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| 5.12.2008 | EN | Official Journal of the European Union | C 311/178 |
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5.12.2008

EN

Official Journal of the European Union

C 311/178

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REPORT

REPORT

on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2007 together with the Office's replies

(2008/C 311/26)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | STATEMENT OF ASSURANCE |
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3-6

| 7-10 | OBSERVATIONS |
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7-10

Tables 1 to 4

The Office's replies

The Office's replies

INTRODUCTION

| 1. | The Office for Harmonization in the Internal Market (hereinafter ‘the Office’) was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Community legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union. |
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1.

The Office for Harmonization in the Internal Market (hereinafter ‘the Office’) was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Community legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union.

1

| 2. | Table 1 summarises the Office's competences and activities. Key data summarised from the financial statements drawn up by the Office for the financial year 2007 are presented in Tables 2, 3 and 4 for information purposes. |
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2.

Table 1 summarises the Office's competences and activities. Key data summarised from the financial statements drawn up by the Office for the financial year 2007 are presented in Tables 2, 3 and 4 for information purposes.

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

| 3. | This Statement is addressed to the Office Budget Committee in accordance with Article 137 of Council Regulation (EC) No 40/94. |
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3.

This Statement is addressed to the Office Budget Committee in accordance with Article 137 of Council Regulation (EC) No 40/94.

| 4. | The Office's accounts for the financial year ended 31 December 2007 (2) were drawn up by its President, pursuant to Article 119 of Council Regulation (EC) No 40/94, and sent to the Court, which is required to provide a statement on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Office's accounts for the financial year ended 31 December 2007 (2) were drawn up by its President, pursuant to Article 119 of Council Regulation (EC) No 40/94, and sent to the Court, which is required to provide a statement on their reliability and on the legality and regularity of the underlying transactions.

2

| 5. | The Court conducted its audit in accordance with the IFAC and ISSAI (3) International Auditing Standards and Codes of Ethics, in so far as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular. |
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5.

The Court conducted its audit in accordance with the IFAC and ISSAI (3) International Auditing Standards and Codes of Ethics, in so far as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular.

3

| 6. | The Court has thus obtained a reasonable basis for the Statement set out below:

  Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question |
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6.

The Court has thus obtained a reasonable basis for the Statement set out below:

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question

OBSERVATIONS

| 7. | The Office's 2007 budget amounted to 276 million euro, as compared with 212 million euro the previous year. The 2007 budget includes a reserve of 118 million euro, as compared with 77 million euro the previous year. The Office's budget is financed by fees paid by the users of its services. |
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7.

The Office's 2007 budget amounted to 276 million euro, as compared with 212 million euro the previous year. The 2007 budget includes a reserve of 118 million euro, as compared with 77 million euro the previous year. The Office's budget is financed by fees paid by the users of its services.

| 8. | In recent years, the Office has significantly reduced the number of its permanent staff while increasing the volume of its activities via a systematic automatisation of processes and an outsourcing of supporting activities. Expenditure on IT consultancy, development and maintenance increased from 7,5 million euro in 2000 to 17 million euro in 2006 and to 22 million euro in 2007. The benefits of this approach should be evaluated by the Office through a global cost-benefit analysis. |
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8.

In recent years, the Office has significantly reduced the number of its permanent staff while increasing the volume of its activities via a systematic automatisation of processes and an outsourcing of supporting activities. Expenditure on IT consultancy, development and maintenance increased from 7,5 million euro in 2000 to 17 million euro in 2006 and to 22 million euro in 2007. The benefits of this approach should be evaluated by the Office through a global cost-benefit analysis.

| 9. | For the 2007 projects managed by the Office's Quality management department, cost/benefit analysis, financial estimates and due justifications were not always prepared. A direct link between the projects and the budgetary commitments was not established, which did not permit efficient cost controlling and management. |
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9.

For the 2007 projects managed by the Office's Quality management department, cost/benefit analysis, financial estimates and due justifications were not always prepared. A direct link between the projects and the budgetary commitments was not established, which did not permit efficient cost controlling and management.

| 10. | In its report (4) on the Office's annual accounts for 2006, the Court observed the need for the Office to propose a level of fees to the Commission which reflects more accurately its real costs (5). The accumulated budgetary surplus (6) in 2006 was 201 million euro and in 2007 it reached 273 million euro. The Office, together with the Commission, also needs to reflect on how it can make better and more productive use of the funds currently held in reserves. |
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10.

In its report (4) on the Office's annual accounts for 2006, the Court observed the need for the Office to propose a level of fees to the Commission which reflects more accurately its real costs (5). The accumulated budgetary surplus (6) in 2006 was 201 million euro and in 2007 it reached 273 million euro. The Office, together with the Commission, also needs to reflect on how it can make better and more productive use of the funds currently held in reserves.

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5

6

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 18 September 2008.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 11, 14.1.1994, p. 1.

1

(2)  These accounts were drawn up on 20 June 2008 and received by the Court on 1 July 2008.

2

(3)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

3

(4)  OJ C 309, 19.12.2007, p. 141.

4

(5)  Article 134(2) of Council Regulation (EC) No 40/94 of 20 December 1993.

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(6)  Carried over budgetary results plus reserve fund according to Article 16 of the Office's Financial Regulation.

6

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Table 1

Office for Harmonization in the Internal Market (Alicante)

| Area of Community competence deriving from the Treaty | Competences of the Office as specified in Council Regulation (EC) No 40/94 | Governance | Resources made available to the Office in 2007

  (Data for 2006) | Products and services supplied in the 2007 financial year |
| --- | --- | --- | --- | --- |
| Free movement of goods

  Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

  (From Article 30 of the Treaty)

  Restrictions on freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

  (From Article 49 of the Treaty) | Objectives







  — | To implement the Community legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union. |

Area of Community competence deriving from the Treaty

Competences of the Office as specified in Council Regulation (EC) No 40/94

Governance

Resources made available to the Office in 2007

(Data for 2006)

Products and services supplied in the 2007 financial year

Free movement of goods

Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

(From Article 30 of the Treaty)

Restrictions on freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

(From Article 49 of the Treaty)

Objectives

—

To implement the Community legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union.

Tasks

| — | To receive and enter applications for registration. |
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—

To receive and enter applications for registration.

| — | To examine the conditions for entry in the Register and compatibility with Community legislation. |
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—

To examine the conditions for entry in the Register and compatibility with Community legislation.

| — | To search at the industrial property offices of the Member States for any pre-existing national trade marks. |
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—

To search at the industrial property offices of the Member States for any pre-existing national trade marks.

| — | To publish applications. |
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—

To publish applications.

| — | To examine any opposition by third parties. |
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—

To examine any opposition by third parties.

| — | To register or reject applications. |
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—

To register or reject applications.

| — | To examine applications for revocation or invalidity. |
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—

To examine applications for revocation or invalidity.

| — | To handle appeals against decisions. |
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—

To handle appeals against decisions.

1.   Administrative Board

Composition

| — | One representative of each MemberState. |
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—

One representative of each MemberState.

| — | One representative of the Commission and their alternates. |
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—

One representative of the Commission and their alternates.

Task

| — | To advise the President on matters for which the Office is responsible. |
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—

To advise the President on matters for which the Office is responsible.

| — | To prepare lists of candidates (Article 120) for President, Vice-Presidents and chairmen and members of the Boards of Appeal. |
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—

To prepare lists of candidates (Article 120) for President, Vice-Presidents and chairmen and members of the Boards of Appeal.

2.   President of the Office

| — | Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board. |
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—

Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board.

3.   Budget Committee

Composition

| — | One representative of each MemberState and one representative of the Commission and their alternates. |
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—

One representative of each MemberState and one representative of the Commission and their alternates.

Task

| — | To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports. |
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—

To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports.

4.   Decisions related to the applications

Decisions are taken by:

| (a) | the Examiners; |
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(a)

the Examiners;

| (b) | the Opposition Divisions; |
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(b)

the Opposition Divisions;

| (c) | the Administration of Trade Marks and Legal Division; |
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(c)

the Administration of Trade Marks and Legal Division;

| (d) | the Cancellation Divisions; |
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(d)

the Cancellation Divisions;

| (e) | the Boards of Appeal. |
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(e)

the Boards of Appeal.

5.   External audit

Court of Auditors.

6.   Discharge authority

The Office's Budget Committee.

Final budget

276 million euro

(212 million euro)

Including a Community

subsidy: 0 % (0 %)

Staff numbers as at 31 december 2007

647 (675) posts in the establishment plan, posts occupied: 619 (603) + 89 (72) other staff (auxiliary contracts, seconded national experts, local and employment agency staff, special advisers)

Total staff: 708 (675)

Trade marks

Numbers of applications: 88 200

Number of registrations: 68 000

Cases of opposition: 16 400

of which cases settled: 12 200

Appeals to the Boards of Appeal: 1 970

Average time of registration

(excluding opposition or appeal):

| — | before publication: 7,5 months |
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—

before publication: 7,5 months

| — | between publication and registration: 6,5 months |
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—

between publication and registration: 6,5 months

Designs

Designs received: 78 000

Designs registered: 77 000

Source: Information supplied by the Office.

Table 2

Office for Harmonization in the Internal Market (Alicante) — Implementation of the budget for the financial year 2007

| (1000 euro) |
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| Revenue | Expenditure |
| Source of revenue | Revenue entered in the final budget for the financial year | Revenue received | Allocation of expenditure | Final budget appropriations | Appropriations carried over from the previous financial year |
| entered | committed | paid | carried over | cancelled | available | paid | cancelled |
| Own revenue | 172 887 | 179 777 | Title I
  Staff | 63 716 | 60 066 | 58 968 | 1 097 | 3 650 | 1 390 | 1 056 | 333 |
| Other revenue | 465 | 6 801 | Title II
  Administration | 37 363 | 35 272 | 25 402 | 9 870 | 2 091 | 10 691 | 9 616 | 1 075 |
| Interest | 11 100 | 12 284 | Title III
  Operating activities | 56 294 | 48 091 | 30 390 | 17 702 | 8 203 | 14 407 | 13 193 | 1 214 |
| Balance of the previous financial year | 91 123 | 124 682 | Title X
  Reserve | 118 202 | 0 | 0 | 0 | 118 202 | 0 | 0 | 0 |
| Total | 275 575 | 323 544 | Total | 275 575 | 143 429 | 114 760 | 28 669 | 132 146 | 26 488 | 23 865 | 2 622 |
| Source: Data supplied by the Office. This table summarises the data provided by the Office in its annual accounts. Revenue collected and payments are estimated on a cash basis. |

(1000 euro)

Revenue

Expenditure

Source of revenue

Revenue entered in the final budget for the financial year

Revenue received

Allocation of expenditure

Final budget appropriations

Appropriations carried over from the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

Own revenue

172 887

179 777

Title I

Staff

63 716

60 066

58 968

1 097

3 650

1 390

1 056

333

Other revenue

465

6 801

Title II

Administration

37 363

35 272

25 402

9 870

2 091

10 691

9 616

1 075

Interest

11 100

12 284

Title III

Operating activities

56 294

48 091

30 390

17 702

8 203

14 407

13 193

1 214

Balance of the previous financial year

91 123

124 682

Title X

Reserve

118 202

0

0

0

118 202

0

0

0

Total

275 575

323 544

Total

275 575

143 429

114 760

28 669

132 146

26 488

23 865

2 622

Source: Data supplied by the Office. This table summarises the data provided by the Office in its annual accounts. Revenue collected and payments are estimated on a cash basis.

Table 3

Office for Harmonization in the Internal Market (Alicante) — Economic outturn account for the financial years 2007 and 2006

| (1000 euro) |
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| | 2007 | 2006 |
| Operating revenue |
| Revenue from fees | 179 040 | 184 066 |
| Revenue from the sale of publications | 186 | 285 |
| Other revenue | 6 583 | 172 |
| Total (a) | 185 809 | 184 523 |
| Operating expenses |
| Staff expenses | 59 640 | 58 055 |
| Fixed asset related expenses | 3 650 | 3 586 |
| Other administrative expenses | 34 100 | 26 833 |
| Operational expenses | 40 745 | 34 720 |
| Total (b) | 138 136 | 123 194 |
| Surplus /(deficit) from operating activities (c = a – b) | 47 673 | 61 329 |
| Financial operations revenues (e) | 14 011 | 8 149 |
| Financial operations expenses (f) | 74 | 63 |
| Surplus /(deficit) from non-operating activities (g = e – f) | 13 938 | 8 086 |
| Economic result for the year (h = c + g) | 61 611 | 69 415 |
| Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis. |

(1000 euro)

2007

2006

Operating revenue

Revenue from fees

179 040

184 066

Revenue from the sale of publications

186

285

Other revenue

6 583

172

Total (a)

185 809

184 523

Operating expenses

Staff expenses

59 640

58 055

Fixed asset related expenses

3 650

3 586

Other administrative expenses

34 100

26 833

Operational expenses

40 745

34 720

Total (b)

138 136

123 194

Surplus /(deficit) from operating activities (c = a – b)

47 673

61 329

Financial operations revenues (e)

14 011

8 149

Financial operations expenses (f)

74

63

Surplus /(deficit) from non-operating activities (g = e – f)

13 938

8 086

Economic result for the year (h = c + g)

61 611

69 415

Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis.

Table 4

Office for Harmonization in the Internal Market (Alicante) — Balance sheet at 31 December 2007 and 2006

| (1000 euro) |
| --- |
| | 2007 | 2006 |
| Non-current assets |
| Intangible fixed assets | 1 307 | 1 023 |
| Tangible fixed assets | 25 728 | 25 948 |
| Current assets |
| Short-term pre-financing | 186 | 124 |
| Short-term receivables | 4 105 | 2 520 |
| Cash and cash equivalents | 343 350 | 281 510 |
| Total assets | 374 676 | 311 125 |
| Non-current liabilities |
| Provisions for risks and charges | 834 | 727 |
| Other long-term liabilities | 23 | 20 |
| Current liabilities |
| Provisions for risks and charges | 8 849 | 12 266 |
| Accounts payable | 59 928 | 54 681 |
| Total liabilities | 69 634 | 67 694 |
| Net assets | 305 042 | 243 431 |
| Reserve |
| Reserves | 90 171 | 72 353 |
| Accumulated surplus/deficit | 153 261 | 101 663 |
| Economic result of the year | 61 611 | 69 415 |
| Net capital | 305 042 | 243 431 |
| Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis. |

(1000 euro)

2007

2006

Non-current assets

Intangible fixed assets

1 307

1 023

Tangible fixed assets

25 728

25 948

Current assets

Short-term pre-financing

186

124

Short-term receivables

4 105

2 520

Cash and cash equivalents

343 350

281 510

Total assets

374 676

311 125

Non-current liabilities

Provisions for risks and charges

834

727

Other long-term liabilities

23

20

Current liabilities

Provisions for risks and charges

8 849

12 266

Accounts payable

59 928

54 681

Total liabilities

69 634

67 694

Net assets

305 042

243 431

Reserve

Reserves

90 171

72 353

Accumulated surplus/deficit

153 261

101 663

Economic result of the year

61 611

69 415

Net capital

305 042

243 431

Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis.

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THE OFFICE'S REPLIES

| 8. | Future automation projects and eventual outsourcing of tasks are systematically taken into account when planning future establishment plan's sizes and recruitment processes. The increase in the IT budget is the result of a significant increase of information systems, either because new tasks (Madrid protocol, Community designs, renewals) or because of the e-business strategy and the re-engineering of our internal trademark management systems as well as important investments in IT Security (business continuity). Internal methodology already foresees cost/benefit analysis for each IT project. A similar methodology will be implemented for outsourced activities. |
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8.

Future automation projects and eventual outsourcing of tasks are systematically taken into account when planning future establishment plan's sizes and recruitment processes. The increase in the IT budget is the result of a significant increase of information systems, either because new tasks (Madrid protocol, Community designs, renewals) or because of the e-business strategy and the re-engineering of our internal trademark management systems as well as important investments in IT Security (business continuity). Internal methodology already foresees cost/benefit analysis for each IT project. A similar methodology will be implemented for outsourced activities.

| 9. | New tools for project management (including financial estimates management) are going to be introduced. The application of the existing quality management methodology will be enhanced to cover systematically all these aspects in all projects. |
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9.

New tools for project management (including financial estimates management) are going to be introduced. The application of the existing quality management methodology will be enhanced to cover systematically all these aspects in all projects.

| 10. | In December 2006, the Commission made proposals for a new fee mechanism. The Council, in May 2007, asked the Commission to make an immediate proposal for a reduction. |
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10.

In December 2006, the Commission made proposals for a new fee mechanism. The Council, in May 2007, asked the Commission to make an immediate proposal for a reduction.

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