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Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 13 Jul 2022

Unified Patent Court: Discussion

The proceedings of the Oireachtas committee will be conducted without the requirement for social distancing and with normal capacity in the committee rooms restored.

However, committees are encouraged to take a gradual approach to this change. Members and witnesses have the option to attend meetings in the relevant committee room or online through Microsoft Teams. All those attending in the committee room and its environs should continue to sanitise and wash their hands properly, be respectful of other people's physical space and practise good respiratory etiquette. If they have any Covid-19 symptom, no matter how mild, they should not attend in the committee room. Members and everyone else in attendance are asked to exercise personal responsibility in protecting themselves and others from the risk of contracting Covid-19. As members well know, members who wish to participate in the meeting remotely must do so from within the Leinster House complex only.

Apologies have been received from Deputy Bruton and Senators Garvey and Gavan.

The Unified Patent Court, UPC, plans provide for the introduction of an EU system of unitary patent protection and an international court in which patent litigation will be heard. The Agreement on a Unified Patent Court, UPCA, is an international agreement treaty between 24 member states of the EU, including Ireland, setting up the UPC. The UPC is an international court set up by participating EU member states to deal with the infringement and validity of unitary patents. Ireland signed the UPCA in 2013. The Attorney General has advised that a referendum is required to transfer the judicial powers from the domestic courts to the new international court. Once the UPCA has been ratified, arrangements can be made a for a local division in Ireland. The drafting of the Bill required is currently in the preliminary stages. A decision on the timing of the referendum is a matter for Government.

Today, I am pleased that we have the opportunity to consider these matters further with representatives from IBEC. I welcome Mr. Aidan Sweeney, head of enterprise and regulatory affairs; and Mr. Naoise Gaffney, chair of the IBEC corporate intellectual property, IP, group and vice president of IP at GH Research Ireland.

Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references that witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected by absolute privilege pursuant to the Constitution and statute. Witnesses are again reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statements have been delivered to members. To commence our consideration on this matter today, I invite Mr. Gaffney to make his opening remarks on behalf of IBEC.

Mr. Naoise Gaffney

A Chathaoirligh agus a bhaill an choiste, go raibh maith agaibh as ucht an chuiridh labhairt libh inniu faoin Unified Patent Court. Is dócha liom gurb é an t-ainm atá air i nGaeilge ná Cúirt Aontaithe na bPaitinní nó rud éigin mar sin. I thank the committee for the opportunity to discuss the UPC. My name is Naoise Gaffney, and I am chair of the IBEC corporate IP group and vice president of IP for GH. Research. I am also an adjunct professor of patent law at Trinity College Dublin. I am joined by Aidan Sweeney, IBEC's head of enterprise and regulatory affairs. We are here today to talk about the UPC, the referendum that is required before Ireland might participate in the system, and why, in our view, it is important that the committee gives due consideration and scrutiny to this matter. We would like to ensure that the country does not miss out on the substantial opportunities for economic growth the UPC presents. IBEC welcomed the Government’s recent reconfirmation of Ireland’s commitment to the UPC. It sent an important message to other countries, as well as international investors, that Ireland is determined to be fully involved in the UPC. While progress on the UPC had stalled across Europe due to Brexit and some legal issues in Germany, these issues have now been resolved. The pace has picked up considerably across Europe, with the new court on track to open its doors in early 2023, with or without Ireland.

To provide members with an overview of what it is all about, the UPC is one part of a two-part package that also includes the unitary patent. This unified patent package will create a simpler and more efficient mechanism for obtaining and enforcing patents in Europe. As part of this, the UPC will be a newly-established single court system under international agreement for pan-European patent litigation and enforcement. It will ultimately have exclusive competence in respect of infringement and validity of all patents granted by the European Patent Office, EPO. By way of reference, most patents currently in force in Ireland have been granted by the EPO, which is a centralised European clearing house for patents. The Intellectual Property Office of Ireland, IPOI, based in Killkenny, has similar competence. However, most of the activity from a patent perspective tends to go through the EPO. The unified patent package is needed simply because the current European patent enforcement system does not work effectively for companies, and in particular for SMEs. The current system of country-by-country patent protection. Litigation is extremely expensive, time-consuming and resource-intensive. Under the new system, there will be centralised mechanisms of both protection and enforcement. This could be particularly beneficial to Irish SMEs. SMEs tend to have only a few patents - if they have any at all. These patents are likely to cover their core technologies, which are often their most valuable assets. Under the existing system, getting pan-EU protection and enforcing those rights all the way across Europe can often be prohibitively expensive for such companies. The new system would make this a more realistic prospect for them. Having part of this new system based in Ireland would be further beneficial for these enterprises because they would be able to enforce their pan-European rights through an Irish based court rather than having to play away from home, as it were. As we have alluded to already, it represents a significant opportunity for Ireland. The business case for Ireland’s participation in the UPC has gotten stronger since it was first examined almost a decade ago. Ireland is uniquely positioned to establish itself on the international stage as a patent enforcement hotspot. If done right, Ireland’s participation could yield very substantial gains for the wider Irish economy - gains that would go far beyond an increase in legal services. That point is important, so I would like to re-emphasise it. If Ireland participates in the UPC in an effective fashion, the economy as a whole - not just legal services - stands to gain significantly.

The UPC has been designed to comprise several local divisions across the contracting states. It was decided that Ireland will host its own local division, subject to the referendum passing. This was an important decision. Infringement litigation will not be spread evenly across each local division, and forum shopping is to be expected. Internal conversations are already under way in many large companies to select one location to establish their base for patent enforcement, and a variety of other corporate functions will co-locate to this base. Ireland can compete for this investment, but to stand a chance of success, the local division must be established here in a timely fashion. After Brexit, Ireland has two powerful and unique advantages over other UPC locations. We should bear in mind that a lot of the patent litigation that will take place in the UPC will be global in nature and involve parties originating outside Europe. Being able to litigate on a pan-European basis before a court with native English proficiency and common law experience is a big deal for many such parties, particularly for those from countries with their own common law traditions like the US. Ireland can now take advantage of a marketplace the size of EU and combine it with the fact the country is a hub of patent-intensive industries, both multinational and indigenous.

Let us get to the figures. An attractive and timely-established local division in Dublin will support the further expansion of the patent-intensive sectors across the country, creating jobs, benefiting SMEs and boosting Ireland’s innovation performance. It is expected to contribute at least €415 million, or 0.13% in GDP growth, per annum. It could rise to as much as €1.663 billion, or 0.5% in GDP growth. In addition to the broad economic benefits to the wider economy, there will also be increased expenditure and employment in legal, professional, and other technical advisory services. That is the prize that we can compete for at the moment, but we must play our cards right. While Ireland stands to gain significantly through participating in this system, we will only be able to do so if we participate in a timely fashion. Establishing a well-run and attractive local division that is ready to go when the UPC starts operating or very shortly thereafter will be key to competing for patent litigation to be heard before the Irish-based court. A slow start to implementation will prove costly and prevent Ireland from making the fullest use of the potential of the unified patent system. We should also bear in mind that there will likely be a period between holding a referendum and setting up a local division should the public agree to the establishment of the UPC. That must be factored into the equation. It is possible that an Irish local division could be established soon after it is launched by the initial 16 ratifying states, which will likely take place in early 2023, but it could also be as late as two years down the line. This is likely to affect the attractiveness and take-up of the Irish local division.

Projections indicate that while patent litigation activities could still increase, albeit from the existing extremely low base, we might only get a quarter of the cases that would be available to a well-run, timely and attractive local division. This translates into a significant opportunity cost. While we have stated that there is between €415 million and €1.66 billion to play for, a conservative estimate is that a significant proportion of this will not be available to latecomers to the system. It will be off the table. We are happy to go into more detail on that if the committee wishes. In addition, delayed ratification in Ireland clearly would benefit locations elsewhere. Many of those expected to gain would be key competitor locations for foreign direct investment, FDI.

Prompt action is now required. While the Government has committed to running a referendum on this issue in May 2024, if not before, it is IBEC’s view that May 2024 is the absolute latest date that a referendum should be held and even then, it is at the risk of missing out on significant opportunities. Should other issues be put to the people earlier, the referendum on the unified patent court, UPC, should absolutely be included. Work on enabling legislation should resume. Government should also convene an inter-departmental preparatory group on the UPC and work with external bodies, such as IBEC, to try to influence decisions on the UPC at European level and prepare the groundwork.

Ireland is not out of the running by any means. We have a unique position within the UPC system that could benefit the system as a whole and be of significant advantage to the Irish economy. What we are delivering today is a simple two-part message. The first part is that there is a substantial opportunity here. The second part is very important in that much of the opportunity is only available within a limited timeframe. This is the reasoning behind IBEC’s call for a clear timetable, which captures the urgency of the opportunity at stake. I thank the committee for its attention. We look forward to answering any questions or addressing any specific issues that members of the committee may have.

On the first page of IBEC's submission, it states "these issues have now been resolved, and the pace has picked up considerably across Europe with the new court on track to open its doors in early 2023, with or without Ireland.". To a certain extent, while the subsequent part of the submission does not suggest so, the above suggests that the boat has sailed on this anyway and that things are moving much faster than the State would be capable of catching up with, given all of the constraints in the way of the referendum and everything else. Referendums do not happen quickly. They are not easy and they are expensive. The likelihood is that any Government would want to wait until there were several together. The timetable that is suggested here is one that seems to be moving an awful lot faster than we would be capable of catching up with. Does Mr. Gaffney think there is scope for us to catch up? He has said it is gathering pace. I know this issue has been kicking about for a while. From the limited amount of research I have done, it seems that it goes very fast and then very slowly and so forth. If it is in a very fast phase now, will we not be outpaced?

Mr. Naoise Gaffney

That is a fair question. Further on in our submission, we said that if Ireland joined soon thereafter, it would not be too late for it to participate. It is a fair to suggest that Ireland may not be at the starting blocks when the gun goes off. That is probably quite likely at this stage. The question for us now is how far behind the starting line we will be. That is, to some extent, within our control. I take the Deputy's point about referendums not being run lightly. Much preparation needs to go into them and considerable material needs to be produced to educate the electorate but, at the same time, we still have a degree of choice and control. We alluded to the fact that it would potentially be problematic if Ireland joined two years down the line, but if we only joined a few months down the line, it may be less so. It is perhaps not such a binary situation of our being there or not, but of how quickly afterwards we can join.

It strikes me that we are very far behind on this. I do not know that we would be able to catch up but we can tease that out. Mr. Gaffney will be aware that there are well-accredited groups that have a view about that courts such as the UPC limit democratic freedoms and, crucially, interfere with the creation of things such as patent-free medicine. We have had a debate at this committee, as I know the Committee on Health and others have, on the TRIPS waiver and how important it is to get those medicines, especially in the midst of a global pandemic. Dr. Mike Ryan keeps saying nobody is safe until everybody is safe and that the medicines should be gotten to the people who need them. What would Mr. Gaffney say to the people who would charge that this puts a limit on democratic freedoms and will interfere with the potential to create patent-free medicines?

Mr. Naoise Gaffney

I will make a statement on this and then my colleague, Mr. Sweeney, can make a comment. I will answer by way of analogy. What we are concerned with here, with regard to the UPC, is a transfer of existing judicial powers. It is not the creation of a new regime. It is just the transfer of powers from one forum to another. To the extent that the UPC can be compared to something in the sporting arena, I suggest that what we are faced with at present is the opportunity to allow the Aviva Stadium to be used on a regular basis for the Champions League. All we are talking about is the venue. Many of the other issues, especially around access to patent-free medicines, relate to the fundamental rules of the patent game. Those are about how one plays football. We are not talking about how one plays football. We are just talking about the stadium one plays in. It is a fair criticism of a different issue. I would be very careful not to conflate the two, because one has very little bearing on the other.

Mr. Aidan Sweeney

My colleagues have been before this committee quite recently on the TRIPS waiver issue. The TRIPS waiver and the UPC are two distinct, but important, issues. The commonality is patent. The UPC and the new unitary patent system concerns patents granted by the European Patent Office. There is always a choice to use national patents and opt out of the regime. It just happens that Ireland and Denmark are the only two countries that are required to have a referendum on this issue for legitimacy. The European Court of Justice, ECJ, will be over the unified patent court. There is always a sort of alignment with the current process.

On the second page of IBEC's submission, it says the "current system of country-by-country patent protection and litigation is ... expensive, time consuming and resource intensive". Will Mr. Gaffney give us an example of the kind of money being talked about when he says it is expensive, relative to a SME? Is it prohibitively expensive, to the point where people decide they cannot afford it and will not do it, or is it manageable? One person's very expensive is another person's small change. I ask for a frame of reference of how it would impact on SMEs, in particular. We know from talking to them that they are under the cosh, not just in the moment, but in general. The smaller the operation, the more likely it is to be under massive pressure.

Mr. Naoise Gaffney

Whether the company is small or very large, patenting is typically a global game. There are very few enterprises, even the smallest ones in Ireland, that would be content just with securing protection within the Irish market and not going further afield. The desire here is to get protection in as many other markets as it might be reasonably foreseeable for one to look to do business in.

We are focused here on the reform of the European system, so I will answer the question with regard to Europe. There is a centralised clearing house for the granting of patents called the European Patent Office, EPO. The process to get to the point where the EPO would give one the thumbs up and say one can have a patent, is one chunk of cost. However, the EPO does not grant a single patent that covers all of Europe and instead, it gives one the option to get individual national patents in all of the participating member countries. That is where considerable cost tends to kick in. The cost of engaging with the EPO up to that point is unavoidable and will not change, but the first real saving to be achieved is at the validation stage.

That is where one takes the thumbs-up and turns it into a real patent. Every additional country that one would like to seek protection in could cost another €2,000 to €3,000. A significant issue is translation into international languages. That is on top of the initial sunk cost that one probably incurred, of between €7,000 and €15,000, to get to the point where the EPO has given a thumbs-up. In every year in which one wishes to keep the patents in force, one has to pay each individual national patent office a premium. That is designed to ensure there is not a backlog of patents that people do not want. Things die if people will not pay to keep them alive. The cost really bites in the context of enforcement. No one wants to litigate but sometimes people need to defend their rights. If they want to litigate in Europe, they need to do so in every jurisdiction where they have a patent in force. They need to go to Germany, France and the Netherlands. Each litigation will cost hundreds of thousands of euro.

Now, for the first time, there is an opportunity to just do that once rather than doing it five times in different jurisdictions. It is expensive anyway and will potentially still be out of the reach of small and medium enterprises, SMEs, but thankfully the Unified Patent Court, UPC, system provides specific financial supports for SMEs to use the system. It was the EU's intention to make this as accessible as possible to SMEs. There are significant savings to be had on the litigation front too. At present, many SMEs may only have one or two patents. That may not be because they only have one or two technologies worth protecting but because those are the technologies SMEs can afford to protect. If it gets cheaper, they will be able to protect more.

Do we have any research on the number of companies that have just one or two patents which could scale the number up?

Mr. Aidan Sweeney

About one in five multinational companies across Europe and about one out of every 100 SMEs has a patent. The patent system in Europe is six times more expensive than in the USA. Addressing that is part of our objective. It was recognised that there was no Single Market for innovation and innovation protection in the EU. The idea for Irish SMEs is that innovations can be exported across the EU. Translation has a risk. Members know, as policymakers, that mistakes can be made whenever a document is translated. One could have a verifiable, enforced patent in one location, which might have been the UK in the past, but it might have been translated incorrectly due to language barriers or some minor point in France, after which it was struck down and the right to that protection was lost. It is the raison d'être of these companies. As much enforcement as possible needs to be given. There is a tremendous opportunity for smaller countries such as Ireland to protect and enforce patents outside Ireland. That has never been available before.

Mr. Sweeney referred to one in 100 compared with one in ten. That is true across the European Union. Does he have any information relating to Ireland specifically, such as a survey of companies with certain proportions stating they would issue more patents if they could afford to defend them? The chances are that we are similar to the rest of Europe. What information are we relying on?

Mr. Aidan Sweeney

We can come back with that information. This is part of our case. We want to build that case among the SME community too to educate it about the benefits of this system. We have engaged with organisations such as Enterprise Ireland about this. It is committed to the project. We have talked to a number of SMEs that sit on our corporate intellectual property, IP, group too. They are passionate about what this can do. The investors into these companies look for the patent portfolios as a verifiable way of doing that. Engagement is monitored centrally by the European Patent Office. This patent system has benefits for SMEs.

Mr. Naoise Gaffney

In addition, we should bear in mind that there is significant scope for Irish companies to grow into this space. This is a niche topic. Any debate on the UPC needs to go hand-in-hand with more general education about IP and why it is important to Irish business. An international innovation index is published every year. Ireland typically does quite well on that index compared with other European countries. Many sub-scores add up to give the overall index. One area where Ireland is quite behind the curve is in its level of IP activity. There is significant scope for Ireland to improve. An important part of that is IP education and reducing costs. If we can reduce costs for Irish companies, it should make it easier for them to be more active in this space and potentially boost our innovation score. If one uses that as a proxy for innovation activity and economic success more generally, then we can achieve that too.

I thank the witnesses for coming and for the presentation. They mentioned more than once that the ratification of this court would lead to substantial gains for the Irish economy. I have seen figures of 0.13% of GDP or even 0.5%, which is more than €1.5 billion. Will the witnesses give a breakdown of how those figures are arrived at and more detail on that?

Mr. Naoise Gaffney

The corporate IP group in IBEC represents companies that have significant IP activity in Ireland. There is a lot of IP management activity in Ireland. All of us in the group essentially live and breathe the management of IP every day. We work for a mix of multinational and native enterprises. We essentially put ourselves forward as the people who do this at the grassroots. We have a ground-level perspective. The message that we are trying to provide is that the calculation is essentially based on the gravitational, knock-on effect that an active court would have. We are talking about attracting additional functions into the country through foreign direct investment. At the same time, we want to upskill the workforce more generally. That will have an osmotic effect in benefiting our SMEs, which will become more sophisticated in this area as a result. The calculation is an indication of the wider economic growth that would occur if we established a reputation as one of the top three or four hotspots for IP activity in Europe. When I talk about this, I always talk about the old Kevin Costner film, "Field of Dreams". The famous line from that is, "If you build it, they will come." That is how we see it working in this context.

Does Mr. Sweeney want to add anything about technical details and calculations?

Mr. Aidan Sweeney

The business case for this has substantially changed from a decade ago, when we originally signed up to the UPC agreement. A large factor is Brexit. Looking at the data and evidence, there has been a significant gain for Ireland from Brexit in this area. We have modelled the patent-intensive sectors in the country, including life sciences, medical devices and technology. That is where our enterprise policy has brought the country. Our economy has built a model of substance over time. We are looking at the location impact on those sectors. As Mr. Gaffney said, the Deputy referred to the timeliness of this. Much of the activity in the UK was non-EU foreign direct investment in life sciences, medical devices and so on. Those companies are located here. The idea is that bringing these activities here closes the loop on the end-to-end business services, IP and innovation, legal services and so on across different corporate functions. Locating a function like this here brings jobs and wider investment.

We have looked at similar models in terms of not just the courts system but the effects of, for example, moving the European Medicines Agency to Amsterdam. That is why we arrived at those figures of between 1% and 4% as the assumed growth in those activities in addition to those patent-intensive sectors. That is how we arrived at those figures.

They are absolutely enormous figures - €1.5 billion is huge and 0.5% of GDP. I note it was proposed that Paris, Munich and London form the central division. Is there an opportunity for Ireland to take the place of London if we move quickly enough and have the central division in Ireland? What would it mean if that happened?

Mr. Naoise Gaffney

That is a great question and I thank the Deputy for asking it. Yes, absolutely, there is an opportunity here. IBEC published a 50-odd page report on this general issue in the fourth quarter of last year. In that we talk about the central division as well as the local division. Now that London is not participating there is the potential for a new venue to win the London prize, so to speak. Milan is currently in the hot seat and, until recently, Amsterdam was also in contention. Certainly it is IBEC's view that it would be fantastic if Ireland were able to make a pitch for that. We believe it should. There are many voices in Ireland that firmly believe that.

However, for the purposes of trying just to communicate a simple message, IBEC has focused first and foremost on communicating to our European partners as well as users of the system, to ensure that Ireland communicates to them that we are committed to the system generally and that we have a firm timetable for our own local division. Walk before you can run. We believe there might be something of a credibility gap if we start making bona fide noises now about why we should be entitled to the central division when we have not even given our partners a clear indication of how and when we plan to implement the local division. We are firmly of the view that this is something Ireland should look at. There are significant benefits that Mr. Sweeney can refer to, but let us get the ordering of these issues right. We will not be able to pitch for that credibly unless we can first get our house in order with respect to the local division.

Mr. Aidan Sweeney

In the figures it has the potential to add an extra €314 million, up to €1.25 billion, should we get the central division, but our key message about this now is that decisions are being made in companies due to the pace of events about where they are going to locate. We have seen a number of people looking at setting up in Ireland. We have a number of law firms coming in and a number of multinationals are expanding their IP activities out of Ireland. When talking to a number of companies one, in particular, highlighted that it came here a couple of years ago on the assumption that the local division would be in by now. There is some frustration around this. The key thing is the message of the Government announcement two weeks ago. That recommitment has sent a very powerful signal. The next stage for us is to try to get certainty about that date for a potential referendum. However, we can play for this, and that is the key point.

We need to pass legislation here. I notice that a general scheme was approved in 2014. Is there any indication of what has happened since then? It appears to have stalled, with no movement at all. Chairman, we need to send a strong message to the Department and the Minister that we must move on this as quickly as possible and have a referendum as soon as possible. That means we have to get the legislation to provide for a referendum through the Houses quite speedily as well.

Mr. Aidan Sweeney

The key thing is that from 2014 timing was against us. Brexit had happened. That was what caused the process to go into some stasis because we did not know. The UK was so central, hosting one of the central division courts, as a key partner around that and that was only resolved in the past year or two in terms of its official withdrawal from the process. There were a couple of constitutional challenges in Germany. Within that time we have had changes at the top of the Department, changes in the officials in the IP unit and changes in the system. Also, the business case had dramatically changed for Ireland in terms of the benefits of this. That is the reason for us to demonstrate the importance of this issue, and also the importance of the committee scrutinising this. Engagement right across the policy system is important if we are to put such an important issue to the people.

I certainly will be supporting moving as quickly as possible on this. From what I have read and having heard what the witnesses have said, it is crucial. I note there is a suggestion that the ratification date could be as far away as 2024. Is that too far out? Is it risky? Should we try to move before that, have a referendum and get this done?

Mr. Naoise Gaffney

It is our view that we should move as quickly as possible. My understanding is that the 2024 date is the date on which the European and local elections are due to take place, so people will be going to the polls anyway. The question is whether there is any basis on which to bring people to the polls before that. As Deputy O'Reilly pointed out, that will likely require at least one other referendum issue to be on the card at the same time.

Deputy O'Reilly asked whether this was a binary issue and if we have lost everything if we do not join at the beginning. It can be considered a sliding scale. The later we are, the less potential opportunity will remain for us to play for or the more we will have to redouble our marketing efforts to potential users of the system to try to convince them that it is worth waiting for the Irish division when it comes on stream. However, that is fighting an uphill battle. Our message here today is that we appreciate that bringing this through is not a straightforward undertaking by any means but, nonetheless, best efforts to do things as promptly as is feasible is something that should definitely be considered.

Of course, because of our English-speaking population and common law jurisdiction - and I heard Mr. Gaffney's comment that we have to walk before we can run - further down the road we would be in a strong position to pitch for the central division. There is also the fact that we have many multinationals here.

I thank the witnesses for their responses.

Mr. Aidan Sweeney

I should say to Deputy Stanton that this is also an opportunity for us to support Europe in this objective, because Europe wants to become the hub of IP activities globally and to influence them from our policy perspectives, oversight and so forth. The key thing for us is that it will only work if there is a strong common law system involved. It is developed on a hybrid system between common law and civil law. We want to be able to say to our European partners over the coming months that we can support them in this message.

The key thing also is to emphasise that an indicative timeframe for the referendum is very important to this because it is a further demonstration of our commitment to it. We need to get out there and market Ireland as the location, but also do the educational process for the SMEs and get them to prepare for this new system. It is coming down the line for them.

I call Deputy Shanahan.

I thank our guests for attending the meeting. I join Deputy Stanton in saying that this needs to happen very quickly. I have experience of working in two companies in Ireland, in SMEs in the medical device area, where patenting was a particular problem. Cost was the main issue in trying to do patents in different countries and trying to figure out where one could and could not protect them. If anybody looks at this, particularly at the high end of business and intellectual property rights, it is important that we would be very proactive in this area.

I have a couple of questions. One relates to the Brexit gain that our guests have highlighted. Basically, they are saying that we might potentially take over London's situation in a future court location.

When this is quantified, however, are we talking about just legal and professional services? Mr. Gaffney put a very high figure into his opening statement. He said that if Ireland were to get the court, it would contribute €1.663 billion per annum to GDP growth. How has IBEC calculated that number? What specific services or business sectors are the witnesses saying will benefit from having this located here?

Mr. Naoise Gaffney

In our report in the fourth quarter of last year we placed a separate figure on the value to the legal services industry, which we did not put in our opening statement because I had the unenviable task of trying to keep it to eight minutes. That report was a 50-page document. My colleague, Mr. Sweeney, can go into the figures in more detail, but the value is in the order of €100 million or €200 million, depending on the level of activity. In my answer to some of Deputy Stanton's questions I said that the large figures we place on what it would mean for Ireland if we have a successful local division here have very much to do with the gravitational effect on the onboarding of additional corporate activity. Typically speaking, from a multinational perspective, which I will deal with first, when it comes to locating certain parts and functions of an entity in different locations, there is a tendency to keep certain functions close to the nerve centre. Even if a body's headquarters are in one country, sometimes there might be a cluster of significant individuals - not necessarily the key people but significant individuals all the same - in some other jurisdiction. Some of the last functions to depart that nerve centre are on the corporate side. IP management is one such function. If, however, a decision is made to relocate IP management activities, it tends typically to bring a lot of other corporate activities along with it. It is therefore not just IP managers one sees coming into the country as the result of a gravitational effect; there is an ancillary pull on a lot of other activities as well. One may therefore find a lot of that nerve centre, not just the IP element, moving to Ireland.

A really good point was made about this opportunity being to a large extent potentially more valuable to Ireland after Brexit. The UK made a significant contribution to the design of this system back in the day, before Brexit was even on the horizon. As a result, going back to Mr. Sweeney's point earlier, the UPC was designed very much as a nice hybrid of the Commonwealth traditions of the English-speaking world and the civil law traditions of France and Germany and the countries clustered around them. Ireland now has this opportunity to step into Britain's shoes. I was on a panel at a meeting in London on intellectual property in the first quarter of this year at which I made that point and then went on to tell the audience that, of course, Ireland is not the UK and that we have been trying to make that point for about 800 years. At the same time, there is now an opportunity for Ireland to step up and to play in the top tier and, going back to Mr. Sweeney's point, to contribute to the overall betterment of the system in a way we may not see if we step back, are passive about this and allow the system to proceed in such a way that, essentially, it just becomes a clone of the German system; that is, I think, the way German practitioners would like it because that is the system with which they are most familiar.

I will make one other point. In the higher education sector in this country we hold an awful lot of intellectual property rights. In some cases the property is patent-protected; in some cases it is not. Commercial companies may be sought to come in to assist. They might look at the IP in the context of commercialisation and see how that might be rolled out. The first question becomes patenting, the cost and the protection and whether one's rights can be enforced. For a lot of countries, including Ireland, as Mr. Gaffney said, this is a global business. Smaller SMEs will not go to China. They cannot. It is very expensive to litigate in the US and very difficult to enforce one's rights, so smaller companies end up having to partner with bigger ones, probably multinationals. They can fight that space.

There is a significant benefit to Ireland of the IP we hold within higher education. I do not think Mr. Gaffney referred to this in his opening statement but I am sure IBEC is well aware of it. I would like to see some coalescing of IBEC's strategy with higher education in understanding that we have an awful lot of IP that could be expressed commercially but has to be safeguarded in the first instance. I do not even know if we have a good repository in this country to understand how many European patents we have sitting in abeyance. As the witnesses will know, they have to be removed every number of years, and that costs money. There is a body of work to be done on that.

As Deputy Stanton said, this is a very important topic for the committee. We absolutely need to speak to the Department and to ask that what IBEC is asking to be expedited is expedited and that we try to get this matter to a referendum as quickly as possible, get legislation through and get it decided on. I think my time is up, more or less.

Mr. Aidan Sweeney

On that very important point, it was welcome to see IP get such prominence in the recently published national specialisation strategy this week. We have been engaging with the higher education sector and Science Foundation Ireland on this and its benefit. Bringing these innovation decision-makers to Ireland will have a knock-on, spin-off benefit for the research performed here and potential partnerships with the academic institutions. There are also potential policy innovations with the UPC and the new system that will benefit the higher education system in respect of potential grants or support for them to enforce their rights through the new courts. They might cover their costs. That was one of the proposals at the outset. For us to have that message, we need to be at the table of the preparatory committee trying to put those issues forward for us. That has been one of the key things for the UPC, as have been some benefits to support SMEs and the higher education sector in protecting their IP through the new system. There could therefore be benefits for Ireland, but we need to be there articulating that.

Thank you, everybody. Nobody else has indicated to speak. I thank the witnesses for coming. This is the third meeting we have had on this issue. We have discussed it with the Department and with IBEC previously. I share the concerns and echo the comments of the other Deputies that we get this done as fast as we can. That will be up to the committee. We will talk about this again in private.

I will make just a brief comment. Mr. Sweeney said there is a risk if we miss out on significant opportunities and if we wait until 2024. Mr. Gaffney said that while there is potentially €415 million to €1.6 billion to play for, a conservative estimate is that a lot of that will not be available to latecomers. We are aware of what Mr. Gaffney is saying. We have to progress this if we want to progress it as fast as possible; otherwise, we will lose out. The reason for the proposed date in May 2024 is that there will be local elections on that day. I cannot see how we would have a stand-alone referendum on this. It would be very difficult to explain to the general public what it is about. The committee has had three meetings on it and it is just about clear to us now, after those three meetings, so it will be a difficult one to explain to people.

I thank the witnesses for coming in and assisting the committee with its consideration of this. We will discuss the matter with Department officials. I think we will look for one or two more submissions from other organisations. We will probably do a report on the matter after that, but the committee will decide. Is that agreed?

Are we adjourning now or going into private session?

We will go into private session to consider the matter further. Is that agreed? Agreed.

The joint committee went into private session at 10.29 a.m. and adjourned at 10.51 a.m. sine die.