En Munich, 26.09.2019 SUBJECT: President's Activities Report SUBMITTED BY

Transparency of the Office's activities is ensured through regular reporting to the Council. The present report outlines the major developments and most relevant endeavours characterising 2019 so far.

In June the Council unanimously approved the Strategic Plan 2023 (SP2023) that encompasses the five strategic goals the Office will pursue to evolve into a sustainable office that delivers excellence. Until now the reporting had a configuration linked to the various business areas and to the relevant departmental subdivisions, focusing more upon the operations of the Office. This report seeks to gradually move towards a report that more closely reflects SP2023, following its structure and describing the achievements in the various goals and key initiatives.

This report therefore needs to be understood as a transitional one that will improve alongside the implementation of the programmes and projects of the SP.

The Office also intends to propose a better aligned and more comprehensive reporting process. An annual report on the implementation of SP2023 will be submitted to every June meeting of the Administrative Council, together with the other annual reports in annex, such as the Social, Environmental, and Quality reports. In this way a consolidated report on the management of the Office will coincide with the submission of the Opinion of the Board of Auditors on the yearly accounts of the Office.

II.

GOAL 1: BUILD AN ENGAGED, KNOWLEDGEABLE AND COLLABORATIVE

ORGANISATION

In SP2023, the EPO has placed a focus on the development of its staff and their performance. After all, the achievements of the EPO's staff have supported the Office's overall success throughout its history. Among the goals of SP2023, the EPO has therefore committed to ensuring it is capable of attracting some of the brightest talents from across Europe and to supporting their ongoing professional development. The successful fulfilment of those goals are closely linked to staff engagement, which underpins not just Goal 1, but also the ability to achieve many of the EPO's other strategic goals.

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Like other pivotal projects, such as a reorganised BIT, some initiatives were started before June 2019, to help the EPO address issues that were felt to be particularly pressing. Making immediate progress on staff engagement was seen to be one of those pivotal projects. A Strategic Staff Survey, which sought to accurately measure staff engagement, was therefore carried out in the first half of 2019. Its findings have revealed a number of clearly identifiable action points which will in time either be translated into projects and programmes of SP2023 or carried out as accompanying measures in other projects. The Office-wide staff survey has helped the EPO to focus on the promotion of direct communication to the staff and reinforcement of managerial communication, talent development, and social dialogue.

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ATTRACT AND DEVELOP TALENTS
As previously reported to the Council, the office has adopted a prudent approach to recruitment taking into account the progress of the Early Certainty programme. As the Office makes progress in absorbing its backlogs, it continuously seeks to improve rebalancing of its staff, in particular examiners and formalities officers.

In the frame of the rebalancing exercise, several internal DG 1 job fairs were organised, involving 59 teams across sectors. Examiners interested in a move to another technical field will receive the appropriate support and the possibility to have a test phase before transferring to other team. Any move will be accompanied by reskilling programmes to make sure that the needs of both the staff concerned and the Office are met.

These actions were completed by the usual external recruitment process: since the beginning of the year, 81 external candidates were recruited as examiners, 40 have already started in different fields of technology, while 41 other suitable candidates should start in the near future.

As part of the initiatives to foster diversity, the Office has launched the mentoring programme, "Women in the Lead" to support talented women in developing their career perspectives and personal development opportunities through structured exchanges with experienced senior managers and directors. The programme started in April 2019 with a pilot for 51 mentees and 26 mentors and will last six months. The full mentoring programme will be rolled-out in the coming months.

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Building upon the success of the part-time working scheme, and as part of the Office's efforts to support flexible working arrangements and a work-life balance, the ad hoc teleworking pilot was launched in April this year. Up until this point, 44% of eligible employees have signed the agreement and 111 employees have already teleworked and so far 400 days of telework were requested. A qualitative analysis to measure the satisfaction of both employer and employees is on-going in order to adjust the scheme before its extension to all staff.

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PRAKTIKA EXTERN PROGRAM
The Praktika Extern Program has been an excellent learning opportunity for examiners, IP attorneys and Industry in developing an enhanced understanding of their respective needs. The successful implementation of the Praktika Extern program enabled 86 examiners to work directly within a user organisation for a period of up to three weeks. 393 examiners participated in the programme between 2010 and 2018.

Evaluation and feedback received also helps the EPO to focus on continual improvement of procedures and workflows. In 2019 the program has been expanded to include 30 formalities officers.

Praktika Extern examiner participation (incl. 2019 applications)

200 150 100 50

150

86
55
46

42

41

39
36
34

14

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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MAKING OUR PREMISES MORE FUNCTIONAL
The bike parking facility at the Isar building is now operational. In line with the EPO's health policy, it will encourage staff to use an environmentally-friendly form of transport.

Construction work on the PH7 data centre for disaster recovery has been finalised. It fully complies with the established data centre standards (EN 50600 class 3).

In February 2019, the BFC approved the request to increase the facility capacity for the BoA located in Haar. The extra meeting space and additional, fullyrefurbished offices were handed over to the BoA in two stages in April and October 2019.

As of the beginning of September, staff members can also use their access badge for the canteen, cafeteria and coffee purchases at all sites, and for printing documents. New recharge machines have also been installed outside the canteens, for crediting access badges.

The asbestos removal in Old Main in The Hague is progressing as planned and constructive demolition is scheduled to start in January 2020. Regular onsite checks confirm that the removal and demolition preparation activities fully take into account staff health and safety.

The new Corporate Contract Process (CCP) was implemented successfully in 2019 for several major contracts across sites. This new methodology, focusing on quality control throughout the entire process, gives the EPO a suitable level of control over activities, and also when outsourced.

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DIRECT AND TRANSPARENT COMMUNICATION WITH THE STAFF AND FOLLOW-UP OF THE STAFF SURVEY

A wide-range of initiatives are ongoing to improve direct communications with staff. These include more systematic communications via videos, in addition to communiqués, dedicated intranet pages on important topics and events, such as SP2023, follow-up of the staff survey, quality, social dialogue, and financial study. Specific efforts are also focused on managerial communication.

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Through new discovery sessions, team managers and directors are able to interact directly on strategic and operational issues directly with the President and Vice-Presidents. Since June 2019, around 200 managers have participated in the discovery sessions. This programme will continue throughout the implementation of the Strategic Plan.

Following the publication to all staff of the staff survey results, the results were debated at each managerial level, from units to DG. These discussions allowed the Office to build a comprehensive action addressing areas of improvement, such as managerial communication, working effectiveness, quality and external reputation, and talent development.

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DIALOGUE WITH SOCIAL PARTNERS
A wide-range of topics are currently under discussion in several meetings of working groups at the technical level, covering the performance management system, the resources and communication means for Staff Representatives, the actuarial funding valuation and remuneration and social security, healthcare and guide to cover. These meetings have paved the way for the Office to submit written proposals to Staff Representatives on these issues before the end of year.

In addition, discussions have been held on the next salary adjustment. The analysis of the impact of the current formula and proposals for the future have been addressed, with a view to making concrete proposals to the June 2020 Administrative Council.

In the framework of the "Diversity and Inclusion" programme, a working group involving staff representatives has been established.

New rounds of discussions with the unions have been held. In the frame of these discussions, the Office has made an offer to integrate SUEPO offices into the EPO's premises.

Concrete proposals have been made to close and amicably settle past disciplinary cases concerning staff representatives.

To enhance transparency, the social dialogue intranet page was recently revised to display agendas and outcomes of different meetings between the administration and social partners. In addition, a new dedicated mailbox for questions, comments and suggestions from staff has been introduced. Announcements regarding specific projects and working groups will soon be published.

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III.

GOAL 2: SIMPLIFY AND MODERNISE EPO IT SYSTEMS

A digital transformation is a key element in achieving a more effective and sustainable organisation. The simplification and modernisation of EPO IT systems therefore started immediately with the reorganisation of its structure to create a more agile structure that has clarified responsibilities and supports effective decision making.

As underlined in Goal 1, people are at the centre of the EPO's success and, accordingly knowledgeable and skilled staff will be instrumental in achieving a successful digital transformation. As such an upskilling exercise is underway. Progress can also be reported in a range of other areas from IT infrastructure, deliverable for supporting a patent grant process and the preparatory work for IT cooperation, which started in July.

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AUDIT LEADING TO ACTIONS
Following the BCG audit on IT, a new organisational structure has been implemented. The new structure, which became effective as of 1st of May 2019, introduced a flatter structure, bringing together Information Management (IM) and Automation Support functions of DG 1. The revised organisational structure clarifies responsibilities by reducing complexity and hierarchical layers. This should result in more efficiency and effectiveness.

The Office is also conducting an ongoing upskilling exercise to achieve a knowledgeable and reliable IT workforce. Over 90% of IT staff took part in a skills survey which, together with the learning paths which are currently being defined, will serve as the basis for individual professional development plans. However, some upskilling efforts have already started such as webinars on technical subject matters and knowledge exchange meetings on patent granting process. These initiatives could be started sooner since the Office has been able to tap into the knowledge already available in the organisation. The training has been developed internally by staff members for staff members

The new organisation is led by a CIO and CTO function, supported by 6 Directors. 3 of those Directors are in charge of 3 "vertical" lines of activity: PGP, Corporate and IT co-operation, while the 3 remaining ones manage "horizontal" functions that cut across the whole area: IT Architecture, IT Planning and IT Operations.

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UPGRADING IT INFRASTRUCTURE
The two rooms in the new data centre in Luxembourg were handed over to EPO in September 2018. By April 2019 the racks, cables, power, and cooling were installed and audited by EPO and an external party. The connectivity to Munich and The Hague was set up in May 2019. Servers for the new data centre were delivered for testing in The Hague during summer 2019. Firewalls will now be set up and servers will be moved to the new Data Centre, prior to migrating the applications that will be running before the end of 2020.

The Office has also invested in improving its disaster recovery server capacity, located in its BT7 building in Munich: 82% of the physical servers, 70% of the number of CPUs, and 90% of the memory capacity is available in case of a disaster. Coupled with a secondary mainframe available in BT7 in order to support legacy systems, this is deemed sufficient hardware to face a crisis.

In the course of the year all the Office's desktop computers will be replaced with high-performance, state-of-the-art laptops running the latest versions of Windows (windows 10) and MS Office software, which will improve the user experience for EPO staff, as well as enhancing security, mobility and collaboration. The project is ongoing with a pilot of 250 staff members and approximately 10 000 PCs are planned to be rolled out between October and the end of 2019.

The mainframe re-platforming project was also kicked-off in view of porting legacy applications to a more modern, open source platform and allow for the decommissioning of the IBM mainframe at the end of 2020.

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DELIVERIES FOR THE PATENT GRANT PROCESS
Progress has been made on improving the Office's existing tools: o A new beta version of Espacenet was unveiled in 2018, and has since been fine-tuned and improved continuously on the basis of feedback received, so that by the end of 2019 it can replace the current Espacenet.

o A new version of ANSERA including non-patent literature has been made available to examiners in 2019.

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o In close cooperation with the USPTO, the new CPC International system was rolled out sucessfully. It introduces major IT improvements: a new, cloudbased, modern infrastructure for the CPC data exchange between the EPO and USPTO, the storage of CPC classification data at simple patent family level only, and the suppression of the concept of "co-ownership of allocations" (i.e. each office will manage its own allocations). Users will also be able to see which office has endorsed a CPC allocation and use this information during a search. The capability of selecting the classifying office will improve the quality of search with changes visible in various EPO products including EPOQUE, EpoqueNet, ANSERA and Espacenet.

o The performance of the eDrex application has been improved to make it more user-friendly for examiners.

o Improvements to Trimaran and other internal tools have been implemented to contribute to an enhanced user experience.

o Following the agreement with the CPVO (Community Plant Variety Office), data concerning plant varieties is now searchable by EPO examiners.

o Several other changes aiming at preserving the legal compliance of our
IT systems have taken place, like the abolishment of cheques as a refund method, adjustments to PCT fees, changes to the Boards of Appeal Rules of Procedure and Amendment to Rule 126 EPC.

o The Office continues to face difficulties with creating a harmonised filing system that will replace the existing filing solutions, and allow for the submission of DocX filings. Progress has been slower than expected, but a pilot phase on the basis of a reduced number of EP forms has been planned for the end of 2019.

o A new technology for storing images has been used to replace a legacy system. This now powers Espacenet as well as EPOQUE and ANSERA. This new system is ready to support colour images and drawings in the future.

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PREPARATORY WORK FOR IT CO-OPERATION
Following the annual co-operation meeting that took place in Kilkenny, the Office proceeded to set up the co-operation mechanisms to run the future co-operation projects in the area of IT.

A round of technical visits to almost all Offices took place predominantly between July and September 2019, and has laid the grounds for designing a project portfolio to be discussed at technical level during at the TOSC meeting, by IT experts from all NPOs.

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DELIVERIES FOR OTHER AREAS
The migration of EPO's SAP infrastructure to a cloud-based solution in SAP/HEC is well under way and planned to be completed in early 2020, which will enhance the availability of our corporate systems, as well as producing some savings in terms of IT operations. Reporting solutions and dashboards for data quality, travel management, HR and General Administration were deployed.

The EPO's Language Service is now largely digitalised thanks to its full set of Computer-Assisted Translation Tools (CAT). A machine translation (MT) tool has recently been integrated into these CAT tools. It allows for the secure machine translation of unpublished and confidential documents.

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IV.

GOAL 3: DELIVER HIGH-QUALITY PRODUCTS AND SERVICES EFFICIENTLY

In the context of an increasing volume of applications, the EPO remains committed to focusing on the quality of its products and services, while simultaneously improving the performance of the Patent Granting Process.

A number of actions are underway to reflect the priorities identified in SP2023 that will help the EPO to offer a more efficient Patent Granting Process that is capable of making continual improvements in Quality.

The User is at the centre of these improvements and discussions have therefore been undertaken with external stakeholders, as well as internally, to work in partnership with applicants and enforce user dialogue undertaken in Goal 3. Discussions on the definition of Quality have been launched and progressed throughout the year, helping to attain feedback from a range of users.

At the same time, the Office is making progress in becoming a more agile organisation. The backlog has been reduced, timeliness continues to improve, supported by a rebalancing exercise.

In addition, innovative ways of working have started to be developed, such as the Collaborative Quality Improvement pilot, which has already yielded a marked increase in quality as a direct result of the initiative. Given the crucial role that audits play in monitoring quality, the Office is also reflecting on ways to reinforce the impact of DQA audits on the quality of its products.

The European Patent Register continues to show positive trends in terms of timeliness and perceived quality. Finally the list of professional representatives continues to grow although the office will continue to monitor the geographic representation of patent attorneys.

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PGP WORLOAD AND PRODUCTION
Up to July 2019, 105 400 European patent applications (European direct applications filed in 2019 and PCT applications entering the European regional phase in 2019) were recorded. This represents a 3.8% increase over the corresponding figure of 2018.

EPO Applications

200 000

Budget 176 000
174 300

150 000 100 000

166 600
159 100

as of 26.08.2019 as of 27.08.2018

101 575

50 000 0

105 400

(+3.8%)

2016

2017