PROGRAM 31 THE HAGUE SYSTEM

PROGRAM 31 THE HAGUE SYSTEM

OVERVIEW OF PROGRESS IN 2014

1. 
   In 2014, the Republic of Korea became party to the Geneva (1999) Act of the Hague Agreement Concerning the International Registration of Industrial Designs (hereinafter referred to as “the 1999 Act”). The accessions of other prospective members, notably Japan and the United States of America, were postponed to 2015, resulting in a lower than anticipated growth rate in membership in 2014. Furthermore, by the end of 2014, three consents were still required for the termination of the 1934 Act, and four Contracting Parties outside the EU and OAPI remained bound by the 1960 Act.
   

2. 
   Significant progress towards the enhancement of the legal framework of the Hague System was achieved in 2014. Notably, following the fourth session of the Working Group on the Legal Development of the Hague System for the International Registration of Industrial Designs, the Hague Union Assembly adopted provisions that introduced a “feedback mechanism”. In addition, changes to the Administrative Instructions were introduced with a view to giving users more flexibility in respect of the formal disclosure of their designs. These two developments provide the foundation for moving forward with the long-awaited expansion to jurisdictions where substantive examination is undertaken. Together with the changes made to the electronic filing interface to cater for the accession of the Republic of Korea, the System should be better equipped to cope with the additional complexities arising from the anticipated accessions.
   

3. 
   Filings also remained considerably below the forecasted figure for 2014, in spite of a general increase in terms of designs filed and recorded international registrations. As a result, progress was limited with respect to the introduction of greater flexibility in the database, which was meant to be pursued only after experience with an expanded membership was gained. Nonetheless, progress towards introducing more automated processes in the existing information technology platform continued on track, with one additional process (Statement of Grant of Protection) being automated in 2014, for a total of three automated processes.
   

4. 
   The design, planning and implementation of activities by Program 31 were informed and guided by the relevant Recommendations, in particular Recommendations 1 and 6.
   

PERFORMANCE DATA

RESOURCE UTILIZATION

Budget and Actual Expenditure (personnel and non-personnel)

A. Budget after Transfers 2014/15

5. 
   The 2014/15 Budget after Transfers reflects a net increase in personnel resources primarily due to the temporary transfer of a staff member from Program 10 to Program 31 to provide additional support for the Working Group meetings and promotional activities. This is reflected under Result II.5 (Improved productivity and service quality of the Hague operations).
   

6. 
   The net decrease in non-personnel resources is primarily due to: (i) the transfer of non-personnel resources for an intern (to Program 23 which centrally manages interns) to support the work on new accessions under Result II.4 (Wider and better use of the Hague System); and (ii) a slight downward adjustment made for cost efficiency gains.
   

B. Budget utilization 2014

7. 
   The non-personnel budget utilization rate for the Program amounted to 29 per cent of the 2014/15Budget after Transfers. This resulted primarily from a delay in IT-related work due to the postponement of the accessions of certain Contracting Parties under Result II.4 (Wider and better use of the Hague System).
   

Program 31 Annex: Indicators of the Hague System Operations

PERFORMANCE INDICATORS FOR THE EXPECTED RESULT

1. 
   As background for the performance indicators for the expected result “improved productivity and service quality of the Hague operations”, the evolution of the following factors needs to be considered:
   

• 
  The Hague System workloads;
  
• 
  The composition of those workloads;
  
• 
  The level of automation; and
  
• 
  The resources assigned to cope with the workload.
  

2. 
   The International Bureau (IB) receives four main types of documents, namely international applications, renewals, changes and decisions. The latest trend for each of these documents is presented below. Additional information on the applications received, such as their average number of designs, are also provided. For technical reasons, the indicator on the irregularities issued shows data based on processed documents rather than on incoming documents.
   

• 
  In 2014, the IB received 2,924 international applications, down 2.2 per cent from 2013. In 2013, applications received sharply grew by 15 per cent.
  
• 
  In 2014, 89 per cent of applications were filed electronically. The share of electronic filings increased by 10 percentage points from 2011 to 2014, from 79 per cent in 2011 to 89 per cent in 2014.
  

• 
  In 2014, an application contained, on average, nearly five designs. Between 2011 and 2014, the average number of designs per application varied between 4.5 and 5 designs.
  

• 
  In 2014, an application contained, on average, nearly five designations.
  

3. 
   Irregularities in applications are grouped among the ten categories shown below.
   

• 
  In 2014, the IB identified 1,557 irregularities in applications, down 14 per cent over 2013.
  
• 
  Despite this sharp decrease, the irregularities related to product indications increased for the third consecutive year. Together with irregularities of payment, they nearly accounted for half of total irregularities in 2014.
  

• 
  The number of renewals decreased for the second consecutive year to 2,703 renewals in 2014. This represented a 5 per cent drop on 2013.
  
• 
  Since 2013, a majority of renewals were processed automatically. They accounted for 60 per cent of total renewals in 2014
  

• 
  Applicants requested 1,063 changes in international registrations in 2014, up 8 per cent from 2013.
  

• 
  The number of decisions received in 2014 increased by 10 per cent, to 3,169 decisions.
  
• 
  Between 68 per cent and 72 per cent of decisions were processed automatically since 2011.
  

4. 
   The total workload represents the weighted total number of documents received at the IB. All four categories of documents are included (applications, renewals, changes and decisions).
   

5. 
   As processing these types of documents does not require equal resources, they are each weighted differently. According to this weighting, during the time required to process an international application, an examiner can process eight renewals, four changes or four decisions. Similarly, during the time required to process an international application, an employee involved in the automation process can be deemed to process 13 documents.
   

• 
  In 2014, the total workload remained stable compared to 2013. In 2014, applications alone represented 76 per cent of the total workload.
  
• 
  Between 2011 and 2013, the increase in workload was mainly due to the increase in the number of applications received.
  

6. 
   The total cost of production is the total Hague System expenditure, plus a proportion of expenditure on support and management activities. It has direct and indirect components. Direct costs reflect expenditure incurred by the IB in administering the Hague System.¹⁷ Indirect costs reflect expenditure for supporting activities (such as buildings and information technology). Indirect costs are weighted to take into account only the share attributable to the Hague System.
   

• 
  The total expenditures related to the processing of the Hague System are estimated at 5.7 million Swiss francs in 2014. This represents a decrease of 5.7 per cent on 2013. Direct and indirect costs have decreased, by respectively 8.1 per cent and 2 per cent.
  
• 
  In 2014, the direct costs accounted for 60 per cent of total expenditures.
  

7. 
   The IB’s efficiency in processing transactions can be measured by the unit cost, defined as the average cost of producing one unit of output.
   

8. 
   As the IB registers new applications and maintains existing registrations, it is relevant to have a unit of output which includes a set of transactions. Two unit cost indicators are presented below using two different units of output.
   

9. 
   As part of the IB’s efforts to continuously refine the methodology for calculating unit costs, the methodology has been revised in the Program and Budget to reflect more accurately the cost of processing Hague workloads at the IB.
   

10. 
    The revisions in question are the following:
    

• 
  The methodology for calculating direct and indirect costs for the Hague have been aligned with the methodologies for calculating PCT and Madrid unit costs.
  

• 
  A weighted System has been introduced to better approximate the actual work required to process the four categories of documents, taking into account that certain of these documents are more labor-intensive than others.¹⁸
  
• 
  The first unit cost has been redefined to include designs contained in new international registrations and in renewals (the unit cost in the Program and Budget 2014/15 included only designs contained in new international registrations). The rationale for adding designs contained in renewals as a component of this unit cost is a sharper focus on the core Hague outputs, namely the international registration and its renewal.
  
• 
  The second unit cost is based on the number of documents processed and recorded in the register rather than the number of recordings due to the different levels of efforts required to process the various documents.
  

11. 
    For ease of comparison, the graphs below depict the evolution of the two unit costs from 2008 to 2014 using the old methodology and from 2012 to 2014 using the new methodology, including a breakdown of the contribution of direct and indirect costs.
    

12. 
    New designs consist of designs in international applications that are registered within a given year, and renewed designs consist of existing designs in international registrations that are renewed within a given year. Combined, designs contained in these two types of transactions reflect the core business of the IB.
    

13. 
    As processing designs contained in these two types of documents do not require equal resources, they are each weighted differently.¹⁹ The unit cost is calculated by dividing the total cost of production by the number of new/renewed designs.
    

Old method	New method

• 
  The average cost of processing a new/renewed design was of 366 Swiss francs in 2014, down 12.8 per cent from 2013. This decrease was mainly due to a decrease of 5.7 per cent of the cost of production combined with an increase of 8.2 per cent of the number of new/renewed designs.
  

14. 
    The documents recorded in the register correspond to the total workload (see “Total workload” above).
    

Old method	New method

• 
  The average cost of recording a document in the register decreased to 1,483 Swiss francs in 2014. This is due to the decrease of 5.7 per cent of the cost of production.
  

15. 
    This indicator reflects the time required by the IB to process regular applications. The timeliness is calculated between the time elapsed between the date of receipt of an application and the date it was registered.
    

• 
  The share of applications processed within less than one week constantly increased since 2011, to 45 per cent of applications in 2014.
  
• 
  In 2014, 85 per cent of applications were processed within 2 weeks from the date of receipt at the IB.