1999/267/EC: Commission Decision of 7 April 1999 relating to a proceeding pursuant to Article 85 of the EC Treaty (IV/36.147 EPI code of conduct) (Text with EEA relevance) (notified under document number C(1999) 494)
Date: 1999-04-07
Institutions: European Commission
Subjects: European Patent Office, European patent, advertising malpractice, code of conduct

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 7 April 1999

relating to a proceeding pursuant to Article 85 of the EC Treaty

(IV/36.147 EPI code of conduct)

(notified under document number C(1999) 494)

(Only the French text is authentic)

(Text with EEA relevance)

(1999/267/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Whereas:

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation No 17 of 6 February
1962, first Regulation implementing Articles 85 and 86 of
the Treaty (1), as last amended by the Act of Accession of
Austria, Finland and Sweden, and in particular Articles 2
and 6 thereof,

Having regard to the application for negative clearance
and the notification with a view to an exemption
presented on 17 July 1996 pursuant to Articles 2 and 4 of
Regulation No 17,

Having regard to the Commission Decision of 7 May
1998 to initiate proceedings in this case,

Having regard to the summary of the application and
notification, published (2) in accordance with Article 19(3)
of Regulation No 17 and Article 3 of Protocol 21 to the
Agreement on the European Economic Area (EEA),

Having consulted the Advisory Committee on Restrictive
Practices and Dominant Positions,

(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ C 155, 20.5.1998, p. 3.

I. THE FACTS

A. The notification

(1)

(2)

On 17 July 1996 the Institute of Professional
Representatives before the European Patent Office
(hereinafter referred to as ‘the EPI') notified its code
of conduct, as last amended by its Council on 7
to the Commission with a view to
May 1996,
obtaining negative clearance or,
failing that, an
exemption from the prohibition of restrictive prac-
tices.

This notification was in reply to a statement of
objections sent to the EPI on 18 November 1995
following a complaint lodged on 8 June 1992 by
Michael Harrison, European Patent Agent for the
firm of solicitors styled Dibb Lupton Broomhead
(now Dibb Lupton Alsop) of the United Kingdom
(Case IV/34.775).

On 18 December 1996 the Commission sent a
letter of warning to the EPI stating inter alia that
an exemption could not be granted either
in
respect of the provisions of the code of conduct
prohibiting advertising, based as they were on
vague and imprecise notions, or with regard to the
requirement that members charge reasonable fees.

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On 3 April 1997 the EPI transmitted a new version
of the code of conduct to the Commission, but this
was still not satisfactory. On 14 October 1997,
following discussions with the Commission, the
EPI submitted the version as last amended on 30
September and 3 October 1997, which is the
subject of this notice.

B. The EPI and the rules governing its opera-

tions

1. The Munich Convention

(3)

The Convention on the grant of European patents
(hereinafter referred to as ‘the Convention'), signed
in Munich on 5 October 1973, sets up a common
body of law between the Contracting States (3) in
the field of patents for inventions.

The European Patent Organisation (hereinafter
referred to as ‘the Organisation'), the intergovern-
mental entity set up by the Convention, enjoys
administrative and financial autonomy and is
responsible for granting European patents.

The bodies of the Organisation are the European
Patent Office (hereinafter referred to as ‘the EPO')
and the Administrative Council. The EPO grants
patents under the supervision of the Administrative
Council.

The Administrative Council is composed of repre-
sentatives and alternate representatives of
the
Contracting States (one per State).

(5)

(6)

2. The EPI

(4)

The EPI was set up by the Administrative Council
of the Organisation on the basis of Article 134(8)(b)
of the Convention.

The EPI is a non-profit-making organisation whose
expenditure is covered by its own resources, derived
in particular from the subscriptions paid by its
members. Its object
is to collaborate with the
Organisation on matters relating to the profession
of professional
in particular on
representative,
disciplinary matters and on the European Quali-
fying Examination, and to promote compliance by
its members with the rules of professional conduct,
notably by way of recommendations.

All persons on the list of professional representa-
tives are members of
the Institute. The EPO
informs the Institute of any changes to this list.

(3) At present, the 15 Member States of the European Union plus

Liechtenstein, Monaco and Switzerland.

Consequently, all European patent representatives
are members of the EPI.

is elected by the Institute’s
The EPI Council
members. Each State being a party to the Conven-
tion makes up a constituency in which those
members having their place of business or employ-
ment there have a vote (Article 7(1) and (2) of the
Regulation on the establishment of the EPI). The
Council has the management and control of the
affairs of the EPI and may, within the terms of the
Regulation on discipline for professional represent-
atives, make recommendations on conduct (Article
9(3) of the Regulation on the establishment of the
EPI). The President of the Council represents the
EPI. A Board, made up of at least the President, the
Vice-Presidents, the Secretary-General and Treas-
urer, performs the duties conferred on it by the
Council (Article 10 of the Regulation on the estab-
lishment of the EPI).

The profession of European patent representative is
therefore organised and unified within the EPI. No
distinction is made in the Convention between
self-employed patent
representatives and those
employed within the patents department of a firm.

3. The Regulation on discipline for professional

representatives

Pursuant to Article 134(8)(c) of the Convention, the
Administrative Council of
the Organisation has
adopted rules on the disciplinary power to be exer-
cised by the EPI and the EPO over professional
representatives (Regulation on discipline for profes-
sional representatives of 21 October 1977, herein-
after referred to as ‘the Regulation'). In its first part,
the Regulation lays down ‘rules of professional
conduct' under which a professional representative
is required, in the performance of his duties:

(cid:190) to exercise his profession conscientiously and
in a manner appropriate to its dignity; in parti-
cular, he shall not knowingly make any false or
misleading statements (Article 1(l) of the Regu-
lation),

(cid:190) to conduct himself in such a manner as not to
prejudice the necessary confidence in his
profession (Article 1(2) of the Regulation),

(cid:190) to refuse or withdraw his services if acceptance
or continuation would necessitate his dealing
with a particular matter on which he has repre-
sented or advised another client with opposing
interests and the conflict has not been resolved
(Article 3(2) of the Regulation).

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Any professional representative who fails to comply
with these rules of conduct may incur a penalty (a
warning, reprimand or fine, or deletion from the
list of professional representatives for a temporary
or indefinite period (cid:190) Article 4 of the Regulation).

The Disciplinary Board is made up of three legally
qualified members of the EPO and two profes-
sional representatives. It considers alleged breaches
of the rules of professional conduct referred to it by
the
the Disciplinary Committee (Article 7(l) of
Regulation).

(7)

(8)

Breaches of the rules of professional conduct may
be considered by the EPI Disciplinary Committee,
the EPO Disciplinary Board and the EPO Disci-
plinary Board of Appeal (Article 5 of the Regula-
tion).

The EPI Disciplinary Committee is elected every
two years by the EPI Council on the basis of the
recommendations of each national group on the
Council. It is made up of EPI members who are
not already on the EPI Council or Board (Article 11
of the Regulation on the establishment of the EPI).

When an alleged breach of the rules of professional
conduct is referred to the Disciplinary Committee,
its chairman appoints three members and one
alternate member to a chamber in charge of exam-
ining the case.

(10)

If the Disciplinary Committee is unable to take a
final decision within nine months of an alleged
breach being brought to its notice, it submits a
report to the President of the EPO Disciplinary
Board before the nine-month period has expired.
The President can decide either to extend the time
limit or to refer the matter to the Disciplinary
Board itself (Article 6(3) and (4) of the Regulation).

The Disciplinary Committee does not have the
power to delete an EPI member from the list of
professional representatives before the EPO, but it
can discuss matters, issue warnings or reprimands
or refer the case to the EPO Disciplinary Board if it
considers that a penalty greater than a warning or
reprimand is appropriate (Article 6(2)(b) and (c) of
the Regulation).

Proceedings before the Disciplinary Committee are
not public, and its deliberations are confidential.

The decisions of the Disciplinary Committee set
out the facts of the case and the reasons for the
decision but, unlike those of the two other disci-
plinary bodies, they are not published in the Offi-
cial Journal of the EPO. They are published only
in the EPI’s internal newsletter (EPI Information).

(9)

The Disciplinary Board and the Disciplinary Board
of Appeal are independent bodies forming part of
the Organisation.

the Disciplinary Board are
The members of
appointed by the President of the EPO for a term
of three years. The professional representatives are
selected from a list proposed by the EPI Board and
may not simultaneously sit on any other disci-
plinary body or on the EPI Board, nor be employed
on a full or part-time basis by the EPI (Article 9(2)
of the Regulation).

After any preparatory inquiries which it may wish
to carry out, the Disciplinary Board decides either
to dismiss the matter or to impose a penalty
(Article 7(2) of the Regulation).

They

professional

representatives.

The Disciplinary Board of Appeal is made up of
three legally qualified members of the EPO and
are
two
appointed by the Administrative Council for a term
of five years. This Board hears appeals against final
decisions, including dismissals, of the EPI Disci-
plinary Committee and the EPO Disciplinary
Board (Article 8(1) of the Regulation). Appeals may
be
representative
the professional
concerned, the President of the EPI Council and
the EPO President. The members of the Disci-
plinary Board of Appeal may not simultaneously sit
on any other disciplinary body or on the EPI Board
or be employed on a full or part-time basis by the
EPI.

lodged by

(11) Members of a disciplinary body are independent in
the performance of their duties (Article 11 of the
Regulation).

Before any decision is taken which might prejudice
the interests of a professional representative, the
representative in question is given the opportunity
to comment.

The same also applies to the President of the EPI
Council and the President of the EPO (Article 12
of the Regulation). All decisions by a disciplinary
body must state the reasons on which they are
based and be given in writing. They are then noti-
fied to the professional representative, the President
of the EPI Council and the President of the EPO.
Complainants are informed of the results of the
proceedings (Article 21(l) of the Regulation).

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(12) Decisions of the Disciplinary Board of Appeal are
not open to appeal before the national courts of the
Member States of the Organisation, although this is
not expressly forbidden by the EPI or EPO rules.

This situation seems to be consistent with the
general principle of public access to justice since it
would appear that the Disciplinary Board of Appeal
can be deemed equivalent to a legal body for the
following reasons: 1. its members have legal (three
members) or technical
(two members) qualifica-
tions and may not sit on any other disciplinary
body involved in adopting the initial decision; 2.
they are appointed for five years and cannot be
relieved of their duties during that period except
for serious reasons; 3. they are independent in the
performance of their duties, are not bound by any
instructions in reaching their decisions, and cannot
take part in an appeal
if they have a personal
interest; 4. decision must be reasoned, and the
representative
professional
against whom the
taken is given the opportunity to
decision is
comment; the same also applies to the President of
the EPI Council and the President of the EPO; 5.
oral proceedings are initiated either at the request
of the professional representative or at the instance
of the Disciplinary Board of Appeal if it deems it
expedient; oral proceedings take place in the pres-
ence of all the members of the Disciplinary Board
of Appeal, an official responsible for drawing up
the minutes, the professional representative and his
legal representative, and the Presidents of the EPO
and the EPI or their representatives.

4. The code of professional conduct

(13)

The notified code of professional conduct amends
the version adopted at the fifth meeting of the EPI
Council, held on 5 November 1985 in Munich (4).
Responsibility for the code rests exclusively with
the EPI Council (the text is published in the EPO
Official Journal
the purposes of
solely for
providing the public with full information on the
rules of conduct of professional representatives),
although the legal basis for its adoption by the EPI
is to be found in Articles l to 4 of the Regulation
on discipline for professional representatives and in
Article 4(c) of the Regulation on the establishment
of the EPI, which was adopted by the Adminis-
trative Council of the Organisation.

The EPI Council can amend this code as and when
it wishes without having to obtain any author-

(4) OJ 9/1986 of the EPO, p. 331.

isation from the EPO or
Council of the Organisation.

the Administrative

the Administrative Council of

the
By contrast,
Organisation is not able to amend or repeal the
code as such, although it may, at its own initiative
or that of the EPI Council, amend the Regulation
on discipline
representatives
for professional
(Article 29 of the Regulation). It may also amend
the Regulation on the establishment of the EPI.

The purpose of
to regulate the
the code is
members’ conduct and other activities linked to the
Convention.

(14)

‘relationship with other members',

The rules laid down by the code are grouped into
seven articles with the titles ‘general', ‘advertising',
‘relationship with
‘relationship with the public',
clients',
‘rela-
tionship with the EPO', and ‘relationship with the
Institute'. The code is preceded by several defini-
tions, including the one for the term ‘fees', which is
deemed to mean ‘reasonable and justifiable fees'.
These definitions constitute a preamble to the code
and are not applied by the EPI as such. The EPI
cannot therefore impose penalties on its members
for not charging reasonable or justifiable fees. The
rules of the code are as follows:

‘Article 1 General

(a) The general requirements for members of the
Institute are laid down in the Disciplinary
Regulation.

(b) The general principles of professional conduct
are laid down in this code, which reflects the
present views of the Council. A member is not
released by this code from his own responsi-
bility to comply with the rules of professional
conduct set out in Articles 1 to 3 of the disci-
plinary Regulation.

(c) The basic task of a member is to serve as a
reliable adviser to persons interested in patent
matters. He should act as an independent coun-
sellor by serving the interests of his clients in
an unbiased manner without
regard to his
personal feelings or interests.

(d) A member is required to take measures to safe-
guard his client’s interests in the event of his
being prevented from exercising his profession.

(e) Good fellowship among members is a necessity
for preserving the reputation of the profession
and should be exercised irrespective of personal
feelings.

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(f) Each member should know of the code and

Article 4 Relations with clients

cannot plead ignorance of it.

(g) A breach of the code cannot be justified by

referring to instructions from a client.

Article 2 Advertising

(a) Advertising is generally permitted provided that
it is true and objective and conforms with basic
principles such as integrity and compliance
with professional secrecy.

(b) The following are exceptions

to permitted

advertising:

(a) A member must at all times give adequate care
and attention and apply the necessary expertise
to work entrusted to him by clients. A member
shall keep clients informed of the status of their
cases.

(b) In principle, a member does not need to serve
in matters not
the
connected with professional work entrusted to
him by the client.

interests of

client

a

1. comparison of the professional services of

one member with those of another;

(c) A member may demand advance payments

from a client.

2. the identification of a client without
express authorisation of that client;

the

3. the mention of the name of another profes-
sional entity unless
a written
cooperation agreement between the member
and that entity; and

there is

4. the

advertisement,

or
publishing of offers to buy, sell or negotiate
industrial property rights, except upon the
instructions of a client.

announcement

Article 3 Relations with the public

(a) A member must uphold the public reputation
of the Institute, of its members and of the prac-
representation before the European
tice of
Patent Office.

(b) A member must not give any indication on
office premises, stationery or otherwise which is
misleading to the public.

(c) A member must not give any commission to
others for the introduction of business, but this
does not extend to the acquisition in part or in
whole of another patent agency practice.

(d) A member must not pertnit without adequate
supervision professional activities related to the
European Patent Office under his name or the
name of his association by a person who is not
a member.

(e) As far as the exercise of his profession is
concerned, a member is responsible for the acts
of non-member assistants.

(d) In addition to the requirements of Article 3(2)
of the disciplinary Regulation, a member must
decline an order which is in conflict with his
own interests. In all such cases, if the order
cannot be postponed without possible damage
to the client, a member must accept and
perform the order so far as immediately neces-
sary to avoid such possible damage; thereafter
he must resign from the case.

(e) A member must not acquire a financial interest
in any industrial right in such circumstances as
to give rise to a conflict between professional
duty and interest. He must not charge a fee
directly related to the outcome of the services
he provides.

(f) Supplementary to Articles 2 and 3 of the disci-
plinary Regulation, a member must not take
any action against a particular matter which is
being handled or has been handled by the
member or another person in his office, unless
the client in the matter agrees to this action or
unless the member has no cognisance of the
matter and is no longer in a position to take
cognisance of it. The member is not permitted
to make use in the action of
information
obtained during the time the matter was previ-
ously handled, unless the information is public.

(g) A member is automatically released from his
secrecy obligation under Article 2 of the disci-
plinary Regulation if
information
becomes published.

the secret

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Article 5 Relations with other members

(a) A member must observe good fellowship
towards the other members, and this includes
courtesy and the fact that a member may not
speak of another member in discourteous or
offensive
in respect of
another member should first be discussed in
private with the other member, either directly
or through a third member, and then if neces-
sary through the official channels prescribed by
the Institute and in the disciplinary Regulation.

terms. Grievances

(b) Since a prime interest of the Institute is to
maintain a unified profession, no member must
exercise or promote discrimination between
members, for example on grounds of language
or nationality.

(c) A member must avoid any exchange of views
about a specific case which he knows or
suspects is being handled by another member
with the client of the case, unless the client
declares his wish to have an independent view
or to change his representative. The member
may inform the other member only if the client
agrees.

(d) Where a member is instructed by a client to
take over the handling of a case from another
member, the member so instructed is free to
accept such instruction but then must ensure
that the other member is informed. Such other
member must, without delay, loan or transfer
all documents necessary for the handling of the
case or provide copies at reasonable expense to
the new representative.

Article 6 Relations with the European Patent
Office

In all dealings with the European Patent Office and
its employees, a member must act courteously and
must do everything possible to uphold the good
reputation of the Institute and its members.

Article 7 Relationship with the Institute

(a) Members must keep the Institute informed of
their address to which correspondence and
other information from the Institute are to be
sent. Changes of address must be notified to the
Secretary-General without delay.

(15)

Article 6 of the Regulation on the establish-
ment of the Institute.

If a member fails to pay the subscription as
required by the arrangements, the matter may
be referred by the Treasurer to the Disciplinary
Committee.

(c) No member may, unless authorised by the
President of the Institute, make any written or
oral communication on behalf of the Institute.

(d) A member has the right to seek through the
Secretary-General an opinion on the permissi-
bility, under the code, of any act the member
proposes to do or sanction. Such opinion is not
binding on the disciplinary bodies.

(e) Except as provided in paragraph 5(b), breaches
of the code must be brought to the notice of
the Disciplinary Committee in writing.'

C. Amendments to the code of conduct

although

comparative

The code of conduct with which this notice is
concerned has been substantially amended as
compared with the version which was the subject of
the statement of objections of 18 November 1995
and even as compared with the notified version.
Previously, individual advertising was prohibited as
a matter of principle, and only advertising bene-
fiting the entire profession was authorised. Under
the new code, individual advertising is allowed in
advertising
principle,
remains prohibited. The previous code prohibited
any supply of unsolicited services. The new rules
continue to prohibit
the supply of services in
respect of cases already in progress or to users who
have already been the client of another repres-
entative for a specific case. The provision whereby
members were required to charge fees which were
reasonable but sufficient to maintain their profes-
independence (Article 1(f)) has also been
sional
deleted. Nevertheless, a reference to reasonable and
justifiable fees remains in the preamble to the code.
It must be interpreted solely as a suggestion which
cannot be used by the EPI,
in isolation or in
conjunction with other provisions of the code, to
reprimand members. Finally, Article 5(b) must be
interpreted as referring to discrimination based on
nationality, language, race or the like.

D. The relevant market

(b) Members must pay,

in accordance with the
arrangements laid down and notified by the
Council, the annual subscription required by

(16)

The relevant services are those associated with
applications for European patents filed with the
EPO.

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(17)

The procedures which must be followed when
applying for a European patent are not
inter-
changeable with those followed when obtaining a
national patent. A European patent is equivalent to
a number of national patents. An international
patent obtained under
the Patent Cooperation
Treaty (PCT) (5) is also equivalent to a number of
national patents corresponding to the countries
designated in the application. A national patent is
not in itself interchangeable with an international
PCT or European (EPO) patent. Several national
patents obtained separately in the designated States
provide the same protection as a European or inter-
national patent for those States. Nevertheless, the
EPO procedure is unique and is well-known to all
professional
the
country in which they pursue their activities; they
are thus able to deal with European patent applica-
tions from anywhere in the world. By contrast,
national patent applications are subject to varying
procedures depending on the country in question.
Local patent agents are most familiar with them
and applications from abroad might, by dint of
statutory requirement, have to be dealt with by a
local agent. In addition, European patent proced-
ures give rise to quite different costs to those
relating to national procedures.

irrespective of

representatives,

Demand for the relevant services comes from busi-
ness and individual inventors wishing to obtain a
European patent in order to protect their inven-
tions or to oppose the grant of a European patent,
and from patent agents in countries which have not
signed the Convention and in Contracting States
which are not themselves professional representa-
tives before the EPO. Demand is worldwide.

the relevant

(other
from non-contracting

(18) As far as the Convention procedures governing
than the filing of patent
applications
States
are
applications)
concerned,
are generally
supplied by professional representatives before the
EPO, and by any lawyer who is authorised to carry
on activities and who has a professional domicile
on the territory of one of the contracting States,
provided that he is authorised to serve as a patent
agent. In any of the procedures established by the
Convention for applications from a Contracting

services

(5) The Patent Cooperation Treaty is an international

treaty
signed on 19 June 1970. International applications filed under
its terms may be the subject of proceedings before the EPO.
When the latter acts as designated Office of elected Office for
an international application, the application is deemed to be a
European patent application (Article 150(2) and (3) of
the
Convention).

State, the applicants are not required to be repre-
sented before the EPO.

(19)

(20)

(21)

Persons who file applications on their own account,
or firms which file applications via a professional
representative whom they employ, cannot be
considered to be in competition with professional
representatives, in particular because of the small
number of applications filed by such means. The
same applies to lawyers within the Community,
including those who satisfy the conditions confer-
ring upon them the right of representation before
the EPO alongside professional
representatives.
However, such lawyers make almost no use of that
right. The EPI has itself confirmed that 85 % of
European applications are filed by professional
representatives, claiming that this high percentage
is due to the fact that applicants consider that
European patent applications,
their
importance, complexity and technicality, must be
filed via qualified professionals, namely profes-
sional representatives before the EPO (letter of 10
November 1993). Even those applicants that are
not required to obtain representation in their deal-
ings with the EPO will call on the services of a
In
professional
addition, some major applicants, in particular those
specialised in chemicals, tend not to appoint the
patent agents employed in their patents depart-
ment to represent them in applying for patents but
also call, on the services of self employed profes-
sional representatives (6).

representative before the EPO.

in view of

In conclusion, the relevant market is the market in
services associated with European patent applica-
tions, which is separate from the market in services
associated with national patent applications. The
former has a dimension which is at least European,
and the professional representatives of the various
contracting States compete on it. By contrast, the
latter is made up of several national markets.

In 1997,
the list of professional representatives
before the EPO contained 5 861 names (7), of which
5 563 are within the Community. The breakdown
between Member States was as follows: Belgium:
101; Denmark: 110; Germany: 2 078; Greece: 46;
Spain: 176; France: 565; Ireland: 32; Italy: 276;
Luxembourg: 13; Netherlands: 273; Austria: 84;
Portugal: 51; Finland: 163; Sweden: 246; United
Kingdom: 1 349.

(6) See the speech given by Mr Paul Braendli, then EPI President,
at the conference of the International Federation of Industrial
Property Attorneys on 27 June 1978. The EPI’s letter of 10
November 1993 does not invalidate these observations.

(7) European Patent Office, 1997 Annual Report, p. 30.

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Within the Community, two countries (cid:190) Germany
(37,4 %) and the United Kingdom (24,2 %) (cid:190)
accounted for the majority of professional represen-
tatives.

A large proportion of European patent applications
also come from applicants in the United States of
America and Japan, who must appoint a European
patent agent for that purpose.

this

A total of 39 646 European patents were granted in
1997 (8). Of
figure, 49 % originated in a
Contracting State and 47,8 % in the United States
of America or Japan; 28 245 were obtained on the
basis of a European application, the rest on the
basis of Euro-PCT applications.

The number of European patent applications filed
in the same year was 72 904, of which 27 466 were
international applications filed under the PCT.

A rough estimate of the value of the market in the
representatives
services supplied by professional
can be made on the basis of the average cost (9) (in
12 Member States of the Community plus Switzer-
land) of a European patent application (excluding
registration costs) (cid:190) ECU 8 372 (cid:190) multiplied by
85 % of the number of applications in 1997. This
gives a total of ECU 519 million.

E. Comments from third parties

(23)

(22)

Further to the notice issued pursuant to Article
19(3) of Regulation No 17,
the Commission
received comments from the EPI and from the
United Kingdom Office of Fair Trading.

The EPI asked that the reference to the de facto
monopoly of professional representatives be deleted
because representation in the proceedings estab-
lished by the Convention can be provided by any
lawyer authorised to carry on activities on the ter-
ritory of a Contracting State on the same footing as
the EPI
a professional representative. Moreover,
takes the view that, in amending Council Directive
84/450/EEC of 10 September 1984 relating to the
approximation of
and
the Member States
administrative provisions of
concerning misleading advertising (10), European
Parliament and Council Directive 97/55/EC (11)
directly confers on the EPI the right to maintain or
prohibit comparative advertising, since it has been
entrusted by the EPO with regulating the activity of
professional representatives. According to the EPI,

regulations

laws,

the

(8) European Patent Office, 1997 Annual Report, p. 62.
(9) These are average costs for 1991. See ‘Obtaining a patent
the time, risks and
involved', A. Bouju, EC Commission, 1991, EUR

protection in an industrialised country:
costs
Reports, 13488.

(10) OJ L 250, 19.9.1984, p. 17.
(11) OJ L 290, 23.10.1997, p. 18.

the Commission cannot therefore prohibit what is
authorised by the said Directive.

The Office of Fair Trading considered the
Commission’s position to be reasonable but drew
its attention to the need for the Commission to
monitor the application of the EPI code of conduct
and to the fact that the Commission’s notice does
not make any reference to the appreciable effect on
trade between Member States.

The Commission has assessed these comments but
has decided that they do not justify any amend-
ment to its preliminary position as outlined in the
published notice. Some of the aspects raised have
been dealt with in Section D (‘The relevant
market'). The others are dealt with in the following.

II. LEGAL ASSESSMENT

A. Article 85(1) of the Treaty and Article 53(1)

of the EEA Agreement

1. Undertakings, associations of undertakings

Professional representatives before the EPO are
undertakings within the meaning of Article 85(1) if
they carry on their activities as
self-employed
persons. In this capacity, they supply their services
on an ongoing basis and in return for payment,
assuming the financial risks associated with the
pursuit of this activity. The fact that they represent
a regulated liberal profession and that their services
are intellectual, technical or specialised in nature
and are supplied on a personal and direct basis
their economic
the nature of
does not alter
activity (12).

According to the Court of Justice of the European
Communities (judgment of 23 April 1991 in Case
C-41/90 H(cid:148)fner v. Macrotron), ‘the concept of an
undertaking encompasses every entity engaged in
an economic activity, regardless of the legal status
of
is
the entity and the way in which it
financed (13)'.

(24)

The EPI, to which all professional representatives
registered with the EPO belong, is an association of
the same
undertakings within the meaning of
provision of the Treaty, even though it was set up
by the Administrative Council of the Organisation
and its powers to monitor compliance with the

(12) See judgment of the Court of Justice of 18 June 1998 in
ltaly [1998] ECR I-3851, at

Case C-35/96 Commission v.
paragraphs 37 and 38.
[1991] ECR I-1979, at paragraph 21.

(13)

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Official Journal of the European Communities

23. 4. 1999

rules of professional conduct of professional re-
presentatives were conferred on it under
the
Convention. The fact
that salaried professional
representatives are also members of the EPI and
have a say in determining the provisions of the
code, which might not even concern them, does
not prevent it from being considered that these
provisions are the expression of the collective will
of the EPI members who carry on the profession
on a self employed basis.

competition, the use of this power is still subject to
Article 85 (see in this regard recital 48 of Commis-
sion Decision 95/188/EC (14)).

(27)

In the case in hand, the restrictions of competition
relate to the adoption by the EPI of certain provi-
sions of the code of conduct limiting competition
representatives and which
between professional
in which the EPI has
constitute the manner
laid
applied the rules on professional conduct
down by the disciplinary Regulation.

2. Decisions by associations of undertakings

(25) Adopted as it was by the EPI Council, the code of
professional conduct constitutes a decision by an
association of undertakings.

The purpose of
‘to regulate the
this code is
members conduct and other activities linked to the
Convention', and its provisions are binding on all
members. The EPI enforces the provisions of the
code on the basis of penalties (reprimands or warn-
ings).

3. Lack of effect of the legal framework on the

application of Article 85

(26)

by

adopted

representatives,

The existence of the Regulation on discipline for
professional
the
Administration Council of the Organisation, and
the powers conferred on the EPI by Article 4(c) of
the Regulation creating an Institute of Professional
Representatives before
the EPO to ‘promote
compliance by its members with the Rules of
inter alia through the
Professional Conduct,
formulation of
(see point 4)
recommendations'
cannot be invoked as a reason for not applying the
competition rules of the Treaty to the EPI’s re-
strictive practices. On the one hand, responsibility
for adopting the code rests solely with the EPI
Council. EPO Official Journal 9/1986 indicates in
this regard that the text is published therein solely
for the purposes of providing the public with full
information on the rules of conduct of professional
representatives (see point 13). On the other hand,
even if public authorities delegate to an association
to adopt practices which restrict
the power

In its judgment of 30 January 1985 in Case 123/83
BNIC v. Clair (15), the Court of Justice held that
‘Article 85 states that
it applies to agreements
between undertakings and decisions by associations
of undertakings' and that
framework
within which such agreements are made and such
decisions are taken and the classification given to
that
legal
framework by the various national
systems are irrelevant as far as the applicability of
the Community rules on competition and in
particular Article 85 of the Treaty are concerned'.

‘the legal

This same case-law also applies in the context of
the legal framework created by the Convention.

Moreover, in its judgment of 16 November 1977 in
Case 13/77 INNO v. ATAB (16), the Court stated
that undertakings could not escape the application
of the Treaty’s competition rules for the sole reason
that their conduct has been encouraged by a public
body because, if this were the case, Articles 85 et
seq. would be deprived of all effectiveness.

4. Provisions of the code of conduct which do not

restrict competition

By dint of the amendments made to the notified
code, most of
its provisions no longer restrict
competition.

(a),

The provisions of Article 7 on members’ ‘relation-
ship with the Institute' relate solely to adminis-
trative or procedural aspects. Article 1 (‘General')
lays down the general principles applicable to the
(f) and (g)) and the
code (paragraphs
(b),
impartiality,
members’ professional duties
competence and responsibility (paragraphs (c) to
(e)), which
restrict
competition. Article 3(a), (d) and (e), Article 4(a) and
Article 6 (‘Relationship with the EPO') are not in
themselves restrictive either, given that their sole
objective is to ensure members’ responsibility and
competence. Likewise, Article 2(b)(2) and Article
4(b), (c) and (g) do not have the purpose or effect of
restricting competition.

themselves

not

do

in

of

(28)

(29)

(14) OJ L 122, 2.6.1995, p. 37.
(15)
(16)

[1985] ECR 391, at paragraph 17.
[1977] ECR 2 115, at paragraphs 30 to 34.

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Official Journal of the European Communities

L 106/23

(30) Article 5(a) and (b) also do not set out to restrict or
distort competition between members of
the
profession. They are not likely to have a restrictive
effect provided they are applied objectively and
without discrimination.

(31) Article 5(d) lays down obligations which are neces-
sary to facilitate the transfer of
files from one
member to another by allowing the new member
to obtain all the documentation needed to take
over a case. This provision,
indeed, promotes
competition between representatives to the benefit
of users.

sentatives to comply with rules of professional
conduct (see point 6). Moreover, representatives are
required to comply with the EPI code of conduct,
which obliges them to meet their duties of compet-
ence, impartiality, integrity and responsibility and
to avoid conflicts of interest, maintain professional
secrecy and not to engage in misleading advert-
ising. All of
these obligations must be deemed
legitimate and consistent with the ethics of the
profession. The canvassing of clients must also
comply with them. Consequently,
the EPI’s
that members must canvass clients
requirement
directly and not via intermediaries
justified
within the profession, given that
it would be
impossible to impose the rules by which represen-
tatives are bound on third parties.

is

(32)

The restrictions contained in Article 2(a) and
Article 3(b)
to avoid
misleading advertising or to protect professional
secrecy.

are necessary in order

(35)

(33)

The provisions of Article 2(b)(4), Article 4(d) and
the first sentence of Article 4(e) are necessary in
order to avoid conflicts of interest. Such conflicts
might arise if
the same representative supplied
services to clients with opposing interests (for
the holder of a patent and a person
example,
having infringed that patent), if the representative’s
interests were in conflict with those of the client, or
if the representative’s professional obligations were
in conflict with his personal interests, particularly
those of a financial nature.

(34) According to the EPI, Article 3(c) is aimed at the
following two situations: 1. the payment of a fee by
one representative to another for the transfer of a
file at the client’s request or in the event of a
the payment of a
conflict on interests, and 2.
commission by a representative to a third party
(other than members of
for the
procurement of files. The prohibition of the first
situation does not restrict competition. It facilitates
files from one representative to
the transfer of
another, and is beneficial to users of the services
whilst improving competition.

the profession)

The second situation (cid:190) whereby representatives
are prohibited from paying commission to third
parties (cid:190) must be assessed according to the
specific characteristics of the profession in question
and the rules governing it. The need to safeguard
the proper functioning of the EPO requires repre-

from charging fees

The second sentence of Article 4(e) prohibits
members
related to the
outcome of the service provided. This means that
representatives may not, for example, charge higher
fees simply because a patent is granted or lower
fees if a patent is not granted. It is also prohibited
for them to charge fees according to the results of
working the patent in question. This restriction on
members’ freedom of commercial action must be
viewed in the context of the overall system by
which the EPO grants patents, a system which is
one of the major factors of economic growth. The
average duration of a successful patent application
procedure was 50,2 months in 1997 (17), and the
economic results of a patent, even if it becomes
important over time, are difficult to forecast. If this
restriction did not exist, representatives would be
encouraged to take on cases which offered good
short-term commercial prospects rather than cases
whose outcome would only be known in the very
long term. Moreover, uncertainty as to the price
which the client would be required to pay for the
services provided by the representative would
continue for a long time. This would preclude
transparency as to the price payable by the user.
Without this restriction, there would also be a risk
that procedures would be initiated before the EPO,
not because of the merits of a patent or of opposi-
tion to it but rather because of the representative’s
in other
purely commercial motives. Even if
circumstances it might constitute a restriction of
competition to prohibit
fees from being deter-
mined according to outcome, it is necessary in the
economic and legal context specific to the profes-
sion in question in order to guarantee impartiality
on the part of representatives and to ensure the
proper functioning of the EPO. A prohibition of
this nature should therefore not be covered by
Article 85(1) of the Treaty and Article 53(1) of the
EEA Agreement.

(17) European Patent Office, 1997 Annual Report, p. 19.

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(36) Article 4(f) sets out to prevent conflicts of interest
in that it merely prohibits a member from taking
an action against a case which is being or has been
handled by himself (or his office). If this restriction
did not exist, a representative would be able to
represent clients with opposing interests, such as a
patent holder and a person having infringed the
patent, or appeal against a patent obtained with his
participation.

ence, integrity and responsibility on the part of
representatives, to prevent conflicts of interest and
misleading advertising,
to protect professional
secrecy or to guarantee the proper functioning of
the EPO. Those provisions therefore fall outside
the ambit of Article 85(1) of the EC Treaty and
Article 53(1) of the EEA Agreement. They are not
liable to restrict competition if they are applied
objectively and without discrimination.

(37) Article

a

representative

5(c) prohibits

from
approaching a client of another representative in
two situations: when the client is involved in a case
which is being handled by the other representative,
and when the other representative has finished
handling a case involving the client. The first situa-
tion (prohibition on offering unsolicited services in
respect of cases which are being handled by
another representative) does not set out to restrict
competition. This is because it contributes to a
smooth handling of cases, particularly since the
client is able to change representative if he so
wishes, and since other provisions of
the code
make it straightforward to transfer files when a
client decides to do so. It should be stressed that
the
can be obliged to avoid
exchanges of views with the client of another
representative only if he is objectively aware that
the other representative is indeed handling the
case. The word ‘suspects' in that provision should
therefore be interpreted in this sense.

representative

As for the second situation, this does constitute a
restriction of competition, since if a representative
is not allowed to exchange views with a potential
client on a specific case which has already been
handled by another representative, it will be diffi-
cult for him to offer to handle new cases which
would be linked to the specific case and he will
even have difficulties in establishing any profes-
sional contact with that client. This prohibition
might
from
approaching the former clients of other representa-
restriction of
tives.
competition and is assessed at recital 39 et seq.

therefore constitutes

therefore prevent

representatives

It

a

(38)

In conclusion,
the code of
the provisions of
conduct mentioned at recitals 29 to 37, with the
exception of the second situation relating to Article
5(c), do not set out to restrict competition. They are
necessary, in view of the specific context of this
profession, in order to ensure impartiality, compet-

5. Provisions of the code of conduct which signi-
trade

competition or affect

ficantly restrict
between Member States

(39)

(40)

The provisions of the EPI code of conduct relating
to comparative advertising (Article 2(b)(1) and (3)),
and, in so far as the active provision of services for
former clients of other representatives might be
prohibited or hampered, Article 5(c) thereof, limit
the freedom of members and have as their object or
effect to restrict competition between members of
the profession.

Even if the Commission acknowledges that the
merit of the practitioner and the quality of services
are essential elements of the competition between
members of a liberal profession, it considers that
the term ‘competition' also covers other elements,
such as fees (18) and advertising.

The arguments presented by the EPI to the effect
that these restrictions are necessary in order to
ensure the profession’s reputation do not justify
obstructing access to clear and accurate information
on the services in question, how much they cost
and the conditions on which they are supplied so
to choose freely which
as to enable the client
supplier of services to engage.

and their

(41) Advertising covers not only accurate information
for the user but also a promotion of the services on
offer, including comparison with a competitor or
with the services of competitors. In addition, the
members of a profession should have the freedom
to actively seek out clients without thereby directly
jeopardising the quality of the personal relationship
clients.
between service providers
Providing information on the services on offer,
where it is accurate and precise, and comparative
advertising, where it compares representative and
verifiable aspects and is not misleading, are means
of increasing user information to the benefit of
users and are important elements of the competi-
tive process. They allow users
to distinguish
between the alternatives which exist at the time of
obtaining a service and to make a rational choice of
service provider, whether it be within their national
frontiers or elsewhere in the Community. They also
make it easier for new operators to establish them-
selves on the market and stimulate innovation in
the means of providing services.

(18) See footnotes 12 and 14, and also Commission Decision 93/

438/EEC (OJ L 203, 13.8.1993, p. 27).

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L 106/25

(42) With regard to the restrictions on comparative
advertising, it must be stressed that Directive 84/
450/EEC adopts, in Article 7(5), a more flexible
approach to the prohibition of comparative advert-
ising within the liberal professions. Nevertheless,
the sole purpose of this provision is not to prevent
Member States from retaining or introducing, in
compliance with the provisions of the Treaty, any
prohibitions on the use of comparisons in the
advertising of professional services. Such prohibi-
tions or
result directly from
legislation or be imposed by a body or organisation
responsible, under the law of the Member States,
for regulating the exercise of a professional activity,
whereby rules of professional conduct are binding
on any profession which has not been the subject
of harmonisation at Community level.

restrictions might

to

establish

Article 7(5) does not provide for any automatic
derogation in respect of rules issued by professional
organisations, although it does permit Member
derogations. Even
such
States
supposing that the EPI were able to claim such a
derogation, this would not mean that Article 85 of
the Treaty would not be applicable since the
derogation would have to be ‘in compliance with
the
the rules of
Directive). Irrespective of any other legal rules
which might be applicable, it is beyond question
that the clause in question must be analysed in the
light of Article 85 of the Treaty (Article 53 of the
EEA Agreement).

(Article 7(5) of

the Treaty'

(43) Article 2(b)(1) and (3), of the code of professional
conduct, which prohibit comparative advertising,
and, in so far as the supply of services to former
clients of other representatives might be hampered,
Article 5(c) thereof, restrict the ability of more effi-
cient representatives to develop their services to the
detriment of less efficient representatives. These
provisions thus help to crystallise the clientele of
each professional
representative within each
national market. This is because representatives are
services with others
unable to compare their
provided both within and outside their own
country, and their possibilities of offering their
services to (domestic or foreign) potential clients
who have already been clients of another repres-
entative in a specific case are considerably reduced.
Thus, users throughout the world do not have the
complete information concerning the provisions of
services linked to applications for European patents
which would enable them to approach any repres-
entative irrespective of his/her geographical loca-
tion.

The provisions prohibiting comparative advertising
and those which are liable to prevent services from
being offered freely to users who have already been

(44)

(45)

(46)

clients of another representative are binding on
members of the EPI. They are not necessary to
ensure professional responsibility, independence or
secrecy or to prevent false or deceptive statements
or conflicts of interest and thus to ensure that EPI
members comply with the rules of professional
conduct (as contained in the first part of the disci-
plinary Regulation), which do not, in themselves,
restrict competition.

These restrictions are significant because they
concern all professional representatives on the EPO
list who are members of the EPI. These are repre-
sentatives in all Contracting States, including all
the Member States of the Community.

relate to cross-border

services,
The restrictions
namely services linked to applications for European
patents filed with the EPO which involve services
in the Contracting States indicated on the applica-
tion. They are therefore liable to distort signifi-
cantly trade flows in the relevant services between
the Member States.

B. Article 85(3) of the Treaty and Article 53(3)

of the EEA Agreement

The restrictions of competition indicated above
(the requirement binding on all EPI members to
refrain from comparative advertising (Article 2(1)(1)
and (3)), and from approaching on their own initia-
tive users who have already been clients of another
member in a specific case by exchanging views on
that case (Article 5(c)) may be exempted from the
prohibition of Article 85(1) of the Treaty because
they fulfil the conditions laid down in Article 85(3)
thereof and Article 53(3) of the EEA Agreement on
condition that they remain transitional in nature.

The profession in question has a long tradition of
virtually total prohibition of individual advertising
and the supply of unsolicited services. Maintaining
this situation and the restrictions referred to above
is unquestionably incompatible with the system of
effective and undistorted competition demanded by
the Treaty. Nevertheless, a changeover
from a
system of virtually total prohibition on advertising
and on the supply of unsolicited services, as
currently exists, to one of total freedom, involves a
significant transformation of the framework within
which professional representatives operate. If this
changeover is made suddenly, there is a potential
risk of confusion in the mind of the public such as
might damage the image that professional repre-
sentatives give to institutions participating in the
administration of justice.

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Accordingly, representatives and users alike must
be allowed a short period to adapt to the new
situation. Consequently,
abovementioned
restrictions may therefore be maintained on a
transitional basis so as to avoid confusion and to
allow users to receive a fair share of the resultant
benefits.

the

(48)

The disadvantages in terms of competition which
result from these restrictions would appear to be
outweighed by the advantages of an orderly transi-
tion. The amended code of conduct already repre-
sents a significant improvement over the situation
prevailing previously.

Competition is not eliminated for a substantial part
of the services in question since the restrictions
only exclude certain methods of advertising and
offering services while leaving members free to
compete with each other by a range of other
means. For example, the EPI code of conduct now
allows a professional representative to advertise his
office in the yellow pages or in the press without
any time limit, to advertise his services not only in
circulars but also in specialised magazines and in
the press, to indicate the scale of charges for his
services, and to advertise a specialisation or partic-
ular professional experience which would be useful
for users seeking special expertise for a specific
case. Such forms of advertising guarantee that users
are informed of the services available to them, how
much they cost, and which professional repres-
entative is best qualified to deal with a particular
case. They thus make the services more accessible
to users, and in particular to small and medium-
sized firms, and encourage the development of
greater efficiency within the profession of profes-
sional representative.

The restrictions on comparative advertising and the
supply of services must also be deemed vital to
avoid the disadvantages of a sudden changeover to
a system of total freedom, provided they remain
transitional. The indisputable advantages stemming
from the existence of a short transitional period
could not be achieved by any other means.

The Commission takes the view that a transitional
period running from 14 October 1997, the date on
which the EPI submitted to the Commission the
version of its code of conduct which is the subject
of this Decision, to 23 April 2000, the deadline by
which Member States must adopt the provisions
necessary to comply with Directive 97/55/EC, is
appropriate. This is enough to enable representa-
tives to adapt gradually to the new situation and to
avoid the risks of confusion for users, which are
liable to damage the image that professional repre-
sentatives give to the institutions before which they
represent their clients. These risks would in fact
result from too sudden a transition from a situation
in which nearly all advertising and the supply of
unsolicited services by EPI members was prohib-
ited to one in which all forms of advertising and
supply of services is permitted. The period of
exemption may not extend beyond the date of 23
April 2000 so as to avoid any discrepancy between
professional representatives and other professions
in the Member States which will implement the
provisions
abovementioned Directive
without any exceptions for the services of liberal
professions,

the

of

HAS ADOPTED THIS DECISION:

Article 1

Article 85(1) of the EC Treaty and Article 53(1) of the
EEA Agreement are, pursuant to Article 85(3) of the EC
Treaty and Article 53(3) of the EEA Agreement respec-
tively, hereby declared inapplicable to the provisions of
the code of conduct of the Institute of Professional Repre-
sentatives before the European Patent Office (EPI), in the
version as adopted on 30 September and 3 October 1997,
prohibiting members
from carrying out comparative
advertising (Article 2(b)(1) and (3)) and, in so far as it is
liable to make it more difficult to supply services to users
which have already been clients of other representatives
in a specific case, to Article 5(c) thereof.

This exemption shall be granted from 14 October 1997 to
23 April 2000.

C. Duration of the exemption

Article 2

(47)

In accordance with Articles 6 and 8 of Regulation
No 17, a decision granting an exemption must
indicate the date on which it takes effect and the
period for which it applies.

On the basis of the information at its disposal, there is no
reason for the Commission to take action pursuant to
Article 85(1) of the EC Treaty and Article 53(1) of the
EEA Agreement with regard to the provisions of the EPI
code of conduct other than as referred to in Article l of
this Decision.

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Official Journal of the European Communities

L 106/27

This Decision is addressed to:

Article 3

The Institute of Professional Representatives before the European Patent Office (EPI/EPO)
Erhardtstraße, 27
D-80331 M(cid:154)NCHEN

Done at Brussels, 7 April 1999.

For the Commission

Karel VAN MIERT

Member of the Commission