growing backlog is not conclusive, but comfort can be found in the Administrative Council Survey, which indicates that the EPO’s production is growing faster than its incoming workload. The Survey considers three scenarios for the next decade and anticipates that except in a scenario of extreme growth, the program of recruitment, building and training at the EPO will more than cope with the demand.

Conclusions

The EPO granted 13% fewer patents in 2007 than in 2006, in spite of a steady rise in applications. The EPO has not yet published the grant rate figure for 2007, so at present we cannot say whether there has been a corresponding rise in other dispositions (refusals and withdrawals), representing a continued trend of increased toughness on the part of examiners, or a corresponding fall in other dispositions indicative of a growing backlog.

Regardless of a rising or falling grant rate, it is clear that applications continue to enter the examining divisions at a faster rate (140,700 new requests for examination in 2007) than the rate at which the examining divisions can dispose of them (98,000 calculated on the basis of numbers granted and a 55.9% grant rate). We believe there is a growing backlog. We are aware of visible efforts to grow the office to meet the demand, but are concerned that these may not go far enough and may take time to come on stream. EPO President Alison Brimelow is recently quoted as saying “I am coming to the conclusion that the backlog will not be mastered” and she muses over possible long-term strategic and possible legislative initiatives. The system has worked for 30 years, is popular and is self-funding. It is a victim of its own success and the Office needs to build on that success and plan for it rather than contemplate throwing the baby out with the bathwater.