David Stanton (Cork East, Fine Gael) | Oireachtas source

I congratulate the Minister and his officials on bringing forward this important legislation. I was seized by the importance of this legislation on 13 July 2022 when representatives from IBEC appeared before the Joint Committee on Enterprise, Trade and Employment. The Chairman, Deputy O'Reilly, I and others were taken by the importance of the UPC Act and Ireland becoming part of the court.

This is probably among the most important work we will do for the State in the long term. The Leas-Cheann Comhairle put her finger on it when she spoke about it being hard to stay awake for this discussion. Others agreed with that sentiment. There is a conundrum here. Some years ago in America, Drew Weston wrote a book entitled The Political Brain:The Role of Emotion in Deciding the Fate of the Nation. His thesis was that people vote with their hearts, not their heads. Part of the conundrum we have with this type of legislation is that while it is vitally important, it is not emotional. It does not seize people in the same way as other legislation and issues we discuss here.

Deputy Naughten and others outlined very well the importance of legislation. Just to clarify, the word "patent" is pronounced differently on either side of the Atlantic. I looked it up earlier. In any event, we need to recognise the importance of this patent court and how we become part of it. Denmark ratified the agreement ten years ago, in 2014, shortly after it was signed. We have been ten years waiting to do it, which is far too long, but I welcome the fact that we are doing it now.

I have a question for the Minister and I hope he will give me an answer to it. I hope this constitutional amendment will pass. The fact that we are having the referendum in June at the same time as local and European elections means there will be a big turnout and hopefully people will be seized by it and will vote "Yes". As far as I can see, none of my colleagues who spoke are opposed to joining the court. In fact, there is broad agreement. It begs the question, with the McKenna judgement, if someone jumps out and says they are opposed to this, one would have to ask why. In my view, there is no downside to this at all. It is all positive, especially for SMEs. Deputy Naughten and others pointed out that SMEs will benefit hugely from this. The large corporations are big enough to do their own thing, no matter what. They are okay right now because they have the resources, personnel, expertise and potential to go and fight their corner anywhere on the globe. The indigenous SMEs will benefit massively from this. They will not have to go to Italy, Germany and France and all the other countries that ratify this agreement to register their patents, fight their corner and litigate afterwards. They will be able to do it here in Ireland. They will be able to register the patents once and litigate once, which will save costs, trouble, expertise, travel and everything else that goes with that. That will mean these companies will soon be encouraged to lodge patents, develop new technologies and register them. This is a massive benefit for our indigenous SMEs.

We will not second-guess the people but hopefully they will vote "Yes" in this referendum. What happens next? What preparation has been done in the Department and by the Government to ensure the court is established? How long will it take for a court to be set up here? I assume that quite an amount of preparatory work has been done on this. People might argue that we cannot do anything until the people have their say in the referendum. We should be prepared in any case and we should be moving as quickly as possible on this.

Much of my contribution draws on the work of IBEC. One question people might ask is why we need a referendum. We are required to hold a referendum before ratifying the agreement on a unified patent court because of Article 34.1 of the Constitution, which states "Justice shall be administered in a court established by law by judges appointed in a manner provided by this Constitution". The agreement on a unified patent court, with its commitment to an international court that will ensure patents rights, is not currently compatible with the Irish Constitution. Therefore, we need the people's permission to insert a reference in the Constitution similar to that in Article 29 allowing Ireland to participate in the International Criminal Court. It is a similar type of vehicle. We need to have a referendum because we cannot go ahead without such a reference. IBEC notes:

The Unified Patent Court (UPC) is one part of a two-part package that also includes the Unitary Patent. This unified patent package will create a simpler and more efficient mechanism for obtaining and enforcing patents in Europe. The UPC will be a newly established single court system under international agreement for pan-European patent litigation and enforcement. It will ultimately have exclusive competence in respect of infringement and the validity of all patents granted by the European Patent Office (most patents in Ireland are granted by the EPO).

The unified patent package is needed simply because the current European patent enforcement system does not work effectively for many companies, in particular, SMEs, as I said. IBEC goes on to note:

The current system of country-by-country patent protection and litigation is extremely expensive, time consuming and resource intensive. Under the new system, there will be centralised mechanisms of both protection and enforcement. This could be particularly beneficial to Irish SMEs. SMEs tend to have only a few patents covering their core technologies - these are often their most valuable assets. Under the existing system, pan-EU protection and enforcement can often be prohibitively expensive for such companies, but the new system would make this a more realistic prospect for them.

Ireland is required to hold a referendum to ratify the Unified Patent Court Agreement. Doing so would ensure that Irish businesses have the same strategic competitive advantage available under the new pan-European IP system as those businesses in European countries which are already part of the new UPC system.

Ireland would host a local division of the Unified Patent Court.

Under the UPC, a dedicated Local Division of this new European patent court would be established in Ireland. This Irish Local Division of the UPC would provide specific comfort for enterprise, in particular indigenous SMEs who are increasing their rate of patenting but might not have much exposure to patent enforcement procedures. Companies finding it necessary to enforce their European patent rights will only have to litigate in one single location. This has not been available to Irish companies before. It will provide better access to enforcement for companies that currently cannot afford to litigate across different countries or jurisdictions.

There is a strong business case for Ireland's participation in the system. An IBEC APTMA 2022 survey found that 78% of businesses would be likely to increase their patenting activity to protect their innovations if Ireland were to sign up to the new unitary patent and unified patent court system. Ireland is uniquely positioned to establish itself on the international stage as a patents enforcement hotspot.

This will bring substantial gains for the wider economy, gains that will go far beyond an increase in legal services. An Irish local division of the UPC that is English speaking and rooted in the Common Law tradition would be attractive to European patent litigation that might otherwise have occurred elsewhere. More importantly, it would support the further expansion of the patent-intensive sectors, such as medicine, medical technologies, biopharma, and life sciences. These technologies across the country are creating jobs that benefit SMEs and boost Ireland's innovation performance.

IBEC has estimated, as Deputy Naughten said, that the value added to the economy from Ireland's participation in the UPC could be worth as much as €1.6 billion per annum. That is not to be sneezed at. That is why it is so important. It would also mean that Ireland would become far more attractive to FDI and companies that want to establish themselves here. I understand that since the Government has decided to go ahead with this referendum there has been an increase in the number of companies that are actually looking to Ireland. These are companies with legal and technology backgrounds that want to come and establish themselves here simply because we are hopefully on the verge of ratifying this referendum and decision. This is very important.

By international standards, there is a low rate of patent litigation before the Irish courts, although a recent increase in local litigation by the pharmaceutical sector has been reported. It has been estimated that Ireland has 0.2% of the share of European patent litigation, but it should be noted that raw patent case counts are often not particularly informative, especially when compared over time and across jurisdictions. They can be open to misinterpretation. For example, is a low rate of litigation in a country indicative of fewer underlying disputes? Is it the case that disputes can be settled prior to a court or are they simply not enforced at all? If this is added to the fact that under the current European patent enforcement system, Irish companies will have to resort to litigating in other European countries to enforce their rights. These are rights that might cover larger, more lucrative markets.

This is a win-win for everybody concerned. One of the key benefits of the UPC is that companies that find it necessary to enforce European patent rights would only have to litigate in one single location at a time, which would be here. The system is truly pan-European.

The other issue that has occurred since all this started is that Britain has left the European Union and it had a very important role to play here. We had the opportunity to step into that in a certain way, as has been said earlier, but that did not happen. Nevertheless, we can benefit hugely because, as I said, we are English-speaking and we are under a common law jurisdiction. The use of the new system will strongly welcome a local division with a reputation for emphasising speedy case management that demonstrates quality and consistent judicial decision-making. The Dusseldorf local division of the UPC has identified the quality and availability of judges as integral to its success on a European scale.

Ireland's local division has two additional powerful but distinct advantages. It is to be established against the backdrop of a native English-speaking environment and the common law traditions that Ireland can offer. This is hugely important. Ireland can exploit the fact that non-EU FDI is more receptive to the UPC litigation that would otherwise be destined for a UK, local or central division. That may now be up for grabs. The central division is now gone, as we know, but we still have a huge opportunity here to gain massively from this.

I encourage the Minister of State to put in place a strong, well-thought out campaign to inform people, as well as to inform colleagues in this House and the other House. Many colleagues do not understand the importance of this. There is the fact that we are discussing this on a Thursday afternoon when many Members are gone. That is the way the cookie crumbles, but it is probably not advantageous either. This is probably one of the most important decisions we will make in a long time for our economy and businesses going forward into the future. If we do not do this, we will run the risk of slipping back on this one - big time.

UPC is different from other courts in Europe because, for the first time, it will provide a forum for private parties to settle disputes in Europe on a transnational basis. It has the ability to offer parties that are willing to litigate patents in Ireland the scope and impact far beyond anything that could be hoped for through an indigenous court whose jurisdictional reach does not extend beyond the borders of the State. Our ambition to become an international centre for commercial litigation arbitration necessitates being an active participant in the UPC system because it may be a model for future initiatives to develop transnational dispute resolution in the EU.

There are huge benefits to this above and beyond what we are actually doing. I commend the Minister of State and his officials on tabling this at this time. I encourage him to ensure that once the referendum is hopefully passed, we are ready to move as quickly as possible to establish the court. The selection and training of judges will be important parts of this. If we get this right, others in Europe might decide to come to Ireland to settle their disputes. That is to be welcomed as well. This is a win-win for everybody.

As I said earlier, because this is not an emotional issue and because it is technical, many people will switch off and not engage with it. That is a risk. I hope it will pass. I do not detect any negativity from Members on this issue. It will be interesting to see how the McKenna judgment will be used here, but that is for another day. I thank the Minister of State for his time.

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