Report on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2009, together with the Office’s replies
Date: 2010-10-05
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Union Intellectual Property Office, administration of the Institutions, competence of the institution, financial control, implementation of the budget, report








C_2010338EN.01017301.xml










14.12.2010   


EN


Official Journal of the European Union


C 338/173





REPORT
on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2009, together with the Office’s replies
2010/C 338/30

CONTENTS








 



Paragraph




Page





INTRODUCTION …


1-2


174




STATEMENT OF ASSURANCE …


3-12


174




COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT …


13-15


175




OTHER MATTERS …


16-18


175




Table …


176





The Office’s replies …


178





INTRODUCTION







1.


The Office for Harmonization in the Internal Market (hereinafter ‘the Office’), located in Alicante, was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Union legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union (2).










2.


The Office’s 2009 budget amounted to 338 million euro, compared with 318,4 million euro the previous year. The number of staff employed by the Office at the end of the year was 742, as compared with 724 the previous year.



























































































































12.


The comments which follow do not call the Court’s opinions into question.





COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT







13.


The works related to the fitting-out of buildings planned for 2009 suffered significant delays. Out of the 7 million euro of initial appropriations, only 1,6 million euro was committed and 0,3 million euro was paid.










14.


In 2009, the Office paid 305 984 euro to an external, commercial provider of short term contract staff. This payment was not provided for in the contract. This expenditure is not legal and regular according to the Office’s Financial Regulation.










15.


The cash held by the Office as at 31 December 2009 amounted to 474,2 million euro. Despite the size of this amount, the Budget Committee has not yet adopted instructions or guidelines for treasury management.





OTHER MATTERS







16.


For the past three years (11), the Court has noted the need for the Office to propose to the Commission a level of fees which more accurately reflects its real costs (12). The cumulated budgetary surplus has increased from 273 million euro in 2007 to 350 million euro in 2008 and 402,6 million euro in 2009. Although amendments to the Fees Regulation came into effect on 1 May 2009, the year-end surplus has increased by more than 50 million euro in 2009. The long-term impact of these amendments should be carefully evaluated by the Office and, if necessary, further adjustments to the fees should be proposed to the Commission in order to reach a more balanced budget in the near future.










17.


The Office has not yet adopted all the implementing rules of the Staff Regulations (13) or internal guidelines for recruitment.










18.


The President of the Office appointed himself and the Vice-President as the only members for a recruitment (14) selection committee. This did not respect the principle of segregation of duties, as the Office’s President is also its Appointing Authority. The procedure was thus irregular.





This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 5 October 2010.


For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President





Table


Office for Harmonization in the Internal Market (Alicante)











Area of Union competence deriving from the Treaty


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


Governance


Resources made available to the Office in 2009

(Data for 2008)



Products and services supplied in the financial year 2009

(Data for 2008)






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 36 of the Treaty on the Functioning of the European Union)

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

(From Article 56 of the Treaty on the Functioning of the European Union)




Objective







—


To implement the Union 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.










—


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










—


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










—


To publish applications.










—


To examine any opposition by third parties.










—


To register or reject applications.










—


To examine applications for revocation or invalidity.










—


To handle appeals against decisions.







1 —   Administrative Board


Composition







—


One representative of each Member State.










—


One representative of the Commission and their alternates.





Task







—


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.





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.





3 —   Budget Committee


Composition







—


One representative of each Member State 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.





4 —   Decisions related to the applications

Decisions are taken by:






(a)


the Examiners;










(b)


the Opposition Divisions;










(c)


the Administration of Trade Marks and Legal Division;










(d)


the Cancellation Divisions;










(e)


the Boards of Appeal.





5 —   External audit

Court of Auditors.

6 —   Discharge authority

The Office's Budget Committee.



Budget

338 million euro
(318 million euro)

Staff at 31 December 2009

658 (643) posts in the establishment plan, posts occupied 614 (606) + 128 (118) other staff (auxiliary contracts, seconded national experts, local and employment agency staff, special advisers)
Total staff: 742 (724)



Trade marks

Number of applications: 88 300 (87 400)
Number of registrations: 90 000 (81 400)
Cases of opposition: 13 900 (18 700)
Appeals to the Boards of Appeal: 1 588 (1 815)
Appeals pending: 1 378 (1 618)

Average time of registration (excluding opposition or appeal)

before publication: 4 (6) months

Designs

Designs received: 69 500 (72 700)
Designs registered: 71 500 (78 400)





Source: Information supplied by the Office.






THE OFFICE’S REPLIES






13.


Due to the economic situation in the building industry in Spain, the Office received far more bids than expected and the evaluation of the bids took more time than planned. However it turned out that the Office could conclude contracts with better prices than anticipated.










14.


The pay adjustments were based on the requirements of the Spanish national labour law and an EU Directive and were the consequence of changes introduced in the new Staff Regulations which entered into force on 1 May 2004. The Office acknowledges that they should have been provided for in the contract, but statutory requirements override contractual provisions. The Office does not accept therefore that the payments were not legal, or that they should be recovered.










15.


The Office believes that the treasury policy is not within the formal competence of the Budget Committee according to the Financial Regulation and the CTM Regulation. Nevertheless the Office will continue to keep the Committee informed of its overall approach, as it has done since 2008, and intends to submit a new policy document shortly for an opinion.










16.


The Office expects the biennial revision — as agreed in the September 2008 meeting — to ensure budgetary equilibrium in the future. However this is a matter for the legislators.
The projected impact of current fee levels on the future budget balances has for many years been a feature of the business plan documents submitted to the Budget Committee.










17.


The Office takes good note. A systematic review of the existing implementing rules available in the OHIM will be undertaken in the near future.










18.


The Office understands the reference made to Article 3, Annex III to the Staff Regulations, which refers to competitions, but considers that the provisions are not mandatory for the selection procedures for temporary agents. Nevertheless, the Office will consider other ways of strengthening the procedures although it believes as a matter of principle that the President should be closely involved in the selection procedures of its top management.







(1)  OJ L 11, 14.1.1994. p. 1.

(2)  The Table summarises the Office’s competences and activities. It is presented for information purposes.

(3)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

(4)  The financial statements include the balance sheet and the economic outturn account, the cash-flow table, the statement of changes in capital and the annex to the financial statements which includes the description of the significant accounting policies and other explanatory information.

(5)  The budget implementation reports comprise the budget outturn account and its annex.

(6)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 (OJ L 357, 31.12.2002, p. 72).

(7)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

(8)  The rules concerning the presentation of the accounts and accounting by the Agencies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are integrated as such in the Financial Regulation of the Office.

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

(10)  The Final Annual Accounts were drawn up on 21 June 2010 and received by the Court on 5 July 2010. The Final Annual Accounts, consolidated with those of the Commission, are published in the Official Journal of the European Union by 15 November of the following year. These can be found on the following website http://eca.europa.eu or www.oami.europa.eu

(11)  OJ C 304, 15.12.2009, p. 159, OJ C 311, 5.12.2008, p. 178 and OJ C 309, 19.12.2007, p. 141.

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

(13)  ‘Recruitment procedures for temporary and contract staff’, ‘Disciplinary procedures’, ‘Attestation’ and ‘Dealing with sexual and moral harassment’.

(14)  Recruitment procedure VEXT/09/590/AD/12/HRD.