Ladies and Gentlemen,

Thank you for giving me the opportunity to take part in this very interesting FICPI Open Forum.

Opening remarks

I have been invited to say something about national patent offices and their prospects of survival. As I represent such an office and as we at my office have thought a good deal about this particular question, it is quite interesting for me to be able to present our considerations at this FICPI Open Forum.

When FICPI held its international conference in Copenhagen last year, I gave a speech at the opening of the conference. My main theme then was that – regardless of the emergence of new systems in the patent sector, including a Community Patent – it is important to preserve the national patent offices. I suggested that some of the work with European patents might be delegated to those NPOs, that need such work in order to maintain a proper size, provided that they are qualified, and willing to do that work.

I will focus on European national patent offices. Should any of my remarks prove interesting or relevant in a wider geographical context, I would naturally be pleased.

Overview of the problem (Overhead)

This overhead shows the different strategies, which may be pursued by various NPO’s in order to serve their industry. Several EPO member states have chosen strategy I. These countries have chosen not to build up in-house expertise for performing substantial search. If such a search is required as part of the grant procedure, it will be carried out by the EPO.

The necessary services for pursuing this strategy can be provided by the NPO’s in a qualified manner more or less independent of the size of the NPO. It is my opinion, therefore, that countries which have chosen this strategy will not have any difficulty in maintaining their NPO at a level of competence suitable for their purpose.

Strategy II applies to the member states, which carry out search, and examination work on their own. This can only be done in a qualified manner if staff number exceeds a critical mass. The question of survival of NPOs of countries pursuing strategy II depends, therefore, to a large extent upon the size of the country - or more exactly, on the size of national patent activity of the country.

Mr. Bruce Alexander of Boult Wade Tennant, London, wrote an article in the magazine "Patent World" in March this year titled "Wither National Patent Offices?" I believe that he especially had "strategy II" offices in mind. I quote:

"Those NPOs which may face problems in future are the NPOs of all other countries of Europe which at present only handle a limited amount of national patent applications and grant patents on the basis of substantial search and examination at EPO level in house and whose clients want their NPOs to continue to offer this service together with commercial services including substantial searches".

The Danish NPO is in exactly this category. But also other NPOs in EPO member states are more or less in the same situation. Since I am most familiar with my own circumstances, I shall explain the problem as it relates to the Danish Patent Office.

Relations between customers and the Danish Patent Office

The Danish Patent Office has primarily customers from Danish trade and industry, patent agents, public and semi-public institutions, university researchers and independent inventors. We play a dual role in relation to the customers. On the one hand, we act as an authority; on the other, we conduct services on a commercial basis.

Our activities as an authority include the granting of patents, registration of utility models, trademarks and designs, and the general communication of know-how in this connection. This part of our work currently accounts for approx. 90% of turnover and is fully fee-financed, without any support from the Government.

Since our accession to the EPO in 1990, we have seen the authority-related part of our patent activities change quite dramatically. The number of applications from Danish applicants has remained unchanged: approximately 1,200 per annum. The number of foreign applications has, however, dropped from 5.800 to 300 per annum.

Our commercial activities consist of services sold to the Danish business community on market terms. At present these activities account for about 10% of turnover. Also these activities are of course fully paid for by the customers.

Typical examples of our commercial services related to patents are listed in the next overhead. They are:

• Technical searches
• Profile analysis
• Surveillance
• Training courses / education
• Participation in projects

Companies use our commercial service for novelty searches, investigation of existing techniques, the legal status of rights in technical fields, etc. This enables them to estimate trends in development. The quality and applicability of these services depend very much on the Danish Patent Office having staff who are highly trained in both search and examination procedures.

To be somewhat more specific about the commercial services, I will give you the reasons why searches are so important. They

• lend inspiration to the solving of a technical problem
• reveal at an early stage whether other people have already thought of the same idea
• identify existing rights and make it possible to avoid infringing them
• show what other people are doing in the field
• provide a sound basis for a patent application.

The material accompanying the manuscript explains in more detail the nature of the various services. Two examples are given from our commercial activities, which are patent-related, and which require that the staff must be highly qualified patent engineers, skilled in search and examination work comparable to the EPO level. The examples serve to illustrate how the Danish Patent Office participates in co-operation with Danish companies and innovation centres, with the objective of improving their innovation activities.

The relationship between the Danish Patent Office and its customers is very flexible and unbureaucratic and the success is to a large extent based on our informal and frequent dialogue and interaction with the customer. In many ways our commercial service acts as en extra desk function for the companies using this possibility.

This is true when speaking of our commercial activities. But there is also a corresponding relationship between applicants and the Patent Office in our activities as an authority, which makes the Danish Patent Office attractive to the Danish applicants.

I hope that my explanation and the examples showing how the Danish Patent Office enters into working relationships with its customers can serve as useful illustrations. Danish companies – even the largest ones – and innovation centres have expressed the clear desire to co-operate with an NPO that is capable of performing substantial search and examination at EPO level. The individual customer expects local knowledge and an insight into the local cultural background. He wants the service delivered in the form of a dialogue. He expects the process to be conducted in Danish. And one final but important detail is that he expects to get such a service at a reasonable price.

If Danish industry is deprived of such a service in future, it will be seen as a deterioration of the terms under which Danish companies compete on international markets.

Developing the business basis of the Danish Patent Office

Why exactly is Danish industry in danger of losing the present level of service which is provided by the Danish Patent Office as a patent authority and service provider?

The simple fact is that within the next few years we shall find ourselves in short of

work. This will happen as we gradually reduce the backlog of patent applications still with us from the old days, and as information technology enables us to become even more efficient and productive than we are at present. It will then be necessary to look for new tasks, which are sufficiently demanding in order to enable our highly qualified examiners to maintain and develop their skills. Otherwise we shall not be able to maintain the crucial mass of approximately 50 examiners that we consider necessary to be able to work reasonably efficiently with our innovation-related activities.

We are, therefore, actively and seriously engaged in expanding our volume of work by three measures, all of which involve the expertise of our examiners.

Firstly, we are encouraging Danish industry and Danish researchers to engage more fully in patent activity. A side effect of this will be more work for our examiners.

Secondly, we are actively engaged in developing new commercial services, which our customers are requesting – and which require the assistance of our examiners.

However, even if we succeed in generating some expansion in these fields, we do not think it will be sufficient to maintain the necessary staff of about 50 examiners.

And thirdly, therefore, we believe that the Danish Patent Office should be a resource for the EPO on a sub-contractual basis. Both with regard to work involving European patents and work on future Community patents.

Our motivation is not job creation at the Danish Patent Office. If it were, we would not get the support of the Confederation of Danish Industries. Our reason for taking these steps is to maintain in Denmark a qualified NPO as a framework condition for Danish industry. Danish industry is very much in favour of this objective. Appended to my manuscript you will find a copy of the statement to this effect made by the representative of the Confederation of Danish Industries at the European Commission hearing in Luxembourg last November on "The Green Paper on Patents".

A rhetorical question – and an answer

In the light of these considerations, I would like to put a rhetorical question – and attempt an answer: (Overhead)

Considering that:

• all of us – supported by the Commission – take a deep interest in the innovation capacity of Europe
• some member states (and Denmark is certainly one of them) find that a qualified NPO is an essential framework condition for industrial innovation
• this may be hard to maintain without transferring qualified patent work from EPO to these NPOs on a contractual basis
• such a division of labour is technically possible today

- then what prevents us from working positively towards making this an element of the future European patent system? Thus ensuring a system based on the Principle

of Subsidiarity which is an essential element in the functioning of the European Community!

The idea has been used before, when the EPO was starting up although at that time for different reasons. And I assume it is merely a matter of letting the idea mature. Before too long we shall hopefully all be in general agreement that the idea adds a healthy and positive element to the design of the European patent system, which the Commission and all the member states work positively towards.

My own answer is: Nothing prevents us – provided that it is done in a proper manner. And there are several good reasons why it should be done. Allow me to be a little more specific about what I believe constitutes "a proper manner". I draw three points to your attention:

There must be a solid legal foundation

Subcontracting will not change the fact that the patents will still be European patents granted by the EPO. But I am fully aware that subcontracting as such will require EPO member states to support this model at a diplomatic conference. There are, however, other pressing issues as well, which will require amendments to the Convention in the early future and which will necessitate such a conference. So we should include it on the agenda for that event.

The level of quality must be high

It would certainly be unacceptable if sub-contracting were to produce a lower quality of work than that supplied by the EPO with its own resources. But industry throughout the world uses the concept of sub-contracting to become even more competitive. And it makes sure that the quality produced by its suppliers is first class. What is to prevent the EPO from organising a similar quality-control system? The EPO, of course, can do it – if it so decides.

In this connection it is important that the quality system should be planned in such a way that it is independent of the President of the EPO – just as the Appeal Board system is independent of the President. Clearly, it would be unacceptable if a member state whose NPO did not meet the quality standard could put political pressure on the President.

The volume of sub-contracting work must be no more than required to ensure the preservation of the NPO’s critical mass

An NPO must not be permitted to request more sub-contracting work than necessary to maintain its "critical mass" of technical staff in order – with reasonable efficiency – to provide its national industry qualified patents work. Guidelines would have to be drawn up for the determination of calculation of "critical mass".

At the DKPTO we are presently preparing documents on these three subjects. It is the intention that these documents should provide a basis for the further discussions at EPO level.

To avoid any misunderstanding, we are not talking of any disintegration of the EPO.

The bulk of work should be maintained at the EPO thus enabling it to set the standards. Where the limit should be, I do not know exactly. I have the feeling that at the present time the EPO should not outsource more than 20% of its work to sub-contractors – maybe the limit should be lower.

Concluding remarks

We can probably all agree it is a vital and basic condition for European industry that in each country there is an effective infrastructure to provide the protection of industrial property rights. There are different strategies for achieving this, and each country should, of course, choose the strategy best suited to its particular situation. I find that the EPO has an obligation to assist in ensuring such an infrastructure - especially for those countries, which are at the outskirts of Europe and whose mother tongue is not one of the three official EPO languages.

This is a job for the EPO, which seems to me to be as relevant as a task which it already shoulders – namely, the task of assisting relevant non-member states to develop a healthy infrastructure in this field. I am thinking here of many East European countries – but also, for example, of China.

For some member states, such as Denmark, one of the most efficient and relevant ways of offering assistance will be to subcontract some search work. I would like to add, however, that such a system of sub-contracting offers another benefit: it would help to improve the EPO’s own flexibility in the event of a fluctuating workload. Moreover, the salaries paid by sub-contractees are normal national salaries – not the salaries of international agencies.

I first launched these ideas almost a year ago at the FICPI Congress in Copenhagen and a short time later at the Conference of the International Chamber of Commerce in Paris. The feed back and positive backing that I have received still convinces me that the ideas has a lot of merit.

Nevertheless, I think it would be highly desirable if FICPI would consider giving the idea additional support. It is necessary; since it takes a lot of power to turn a European supertanker like the EPO.

Anyone interested in learning more about the idea can order from the Danish Patent Office a copy of our memorandum of January 9, 1998, entitled "How to create synergy between the EPO and the NPO", plus the appendix of April 3, 1998.

Thank you for your attention!