Conor Lenihan (Dublin South West, Fianna Fail)

Having obtained a copy of the judgment, my Department referred it to the Attorney General's office for advice, which we are currently awaiting. As the Minister of State with responsibility for intellectual property, I am concerned to ensure generally that the interests of rights holders in respect of copyrights and performances are upheld and not infringed by illegal activity on the Internet or elsewhere. However, I must also have regard to the position of our ISPs. Articles 12 to 14, inclusive, of the European e-commerce directive provide defences to ISPs that transmit digital content, including copyrighted material, by electronic means on the Internet. These articles have been transposed in Ireland through regulations 16 to 18, inclusive, of SI 68 of 2003. Regulation 16 provides that ISPs are not liable for information transmitted by them in a communication network where an ISP establishes that it is a "mere conduit" or carrier of the information. Regulation 17 similarly covers caching or temporary storage. Regulation 18 deals with hosting or permanent storage. However, these regulations do not affect the power of any court to make an order against an ISP requiring that it not infringe or cease infringing any legal right.

The Departments of Enterprise, Trade and Innovation and Communications, Energy and Natural Resources, the latter under the Minister, Deputy Ryan, are in contact regarding the case, but the advice of the Attorney General on the case's implications is awaited. Senators will appreciate that I am not in a position to speak further about the case or its potential implications. The matter is a sensitive one, as I am sure Senator Norris is acutely aware.

I will address two distinct issues relating to the importance of protecting intellectual property - first, the importance of intellectual property protection to business and the State supports for a strong innovation environment and, second, the importance of having a sound and balanced regulatory environment for the protection of intellectual property. The concept of intellectual property covers a wide range of creations of the human mind, from the inventions, symbols and designs used in industry to literary and artistic works. The most common vehicles for protecting intellectual property rights are patents for inventions, trademarks for branding and copyright for artistic works such as books, films and paintings. Intellectual property protection and innovation are inextricably linked. The products resulting from innovation generally come at a considerable cost to companies in terms of human and financial resources. It is the facility to protect the fruits of this investment with intellectual property through patents, trademarks and copyrighting that provides the incentive to industry to invest in research and development.

Patents are one of the most valuable assets to companies seeking to protect innovation. They are central to supporting innovative companies across the business sector in several ways. First, they add economic value to inventions by giving them a monopoly for a fixed term. This can help to secure funding for commercialisation of inventions and bring products to the market, which leads to profitable commercial returns. Second, they allow for the circulation of cutting edge technological information. In exchange for the monopoly right gained in a patent, applications are published after an initial period from their filing or priority date. This encourages inventors and their competitors to research further developments arising from this information and often results in further technological advances and breakthroughs. Third, patent licenses encourage inventors, investors and manufacturers to co-operate. This particular co-operation linkage is key to innovation. Licenses are the key means of exchange in the knowledge society marketplace for ideas and often result in furthering research and cutting the time to market.

Trademarks facilitate the development of branding, enable consumers to identify a product or service of a particular company and help to distinguish one product from other similar products. Trademarks are often associated with certain characteristics of goods or services such as taste, quality, reliability or value for money.

A strong trade mark associated with a successful product can ensure the continued success of the product even after a patent has expired and competing products become available. It is important for business to register and protect their trade marks so that quality goods and services are identified with their trade mark by their customers.

It is widely accepted that a high level of copyright protection is generally essential for the encouragement of intellectual creation. Copyright ensures the maintenance and development of creativity in the overall interests of authors, producers, consumers and the public at large. A rigorous and effective system for the protection of copyright, and what are deemed to be related rights, is necessary to provide authors and producers with a just reward for their creative efforts and also to encourage producers and publishers to continue to invest in creative works. In the modern world of business, the intangible assets of a company are often more valuable than the company's physical assets. Identifying and protecting the intellectual property in a business can increase competitiveness and assist the business in a variety of ways such as building a strong branding strategy, providing access to capital or through profitable licensing agreements.

It is imperative that Irish companies, in particular small and medium-sized enterprises, understand the importance of protecting their innovative products and services through the use of intellectual property. The importance of providing an environment for business in which innovative ideas are encouraged and rewarded has long been and continues to be a core objective of this Government. Commercialisation and the transfer of technology flourish where intellectual property rights and associated know-how are guaranteed and legally enforced. Ireland's legislative framework in intellectual property and in other relevant fields enables companies here to create, protect and exploit their intellectual property assets. An additional important consideration is that it provides researchers in our third level institutes with the means and incentive to commercialise this intellectual property for the benefit of industry and ultimately the Irish economy and taxpayers.

In recent years, this Government has been implementing measures that encourage the development of intellectual property, IP, by means other than intellectual property regulation, and this has included a range of supports to encourage commercialisation, technology transfer and the generation of intellectual property where possible and feasible. There are two reasons the State provides this support: to increase the level of intellectual property transferred to industry from research in higher education institutions for the benefit of the economy; and to facilitate the development of high quality and effective systems and policies to ensure that the intellectual property is identified, protected and transferred, where possible into companies in Ireland. These have both been identified by the recent task force on innovation as key priority areas for improving and growing Ireland's knowledge economy.

Enterprise Ireland provides a range of supports to encourage the generation of intellectual property. These include specialist support to third level institutions in identifying and exploiting intellectual property, financial support for research and resulting intellectual property protection, support for emerging start-ups and linking inventions emerging from different universities where appropriate. Enterprise Ireland also funds commercialisation specialists in the technology transfer offices. This measure supports a network of dedicated staff placed within the commercialisation function of the universities and institutes of technology and working directly with them to ensure that best use is made of research outputs with commercial potential. The supported intellectual property provides a vehicle that is critical to the successful licensing of academic research to existing, spin-off or campus companies and in this way encourages products based on the technology to reach the marketplace. Ireland's tax system has for some time encouraged both the creation and management of intellectual property, by means of our 25% research and development tax credit, patent royalty exemption, and, most recently, our new 2009 IP tax deduction regime, along with making Ireland an attractive environment for foreign direct investment with our 12.5% corporation tax rate.

Effective IPR enforcement is an essential part of protecting the health and safety of individuals, because certain counterfeited products such as medicines, foodstuffs, body care articles and children's items that are produced in an unregulated environment can pose a serious health threat. It is very important that we recognise the link between intellectual property crime and organised crime. Organised crime groups use the trade in fake goods to generate profit and to fund other forms of organised crime, such as human trafficking, money laundering, firearms and illegal drugs. The Internet and digital technology have presented criminals with an efficient, high-speed and anonymous way to conduct IP crime across borders and continents. Although luxury goods have traditionally been targeted for counterfeiting and piracy, today a wider variety of mass consumption goods are affected, for example, foodstuffs, cosmetics, spare parts for cars, toys and various types of technical or electrical equipment.

Due to the clandestine nature of many counterfeiting and piracy activities it is difficult to accurately assess their scale. The OECD published a report in November 2009 which confirms that counterfeiting and piracy of tangible goods is a major impediment to global trade and is getting worse. The report estimates that global trade in counterfeit and pirated goods more than doubled in this decade to approximately US $250 billion in 2007, up from just over $100 billion in 2001. That figure does not include goods produced and consumed within countries. The real figure is, therefore, possibly far higher than that estimate.

The international scale of the problem is also clear at European level. The European Commission's annual report on EU customs actions shows an upward trend in the number of goods suspected of violating intellectual property rights. In 2009, over 43,500 cases of such goods were stopped by customs, totalling 118 million articles. It is clear from even a quick glance at these issues that the nature of IP crime means it must be tackled at national and international levels. This requires a collaborative approach between state authorities and the private sector. A number of important initiatives at international level are under way.

Within the EU there are already a number of legal instruments in place, including the enforcement directive, but in order to make them more effective the European Council adopted a resolution on a comprehensive EU anti-counterfeiting and anti-piracy plan. This resolution endorsed the need to step up the fight against fake goods. In 2009, the European Commission launched the European Observatory on Counterfeiting and Piracy. The observatory is composed of members from both the private and public sectors and is intended to raise awareness and share information and best practices in enforcing intellectual property rights.

I wish to say a few words about the proposed anti-counterfeiting trade agreement, more commonly known as ACTA. The negotiating parties to this agreement include the EU, the United States and other developed countries, as well as a number of emerging economies. The basic aim of the ACTA is to establish effective enforcement standards for existing intellectual property rights. In this regard it should be borne in mind that, from an EU perspective, intellectual property rights account for a large proportion of the EU's GDP and are important to high-growth sectors. The EU can only remain competitive if it can rely on innovation, creativity, quality and brand exclusivity. These are some of the EU's main comparative advantages on the world market and intellectual property rights protect them all. However, the means of adequately enforcing those rights in important export markets to date have been limited.

The agreement aims to establish a comprehensive, international framework that will assist its members to effectively combat the infringement of IPRs. It will not create new IP rights, nor will it define their acquisition, duration, scope of protection or registration. ACTA countries will enforce the rights as they are defined domestically. It will encompass a range of provisions on the enforcement of intellectual property rights, including civil and criminal measures, customs measures, Internet enforcement measures, as well as robust co-operation mechanisms among ACTA parties to assist in their enforcement efforts. Following 11 rounds of international negotiations over two and a half years, a substantial level of agreement has been reached and almost all outstanding issues have been resolved. While some further work needs to be completed, I expect a deal will be finalised in the near future.

Let me say a few words about enforcement of IP legislation in Ireland. As Members of the House will be aware, the Minister for Justice and Law Reform is preparing a White Paper on crime. In this regard a number of discussion documents have been prepared, the most recent of which deals with organised and white collar crime. The discussion paper contains a section on intellectual property crime and points to the active role played by the Garda Síochána and Revenue's customs service in ensuring effective enforcement of the legislation. The Garda Síochána has adopted a proactive approach in tackling IP enforcement issues with the National Bureau of Criminal Investigation, NBCI, which was established as a response to organised crime. The anti-racketeering unit within the National Bureau of Criminal Investigation provides expert guidance and support to divisional and district Garda personnel tasked with investigating the importation and sale of illicit and counterfeit goods, including cigarettes. The sale of goods at markets is the subject of regular and ongoing monitoring by the Garda Síochána for counterfeit goods and products. The Revenue's customs service enforcement has concentrated mainly on the points of importation into the State and has resulted in the seizure of growing quantities and varieties of products.

In 2009 there were 1,019 intellectual property rights seizures valued at €2.5 million, in addition to the seizure of 116 million counterfeit cigarettes.

In recent decades, due to the global nature of trade and the advent of Internet trading the need for global IP protection was identified. The World Intellectual Property Organisation, WIPO, was established in 1967 to promote the protection of intellectual property throughout the world. WIPO develops conventions, treaties and other regulations on intellectual property protection through co-operation among member states and in collaboration with other international organisations.

The most important single source of rule making in IP is now the European Union. Many of the provisions included in Irish primary and secondary legislation are in transposition of EU directives on intellectual property into Irish law. The Commission's work over the years in harmonising and co-ordinating national approaches in the IP field has had a powerful effect in creating and securing the benefits for all member states in the Internal Market. New issues and proposals continue to surface. At the present time, several significant Commission proposals are under active negotiation.

One of these is the proposed EU patent. Unfortunately the current European patent system, which is administered by the European Patents Office, is expensive and complex, particularly its translation requirements. After grant, the applicant must validate the patent in each country designated in which protection is required. This can be very laborious and expensive. It can also lead to legal uncertainty because if a patent is infringed, the patent holder must initiate legal proceedings in each individual country, with often different legal outcomes. Today, obtaining a patent in Europe costs ten times more than securing one in the US.

In April 2007 the European Commission put forward a communication to the Council entitled Enhancing the Patent System in Europe. The Commission set out to get agreement on creating a simple, cost-effective and high quality one-stop-shop patent system in Europe, both for examination and grant as well as post-grant procedures, including litigation. Negotiations on a future European Union patent are at an advanced stage. The proposed EU patent would provide protection covering all EU member states and substantially reduce costs to industry. Ireland has long-supported the proposed European Union patent as a way of encouraging competitiveness, innovation and reducing costs especially for small and medium sized firms.

Another important area in the protection of intellectual property is that of copyright. The principal European directive in the area of copyright, the Copyright in the Information Society Directive 2001, essentially harmonised the right of reproduction, the right of communication to the public, the right of making available to the public and the distribution right. The basic principle underlying the harmonisation effort was to provide the rightsholders with a high level of protection and, accordingly, the scope of exclusive rights was very broadly defined at that time.

In its 2009 Green Paper on copyright, entitled Copyright in the Knowledge Economy, the European Commission pointed out that copyright laws have traditionally attempted to strike a balance between ensuring a reward for past creation and investment and the future dissemination of knowledge products by introducing a list of exceptions and limitations to allow for certain, specific activities which are usually regarded as desirable in the public interest. These generally pertain to areas such as academic and scientific research, the activities of libraries and archives and the rights of disabled people.

The Commission considered that the main conclusion from the debate was that copyright policy must be geared toward meeting the challenges of the Internet-based knowledge economy. It prioritised access to information products for people with disabilities, licensing solutions for mass-scale digitisation in a European context, and an impact assessment on how to foster the clearance issues that arise in the case of orphan works.

The most recent European economic initiative, the Single Market Act, which is designed to achieve a competitive social market economy, underlines that the absence of a European framework for the efficient management of copyright across the European Union is significantly complicating the process of making knowledge and cultural goods available online. In order to create a single European digital market, the potential of online distribution must be used effectively by enhancing the availability of creative content while at the same time ensuring that right-holders obtain adequate remuneration and protection for their works.

Accordingly, the Commission has signalled that it will now be submitting a proposal for a framework directive on the management of copyright, with the aim of opening up access to online content by improving the governance, transparency and electronic management of copyright. It will also, next year, be proposing a directive on the issue of orphan works.

At the same time, there are those who advocate a more American-type approach to the issue of copyright on this side of the Atlantic. These advocates feel that a broader approach should be adopted in relation to exceptions and exemptions from copyright. They argue that digital innovators in the United States have benefited from the more flexible regime there of exceptions to copyright rules under the broad heading of "fair use". They contrast this with what they categorise as Europe's catalogue of precisely defined exceptions which, they feel, are too inflexible to accommodate technological, business and societal developments. They consider that this prescriptive approach appears increasingly maladapted to the digital economy and that it deprives EU-based innovators of the flexibility that has stimulated the growth of high-technology businesses in the US. This idea, which is being strongly propounded by the information and communications technology sector in Ireland, will also have to be taken into account and examined carefully in the context of any changes being contemplated in the area of copyright legislation in future.

Finally, a Leas-Chathaoirligh, I thank you for providing me with this opportunity to address the Seanad on such an important topic. In outlining the importance of intellectual property to business and to innovation I hope I have reassured the Seanad that the Government, and I as the responsible Minister of State, recognise that protection of intellectual property is a key factor in developing the smart economy.

Protection of intellectual property is high on the priority list in the European Union also, and that is why there are so many initiatives under discussion in regard to intellectual property protection and the fight against counterfeiting and piracy. This Government is committed to fostering an environment that will continue to help Irish-based industry to reap the benefits of investment, research, innovation, creativity and entrepreneurship which are the building blocks of the smart economy plan and will pave the way to renewed growth in the Irish economy and a way out of this dreadful recession.