Willie O'Dea (Limerick City, Fianna Fail)

I congratulate the Minister of State on introducing his first Bill before the House. I also compliment him on the excellent job he has been doing in his Department so far.

A patent is part of the intellectual property family. Patents were central to the development of innovation in technology, on which our future largely depends. There are many definitions, but the best one I can find is that a patent is "a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention". The procedure for granting patents, the requirements placed on the patentee and the extent of exclusive rights vary widely between countries according to national laws and international agreements.

Patents in one form or another have been with us for some time. The first recorded instance we can trace of a patent being granted was in 500 BC when the Greek city of Sybaris granted a patent to people who were developing new refinements of luxury. Sybaris was clearly a wealthy city, perhaps akin to Ireland at the height of the Celtic tiger. In 1449 King Henry VI granted to England the first patent for the introduction of making coloured glass. Patents in the modern sense originated in 1474 when the Republic of Venice enacted a decree that new and inventive devices, once put into practice, had to be communicated to the republic to obtain the right to prevent others from using them. England followed Venice and the first statutory provision we can find is the Statute of Monopolies 1623 under King James I. In the United States, during the so-called colonial period and Articles of Confederation years, 1778 to 1789, several states adopted patent systems of their own. The first Congress adopted a Patent Act in 1790 and the first patent was issued under this Act on 31 July 1790.

The enforcement of patents is generally a matter of civil law. A patent holder will seek damages for the loss of profits due to infringement of the patent and an injunction preventing the infringement activity continuing in future. Some countries, notably Austria and France, have adopted criminal sanctions for infringements.

The Minister of State referred to the costs associated with making patent applications. The most up-to-date figures I could find were estimates provided by the European Patent Office in 2005, which showed that the average cost of obtaining a European patent via a euro-direct application and maintaining the patent for a ten year term was approximately €32,000. Since the London agreement entered into force on 1 May 2008, this estimate is no longer valid as fewer translations are required. In the United States, figures from 2000 show the cost of obtaining a patent was between $10,000 and $30,000 per patent. Where patent litigation is involved, however, the figures can be substantially higher.

The rationale usually advanced for patenting a process or product is that without such a system of protection, much less would be spent on research and development because people would be less willing to invest if they believed their competitors would have immediate access to the products or processes they developed. Another rationale is that it involves disclosure of innovations in the public domain for the common good. If inventors did not have the legal protection of patents, they would prefer to keep their inventions secret. Awarding patents makes the details of new technology publicly available for exploitation by anyone after the patent expires or for further improvement by other inventors. It also introduces competition as competitors will be anxious to design or invent around each others' patents and this will promote healthy competition among manufacturers resulting in gradual improvements of the technology base.

The arguments against patents generally relate to restraint of trade. It is argued, for instance, that patents are inconsistent with free trade. This is particularly evident in areas such as the pharmaceutical industry where pharmaceutical patents prevent generic alternatives from entering the market until the patent expires and, therefore, maintain high costs for medication. However, I understand approximately 5% of pharmaceutical products are patented. Proposals have been made to replace patents with other types of financial incentivisation. For example, it has been proposed that people would be compensated directly - I presume by the state - for the loss of profits arising from the removal of patent protection. This would be a difficult proposal to implement and I do not envisage it will be a realistic option in the immediate future.

The Fianna Fáil Party is committed to transforming Ireland into an innovative hub and increasing innovation and entrepreneurship. While in Government, my party established the innovation task force which recommended that Ireland market itself as an international innovation services centre, offering a location for global intellectual property management licensing and IT trading services. In this context, the task force recommended that Ireland work to harmonise IP regulations at European Union level. It stated "rapid ratification of the London agreement" would "significantly reduce the costs of patent filings". For these reasons, Fianna Fáil will support the Bill.

As the Minister of State noted, before 1 May 2008, once a European patent had been granted, it had to be translated, within three months or six months in the case of Ireland, into the official language of each country where the patentor wanted patent protection. If a translation was not provided to the relevant national patent office within the prescribed time, the patent was deemed to be void ab initio in the state in question. This position continues to apply in states where the London agreement has not entered into law. This leads to high translation costs for patent holders. According to the Minister of State, these costs amount to approximately 80% of total costs associated with patent applications. It also reduces the incentive to apply for a European patent and it has been argued that the position became a burden on the competitiveness of the European economy compared with the position in the United States or Japan.

The 2009 annual European patent report highlights the importance of the European Patent Convention, EPC, regime to the Irish patent system. Of the 34,172 patents granted in 2009 and having effect in Ireland, 99% were granted by the European Patent Office, EPO, under the convention. The patents granted by the EPO in this scenario mean the patent has been granted in Ireland and other European countries. The figures also show that less than 0.5% of EPC patents having effect in Ireland were granted to people living in this country. As the London agreement affects the translation rules of the European Patent Convention, these figures show that the Bill will affect a substantial number of patents having effect in Ireland.

To reduce costs, an intergovernmental conference was held in London in 2000 regarding the London agreement. This agreement provides that contracting states, which have an official language in common with an official language of the European Patent Office, namely, English, French or German, no longer require translation of EU patents into one of the official languages. Other contracting states must choose one of the official languages of the European Patent Office as a prescribed language into which European patents must be translated to enter into force in the states in question. Contracting states maintain the right to require translations of the claim, which is the central part of the patent, into one of their official languages.

A contracting state to the London agreement also retains the right to require that, in the case of a dispute relating to the European patent, a translation should be provided by the patentee in one of the official languages of the state. The London agreement finally came into force on 1 May 2008 after France signed, and I understand 16 states are now signatories. In 2009, the then Department of Enterprise, Trade and Employment released a regulatory impact analysis of the London agreement. The two options identified were to ratify the agreement or do nothing. By ratifying the agreement, Ireland would have to take patent specifications drawn up in French and German as valid without an English translation. The corresponding benefit would be that Irish applicants for patents in other contracting states would have a reduced burden to provide translations, thereby reducing the cost of protecting patents in contracting states. By doing nothing, Ireland would benefit because the larger the number of countries signing up to the agreement, the lower the cost to someone in Ireland seeking a patent.

Research has shown that costs are significantly higher in Europe than in the US or Japan. I was astonished by the figures provided by the Minister of State in this regard. In reducing costs, small and medium sized enterprises could benefit and greater use of patents would certainly be promoted. Across signatory states there has already been a positive impact. A discussion paper published in November 2008 by the Centre for European Policy Research, CEPR, studied the 15 states which had ratified the London agreement. The paper suggested that the costs of patenting through the European Patent Office had already been reduced by between 20% and 30%, with the implementation of the agreement resulting in an average saving of €3,600 per patent and savings to the business sector of approximately €220 million. The CEPR estimated that if all European Patent Convention member states implemented the London agreement, the reduction in costs could be between 40% and 60%. When the United Kingdom ratified the agreement, it was predicted by the country's Intellectual Property Office that investors in businesses would save more than £1 million.

In spite of this, the cost for patents validated in certain European countries will still be several multiples higher than that for patents granted in the United States. The detailed specification of a patent may not be supplied in English, which may have negative effects. There may be negative effects here, for example, for Irish persons or companies wishing to scrutinise or challenge a patent. If they wish to scrutinise the detailed provisions of the patent they would have to translate it at their own expense. This could lead to court action for the infringement of patents. The RIA states that such costs cannot be estimated but potentially could be significant in particular cases. The significance of this is somewhat obviated in that the patent claim, which concerns the central part of the patent, will usually be the first document to be scrutinised by interested parties.

Significant advantages will flow to Ireland from the London agreement, regardless of Irish ratification. Ireland benefits from the London agreement being ratified in other states. In this regard, the RIA states that ratification by Ireland could encourage other states to ratify the London agreement. This would lead to further reduced costs for Irish applications for patent in non-English language EU states. This, along with the increased incentive to patent and innovative benefits arising therefrom, give us justification for ratification. I agree with those arguments and with the purpose behind the legislation.

I have some points that may be more germane to Committee Stage. According to section 5(3) the Bill will only come into effect on such day or dates as will be nominated by the Minister. In other words there is no specific section that states explicitly when it will come into effect. I mentioned the intergovernmental conference that took place as long ago as 2000. The entire process has been characterised by a certain lethargy in spite of the obvious benefits. As an antidote to that and to ensure that we do not fall into the same trap, I ask the Government to consider establishing a time limit within which to implement this.

In regard to section 4, I ask the Minister of State, Deputy Sherlock, to clarify the meaning of "authentic text". Is it the actual text under which the European Patent Office validates the patent, namely, in one of the official languages? The authentic text must always be in English, French or German.

The Minister of State referred to the ongoing efforts to create a single European patent. Obviously, the European Patent Convention, EPC, system we have is infinitely preferably to that which preceded it whereby one had to apply separately in each country in which one wanted to have protection. Under the EPC system there is a single application but it leads to a bundle of patents, as the Minister of State noted, one for each individual country that is nationally enforceable in each such country. A single European patent that would be enforceable uniformly throughout the European Community would be far preferable and less costly. When the Minister of State replies he might give us an update in regard to that and the kind of timescale involved.

All in all, this is good legislation. It obviously has a very limited application in the overall context but is of significant importance and will reduce costs to business by reducing the cost of creating jobs. From that point of view my party enthusiastically supports it.

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