I love a level playing field. Whether it’s a sports team or a business, I love to see the people doing the best job with a given budget coming out ahead.

Unfortunately, the playing field in the world of commercial patent searching has stopped being fair. Several EPO Member States are competing directly with commercial service providers. And not just in Europe, but in the US as well.

The Patent Offices of Denmark, Iceland, Norway (collectively the Nordic Patent Institute), Sweden, and Switzerland*** all offer patentability, clearance, and validity search services. (*** Edit: Please see Frank's comments down below discussing the full separation of commercial and federal services at the Swiss Patent Office.)

Most of us in industry acknowledge the high level skills of the EPO trained examiners. We also acknowledge the power of the internal EPO database, EPOQUE. But it is very discouraging to know that European patent fees are going towards training those same examiners and developing their databases so that work can be taken away from small businesses.

Personally, I do not believe that this should be allowed. Governmental agencies should not be competing directly with private business. Tax money and filing fees should not be used to promote these services. But at US based conferences like AIPLA and IPO, there are expensive booths manned by EPO member state patent office employees directly competing with long time PIUG members.

I would like to see a group of European search firms with European employees draft a very strongly worded letter to the EPO complaining about these unfair business practices. I will gladly sign such a letter and I would like to see PIUG as an organization sign such a letter.

Would others be willing? What are your thoughts? I’ve reached out to a few of my European colleagues (who are technically my competitors, but in this situation we are equally unhappy) and hope to see their voices in this thread.

What is the true legality of EPO member states competing with private business? Usually this is prohibited, if not by law, then at least by “gentleman’s agreement”. Does anyone know the laws governing this?

Also, it truly baffles me that an EPO member state can possibly be in the business of invalidating patents. Do they truly invalidate EPO issued patents? How is that not the ultimate conflict of interest?

Dominic DeMarco
www.demarcoip.com

15 Comments

  1. I would think the conflict of interest also lies in performing patentability searches. If an examiner performs a patentability search as a client service and then receives the same case on his/hers desk, would he/she then cite any new art that was not discovered in the initial paid for patentability search?

    For patent offices with a small number of examiners in a particular art unit, this scenario is not at all unusual.

  2. Depending on how and where database costs are billed, this could be an unfair competition to small service providers. Database cost are the heavy load for small business.

    Henk van den Brink

    1. Henrik, from my experience with them, their prices certainly do not reflect free access to databases. In fact, they were charging quite a bit more than the average provider.

      The unfortunate probable perception from a client's perspective is that examiners are best suited at searching. That's the part I am most concerned about.

  3. Thank you Dominic for brining some visibility to this issue. A few of these offices have been offering patentability services for some time, and this seemed tolerable when they weren't advertising, and they were providing a service to the patent applicants of their country to assist with filing. Now it seems things have changed, and an unfair environment has been created.

    Making a statement about unfair practices, or at least initiating a conversation on them seems like exactly the type of thing that a user group should be doing to protect the interests of its members. So, I think it would be appropriate for all of the patent information groups, especially those in Europe to lobby to get this addressed.

    Have you heard anything from our sister organizations in Europe about this?

  4. The EPO itself used to have a commercial search service (I'm not sure whether they still do).  Several years ago I tried to hire them to do a validity search on a granted European patent and they refused.  I guess they understood the potential conflict of interest.  I'm not so sure whether these other patent offices see the potential for conflict problems in performing searches.  We usually have to rely on organizations to police their own potential conflict of interest issues and sometimes they don't.    It sure is frustrating but I'm not sure what can be done about it. 

    Oh and the EPO has competed with commercial tool providers for years with Espacenet and most recently with another related product.  I think you just have to bite your tongue and consider them all as fierce competitors. 

    1. Lucy,

      With regard to your concluding sentences "Oh and the EPO has competed with commercial tool providers for years with Espacenet and most recently with another related product.  I think you just have to bite your tongue and consider them all as fierce competitors."...

      I think the EPO has gone out of its way not to make Espacenet a competitor of the commercial tools. It is a great service, but with no search history and no proximity operators, it is not threatening the more advanced search tools we rely upon to do a thorough search. I am 99.99% certain that the EPO has chosen to exclude these functions and other advanced functions on purpose to allow a robust database industry to flourish.

      To your second comment, I'm not ready to bite my tongue. I love competition in the workplace. However, I want to compete on cost, quality, and timeliness with firms that have equal footing. If the EPO member states entering the fray truly are on equal footing (as Frank down below notes in his comments pertaining to the Swiss Office), then more power to them. But if they are standing on the shoulders of an infrastructure (personnel, support, or IT) paid for with filing fees and/or tax monies, then I have a legitimate reason to scream "NOT FAIR" from the mountain tops. (smile)

      Dominic

      P.S. Always good to hear from you Lucy! I missed you at the North East meeting and will email you offline about some other stuff...
       

  5. IP Australia offer international type searches on provisionals, and now also patent analytics.  It makes them a competitor of mine but I just need to be be better, faster and cheaper (but not cheap).

  6. Legally I'm not sure there's any way of challenging this, but it's an interesting enough question that I've sent it to the IPKat blog to see what their view is on it - that might get this issue more publicity.

  7. Dear all

    Thank you very much for starting this discussion and for your valuable comments and views. Please allow me adding an insider’s perspective.

    The Swiss Federal Institute of Intellectual Property (IPI, “Switzerland’s Patent Office”) has been offering patent and technology searches for more than 30 years under the label “ip-search” (https://www.ip-search.ch/en.html). Today, the majority of our turnover in this field is made by searches that customers outside Switzerland have ordered—including some that are based in the USA.

    IPI is a public-law institution, but independent from the federal budget. Consequently, it is not supported by tax-money in any way, but relies on fees for patents and trademarks as well as income from the ip-search services (which also comprise trademark searches and educational offers). The Federal Act on the Statutes and Tasks of the Federal Institute of Intellectual Property defines IPI’s tasks and according to Art. 2g IPI provides services under private law in its scope of responsibility, particularly by informing about the IP system, IP protection and the state-of-the-art; see https://www.admin.ch/opc/de/classified-compilation/19950083/index.html (available in German, French and Italian).

    It is understandable that such a construct raises questions about possible miss-use of fees and unfair distortion of the market. However, at least in the case of Switzerland, no such action is permitted. Labor, database, overhead and marketing costs related to ip-search activities are accounted for separately and must be covered by the income from this service. Consequently, our hourly rates are rather high in comparison to private competitors—a disadvantage that we try to compensate by providing highest quality. Database costs are charged for each search.

    Database and software providers consider IPI an “information broker” and clearly distinguish between “office-like use” of their products and “commercial use”. Yes, Epoque seems like an exception because it is not freely available unless you are a patent office. However, it does not give access to data that is not available anywhere else. In fact, it comes with what is on Espacenet and OPS. Additional databases such as DWPI, Asian machine translations or non-patent literature databases have to be licensed individually from the respective provider. For these databases, Epoque is just another host that gives access. Last but not least, EPO charges its member states for using Epoque and it certainly is far from being cheap.

    As far as I can tell, European search firms (including some in Switzerland) see IPI’s ip-search service as just another player on the market. We have been promoting this service for many years in Europe and have recently started corresponding activities in the US. We consider such activities in line with our tasks as defined by law and as fair competition with other private businesses in this market.

     

    Frank Langlotz

    1. Frank - Thank you for this very informative reply! If the Swiss Patent Office is truly separating the two functions (commercial vs. federal) down to the nitty gritty as you've detailed, then I apologize for lumping you in with the other EPO member states that may or may not be doing the same.

      Good luck with your adventures in San Francisco (Link), I hope you 1) get to go and 2) get to be a tourist for a little while!




       

      1. Dominic:

        No problem. We've had very similar discussions here in Switzerland some 30 years ago (long before I joined IPI), so we are aware of these valid concerns and we very stricktly make sure to keep both worlds separated.

        As you can see from the time of my first posting, I'm still in Switzerland, but I'll forward your wishes to my three colleagues who will stay in the Bay Area and in Chicago for another ten days...

  8. Dear all.
    I would just like to add a short comment from us at Nordic Patent Institute on the subject, since we were mentioned specifically in Dominic's original post. 
    First of all thanks to Frank from the Swiss Patent Office for his clarification. The setup he describes for the Swiss Office is close to identical to our own, i.e. a clear separation between authority and commercial services which must be fully covered by the income. Secondly much like the Swiss Office, (as national offices and as Nordic Patent Institute) we have been offering this type of services for over 30 years within this legal framework. 
    Finally I will just like to add that we never perform invalidity searches on patents previously searched and examined by the Nordic Patent Institute or any of the National Patent Offices that form the Nordic Patent Institute. 
    I hope that sheds some more light on this issue. I otherwise refer to Frank's thorough clarification.
    Bodil Hasling
  9. Hello everyone,

    This is most certainly an interesting question.  Thank you to Frank and Bodil for contributing factual information. 

    As you know, we approach things differently on this side of the Atlantic and I cannot think of a similar situation except perhaps the Post Office - and that's an exceptional case - where the government competes directly with private enterprise. Am I correct to understand that you are, in fact, employees of the National government and if so are your paychecks issued by the National government? Are the profits generated by the commercial search service sent to the National Treasury?  If the answer is yes to either question then clearly the service is being performed by the National government regardless of the effort to separate operating cost for the commercial service from the National budget. 

     I am also curious about the workload of the individual search provider.  Do employees sometimes work on private sector commercial jobs and at other times on public sector patent office jobs?  It isn’t clear from what has been said if this is the case.  I hope not because in my mind that depicts a distortion of the private sector job market.

    Robert    

    1. Robert:

      Thanks for your comment and please excuse that I did not make myself clear enough in my first posting.

      Formally, the answers to your first two questions would be “No”, because we are not employed by the Swiss government but by the Federal Institute of Intellectual Property, which is its own legal entity. Moreover, when I wrote independent from the federal budget, I meant that there is no money transferred between the National Treasury and IPI in either direction.

      In practice, the two types of work we do correspond to those of a governmental office and a private company, respectively. However, this alone does not create a market distortion as long as our private activities do not benefit from what we do in the public sector. Our way of accounting enforces this strict separation.

      I hope this did answer your questions.

      Frank

  10. Thanks Frank.  You were clear in your first explanation it is my being obtuse.  When your culture leads you to expect a complete separation between the public sector and the private sector it's hard to get your head around.  One could construe IPI as a private sector entity that performs a public sector  function.  Is there even a word for this kind of hybrid entity?  It isn't quasi because IPI is absolutely public since its parent agency is Federal and still the organization clearly sells a commercial service.  

     We're all searchers here, and we are an international organization, and I am loath to disturb that functional camaraderie but this does not sound fair in anyway.  The market is disturbed by the size of the public sector entity.. I sense that If IPI did not do private sector work and had to survive on public sector fees the entity would be smaller.  In the US that represents a bloated bureaucracy. 

    On the other hand Switzerland is very small country where fees alone might not support the resources necessary to ensure a superior IP search function, nationally speaking and in that case IPI would be in the Nations best interest. I would be worried, hypothetically of course, if there were incentives provided to a private sector client for subsequent public sector work or vise versa.  

    This kind of entity, despite the fact that the commercial service charges commercial rates and that organizations budget separate from the National budget. is still a National government performing private sector work.     .