The European Patent Office, also known as the EPO, is witnessing a power struggle between its tough-minded French president, Benoît Battistelli, and the employee organization SUEPO. The battle of wills is escalating in the run-up to Wednesday's crisis session of the organization’s administrative council.
In an interview with Handelsblatt, Mr. Battistelli accused a senior SUEPO figure, Elizabeth Hardon, of running a campaign of defamation. “She intimidated elected staff representatives," he said. "In some cases people were even threatened with violence.”
At the beginning of the year, Ms. Hardon, an EPO patent examiner, was fired at Mr. Battistelli’s insistence. Internal investigations, he said, had revealed severe breaches of EPO staff regulations. As part of the investigations, an Irish patent judge was also suspended from his position after two truncheons were discovered in his office, in addition to Nazi propaganda pamphlets. Ms. Hardon’s lawyer, who also represents the unnamed Irish judge, denies the accusations against both, calling them “invented allegations.”
The administrative council had asked Mr. Battistelli to defuse the conflict at the Patent Office, one of Europe’s most lavishly funded administrative organizations. But the president, who has been restructuring the office to cut runaway costs and speed up patent processing times, has refused to allow the trade union SUEPO to exercise a veto over his decisions. He insisted Ms. Hardon’s dismissal must stand.
SUEPO has responded by calling for a protest demonstration outside Wednesday’s council meeting in Munich.
The administrative council has given me the job of making the European Patent Office more competitive. Benoît Battistelli, President, European Patent Office
Such chaotic scenes would be unprecedented in what is one of Europe’s most prestigious transnational organizations. The European Patent Office employs 7,000 very well-paid staff, most of them patent examiners or patent judges, at its Munich headquarters, as well as other offices in The Hague, Vienna, Berlin and Brussels. The business of checking patents is a lucrative one – in 2015, the organization’s operating profit was €1.6 billion ($1.78 billion).
Intellectual property protection is of crucial importance, especially for the highly industrialized German economy. Companies like Siemens and Robert Bosch are among the EPO’s most valuable customers. But many mid-sized German firms are also regular visitors to the EPO offices.
But how can an organization function if a battle royal is being waged in its corridors? The conflict is impacting the work of a key institution in European industry and commerce. Trade unionists are at odds with non-unionists, examiners and judges lined up against the president. The case of the Irish patent judge is only the most bizarre of the incidents: He was allegedly caught red-handed sending intimidating messages from a work computer.
The situation is tricky and could well get worse. The administrative council has for some time been urging the warring parties to calm down. It may even decide to get rid of Mr. Battistelli. But the EPO president vehemently denies rumors of his impending departure. He has the “absolute backing of the administrative council,” he told Handelsblatt.
Mr. Battistelli’s opponents say the situation is entirely his fault. Since 2010, when he took office, he has been on a constant efficiency drive, they say, and has been overburdening staff. More and more work has been taken on, say his critics, but no new staff have been hired to do it – entirely the wrong strategy.
“Nonsense,” is Mr. Battistelli’s vehement response. Criticism of his management was pure propaganda, he said. The French executive, trained at the elite French National School of Administration, is sticking to his guns. “The administrative council has given me the job of making this organization more competitive,” he insisted.
Before he took the helm in 2010, costs were surging. The number of patent applications was rising, and so were the fees the office took in. But strong competition from Asia and the United States loomed – patent-approving rivals could be up to 80 percent cheaper than the European process. In addition, the EPO had a large backlog of cases. Appeals were particularly clogged up, with nearly 7,000 cases on the books, and waiting times of up to 3 years.
“Businesses depend on fast, legally watertight procedures,” said Dieter Laufhütte, a board member in the German Association of Patent Lawyers. “Some of the processing times have become unacceptable.” Mr. Laufhütte demanded more patent judges for the EPO.
But Mr. Battistelli does not want to hire more judges and increase costs. He has three key reform ideas: first, he would like to achieve more output through reorganizing the system of promotion and reward; he wants staff to be paid according to performance, not seniority. Second, he aims to reduce the high level of sick leave through a tougher system of monitoring. And finally, he continues to push for the introduction of the new uniform European Union patent, which should make the entire process less expensive for applicants.
Not everyone will like these measures, and that is only to be expected, said Mr. Battistelli. He had expected resistance. But what actually happened, he said, goes far beyond any normal opposition. He said his opponents have resorted to propaganda, defamation and intimidation. He is not afraid to name names: At the top of his list is Elizabeth Hardon, the head of the SUEPO union.
Mr. Battistelli accused the Dutch patent examiner of leading the campaign against him and against non-union personnel representatives in the EPO. He refused to give SUEPO official recognition and, early this year, had Ms. Hardon fired. As with the Irish judge, he said, EPO investigators found incriminating materials in her possession. A disciplinary hearing recommended that the judge be suspended and Ms. Hardon should be fired, along with another union representative.
The disciplinary commission is 50 percent made up of staff. It found that Ms. Hardon had intimidated other employee representatives. An internal report by the committee cited three witnesses as saying she had repeatedly attempted to stop them applying for positions which SUEPO felt it should control. Ms. Hardon is said to have threatened to “send snipers” and made a hand gesture of a gun pointed at them. She denied all charges.
Mr. “Murphy” (his name has been changed), the Irish judge, faced more outlandish charges, for example, that he masterminded an intimidation campaign against Mr. Battistelli and other managers, using dozens of email addresses in the so-called “dark web.”
The Munich employment lawyer Senay Okyay is representing both Ms. Hardon and “Mr. Murphy.” She said they deny all charges and that Mr. Battistelli was trying to flex his muscles to to demonstrate his power. Since April 2015, the administrative council has asked him to enter into negotiations with SUEPO, she said. Instead, he has fired union representatives -- evidence of his clear intention to destroy SUEPO and avoid real dialogue with staff, she said.
Legal steps have been taken, Ms. Okyay said, adding that she was sure the Irish judge will soon be back at work, absolved of any crime. The truncheons were needed for gym exercises, she said.
However, the legal situation is highly complicated. The EPO is a state within a state, subject only to its own regulations, not to national rules. The 173 patent judges of the appeals courts regard themselves as completely independent of Mr. Battistelli’s authority, whereas he claims he has authority over them, on the basis of the European Patent Convention. It seems everyone can find a legal clause to justify their own position.
A further factor adds fuel to the fire: National law has no jurisdiction over European administrative bodies. Someone like Ms. Hardon, looking to contest “unfair dismissal,” would have to appeal to the administrative court of the International Labor Organization. One former German constitutional court judge has said this means the EPO’s structure is not compatible with European law.
Businesses depend on fast, legally watertight procedures. Some EPO processing times have become unacceptable. Dieter Laufhütte, Director, German Association of Patent Lawyers
EPO employees certainly know their rights and treasure their many privileges. In the EPO’s German offices, a married patent examiner with 2 children earns €11,000 per month, after tax. Add in gold-plated pensions, and it is no wonder that the EPO is one of the most sought-after employers in Europe: In 2014, there were 18,000 applicants for 183 vacant places.
Anyone trying to push the staff down the road of reforms and efficiency will have their work cut out. The administrative council may well have known what they were doing when they chose the hard-headed Mr. Battistelli for the job. He is notorious for his tough-minded, centralist leadership style. When the disciplinary committee recommended sanctions against Ms. Hardon and others, he wasted no time in implementing them – and then cut their pensions too, for good measure.
The French administrator continues to push through his package of reforms. There must be greater work efficiency, he said. His next target is the organization’s elevated rate of sick leave. He has implemented a monitoring and assessment system: Anyone not at work can expect a possible visit from a company doctor. Staff call it harassment. But there is nothing sinister about it, said Mr. Battistelli. It is not an invasion of privacy, he adds, noting that something like this has been the law in France for decades. Since its implementation, EPO sickness absenteeism has dropped 22 percent, he said.
Jan Keuchel is a Handelsblatt correspondent covering investigations and the German legal system. Volker Votsmeier is an editor with Handelsblatt's investigative reporting team. To contact the authors: [email protected] and [email protected].