EU trademark office is unwanted financial success

The European Union’s trademark office is facing an embarrassing cash crisis - hundreds of millions of pounds in the bank and no way of spending it.

The non profit-making body based in Alicante was set up to register EU-wide trademarks.

But far from not making a profit, the agency has more than €301m in the coffers – with an extra €229,251 pouring in every working day.

Now the boss of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) has blamed EU governments and euro-bureaucracy for blocking efforts to shift the surplus and cut trademark charges which are making the enterprise an unwanted financial success.

“This is not how it was meant to be” said OHIM President Wubbo de Boer. “It is becoming embarrassing – in fact it’s absurd. Here we are sitting on all this money and unable to do anything about it because of the enormous internal bureaucracy we face”.

The money cannot be poured into the EU budget: the agency is not a drain on resources because it is self-financing and takes no subsidies.

In his eight years at the agency Mr De Boer has overseen a major reorganisation which has seen productivity rise by nearly 60%.

That, and a thriving market in EU-wide trade mark registrations, has helped income soar.

But he says EU governments themselves are resisting reducing registration fees - because they fear undermining their own national trademark offices, which continue to provide trademarks for small business not intending to trade across borders.

“They think they will be forced out of business if it becomes as cheap to apply for an EU mark as for a national one, but that’s not true,” said Mr De Boer.

“Many people only want a trademark valid in their own country and we will not interfere in that market.”

He went on: “What I would do is cut our prices from €1,600 per registration to, say €900, and I would use some of the surplus in the bank to pay back every single person who has paid for an EU trademark.”

There was a hard-won cut in fees in 2005, but the agency continued to do far too well financially.

In May 2007 the European Commission acknowledged the need for another cut. But, 10 months later, the necessary formal proposal has not been presented to EU ministers for consideration.

Mr De Boer said: “On the one hand we have is the outstanding success of the OHIM in becoming more efficient and productive, and on the other hand we have a structure of governance which appears not to be conducive to transmitting the benefits of improved efficiency to the users in a timely manner.

“As a non-profit-making organisation we clearly should not be taking more money from the pockets of business than we need to in order to provide the service we were set up to deliver.”

Mr de Boer spoke out after the agency’s latest report showed the OHIM cash surplus had reached more than €300m by the end of 2007, and growing at a rate of quarter of a million euros every working day.

OHIM received around 90,000 applications for trademarks in 2007, and nearly 80,000 design applications, thanks to the expansion of the single market and the elimination of trade barriers.

Mr De Boer said a significant cut in fees was now “a matter of urgency”. Existing rates were not unfairly high – expect for the fact that the office was clearly making far too much money.

He said the office was determined to continue delivering a high-quality service to customers wanting effective trademark protection – but could clearly afford to do it at far lower rates.

“Some people would say that this is the best kind of financial problem – too much money” added Mr de Boer. “But for us this is not sound financial management – it’s unsound financial management for a body not meat to make a profit.

“I want to see an immediate fee reduction, coupled with the setting up of some project to absorb at least some of the money sitting in the bank. The fact is, we cannot go on saving money like this”.