Patents (Amendment) Bill 2011: Second Stage

I move: "That the Bill be now read a Second Time."

On a personal note, as this is the first legislation I have introduced as a Minister of State, I wish to say it is a privilege to be able to do so.

The Patents (Amendment) Bill 2011 is a short but very important Bill amending three sections of the Patents Act 1992, to allow for the eventual ratification by Ireland of the London Agreement. I will set out the context in which I am bringing this Bill before the House today. Patents are central to supporting innovative businesses in several ways. Patents add economic value to inventions by giving them a monopoly right for a fixed term to enable the commercial exploitation of ideas in the market place. However, in return for that monopoly the inventor must agree to have the details of the invention published. The publication of patents enables research and encourages research, allows business in technical fields to stay abreast of the state of the art and encourages further innovation. It also helps to create co-operative links between inventors, investors and manufacturers through patent licensing.

Protecting intellectual property rights through patenting is important to Irish industry and business. The Irish Patents Office provides for the granting of patents and registering of trademarks and industrial designs. In 1964, a new Patents Act was passed to bring our legislation in line with that of the main industrial countries. This reflected Ireland's outward looking focus for economic development through international commerce, which has continued to this day. The main body of Irish patent law is contained in the Patents Act 1992 which now serves to meet our national needs and our international obligations.

Over the past decade, it has become clear that Ireland's international competitiveness depends increasingly on goods and services, which have high knowledge content. A recent report shows that enterprises across all business sectors spent almost €1.8 billion on research and development activities in 2010. An effective patent system is the key to converting that investment into economic growth. It is imperative that this knowledge is captured at the early stages, protected and exploited to its full potential. Today, inventions can be protected in Europe either through national patent offices or through the European Patent Office located in Munich. Irish and European companies marketing their products, strategically choose to apply for a European patent rather than a national patent to ensure larger geographical protection for their products.

The European Patent Office, established by the European Patent Organisation, is an intergovernmental institution comprising 38 countries, the EU 27 along with 11 other European countries. The functions of the office are to examine patent applications and grant a European patent if the relevant conditions are met. It is worth noting that patent applications originating in Ireland to the European Patent Office have been increasing steadily, underlining the importance to industry of European patent protection. Patent applications to the EPO have risen by 44% and grants of European patents to Irish applicants have increased by 21% since 2004.

Unfortunately, the European patent process can be expensive and complex which can act as a disincentive, especially for small and medium-sized firms. A company wishing to protect its invention across Europe applies to the European Patent Office for a patent. Once a European patent is granted by the office the proprietor must designate the countries where he or she wants patent protection and then the patent must be validated in each member state. At this stage the European patent effectively becomes a bundle of national patents.

To validate a patent, a full translation of the patent must be lodged in each country designated, in the national language of that country. These translation costs make up a very sizeable portion of the costs of acquiring a European patent and the costs must be borne by the applicant. As a result, the European patent is uncompetitive when compared with the cost of obtaining US and Japanese patents.

Let me put the matter in real terms. A European patent validated in 13 European countries is about ten times more expensive than a US patent and 13 times more expensive than a Japanese patent when processing and translation costs are taken into account. It has been estimated that validating a patent in 27 countries costs €32,000, of which €23,000 is for translations alone. Anecdotal evidence suggests these translations into national languages are hardly ever consulted. Only 1% of patents go down the litigation route and in the event that a court case ensues, the authentic text of the patent before the judge is always the patent text as granted by the European Patent Office. Meanwhile, the national translations required all over Europe remain in the drawer. Moreover, it usually takes four or five years to process and grant a patent in the European Patent Office. Consequently, these translations do not serve the purpose of informing the public about state-of-the-art new technologies, as they are only required to be filed after the patent has been granted.

There are other costs associated with the translation requirements such as filing and publication fees to local national offices. Local patent agents often act as intermediaries between the patent proprietor and the national patent offices where the translations are to be filed. These patent agents take on the role of ensuring formal requirements laid down by national law are complied with and the correct fees are paid. Obviously, the patent agent has to be paid for providing this service and a recent study conducted by the European Commission concluded that these costs varied from around €150 to €600 per validation, depending on the member states involved. If a patent is being validated in a number of countries, we can see how these costs can mount up. They particularly affect small and medium-sized enterprises, young innovative companies, start-up companies and public research universities.

Research shows that Irish industry, as elsewhere, often takes a selective cost effective approach when designating states for patent protection, thus leaving the patent vulnerable in those states not designated. In order to reduce these costs, an intergovernmental conference held in London in 2000 adopted the London Agreement. This agreement, which entered into force in May 2008, set out to reduce the cost to applicants by easing the requirement to file translations of granted patents under the European Patent Convention in those countries that signed up to the agreement. The overall aim of the agreement is to reduce the cost of translations across the 38 member states by 50%. In order to reach this level of reduction, it is vital that all member states of the European Patent Convention become a party to the agreement.

Article 65 of the European Patent Convention provides that any contracting state may require a translation of the text of a European patent into one of its languages, if that language is different from the language in which the patent is granted. Under the London Agreement, the parties to the agreement undertake to waive, entirely or largely, the requirement for translations of European patents to be filed in their national language. In effect, under the agreement, states with English, French or German as an official language will dispense with translation requirements entirely for the patent to come into effect.

Having English as an official language, Ireland would have to dispense with the requirement to seek a translation into English of the detailed specification of European patents drawn up in French or German. However, it is important to note that the claims which are the core part of the patent that defines the limit of the monopoly would continue to be available in English after granting. Section 119(6) of the Patents Act 1992 requires that a European patent designating Ireland and drawn up in either French or German must have its specification translated into English for that patent to be validated in Ireland. It is necessary to delete section 119(6) and corresponding subsections where reference to these translations is made in order to give full effect in our legislation to the London Agreement.

In order to assess the implications for Irish inventors and business, my Department carried out a regulatory impact assessment of the London Agreement in 2009. It concluded that the main advantage of the agreement for Irish inventors seeking patent protection abroad was that they would no longer be required to furnish translations to the extent currently required in those countries which became a party to the agreement. This would lead to significant savings when filing in other non-English language European states. Translation costs, publication fees and patent attorney fees would be reduced, with the greatest saving on translation costs. For example in 2007, there were 126 European patents granted originating from Ireland. Twenty-eight states were designated and the total cost of translations to protect the patents was estimated at €6 million, a significant cost to industry. This figure does not include the filing and publication fees to the national offices or patent attorney's fees.

The London Agreement is an optional agreement and to date 16 countries have signed it. However, our accession to the agreement should encourage other member states to accede, thereby reducing further the cost for Irish inventors when filing in other non-English language European states. The more members involved, the greater the benefit to European business.

I see the Bill as just the first step in reducing the burden of costs involved in protecting patents internationally. On the European Union front, we are working with other member states towards the creation of unitary patent protection that will have the effect of reducing the costs of registration and enforcement of patents for businesses. The Commission's proposal for a single EU patent has been under discussion for over 50 years and we are finally seeing some progress. At the EU Competitiveness Council in March of this year the Council authorised the use of the enhanced co-operation procedure for the creation of unitary patent protection in those member states that wished to join. Ireland is one of 25 member states which are forging ahead to achieve a simpler, cheaper and more robust patent system in the European Union that has eluded us of decades. This measure, when fully implemented, will enable Irish-based holders of patents to seek protection for their patent across the 25 member states supporting the unitary patent protection — representing 79% of the territory of the European Union — for a fraction of current costs. The Commission estimates that by implementing unitary patent protection, the overall savings to European business could reach €50 million per year, even in the early stages. These cost reductions should particularly benefit Irish start-up firms and small businesses. When fully implemented, this measure will facilitate a big reduction in costs and red tape which will provide a stimulus for European innovation and make patents more accessible to all companies in the European Union.

Enacting the Bill, combined with our accession to the London Agreement, will remove the current expensive translation requirements which is likely to lead to Ireland being designated in more patent applications and to more patent-related activity in Ireland. It is expected that more inventors and small and medium-sized enterprises, currently deterred from registering patents because of the high costs involved, will be attracted to protecting their intellectual property across Europe. This will further support Ireland's efforts to generate economic growth through promoting and innovating better processes and products. I commend the Bill to the House.

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 voidab 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.

I am sharing my time with Deputies Mattie McGrath and Clare Daly. I thank the Chair for the opportunity to speak to this new legislation, the Patents (Amendment) Bill 2011. I welcome the debate and am glad the Minister of State, Deputy Sherlock, is in the House because there is an important opportunity to link this debate to the debate on invention and the significant potential for new ideas on job creation. I expect the Government to listen to all views in the House and not to become complacent or arrogant in dealing with issues of great national importance. Deputies on all sides of the House have contributions to make, particularly by linking the debate in the issue of job creation and trying to come up with new ideas and inventions and do something to turn this country around. It is important that all politicians take this very seriously.

The Minister of State mentioned that protection of intellectual property rights through patenting is important and I agree strongly with him on that. When a person comes up with a new idea people should move to do their best in its interest. This does not necessarily mean direct involvement on the consumer or industrial fronts. I mention this point as part of a broader debate. In the past 17 years I have observed how successful the Northern peace process has been and often wonder whether it should have been patented at the time to aid conflict resolution throughout the Middle East and other areas of conflict such as the Basque country in Spain. There is great potential to market and develop Ireland as an international hub for new ideas on peace and reconciliation, conflict resolution and human rights. I see that as having potential to bring investment to the country.

It is also very relevant to the recent debate during the presidential campaign, in regard to candidates such as Mr. Gay Mitchell. I am concerned by comments made by him in recent days. Does he support the Good Friday Agreement or do his views damage the entire peace process? Does he support inclusive dialogue? I link these because they are fundamental questions that should be asked. It is important to link this point into the notion of developing Ireland as a hub for peace and reconciliation and into this debate. One President, Ms Mary Robinson, was able to reach out to Mr. Gerry Adams and another, President Mary McAleese, along with her husband, Martin McAleese, was able to reach out to people such as Jackie McDonald from the loyalist community. That is the kind of way forward the people are demanding. That is the issue in point.

The Deputy must speak to the Bill.

I am linking the point into new ideas and inventions——

The Deputy is very inventive.

——and developing Ireland as a hub for conflict resolution, peace and reconciliation. I take the Chair's point regarding the details of the legislation.

The Patents (Amendment) Bill allows for the ratification of the London Agreement on the application of Article 65 of the European Patent Convention. This agreement is a technical addition to the EPC, whose effect is likely to reduce translation costs for patents in Europe. This will mean that European inventors who seek patents in Ireland will not have to translate the detailed specifications of a patent if they are already in another of the official languages, French or German. In a wider international dimension the London Agreement will help Irish inventors who seek patents in other signatory states because a detailed patent specification drafted in English will not have to be translated further. That is what the debate is about.

The Bill makes Ireland a party to the London Agreement, which I welcome. It also seeks to reduce translation costs for patents in Ireland and Europe, a very positive and constructive step. It amends the Patents Act 1992 which is the principal Irish Act relating to patents.

This is the core issue. I return to the idea of developing new ideas and patents as a means of job creation. This is very important. The austerity programme imposed here during the past four years has taken in the region of €20.6 billion from our economy. This plan is working only to the degree that it is doing what it was designed to do, namely, to recover losses incurred as a result of reckless lending by major Continental banks during the bubble years. It is not working in reference to any other criteria. We need to be very focused on these issues. If people come along with new inventions or ideas on job creation and investment we must take them very seriously and support them. When a person comes up with an idea in this regard an imaginative way must be found to leverage investment into the economy to generate jobs and rebuild confidence. I appeal to the Minister on this point. For example, the residue of the National Pensions Reserve Fund, €5.3 billion as of July 2011, should serve as a first element. Private pension funds must also play a critical role in addressing the investment deficit. Prior to the recent market contraction the combined assets were estimated at €78 billion. I make that link because people constantly ask where we will find the money and the resources. There is an example.

I also have major broader concerns. I was strongly opposed to the so-called new pension levy for reasons that were reported widely elsewhere. It is projected to raise €1.9 billion over a four-year period. This figure is based on a rate of 0.6% per annum which would become 2.4% of the value of each fund. If pension funds could be persuaded to increase the proportion of their assets which they invest in the domestic economy by 5% — more than double the value of the levy — this would generate upwards of €4 billion. Again, I am linking this into the debate on the Bill in the context of patenting and new ideas because I am of the view that it is very important.

People should be aware of what exactly constitutes a patent. There is a degree of confusion with regard to copyright and patents. A patent is an exclusive right based on invention and ownership. In effect, it represents a bargain between the state and the inventor whereby he or she is given a monopoly right over his or her invention for a set period in return for the disclosure of that invention. There are many young, talented individuals in this country and this was evident at the recent Young Scientist of the Year exhibition. It is sad that we are losing some of these people because, as a result of mass unemployment, they are being obliged to emigrate. It is important to highlight this issue and to fast-track ideas which will provide assistance to these people. The legislation will be helpful in that regard.

For an invention to qualify for a patent, it must be susceptible of industrial application and must be new and involve an inventive step. A patent is not to be confused with a trademark or with copyright. A trademark is a sign which is capable of being represented graphically — such as a company's brand logo — and which distinguishes the goods and services of one entity from another. Copyright describes rights given to authors and creators of certain works, such as books and music. It is very important to highlight the differences that exist in this regard.

Section 3 of the Bill provides for the repeal in its entirety of section 119A which was inserted into the Patents Act 1992 by means of the Patents (Amendment) Act 2006. Section 119A provides for the restoration of a patent where translations are not filed under section 119(6). Since the requirements under the latter are deleted, the provisions set down in this subsection are no longer applicable. It is important to refer to that matter.

I welcome the debate on the Bill, which has provided an opportunity for Members to put forward ideas. I have offered a few new ideas while also seeking to discuss the main issues relating to the legislation. We should not be afraid of being radical or of engaging in original thinking when it comes to job creation.

I do not know how I am going to follow that. Deputy Finian McGrath was very inventive during his contribution. I hope that neither the Minister of State nor the Minister for Finance will get ideas with regard to patenting the pension levy or other issues of that nature. If they did patent the levy, we would be stuck with it for a long time.

The Patents (Amendment) Bill 2011 is very important. It amends certain sections of the Patents Act 1992 to allow for the eventual ratification by Ireland of the London Agreement. In that context, I thank the Minister of State for bringing the Bill before the House. As he stated, patents add huge economic value to ideas and inventions brought forward by innovative individuals and businesses. They are in place for a very good reason, namely, to protect and secure the rights of individuals who have invested their time and efforts in research and development and who have borrowed money from banks, credit unions, their families, and so on to allow them to do this. It is very important that people should be able to patent their ideas and inventions when they reach the production stage. At that point, an idea or invention can become the property of large tycoons or whomever because they can adapt them slightly and call them their own. I am aware of instances, in respect of the business in which I am involved where machines were copied and changed slightly and where the patent laws that were in place did not provide any protection to the inventors. I hope the Bill will strengthen the position in this regard and make it easier and less expensive for people to obtain patents.

I agree with the Minister of State, Deputy Sherlock, that protecting intellectual property rights through patenting is very important. In 1964, a new Patents Act was passed to bring our legislation in line with that of the main industrial countries. I also agree with the Minister of State that during the past decade, it has become clear that Ireland's international competitiveness increasingly depends on goods and services which have high knowledge content. Our exports are very important to us, especially if they involve new ideas and assist in developing new customer bases in Europe and beyond. It is vital, therefore, that we should have strong and effective patents legislation in place to protect the rights of those involved in trade at home and abroad.

The Minister of State referred to the fact that it costs in excess of €30,000 to register a patent as a result of the need to make applications in each European Union member state. That does not reflect the spirit of the Union and the process should be streamlined. The London Agreement is certainly a step in the right direction in this regard.

Deputy Finian McGrath referred to young entrepreneurs, young business people and education in schools. I compliment South Tipperary County Enterprise Board — a very slimline organisation that has access to very little funding — in respect of the level of support it has given to businesses in my constituency. More importantly, the board has also become involved with local secondary schools and has promoted enterprise competitions and award schemes for second, third and transition year students. I have been lucky enough to be able to attend most of the awards ceremonies held in these schools in recent years. What I saw on display was just amazing. These young people are coming up with some simple but extremely innovative and entrepreneurial ideas.

We are going to be obliged to adapt the education system in respect of this matter. We should not merely train people solely to pursue academic or other careers. The curriculum must be adapted in order that young students who display an ability to be creative in any area of interest can be accommodated. We must harness their creativity and provide them with support because from small acorns large oak trees grow. The ideas being put forward by second level students are very good and are scientifically based, and we must seek to support and promote their efforts. I again compliment my local county enterprise board for running the scheme in question, which is sponsored and supported by a number of businesses. It is important the school curriculum be developed in such a way as to allow the students to whom I refer to be nurtured in their endeavours.

The relevant figures indicate that 925 patent applications were made in 2007. This increased to 1,007 in 2008 before dropping back to 961 in 2009. The decrease in the latter year is a matter of concern. The economy was slipping into recession in 2008 when the highest number of applications was received. I will be very interested in obtaining the figures for 2010.

We must support anyone who comes up with an idea or initiative in the area of business. We must try to stimulate the thought processes of such people. Unfortunately, many individuals have a great deal of time on their hands because their businesses are floundering or they are unemployed. I am of the view that the national internship scheme could be used to stimulate people into developing new ideas and thereby create further employment opportunities. A great deal of discussion has taken place in the House in respect of job creation and the jobs initiative — which I welcome — that was put in place by the Government. Every little bit helps.

We must secure the position with regard to patents but we must also try to retain in this country those individuals who come up with ideas. In addition, we must make the process relating to applying for patents as simple and as inexpensive as possible. It is crazy that almost 90% of the cost of applications relates to the need to obtain translations. I do not know how that cost can be justified but that is how the system has developed.

I welcome the legislation, which I will be supporting, and thank the Minister of State for bringing it forward.

I have no reason to oppose the legislation. The reduction in the translation costs relating to patents is welcome and eminently sensible. However, we must ask what is the role of patents in society, who benefits from them and whether the position in respect of them could be better regulated. In the first instance, the figures produced by the Library and Research Service in preparation for this debate tell an interesting story. The 2009 report of the Irish Patents Office, which deals with Irish patents, lists an average figure of 320 patents granted each year between 2007 and 2009, with roughly one third of those applying being granted a patent. Of the patents granted, 250 were granted to people within the State. In a European context, the European Patent Office granted 33,844 patents with an effect in Ireland, of which only 151 were granted to applicants from within the State. If the two figures are added together, some 400 patents were granted to people within the State, a very revealing figure. It indicates a very low level of innovation and the inability of Irish people to access the system. It also indicates how far we are from the much-lauded smart economy. This is not because Irish people are not intelligent and talented or do not have good ideas, rather it is indicative of a lack of research, development and devotion to science and technology. These issues must be addressed if the economy is to be developed.

How are we proposing to address these issues? We have to consider the key recommendation made in the 2010 report of the innovation task force which indicates we will develop Ireland as a location for global intellectual property management, licensing and intellectual property services. That sounds absolutely fantastic, but what does it really mean? It is merely a continuation of the same policies applied in the past which have allowed the likes of Google, Facebook, Microsoft and others to locate patents in Ireland, particularly in the Irish Financial Services Centre, to avoid taxation liabilities running into billions of euro. The reports of organisations such as A&L Goodbody, one of Ireland's leading law firms, crowing about the process reveals what is going on. That firm advises on ways to exploit Ireland's nice taxation regime relating to patents, specifically for individuals and companies interested in maximising the available benefits under the patent royalty exemption scheme. In particular, it advises parties to consider establishing a separate company to undertake warranty work for the qualifying patent and that this company, in so far as it is commercially viable, should grant licences to an unconnected third party user. If that was to be done, the patent royalties received by the company would be exempt from Irish corporation tax, while any dividends paid by the patent-holding company would be exempt from taxation.

Billions of euro are flowing untaxed through this country with the creation of very little associated employment. In effect, this is a glorified tax avoidance scheme. Given the enterprise statistics produced by the likes of Forfás last year, is it any surprise that the second biggest category of imports in Ireland, in terms of value, at €22.5 billion or 30% of total, was under the heading of royalties and licences? That income is largely untaxed and is of no benefit whatever to the economy. This is totally ludicrous and an upside-down economic policy in promoting innovation and invention in Irish society. We should step back and examine the issue of patents.

The patent process is very expensive for an individual or small company to pursue, even allowing for the welcome reductions provided for in the London Agreement. A small company may be engaged in important investigative or exploratory work in respect of a renewable energy or wave power project, for example, which is vital in terms of the future development of the economy. To lodge an application for a patent in that research area would cost €15,000 to €20,000 per year, which amount would have to be renewed every year. It is not viable for a small company or an individual to pay such costs to protect ideas or advances in research. This leads to a process whereby an individual or a company can struggle for a few years to try to keep things going, but ultimately such parties will be hijacked and taken over by multinational corporations. However, Irish society will be left carrying the can. As the head of the Ocean Energy Development Unit stated last year, we will be left making sandwiches for those developing energy resources along the western seaboard. Given the current state of the economy, that is absolutely reprehensible. The State must take the lead in promoting research, innovation and development. This work must be led by bodies such as the ESB and other semi-State companies.

This debate touches on the question of who benefits from patents and the role they play in society. It should be the case that where the State shares the cost of educating all its citizens and providing incentives for research and development, society should share the benefits. It is not good enough that the process applied in this country means that income derived from patents is exempt from income tax to the tune of €5 million for an individual or a corporation. Such income should be liable to taxation, with the State benefiting from it. The Minister of State and the Government must begin to consider the issues the right way around and put the common good at the centre of the debate. Scientific advances should benefit humankind which should be the overriding priority, rather than leading to the privatisation of individual rights.

The patents issue is getting out of hand on a global scale. At its simplest, the patent system provides a government guarantee for an inventor granting exclusive rights to use, sell or manufacture an invention for a set period. However, this has been taken to extremes, with a dangerous wave of privatisation in terms of biological diversity. Intellectual property rights are being sought in respect of plants, animals and individual parts of DNA. There are also the ludicrous technology agreements and fees which deprive farmers of their generations-old right to hold, replant and exchange seeds. It is a form of bio-piracy and a new form of colonialism, as freely available seeds and specimens were analysed by genetic engineering companies, patented and sold back at a high price to those who had worked with them for years.

Society and the common good must be factored into the debate, as there is no doubt patents are being used to protect massive profiteering, mainly by multinational corporations. This is denying ordinary people and the world's poorest populations access to drugs, medical treatment and technology which could raise their standard of living, which is reprehensible. The pharmaceutical industry in India is a good example in this regard, as Indian companies produce generic drugs far more cheaply than many of the multinational corporations because of its patents legislation which has been designed to prevent the patenting of new uses and forms of known medicines. As a result, the pharmaceuticals produced by Indian companies are mainly used by victims of AIDS and so on. However, the multinational corporations, under the auspices of the World Trade Organization and the General Agreement on Tariffs and Trade, are muscling in to try to force India to change its patents legislation. In so doing multinational companies such as the Swiss firm Novartis are able to use their anti-cancer drugs sold under brand names to the tune of $2,500 for one month's treatment to cut across much cheaper generic drugs costing $200 per month from Indian companies. It is not that the Indian companies are not profiting or that they are charitable; many of the top billionaires in India are involved in the pharmaceutical industry. Nevertheless, this is an indication that massive amounts of money can be made from patents and exclusivity. The way in which they are being implemented at present is protecting private gain and profit rather than benefitting society and humans. The key lesson from this is that the State deserves and is entitled to a share of innovation and development. We have invested in it. Scientific development should be for the development of all, not just the profits of a few.

I am sharing time with Deputy Dara Murphy and Deputy Tom Barry.

It is important when discussing research and development, innovation, creativity, design and engineering that we understand the importance of patents in those areas. It is interesting that Albert Einstein cut his teeth as a clerk in a patents office before he went on to be so creative and innovative. We are having this debate following the death of Mr. Steve Jobs, somebody whose ideas and designs have played an incredibly important part in the 20th and 21st centuries. His legacy still has to be realised. We will probably come to understand in the years to come just how important he was to our lives today.

This Bill is very welcome. It is important that Ireland becomes a party to the London Agreement. It is also important that we reduce our costs in this area, as it is key to research and development here and is important for innovation. I welcome the Minister's remarks about an EU patent. There must be a commitment to a unitary patent protection system in Europe, and we must do everything we can to realise it. A previous speaker referred to the costs of filing for patents. It is seen as a cost of innovation and we must reduce it if we can. We must do what we can to make it easier for us and our partners in Europe to work together towards making the patent process cheaper and more efficient for everybody. That would serve all of us.

The Minister said this is the first Bill he has brought to the Chamber. I am not sure if that is correct, but I propose to offer him some ideas for a second Bill on patents which could be introduced in the coming months or even years. In Ireland, the vast majority of patent applications are for physical products. When applying, one is required to put in an abstract patent design, so one describes one's product on paper. There is a debate at present on whether we should go back to a patenting system whereby one would be obliged to produce a physical manifestation of one's idea, that is, show a proven product one has invented and show how it works.

There are many benefits to that system. One is that it is more cost effective. The time to process the application is greatly reduced because one does not need to pore over pages and pages of detailed design specifications. Instead, one can simply see and examine the design. It also reduces translation costs, which is what we are dealing with today in terms of the London Agreement, because the physical product exists. It also reduces costs if there is a dispute over patents. If one has filed for patent and the patent only exists on paper, and if understanding of that patent has been breached here or in another jurisdiction, the situation is far more difficult because one does not have a physical product with which to compare it.

If we move to a system wherein one is obliged to produce a physical manifestation of one's idea, it can greatly reduce costs. It also favours small inventors. A large company that has teams of lawyers and other people who are skilled and employed wholly to look at this area, it can put in many applications to file for patent before the product has even been properly invented, designed and proven. The system favours larger corporations over smaller inventors. If we moved to the other system, it would favour smaller inventors.

In fact, innovation and inventions currently being developed are making it easier for people to do that. I was in DCU yesterday where the Irish Technology Leadership Group is holding a Silicon Valley Comes to Ireland exposition. It has brought some Irish inventors and American investors to Dublin to show people what is happening. One of the systems on display was a 3D printer. Not many people are aware of what these machines can do. It takes a 3D representational model on a computer screen and turns it into a physical product. It is a fantastic piece of equipment. When a new inventor has an idea, he or she can draw up the design specifications using a design application programme on a computer and have it physically produced to submit to the Patents Office as part of the application. That is a case of somebody's great idea or innovation helping other people to innovate. It could help us to change our patent system and make it better and more cost effective for small inventors.

Another idea for a future patent Bill, if the Minister intends to bring one forward, arises from the innovation task force. The last Government withdrew the patent income tax exemption. This was an important exemption which I and others believed underlined our commitment to research and development. We must reverse this change. It would confirm our commitment to putting research and development at the heart of our plans for recovery. It would confirm to the rest of the world that this country truly wishes to have a smart economy and to do all it can to achieve that. We are not talking about a huge amount of money and the people affected are generally small inventors. Symbolically, however, it could be incredibly important for the State and how it does business in this area.

I put those two ideas to the Minister for, perhaps, future legislation. They merit attention and debate. I urge caution about where we place patents in terms of measuring innovation. Recently, I looked at China's 12th iteration of its five year plan and at Europe's 2020 strategy. In 2009, China had approximately 8,000 patents coming through. In 2010, it was 12,000. By 2015 it might surpass the US in terms of the amount of patents granted. It is using that to measure innovation in China, to say that it is an innovative country. However, with patents one is, in a way, trying to quantify what it not quantifiable, so I caution against using it as a measure of innovation.

It is not how the people in the tech transfer office of Stanford University measure innovation. They are more concerned with deals done to get products to the market because, as we know from our experience with universities here, many patents get left on the shelf. Many of these ideas are not worth people spending money or time on them. While they might be good in and of themselves, they do not necessarily prove innovation, so I caution against using it as a measure. Certainly, we must consider certain metrics and in that regard it plays a part, but it is not the be-all and end-all, saying in effect that ours is an innovative country simply because of how many patents we have.

I will briefly play devil's advocate in this area. Obviously patents are incredibly important and it is important that there is protection for our ideas. If somebody has the ingenuity and energy to patent an idea, it should be respected in law and in the markets. However, I recently met some young entrepreneurs working in the web development space. The type of thing they are concerned with patenting is coding, lines of code and on-line products. They were working together in an incubator unit, an environment where people share their ideas. Their view was that if they worked together, kicked ideas about together and overcame challenges and problems, everybody's boat would rise and everybody would be better off. It was an amazing culture of openness that I have not seen previously.

I asked them if they would not be worried that somebody might take their ideas, use them and undermine what they were trying to do. Their perspective was quite interesting: "Ideas are ten a penny; everybody has an idea. Do not come to me with an idea but with something done." Their opinion was that if somebody had the persistence and dedication to take an idea and develop it to the level where it would be wanted on the market, fair play to them and well done. It was an interesting aspect on intellectual property rights. It refers to a particular field, web 2.0, which involves coding, so it obviously would not apply across the range of things that would be patented, but I thought the idea was interesting. It meant sharing ideas and saying: "If you can make this one work, fair play. I will go with something else because there are so many ideas."

Things move so quickly that sometimes a patent can become irrelevant quite quickly. Also, if one has a small company that works in the Internet sector, one might not have the time or the money to spend five years and €10 million in courts trying to pursue somebody for infringing one's patent. By the time one is proven correct in the courts, the company that has taken the idea might be insolvent or the idea might no longer be relevant to the market. That is something that should be brought to the attention of the House given the nature of this debate.

However, I will return to the essential point, which is the Bill before us today. Anything we can do in the European Union to make it cheaper for those filing for and processing patents and to bring harmony to this area is welcome. It is great that the Minister is focusing on this issue which is incredibly important. I refer to everything we are trying to achieve in the smart economy in terms of innovation and urge the Minister to do much more. It is a fantastic way for us to prove ourselves in this space by giving the matter time in the House and by civil servants giving it even more time. We can say to the interest groups that it is something on which we are working and about which we are passionate and that we will do more.

I welcome the Bill which, as the Minister of State, Deputy Sherlock, said, is straightforward and short. It follows a number of other Bills to fulfil a commitment given in the programme for Government to reduce the cost of doing business in this country. Last week I spoke to the Veterinary Practice (Amendment) Bill 2011 which one may say has very little in common with this Bill, but it has in that doing business here has become extremely onerous and expensive. For example, ten bodies can inspect a farm, and the same applies to restaurants and other businesses.

I compliment the Minister of State who has done an extensive tour of many of the new and indigenous companies involved in various innovative practices. It is very important that a Minister listens to the concerns of businesses and brings forward measures quickly to allow them to conduct their businesses in a more efficient manner.

Patents are extremely important, as they protect intellectual property and encourage people who have the innovative gene to spend time and perhaps money and devote themselves in the knowledge that if they discover a unique product worthy of a patent, their efforts will be rewarded. There is nothing wrong with this.

The suggestion from Deputy Clare Daly of the Socialist Party that there should be a tax on companies which use intellectual property and patents was most extraordinary coming from a politician. One could say her comments were dangerous, given the precarious position of the economy, but I assume nobody will take them seriously. She also named Google. My colleague, Deputy Eoghan Murphy, mentioned the late Steve Jobs whose company, Apple, employs thousands of people in my constituency of Cork North Central. It produces high end products encompassing a huge degree of complexity, individuality and innovation. I am sure the people living in Deputy Clare Daly's constituency would be horrified by her proposal that a tax be put on companies in Dublin which provide ten of thousands of jobs. Even for the Socialist Party, it is a most extraordinary proposal, one which will be ignored, but it is worthy of note that there is such lunacy coming from one section of the Opposition. I welcome the support of Deputy Willie O'Dea and Fianna Fáil for the Bill.

There is a headline inThe Irish Times of today which indicates Irish universities are in crisis. It refers to the falling rating of UCD and Trinity College. Half of the patents in third level institutions in the last year for which records are available, 2009, were produced in UCC and the Tyndall Institute. It should be acknowledged that great work is being done in UCC in producing a large number of patents. There has been very little public comment about the fact that last month it was classified as Ireland’s only five star university. I, therefore, wish to correct the suggestion that universities in Ireland are in crisis. UCC is not in crisis and I am amused by the reluctance of the Dublin-based media to acknowledge the fact there is only one five star university in the country which is to be found in Cork. One of the main reasons cited by the adjudicating panel for that success was the fact that there was a very high level of innovation at UCC through the Tyndall Institute which was visited by Queen Elizabeth II. We should look to the other universities to follow this example and drive greater innovation.

I commend the Minister of State and encourage him to continue on his journey to assist the wonderful innovation taking place in foreign companies and, most of all, in indigenous businesses.

I will try to give a five star presentation like Deputy Dara Murphy. I am delighted to have the opportunity to speak to the Patents (Amendment) Bill 2011 which will help to reduce the cost to applicants under the patents process. It is important to note that the introduction of the Bill will have no financial implications for the Exchequer. I wish we could say this more often of other Bills.

As chairperson of Fine Gael's policy committee on jobs, enterprise and innovation, any support we can offer our entrepreneurs and indigenous industry at this vital time is welcome. We have risen from the economic doldrums before because of the wealth of talent on the island and I hope we can do so again. When we carried out a feasibility study of the sugar industry, all the knowledge came from within Ireland. When we think back to the time that industry was founded in the 1930s, we had to obtain all the knowledge from Germany and elsewhere in Europe, but now we have the confidence and education to do things for ourselves.

The cost of filing translations of patents across Europe is prohibitive and any assistance provided in reducing this cost must be welcomed. One of the main reasons for the introduction of the Bill is the need to address the disparity in the costs associated with patent applications across the European Union which, prior to the London Agreement, made the European patent uncompetitive compared to US and Japanese patents. We are competing on the world stage and cost competitiveness is vital if we are to succeed in this arena. The Bill will ratify the London Agreement which means that when an Irish company applies for a European patent in English, it will no longer have to pay to have it translated into French if it wants to apply in France, German if it wants to apply in Germany and so on. All of these costs were borne by the applicant and were yet another financial stumbling block in progressing innovation and entrepreneurship.

I am glad to hear €1.8 billion was spent on research and development activities in 2010 and that figure will continue to rise. The figure for renewable energy projects is €800 billion worldwide. We need to become more involved in this area to attract some of this investment to this country.

As the managing director of a small business, I know what the costs are. Every cost has been dissected in recent years because businesses are hanging on. Those which export and have gone to the trouble of creating new products need to be protected. The agri-industry is a major example in this regard. We export many products worldwide and innovation is critical. When one considers that China covers 8% of the world's landmass but has 20% of its population, research in food production is critical.

As a biochemist in my early days, I understand the work required to create a patent. The long hours spent in inventing something must be understood. I heard Deputies on the other side of the House criticise large companies which are making money out of patents. They deserve to do so because they have put the time and money into them. The large agro-chemical company, BASF, applied for 1,707 patents last year. This country produces the highest yields of wheat, barley and oats in the world thanks to the help of agro-chemicals which have been tried and tested and are safe for the environment. They do not come cheap but they provide value for money. Those who invent these products deserve to be rewarded for what they do. The industries in Europe that have produced the greatest number of patents are medical technology, with 10,500 patents, computer technology and electrical machinery. Approximately 235,000 patents were filed with the European Patent Office in 2010, an increase of 11% from 2009. Innovation remains strong and we are playing our part in reducing costs and telling inventors that we are open for business. I commend the Bill to the House.

I call Deputy Mitchell O'Connor. Is the Deputy sharing time with Deputy Donohoe?

I think so. I was told that I have one minute, so I will be brief.

Her time is half up already.

I am grateful for the opportunity to contribute to this debate. This legislation is the outcome of a pro-business and pro-enterprise approach on the part of the Government.

I wish to raise a specific question with the Minister. Is he aware of the new patent box regime due to come into effect in the UK in April 2013? The Government needs to pay close attention to this initiative, particularly given that the previous Government abolished the tax exemption for Irish patent royalties. The UK patent box regime will make that country's tax code more competitive in attracting foreign direct investment by global high technology companies. The UK Government proposes to introduce a 10% rate of corporation tax in respect of income from qualifying patents. Qualifying income comes under three headings: income from licence fees and royalties received for use of an invention, income from the sale of products which incorporate inventions from qualifying patents and income from the sale of patents. Furthermore, once a patent is granted a company can claim patent box benefits for any income arising between the date of application and the date on which the patent is granted, up to a maximum of four years prior to the date of granting.

This new regime possibly presents a competitive threat to Ireland given that we are also seeking to attract inward investment from high technology companies. We need to send out a strong message that Ireland is open for business and welcomes foreign direct investment. The UK initiative on patents, alongside continued reductions in corporation tax rates, should receive our careful attention and I would like to hear the Minister's opinion on the matter.

Several of my colleagues have responded to Deputy Clare Daly's comments. I could not help but think about Monty Python and the famous question, "what have the Romans ever done for us?", when she asked about the role of foreign investment and multinational companies in Ireland. She queried the contributions they have made to the common good and asked why do they not pay taxes. It has clearly escaped her notice that all the people who work in those companies pay income tax and their employers pay employers' PRSI. The companies also pay corporation tax. If she wants to query the contribution that type of work makes to the common good or the national interest she needs only to spend a few minutes investigating the commercialisation centres established in all our universities to help Irish researchers use the technology they develop in academic settings to deliver commercial gain, employ people and create wealth.

The Bill has been welcomed by the majority of Deputies. I hope to add to the progress that has already been made in this Bill by raising four issues. A supply of incubation funds and seed capital will be necessary to allow people to take advantage of the new patent regime. Ireland already has a buoyant venture capital industry but many of the sources of funding previously available are drying up due to the impact of the financial crisis. One of the recommendations of the innovation task force report published last year was that we should explore ways of strengthening the supply of venture capital in this State to ensure people can take advantage of the cutting edge ideas they develop. The establishment of a strategic investment fund or bank, which is proposed in the programme for Government, would support the measures taken in this Bill.

The President has made reference to the creation of the international content clearing centre, an idea which won an award in the Your Country, Your Call competition. The centre would help to ensure Ireland was at the leading edge in the sharing and distribution of digital content worldwide. When fleshed out, it is an idea that would sit well with the other initiatives currently underway in Ireland and I intend to ensure it receives Government support it in the coming years.

The research and development tax credit offers a significant strategic advantage to our State. We have made creative use of the ability it grants companies to benefit from research and development conducted here. We should investigate how we can widen the definition of the tax credit to include a wider range of companies engaged in innovation. While the scheme is well defined as covering the life sciences, biotechnology and pharmaceuticals — people who wear white coats in laboratories — anybody who comes up with truly creative and innovative thought should be able to access it.

While I am very supportive of the development of the right kind of patent regime in Ireland, the application of patent policy can at times stifle innovation and competition. New ideas may be blocked because of the way patents are applied by other firms. This is, however, a point of nuance in the context of overwhelming and understandable support for the current patent regime.

If Deputy Clare Daly's opinions about the Bill differed from mine, her differences were minor in comparison to the odyssey which Deputy Finian McGrath embarked on. He touched on various matters, including the presidency.

It was an odyssey of wonderful proportions.

No one can doubt the commitment of Mr. Gay Mitchell to the Good Friday Agreement, constitutional nationalism, true inclusion and robust debate, but none of those things is mutually exclusive. Then again, unlike Deputy Finian McGrath, I have never been in any doubt as to who I will support.

Cuirim fáilte roimh an deis seo labhairt ar an ábhar tábhachtach seo inniu. The Bill may have a bigger impact on Irish innovation and potential investors than some may realise. Its aim is to make the State party to the London agreement. The Bill aims to reduce the cost of patenting by amending the State's Patents Act 1992. The proposed legislation will reduce costs by ending the need to create translations for patents into French and German. I understand there is a flip side in that there could be a marginal increase in costs accruing to Irish businesses in having to translate patents from French and German into English.

Neither am I sure that the Bill is fully revenue neutral, as was stated by a Deputy on the other side of the House. When one scrutinises the Bill there may be some loss of income for the Patents Office. It is important the Government would seek to redress that in some way. There needs to be momentum towards a global standardisation of patents in order that Irish firms and businesses have an equal competitive playing field when operating in the United States or in the Japanese market.

Patents are an unintelligible foreign language to many small businesses. I worked in the enterprise sector for seven years and I never met an owner of an SME who understood how to get a patent. If individuals at the lower end of the scale with fewer than ten employees do not understand the system, that is a barrier to entry because if people do not know how to do things they tend not to do them or at least it takes longer for them to do them. If they cannot understand it themselves, the chances are they will have to use a consultancy firm to help them prepare the business for a patent, which would amount to a serious cost to many small businesses which may be at start-up stage.

The Patents Office has an enormous job of work to help educate small businesses. It could be an idea for the office to educate trainers within the county enterprise board system in order that when they deal with start-up businesses and small to medium enterprises, they are in a position to give good, solid training in all routes to get a patent. It must also be recognised that the patent system is part of the infrastructure of innovation and must be developed in a user-friendly manner. Rather than a person having to have a specific degree in commercial law, most small businesses should be able to grapple with the challenge of developing a patent.

It must be realised that patents are not a silver bullet to success. Ideas often get patented but do not get any further. What is important is that while the reforms are carried out, the Government creates the necessary enterprise environment for businesses to transform their ideas into patents and then to transform the patented product into a monetised or commercial stream for the business. That must be done in a number of ways. I and my colleagues have said that austerity is closing down businesses every week and that there needs to be a system whereby businesses can get credit. According to the Irish Small and Medium Enterprises Association, ISME, 58% of small businesses cannot get credit, yet we have a Credit Review Office in this country that has intervened in 30 cases out of 58% of 250,000 small businesses. Credit is very important, as is reform of the upward-only rent system and creating a progressive taxation system in order that a small business that is going down the route of innovation would have some level of decrease in its rates obligation due to the fact that it is innovating. Perhaps larger businesses which are making much more profit would be charged the difference, as such. For example, a large Tesco store would have to pay more according to its profit and its business model than a small Irish struggling innovating business.

What is more important than patents is aggressively promoting small Irish businesses abroad and creating the educational theme from crèche to primary school, secondary school and third level in order that individuals do not find themselves at the age of 30 years starting a business and developing a patent without knowing anything about it. The language of patents should be introduced into the education system in order that individuals do not see it as a barrier to entry and can function properly when they get up and going.

Is rud maith é an Bille seo. Tá cúpla rud mícheart ann ach b'fhéidir go mbeidh seans ag an Rialtas na rudaí sin a athrú agus a fheabhsú. Tá sé níos tábhachtaí an bhéim a chur ar níos mó tacaíochta a thabhairt do mhuintir gnó, go háirithe ó thaobh creidmheasa, bolscaireachta agus oideachais de.

I thank all of the Deputies who have contributed to the debate. Some have been pertinent to the legislation before us, others arguably not so. I will seek to address the points that were raised in regard to the legislation itself. As an aside, there is only one Deputy Finian McGrath and one could not patent him if one tried.

I will start with the points raised about the UK patent box regime and the royalty exemptions and other reliefs that were suggested by Deputy Eoghan Murphy and also the points raised by Deputy Donohoe. That is being considered at present under the budgetary process. I note the points, which were well made, and we should hear more about it anon. We are talking about innovation, utilising human capital and allowing for where someone who is creative and has an idea that becomes the subject of a patent to have as easy as possible a transition of that idea to commercialisation. The London agreement would facilitate that process through the translation arrangements. That is really what we are talking about in this context.

The proposed change in the legislation would result in a modest loss of revenue to the Patents Office in terms of fees for translations. In the context of this country becoming a party to the agreement, an applicant must lodge a translation in the office within six months of grant of the patent together with a fee of €35. In 2010 that came to €33,215. The level of renewal fees is likely to increase if we accede to the agreement and it is likely that owing to the lack of translation requirements, this country will be designated in more patent applications to the European Patents Office, EPO.

On Deputy Clare Daly's point on the protection system, the unitary patent protection system will address the excessive costs in Europe. That is without question.

The feasibility of the international content clearing centre, which was raised by Deputy Donohoe, is currently under examination by a group from my Department which includes Enterprise Ireland and IDA Ireland. There is a process under way in respect of that project.

Deputy Eoghan Murphy raised points on the physical manifestation of the patented invention. It could be argued that the direction patent applications are taking worldwide is that of an electronic on-line application, but I would like to hear more from Deputy Murphy on this one, perhaps at a later stage and even on Committee Stage. We can address this further if necessary in a more substantive sense. The question of tax relief on patent royalties is currently under review in advance of the next budget, and that should address Deputy Mitchell O'Connor's point on the UK regime.

There were many other points raised. Deputy O'Dea asked when the EU patent will come into effect and about the current position. The concept of the EU patent, previously Community patent, is to provide a patent system that will be affordable, especially for small and medium-sized enterprises, and will provide automatic patent coverage in all member states of the European Union. As Deputy O'Dea pointed out, as protracted negotiations over many years failed to reach agreement on the EU patent, the Commission has requested to examine the possibility of bringing a proposal under enhanced co-operation whereby unitary patent protection applying to these member states willing to participate will be introduced. So far, 25 out of the 27 member states of the EU have indicated a willingness to take part and the Commission envisages that the first unitary patent protection will issue in 2013. As is the case normally with any European initiative, I would not be held to that timeframe.

I thank the Members for their contribution to the debate. In my introductory speech, I set out the rationale for the proposed Patent (Amendment) Bill 2011 and outlined the financial burden on industry in providing the full translation of the European patent to ensure full protection of the patent across Europe. I also stated that these translations are rarely consulted and, as such, offer little or no advantage, either to the patent holder or users of the system. It is imperative, both from an Irish and European perspective, that business is not hampered by a system that is inefficient and costly. Access to a cost-effective and efficient patent system is key to stimulating innovation. Under the current regime, the high cost of translating granted patents acts as a deterrent to business and as a consequence, is a deterrent to innovation. Currently, more than 50% of all enterprises in Ireland continue to engage in considerable research and development activities in spite of the difficult economic environment. It is vital that their innovation is captured and exploited in the best way possible. A patent system in which users have limited access due to high translation costs does not serve this purpose and the cost savings from the London agreement should have a positive effect on research and development, allowing for resources saved on translations to be reallocated to further research and development and other business activities. That is the kernel of this legislation.

I hope Deputy Clare Daly, who spoke about taxation of corporates, gets the point of this legislation. It is about being able to facilitate those who are innovators, those who are Irish who want to get out into other markets and who have ideas. We facilitate that process by implementing the London Agreement so that we can make that passage as easy as possible for young people, for researchers and for industry.

I hope this does not sound patronising. I suggest that every Member of this House, if they have an opportunity to do so, should engage with Science Foundation Ireland, Enterprise Ireland, IDA Ireland and all of our academic institutions to delve into, and inform themselves of, the interaction between research, intellectual property copyright and the innovation and commercialisation taking place. I have undergone such an education process. Every day one learns more about this field. Before Members come into the House and make sweeping statements about taxation of innovation, they should be well informed about the process. I say that respectfully and in a debating manner in the spirit in which we debate these issues in the House. It is not meant as a personal statement to any one person in particular. We should be careful about the language we use in implementing legislation. This is technical legislation. That is all it is. It is to the common good. There is some contention that it may not be, but I argue forcefully that it is to the common good ultimately and it will be beneficial to this country.

The more countries that sign up to the agreement, the greater the saving will be across Europe. In essence, by even one country joining up, the savings are significant. It has been estimated that since the entry into force of the London Agreement in 2008, on average savings of 38% on translation costs have been achieved. The results speak for themselves. That is what we are trying to achieve here today.

On some other points raised, the Patents Office runs business seminars across the country aimed at SMEs, start-ups and entrepreneurs, and these seminars are entitled, "Building a Business on Your Ideas". That is a pertinent point. It speaks to the issue of innovation and how ordinary people can become involved in the process if they have ideas, and there is an excellent programme, through the Patents Office, that seeks to achieve that. The seminars include talks on all elements of intellectual property, IP, how to identify IP within a business and how to protect it. They also provide talks on State supports to industry and they are extremely useful.

On Deputy Clare Daly's points, the number of patent applications, originating in Ireland, to the European Patent Office was 510 in 2010, a slight increase from 498 in 2009. The latest figures for patent filings in 2010 ranked Ireland 14th of the 38 countries in the European patents organisation and we ranked 23rd in the Patent Cooperation Treaty international rankings which cover most countries worldwide.

However, it is important to make the point that the number of national patent applications is not an indicator of patent activity in Ireland. In Ireland, many of the multinational companies, which employ thousands and which undertake and fund major research and development here, patent their products on a global level. Patent applications submitted by large multinational organisations in the United States, for example, would not show Ireland as the source of the application or that the research and development has been carried out in Ireland. It is important to make that point to rebut some of what has been said by Deputy Clare Daly. There are Irish people working in multinational corporations here, or working within academic institutions that interface with those same corporations, who are producing excellent work, ground-breaking world-class research based on Irish intellectual property which will not necessarily be registered as Irish, but it is still Irish people producing the intellectual property and that is the most important point. It forms the basis, and underpins, thousands of jobs within this economy. It is important to send out a more positive message in terms of what this legislation is about.

As many of the contributors mentioned, it is sadly and tragically appropriate that we are discussing this legislation on the day we learned of the death of Mr. Steve Jobs.

Question put and agreed to.