I would like to welcome the Minister for Industry and Commerce to the House.
Patents Bill, 1991: Second Stage.
Question proposed: "That the Bill be now read a Second Time."
May I congratulate you a Chathaoirligh, on your recent election to the Chair of this House and wish you well for many years in the high office you hold. It is a great honour for you and I think it is a reflection of the feelings of all Members of this House towards you that you have been honoured in that way.
Thank you.
The law governing the grant of patents is almost 30 years old. The last revision resulted in the Patents Act of 1964, which is now out of date in many respects. The provisions of that Act are not particularly conducive to expeditious examinations of patent applications. Accordingly, a principal objective of the present Bill, which will replace the 1964 Patents Act, is to establish examinations procedures for patent applications which are less officially time-consuming. The opportunity is also being taken to modernise the law in many respects and to bring it into line with that of other European countries, particularly our EC partners.
Another main objective of the Bill is to enable the State to ratify the European Patent Convention and the Patent Co-operation Treaty. I should like to give the House some information on these two international agreements. The most significant of the two is the European Patent Convention, which was signed by Ireland and 14 other European countries in Munich in September, 1973 and which has been ratified by all EC countries except Ireland. It has also been ratified by Sweden, Switzerland, Austria and Liechtenstein. Many representations have been made in recent years by certain industrial sectors, by the Confederation of Irish Industry and by Members of the Oireachtas pressing for ratification by Ireland of that convention. After ratification it will be possible to designate Ireland as a country in which patent protection for an invention is sought in addition to any or all of the other states which have ratified the convention, and for that purpose the applicant only requires to make one application to the European Patent Office (EPO) in Munich, whereas prior to the convention individual applications had to be filed with the national patent office of each state in which patent protection was required.
The European patent when granted by the EPO will have the same status in each of the designated states as if it were a national patent granted by the respective national patent offices, the effects will be the same in each state, and revocation of the patent by the national authorities will be possible only on the grounds specified in the convention.
Finally, the duration of the European patent — a 20 year term — will be the same in each state. Accordingly, the convention holds many attractions for innovators seeking patent protection. I am particularly pleased to be including in the present Bill provisions for ratification by Ireland of that convention, thus fulfilling the commitment to ratify signalled by Ireland's signature of the convention in 1973. In any event, ratification is regarded by research-oriented industry as an important national incentive in the encouragement of industrial investment and innovation. Most of our Community partners ratified more than 12 years ago.
I mentioned the Patent Co-operation Treaty earlier. This treaty was concluded and signed in Washington in June 1970. It has been ratified by the Community member states — with the exception, again, of ourselves. It has also been ratified by the EFTA countries, the USA, Canada, Australia, and various other countries around the world. The idea behind the treaty is to streamline patent application filing and novelty search procedures for applicants wishing to obtain patent protection in a wider number of countries around the world. Applicants may make one central application — generally to their local patent office — designating the countries in which patent protection is required and the novelty search is carried out by an International Search Authority whose report of the search is then furnished to the patent office of each country in which protection is sought. Final examination and grant is performed by the various national offices. This system economises considerably on the amount of work an applicant would otherwise have to do in order to satisfy the multiplicity of individual national requirements.
A further objective of the Bill is the creation of a special system of patent protection for smaller type inventions. This is the short term patent with which Part III of the Bill deals. I will return to this subject later.
When the Bill was being prepared I took the opportunity to review the procedures for examination and grant of patents under the present law. The present long drawn out procedures were a cause of concern to me in view of the large and growing backlog of applications awaiting examination. There was no prospect of eliminating this backlog without changing examination procedures. I took steps, therefore, to include in the Bill new provisions which will speed up examination considerably. Because of the existing large backlog I have taken the opportunity in the Transitional Provisions of making the new examination procedures applicable also to all applications on hand when the Bill becomes law otherwise the existing backlog, if processed under the present law, would take years to eliminate.
For the information of the Seanad I will now outline the principal features of the Bill and I will elaborate on certain of the objectives to which I earlier referred. Part I contains a listing of definitions and terms used in the Bill. It clarifies certain matters relating to orders or rules made under the Bill and provides for repeal of the present law.
Part II, Chapter I, confirms the continuation in being of the Patents Office and the Controller of Patents, Designs and Trade Marks while Chapter II lays down the criteria an invention must satisfy to be patentable, namely novelty, inventive step and industrial applicability, and defines these criteria. It provides that patents cannot be obtained for certain subject matters such as scientific theories, computer programmes, methods of medical or veterinary treatment, inventions whose exploitation would be contrary to public order or morality and plant or animal varieties. These provisions about what is patentable are quite different from and more specific than our present law which basically provides for the grant of a patent for any new or useful art, process, machine, manufacture or composition of matter. The provisions proposed bring our law into line with that of other European countries and are based on the corresponding provisions of the European Patent Convention. I should explain that the convention has acted as a harmonisation instrument generally in that those European countries which have ratified it have also tended to adopt the legal concepts of the convention in their own domestic law.
Chapter III of Part II deals with the making of applications for patents. These provisions are broadly similar to the present law with a few exceptions. The possibility to file what is called a provisional specification, with an application followed later by a complete specification, is being abandoned. Under the Bill a specification describing the invention and which includes claims defining the matter sought to be protected will be required with an application. It will be possible, nevertheless, to have a filing date accorded to an application which is not formally in order provided the minimum requirements of section 23 are complied with and provided that any formal deficiency is corrected later. It will be possible furthermore for an applicant to file an application and claim the priority of an earlier application he has filed in the office for the same invention, whereas at present only the priority of an earlier filing abroad could be claimed. These changes are more in line with modern practice elsewhere and are generally in the interest of applicants.
Chapter IV of Part II deals with the procedures for search and examination of applications. As may be expected from my earlier remarks, the provisions here are different in a number of respects from the present law. For an applicant who obtains a patent for the same invention in, say, the European Patent Office, or in Germany or the UK, it will still be possible to submit the specification of that patent as evidence of novelty and inventive step in respect of the Irish application. Where no corresponding outside patent application has been made, a search report on the invention will have to be established after the filing of the Irish application. The search report will be established under the authority of the controller by arrangement with an outside office which is capable of doing an adequate novelty search. When the foreign granted patent or search report as the case may be become available, they will be laid open to public inspection by the Controller in conjunction with the application and the applicant will be requested to submit any amendments to the specification of his application in the light of these documents. Any amendments will also be open to public inspection. The office will check whether the subject matter of the application is patentable or not.
These procedures replace the elaborate examination burdens imposed under the present law and which have led to the enormous backlog in examination of applications to which I referred earlier. Up to now the whole onus to identify amendments has lain with the Patents Office and the procedures which have to be observed are time consuming. I am satisfied that the new procedures, which are not unlike those in operation in some European countries, will work well in practice and make for a much more efficient and streamlined system of examination.
I should point out also that the public will have the possibility to inspect applications at all stages. There are provisions, in the public interest, enabling applications to be made to the Controller or the court for revocation of a patent on any of a range of grounds specified in section 58; the grounds include non-patentability of the invention and non-entitlement of the proprietor to a patent therefor. Thus, the system provides for a reasonable balance between the interests of the patent holders in protecting inventions and the rights of the public to have full inspection of all documents comprising an application so that revocation of a patent can be requested where this appears justified.
The term of a patent, under the Bill, will be 20 years; it is currently 16 years. The 20-year term is, again, the norm applying in Europe and is also the term of a European patent under the convention. The research and development costs involved in developing and perfecting an invention can be substantial. In the case of certain inventions such as new pharmaceuticals, official authorisation is required before the new substances can be put on the market. These authorisations can take a long number of years to materialise, resulting in a significant erosion of the term of the patent. For these reasons also the longer patent term is justified.
The provisions in Chapter VII of Part II dealing with infringement of a patent follow generally the lines of the present law. However, the Bill also provides, in accordance with the principles of the European Patent Convention, that proceedings may be instituted after grant for acts of infringement committed before the patent was granted. This is necessary to deter third parties from committing infringements in the interval between the date of publication of a patent application and the grant of the patent.
Part III of the Bill makes provision for the grant of short term patents. The provisions here are completely new to Irish law and were devised because of my concern for the smaller inventor who may find the task of obtaining a normal patent too costly and time consuming and, therefore, a disincentive to protecting his invention. I have set out on the basis of making the task of protecting the invention as easy as possible so that the inventor can concentrate his energies on perfecting the invention and, most importantly, on its marketing. I have framed provisions, therefore, which will ensure that short term patents will be capable of being obtained without undue official obstacles and I intend to provide for lower official fees for these. I hope that what I have provided will prove encouraging to the smaller individual inventor and small companies and an incentive to commercialise useful inventions.
The period of protection of a short term patent will be ten years. This will particularly suit the less technologically complicated inventions which by their nature may not have very long life cycles but which nevertheless have an important place in the whole process of industrial innovation and in the encouragement of new project start-ups. I should make clear that short term patents will not be confined to small inventions and, indeed, it will be possible for an applicant who has applied for a short term patent to make a simultaneous application for a full patent and later abandon whichever application he does not wish to pursue.
The final part of the Bill, Part XII, contains those provisions which are necessary to enable Ireland to ratify the European Patent Convention and the Patent Co-operation Treaty. In the case of the European Patent Convention, what is basically required is that applications for European patents designating the State be treated as having the same legal status as national applications made to the Irish Patents Office; and that European patents designating the State, granted by the European Patent Office, be treated as if they were patents granted under our own national law. Part XII of the Bill fulfils these requirements making also a number of consequential and other miscellaneous provisions. An important provision is that if the language of the specification of the granted European patent is not English, French and German being the two other working languages of the European Patent Office, a translation in English of that specification must be filed with the Irish Patents Office and published here in order for that patent to have effect in Ireland.
As regards the Patent Co-operation Treaty, in order to enable Ireland to ratify this treaty, the Bill provides that Ireland may be designated in international patent applications filed under the treaty. The Bill also specifies in section 127 that, as permitted by the treaty, an international application designating the State shall be deemed to be an application for a European patent designating the State. Availing of this possibility has certain desirable advantages. It means functions concerning international applications which would otherwise have to be performed by the Irish Patents Office will, instead, be performed by the European Patent Office and the result at the end of the day will be the grant of a European patent designating Ireland having the same effects which I previously mentioned in relation to European patents.
In conclusion I should like to mention another patent convention, namely the Community Patent Convention, which was signed by Ireland and the other Community Member States in 1975. It will not be possible to ratify that convention on the basis of the present Bill because an amendment of the Constitution is required before ratification of this convention can take place. This matter is being kept under review in the context of other possible amendments of the Constitution which are likely to arise in the period ahead in relation to matters dealt with at the Maastricht Council.
I commend the principle of this Bill for approval by the House.
In the explanatory memorandum to the Patents Act, 1964, it is stated that the law relating to patents for inventions is intended to encourage invention by giving to inventors exclusive rights of exploitation for a limited term of years while, at the same time, providing adequate safeguards for the general public against unjustified and faulty patents and against abuse of monopoly rights. Thus, in a nutshell, a patent is in effect a bargain between the State and the inventor whereby he is given a monopoly right in his invention for a period of years in return for the disclosure and his invention.
Patents relate to workable new ideas. In turn, those ideas which are applicable to industry will relate to products or processes, machinery, mechanisms, electrical and electronic devices, materials and their modification or synthesis, chemical compositions and so on. Patents, therefore, are about ideas, reduced to specific methods of processes or to the workable product resulting therefrom.
It is in that overall context that I welcome this Bill. Its two main objectives are to update and modernise our domestic patent law so that it is in harmony with the laws of other European countries, especially our EC partners and to enable Ireland to ratify two important international patent agreements. They are the European Patent Convention, the EPC, which was signed by Ireland and 14 other European countries in Munich in 1973 and was ratified by all our EC partners, except Portugal, and has also been ratified by Sweden, Switzerland, Austria and Liechtenstein and secondly, the Patent Co-operation Treaty which was concluded in Washington and signed by Ireland in 1970 and which has been ratified by all the Community member states, except Portugal and Ireland, and which has also been ratified by the EFTA countries, the United States of America, Canada, Australia and various other countries around the world.
In a country like ours which is much dependent on industry any Bill to reform and streamline patent law and procedure after 28 years is certainly to be welcomed by this House. However, I cannot help thinking the present Bill has been put before us now mainly because of extreme pressure from our EC partners to do something about it and also because of the implications of the judgment given by Justice Barron in the High Court on 13 March 1987 in the case of the State, Jacob Rajan and others v. the Minister for Industry and Commerce and the Controller of Patents, Designs and Trademarks.
The creation and development of new technologies and industries and the encouragement and growth of commerce is essential to the economic well-being of Ireland. To achieve advances in these areas depend not only on the ingenuity of scientists, engineers and others but also on the investment necessary to develop new ideas and to set up new enterprises as well as the ability to market these enterprises effectively.
Intellectual property rights, that is patents, registered designs and design right, registered trademarks, service marks and copyright, play an important part in bringing these factors together. In all cases they give legal protection to the ownership of new ideas or brand names and they give the proprietor the right to stop other people exploiting his property. They create for the inventor a system by which he can benefit from his ingenuity, be it the invention of an electronic timer, the design of a fashion shoe, the marketing of chocolate bars under a new brand name or indeed the creation of a new musical. Typically, the rights will be sold or licensed to others or will be used to safeguard investment in new ventures so that the ideas they represent may be developed and exploited to the ultimate benefit of us all.
With over 30 million patents published nationwide and with an extra one million appearing every year, it is clear that patents are an immense source of technical and commercial information and much of that information is unique to patents. However, there is sometimes an unfortunate tendency to associate patented inventions simply with gadgets or gimmicks or with major technological and scientific advances. Both these views are oversimplifications of the true position and, as a result, worthwhile inventions may go unrecognised. Virtually all machines, products and processes and individual parts of them across the industrial spectrum are patentable provided, of course as the Minister has indicated, that they satisfy under this legislation three important criteria: they must be new, they must be inventive and they must be capable of industrial application.
The Patents Office in Dublin receives about 4,700 applications per year while the intake of patents at the Patents Office in London is over 30,000 applications per year. These figures underline the fact that patents are not confined to major technological advances. They cover such diverse subjects as agriculture, medicines, games, paints, electronics and photography — anything from a small detail in an electric switch to a new form of transport like the first hovercraft.
Lord Halsbury, a noted specialist in this area, tells a very interesting story concerning the history of the hovercraft. Sir Christopher Cockrell had his invention put on a secret list by the British Ministry of Supply until within one week of the collapse of the convention date application. They then told him that he was a free man and could patent it anywhere he liked without making any provision for him to do so. Wisely, he went to his old employers, the Marconi company, and they sent him to Lord Halsbury. He set the machinery moving and they had the patent application put through before the lapse of the convention date. Christopher Cockrell's invention, as we all know, was patented all over the world but had that one day gone by, he would have had to refile in London and a Swiss inventor who had filed in Geneva during the course of that particular convention year would have had priority. This demonstrates that time is of the essence as are speedy decisions in regard to matters such as patents.
The patents system has a long history and must be almost as old as the making of products in quantity. While some isolated incidences may be found earlier, the granting of patents for inventions may be said to have begun in the last part of the 15th century. In 1474, the Republic of Venice, by an ordinance, recognised the right of an inventor to secure exclusive rights in his inventions and patents were thereafter commonly issued in Venice. A recipient of one of the Venetian patents was Galileo Galilei who in 1594 received a patent for an invention relating to pumping water.
Lord Nathan in his famous paper to the Royal Society of Arts in 1976 cited the earliest known patent for invention or something like it as having been given by Henry VI in 1449 for the making of coloured glass for the windows of Eton College. Patents for inventions were granted in England with some degree of frequency for the first time during the reign of Queen Elizabeth I. Exclusive monopolies were granted by the Queen, not only for new inventions but also for the manufacture or sale of staple commodities.
D'Ewes journal of the Parliament of 1601 refers, for example, to the unwarranted behaviour of a patentee holding the monopoly in respect of the sale of aqua-vitae and vinegar in the town of Warwick. The matter first came before the courts in the famous case of monopolies in Darcy v. Allien in 1602. This case concerned the exclusive right to import, make and sell common playing cards. The grant was held void as being contrary to both common law and diverse Acts of Parliament. Eventually in 1624 the statute of monopolies was passed to curb abuses and excesses and to regulate the whole matter. The statute of 1624 contained the famous section 6 which recognised the validity of the grant of letters patent for new inventions.
It is well recorded by Charles Dickens in A Poor Man's Tale of a Patent that obtaining a patent in days gone by was a very chancy and expensive business. Since Dickens's day, however, there have been very many developments in the inevitable progress of the patents system. The first comprehensive statute which provided also for the establishment of the Patents Office was passed in 1852 and the first modern statute was passed in 1883. Our present system is based on the Patents Act, 1964, which in turn was largely built on the foundations of the Industrial and Commercial Property Protection Act, 1927. That legislation has served this country well but, as the Minister indicated here this morning, it is clear that from the thorough reappraisal of the whole patent system which was carried out in the United Kingdom in the period 1967 to 1970 by a committee under the able and distinguished chairmanship of Sir Maurice Banks, substantial reform is also required in this country to provide a system which is better adapted to the needs of industry and inventors in these modem times.
The Banks committee examined in detail the United Kingdom's Patents Act, 1949, upon which our 1964 Act is largely based. They emphasised that in many ways it was necessary to make a fresh start — and that is what we are endeavouring to do in this legislation — by replacing outdated concepts, giving effect to new ideas and taking into account the many important international developments that have taken place in the patents field in recent years. There has been a remarkable and healthy upsurge in international patent co-operation over the past 25 years or so. The pressure for this has come from two main sources. The first is from the many industries which trade internationally in one way or another and which would obviously derive benefit if national systems could be harmonised so that patents enjoyed much the same rights wherever they were obtained and could obtain those rights without the necessity, as at present, of going from country to country; and, the second is from the national patent offices in the various countries over-burdened as they are with the problems created by the extensive growth of patent activity and the increasing complexity of technology. The results of this activity can now be seen in four developments.
There is the Council of Europe or the Strasbourg Convention of 1963 which provides for harmonisation of fundamental concepts of patent law and is the basis on which the rest of the international agreements have been concentrated. Secondly, there is the Patent Co-operation Treaty of 1970 which was worked out at a conference of countries in Washington and which included the United States, Japan, our European partners and many developing countries. That system provides for a potentially worldwide system for sharing the work of processing patent applications.
The main objective of the Patent Co-operation Treaty is the streamlining of patent application filing and novelty search procedures for applicants wishing to obtain patent protection in a large number of countries around the world. Applicants may make one central application, generally to their local patent office, designating the countries in which patent protection is required. The novelty search is carried out by an international searching authority and its report of the search is then furnished through the national office of each country in which protection is sought. The final examination and grant is performed by the various national offices.
The PCT system provides substantial benefits to patentees and the national patent offices and provides for a further degree of harmonisation of national patent laws. It should also economise considerably on the amount of work an applicant would otherwise have to do in order to satisfy the multiplicity of individual national requirements.
Thirdly, there is the European Patent Convention, 1970, which will enable an applicant via the European Patent Office in Munich by means of a single application to obtain a European patent having effect as a national patent in as many of the contracting countries as he desires. In addition, the revocation of a European patent by the national authorities would be possible only on the grounds specified and the duration of a European patent, a 20-year term, would be the same in each state.
Fourthly, there is the Community Patent Convention, 1975, which provides for a single patent to be obtained via the European Patent Office having a unitary and autonomous effect throughout the European Community.
The CPC was signed by Ireland and other Community member states in 1975 but, as the Minister indicated in his speech, it is not possible for Ireland to ratify this convention without amending the Constitution. Perhaps the Minister when replying would indicate why this is so because there is another opinion that this legislation could be made applicable in this country without amending the Constitution. I accept the Minister has indicated that an amendment to the Constitution is the appropriate measure to take but perhaps he would indicate whether he has advice from the Attorney General on this matter.
All these international arrangements are interlinked and should eventually give industry and inventors from Ireland and elsewhere the opportunity of obtaining substantially uniform protection over much of the world, and more easily than today. However, these international instruments cannot stand alone. They must be grafted into our national patent system since this will not cease when these instruments come into force. It will continue to serve those who are not concerned to use the European system as well as providing the legal framework for patents obtained by one or other of the international avenues.
In formulating a new code we must be conscious of the need to follow as closely as possible the European Patent Convention. There are two main reasons for this correspondence between the convention and our future law. First, it is to avoid duality of standards between Irish patents and European or Community patents. Without this the patent situation would be in a state of chaos and confusion. Secondly, it will be of considerable assistance to practitioners and inventors to be able to adopt substantially the same practice whether (a) they are seeking an Irish national patent from the Patents Office in Dublin or (b) a European or Community patent from the European Patent Office or (c) an American or other international patent via the Patent Co-operation Treaty.
Patents and patent protection raise a number of practical questions. (1) What is a patent? (2) What do patents do? (3) What do patents not do? (4) What is patentable? (5) Who is entitled to a patent? (6) How is a patent obtained?
What is a patent? A patent is a contract between an inventor or applicant and the State, whereby the inventor or applicant gets a monopoly from the State for a certain period of time in return for disclosing the details of the invention. The patent system thus ensures that information on new inventions is made available for eventual public use to encourage technical and technological development and to discourage secrecy. Under this legislation an Irish patent will last for a maximum period of 20 years dating from when the application for the patent was filed. To keep it in force during this period annual renewal fees have to be paid starting from the fourth anniversary of the filing date.
What do patents do? A person who makes an invention does not need a patent in order to carry it out. He already has a right to do this so long as the invention is not already protected by somebody else's patent. What a patent does is to give the owner or proprietor the right to take legal action to prevent other people exploiting a patented invention without the proprietor's consent. Suppose, for example, a patent is granted that has effect in Ireland. It gives the proprietor alone the right to the manufacture, use, importation or sale within Ireland of the invention for which it has been granted. This right can be used to prevent competition while the proprietor develops a business based on the invention or another person or company may be allowed to exploit the invention and pay royalties under a licensing agreement. Alternatively, the patent may be sold outright by means of an assignment to another person or company.
The monopoly right given by a patent is not of course, enforced automatically. It is the responsibility of the proprietor and not of the Patents Office to look after his rights by finding out whether some one else is infringing them, that is, making, using, selling or importing the invention of the patent without permission and then deciding whether to take legal action. Of course, the mere existence of a patent may deter would-be infringers, or enable the proprietor to obtain some financial recompense without the need to take legal action.
It is not possible to guarantee that a patent, once granted, is valid. Anyone, for example a person accused of infringement, can apply to the court or to the Patents Office for "revocation" of a patent, that is cancellation for the reasons laid down in the legislation. If he succeeds, the patent must either be revoked entirely or be amended to remove the reasons for revocation, if this is possible. In addition, anyone may comment on whether the invention in a published but not yet granted application is patentable by sending observations to the Patents Office.
What patents do not do. Possession of a patent gives no other rewards and should not be taken as an indication that an invention has merit or commercial value. In addition, it should be noted that a patents office does not and cannot give financial or other reward or support for an invention. It does not take sides in disputes between an applicant or patentee and any other party.
What is patentable? Not all inventions qualify for the grant of a patent. Under this legislation to be patentable an invention must (i) be new; (ii) involve an inventive step; (iii) be capable of industrial application; (iv) not be excluded. The concept of newness or novelty is defined in section 11 of the Bill. To be patentable the invention must never have been made public, in any way, anywhere in the world, before the date on which an application for a patent is filed or before the priority date. Inventive step is defined in section 13 of the Bill. An invention involves an inventive step if, when compared with what is already known, it would not be obvious to someone with a good knowledge and experience of the subject.
Industrial application is defined in section 14 of the Bill. In order to be patentable an invention must be capable of being made or used in some kind of industry. This means that the invention must take the practical form of an apparatus or device, a product such as some new material or substance, or industrial process or method or operation. "Industry" should be understood in the broadest sense as including any useful, practical activity. It does not necessarily imply the use of a machine or indeed the manufacture of an article. It includes, of course, agriculture.
Sections 9 and 10 deal with excluded inventions. No matter how ingenious, unusual or beneficial an idea may be, an invention is not patentable if it is merely a discovery, a scientific theory or a mathematical method — section 9 (2) (a); an aesthetic creation such as literary, dramatic, musical or artistic work — section 9 (2) (b); a scheme, rule or method for performing a mental act, playing a game or doing business or a programme for a computer — section 9 (2) (c); or the presentation of information — section 9 (2) (d). However, if the idea necessarily involves more than abstract aspects, so that it has physical features, for example, special apparatus needed to play a new game, then it may indeed be patentable. It is not possible to obtain patent protection for the mere aesthetic outward appearance of an article, for example the shape, configuration, pattern or ornament, which gives it "eye appeal", although this may be suitable for design registration. However, it may be possible to obtain patent protection if the outward appearance has a functional as opposed to a mere aesthetic purpose. In addition, it is not possible to get a patent for an invention if it is a new animal or plant variety, or if publication or exploitation of it would generally be expected to encourage offensive immoral or antisocial behaviour.
Who is entitled to a patent? When an invention is made it belongs to the inventor unless his rights have been given to somebody else, for example by means of an agreement or contract of employment. If the invention resulted from collaboration between two or more people each person may be entitled to a share in the ownership and should be named in any patent application.
How may a patent be obtained? This legislation, when passed, will enable application for a patent to be made in any one of two ways depending on the requirements of the applicant. (1) An application to the Patents Office in Dublin for an Irish national patent and the procedures and conditions for obtaining this patent are set out in this Bill. (2) The applicant can file a Single European patent application under the EPC system. When granted, such a patent will also be valid in any one or more of the European countries that are listed as "EPC contracting states". The applicant can file an international application under the PCT system.
In comparing these alternatives the applicant will have in mind that if it is decided that only a patent that will have effect in Ireland is needed then it is much simpler and cheaper to make an Irish national patent application. If patents in several countries are required it may be cheaper to use the EPC avenue or perhaps the PCT avenue than to make a national patent application in each.
This Bill updates the patent law of this country. As the Minister has indicated, it contains many new provisions as to what constitutes patentability in an invention, sections 9 to 14, as to what the term of a patent shall be, section 36, as to what the effects of a patent and a patent application shall be, sections 40 to 45, and as to the grounds upon which a patent may be revoked. In respect of each of these aspects the Bill follows the corresponding provisions of the European Patent Convention. The other, European countries which have ratified the EPC have adopted similar provisions in their domestic legislation.
Moreover, in any analysis of this legislation, it is interesting to compare and contrast the provisions of the Patents Act, 1964, with the provisions of this Bill. However, there are, in my view, a number of areas which are of special concern. First, I think we can all agree that any new code of patents should encourage and stimulate investment in all levels of industry and it seems to me that the question of expense in carrying out the provisions of the Bill after the application stage is crucial to success. Indeed, the vital importance of expense has been highlighted by Lord Nathan in his address to the Royal Society of Arts which was published by the society's journal for December 1976. He stated:
A patent system can collapse by being too complicated or too expensive, and by failing to adapt to current needs. A situation can be reached in which it is thought that there is more to lose than there is to gain by applying for patents. If that situation arises, patents will die out and secrecy, with all its advantages and dangers, will be the only source of protection.
I hope, therefore, that the Minister, and the Minister of State who cannot be with us today, will take to heart that important comment from a person like Lord Nathan, a person well versed in the intricacies of international patent procedure. For that reason, therefore, I would urge the Minister to give consideration to the setting up of a new patents court to be constituted as part of the Chancery Division of our High Court. This proposal was recommended by the Banks Committee in the United Kingdom and is justified, in my view, by industry's need which was strongly urged in that committee for resolute decision and more certainty in the interpretation of the law.
Second, there is the lack of comprehensive and specific provision in this Bill, provision which is made, incidentally, in sections 36 to 40 of the UK Patents Act, 1977, which recognises the special rights of employee inventors and also introduces the concept of an award scheme to encourage invention by employees. An important group of sections in the UK legislation deals with the rights of employee investors. It contains a major innovation in that it gives employee investors statutory rights which they did not hitherto enjoy in the United Kingdom, and which they do not currently enjoy in this country. These rights of ownership in employees' inventions are at present regulated in Ireland — and would be in my view, regulated in the future, unless there is a change in this legislation by the common law concerning master and servant. The British legislation, therefore, seeks to reconcile the conflicting interests by putting on a statutory basis the law concerning ownership of inventions made by employees and provides a right for an employee to obtain a reward in defined circumstances. It also prevents for the future an employer taking advantage of the weak bargaining position of his employee by requiring him to divest and sign away any rights he may have in the invention that he later makes.
Third, there is, I believe, an urgent need to augment and strengthen resources and personnel at the Patents Office in Dublin and to ensure that the functions and the role and duties of that fine corps of professional examiners in that office are put on a statutory basis. That is certainly not done in this legislation. The problems facing the Patents Office have been highlighted in many annual reports of the Comptroller and Auditor General over many years. In the report for the year ended 31 December 1990 he states:
In various previous reports I referred to my submission, some years ago, containing proposals about the organisation structure of the Office. No action was taken during the year under review in relation to these proposals. Staff numbers in the Office have fallen progressively since the commencement of the public service embargo (from 96 to 77) so that the number of staff serving is less than what it was in 1971. In the meantime, work on all fronts has increased considerably in terms of volume and complexity. It is inevitable that while this situation prevails work backlogs will remain and revenue will be foregone.
Towards the end of the year the Government decided that the question of establishing the Office as a State-sponsored body operating on a commercial basis should be examined. This matter will no doubt receive attention during the coming year.
I would hope, therefore, today that this matter has received Government attention and that the Minister, before we conclude the passage of this Bill, would be in a position to indicate to us whether he proposes to bring in any further amendments to put into legislation and, on a statutory basis, that particular recommendation.
The critical and unsatisfactory situation in the Patents Office itself was highlighted in the case of The State (Jacob Rajan and others) v. the Minister for Industry and Commerce and the Controller of Patents, Designs and Trademarks in 1987. In that case, briefly, a dispute arose in the Patents Office between the Controller and the members of his professional staff as to the arrears of work existing in the office. Pursuant to the provisions of the Patents Act, 1964, it was the duty of the professional staff to examine all applications made to the Patents Office for both patentability and novelty. In order to decrease the backlog of applications the Controller directed the examiners to allow certain applications through with limited investigation and in certain cases without any investigation whatsoever. The professional examiners refused to carry out these instructions because they would be, in their view, and later in the view of a court, in breach of their statutory obligations if they did so. Decisions were subsequently taken by the Controller to refuse to several of the examiners an increment in their salary which would otherwise have been payable to them.
In the High Court, in a very important decision in this area, Justice Barron held, (1) although by virtue of the relationship between the professional staff and the head of their department the examiners were subject to the direction of the Controller, that did not entitle the Controller to direct the examiners as to how to perform their statutory duties, or to direct them to refrain from performing these statutory duties; (2) the decision made by the Controller to refuse the increment payable to some of the examiners was made by reason of the refusal of the examiners to follow the directives issued by the Controller; (3) since that disciplinary action was based on an invalid directive it must itself also be invalid. Since that case concerned the determination and, in my view, a determination which was not open to compromise with the professional examiners, since the Controller sought over a number of years to limit these excellent professional examiners in the performance of their duties, I must say that I view with some concern the statement in the explanatory memorandum under the heading "Authority of the Controller". I quote:
The Bill takes the opportunity to establish clearly that authority in relation to all matters concerning the grant of patent rests with the Controller. In a High Court judgment delivered some years ago it was held that under the present law, patent examination staff have a certain authority independent of the Controller. This was not intended when that law was being drafted and the position has given rise in practice to certain managerial problems.
It seems that what that memorandum is now saying is that in some way when the Controller could not get his way over the past number of years, since his appointment, he is now trying to put some of those examiners into limbo, making it impossible for them to perform their professional work. They are highly qualified people, with the finest qualifications one could find in any Department. I urge the Minister to consider that and to consider putting the role, the function and the duties of these people on a statutory base.
In conclusion, therefore, I would like to take the opportunity again of welcoming the main provisions of this Bill. I hope it will strengthen and modernise our patent system, that it will be of much benefit to industry and to investors and indeed to the country as a whole.
I welcome the Minister for Industry and Commerce to the House and compliment him on presenting this Bill. I welcome the Bill. Ireland has only once ratified patent laws since the foundation of the State. That was in 1964 and that legislation still exists. It is incomprehensible that in 28 years things have not changed or gone forward. It is about time we brought in legislation which is appropriate to the developments that have taken place over that 30-year period. It is vitally important that we come into line and conformity with our European partners. We signed the European Patent Convention in 1973 and yet we have not ratified it. As far as I know, Portugal is the only other EC member state not to have done so. Of course, we are not talking about the Community patent law because of the problem which the Minister referred to earlier.
We are all well aware that industrial sources in Ireland, and in particular the Confederation of Irish Industry, have been pressing for a considerable time to have the new legislation brought before both Houses and passed into law. When this legislation is passed we will, as a country, be able to participate fully in patent protection. It will be possible to apply to the European Patent office in Munich for protection which will guarantee protection within Europe. We all know how long it takes at present to have a patent examined in this country because of the difficulties that exist in the Patents Office to which I will advert briefly at a later stage.
I mentioned the European Patent Office which is based in Munich. I would like to express my regret that it was not sited in Dublin. We are all aware that the Government tried very hard to get the European Patent Office for Dublin. It would have meant a lot to us. It would certainly have created a mobility of people and of industry into this country which unfortunately did not come. I appeal to the Minister that in future we should fight and try to get our due share of the spoils of Europe. I do not believe we have succeeded in so doing to date.
Under the new legislation the duration of the patent will be 20 years and not 16 years as at present. This is just and fair because of the time and money involved in research and development. I know research and development refers to most products but the pharmaceutical industry is probably the classic example we are all aware of and hear so much about. We all realise how expensive is research and development of pharmaceutical products and God knows how many failures the pharmaceutical companies have before they actually get a single success. There is another problem about R and D in the pharmaceutical industry which adds to the time lag of getting back some money from the success of developing a good drug product, namely, that they are subject to the necessity of having to obtain the authorisation of the National Drugs Advisory Board and sometimes that procedure is not too rapid and that adds to the time lag before the product comes on the market.
I know we have the other side of the coin to consider in relation to pharmaceuticals. We have the generic companies. However, I believe the time lag which has taken place — we almost introduced this legislation in 1988 — has given them sufficient time to adapt themselves and their plans to deal with the future development of their generic named products. I think if it had been introduced in 1988 out of the blue it would have been a precipitous decision because at that time the Industrial Development Authority had grant-aided a number of generic companies in this country for developing pharmaceutical products which were coming off patent and it would have been a rather conflicting situation were one arm of the State, namely Big Brother Government, to introduce legislation to make projects non-viable that had been grant-aided by another arm of the State. I believe that since there was that delay the generic companies have had sufficient opportunity to gear themselves for this eventuality.
When multinationals and generic companies are compared, the multinationals will say they are the larger employer, that they research and develop products and that generic companies would not have products to sell without multinational research and development. That is partly correct. Generic companies would say that when drugs come off patent they can supply those drugs to the market at 40 to 50 per cent less cost than the multinationals' price when they are on patent. The Bill needs to acknowledge these facts and it does so reasonably well.
The Minister might bear in mind that few multinational companies do any R and D in this country, a matter not unrelated to this Bill. One excuse has been our short term patent law. More pressure should be exerted on companies which make large profits here to do some R and D in Ireland.
I commend the Controller of Patents, Seán Fitzpatrick, on the excellent job he has done under very difficult circumstances over a number of years. He has shown an exceptional degree of dedication to his job despite inadequate office facilities. He has lacked computerisation and library facilities. People have to go outside the country to find necessary information on patenting. He has had staffing problems and has experienced legal difficulties arising from intransigence among examiners in his office. I totally disagree with Senator Kennedy, as regards who was in the right there.
The courts took a different view.
I am giving my personal view. Senator Kennedy expressed his personal view. I stand by the Controller of Patents.
This legislation will expedite the examination of all patents and provide special arrangements for smaller type inventions which will be dealt with more expeditiously and at a much cheaper rate. This is important because small inventions are often the novel idea of people with little money whose rights must be respected. In the past there were disincentives for brilliant people with little money; it was not worth their while to have patents examined.
The granting of a patent gives a monopoly for a period to the inventor or conceiver of an idea. Inventors should be allowed to reap the financial rewards of their ideas and the work put into their development and this is satisfactorily dealt with by this commendable Bill. I thank the Minister for bringing it before the House and for his co-operation.
I welcome the Minister, Deputy Harney, to the House. I do not have much to say on this Bill partly because I have been in communication with groups, such as the Federation of the Irish Chemical Industry, who indicated clearly to me that they want a speedy passage for this Bill. I raised this matter at the end of 1988 and of 1989 as a result of a letter I received during 1988 from one of the principal pharmaceutical companies in the State, some of which I wish to put on the record because it seems to me that the Bill meets some of their concerns. The letter was from Smithkline & French (Ireland) Limited and this is the relevant part:
Ireland signed the European Patent Convention in 1973 but to date this has not been formally ratified. The Convention provides for 20 year patent protection. It is a matter of urgent concern to Smithkline Beckman which employs 730 people in Ireland, through its subsidiary companies — Smithkline and French — Dublin, Allergan — Mayo, Beckman Instruments — Galway and Penn Chemicals — Cork that legislation be introduced to extend patent protection in Ireland from 16 to 20 years.
This would bring Ireland into line with practice throughout the rest of Europe.
Faced on 1 August 1989 with the expiry of patent protection in Ireland for cimetidine, a constituent of Tagamet — a drug that dramatically reduces the need for hospitalisation of ulcer patients, we urgently seek your support to have the inadequacy of the existing patent regulations resolved by legislation of the Oireachtas during the early days of 1989. While we are aware that such legislation is in preparation and expected to be placed before the Dáil in the coming year, it is of critical importance to Smithkline Beckman that we are not exposed to the loss of patent protection through a technical inadequacy in the legislation as it now stands.
Smithkline Beckman has an investment of over £100 million in its Irish operations and has demonstrated its commitment to Ireland and will continue to do so in the future. We earnestly need your help as an elected parliamentarian to ensure that the necessary patent protection legislation can be introduced and enacted in the coming Dáil session. If for any reason the ratification of the European Convention to give 20 years patent protection in Ireland is delayed the implications for the Smithkline Beckman Corporation and indeed for much of the pharmaceutical industry in Ireland which employs over 12,000 people, are a cause for considerable concern.
I raised this matter in the Seanad at the end of 1988, at the beginning of 1989 and throughout that year and sporadically since then. The explanation I received was that a constitutional impediment existed, the nature of which was never quite explained to me. This was hinted at again at the end of the Minister's speech, where he says:
In conclusion I should like to mention another patent convention, namely, the Community Patent Convention which was signed by Ireland and other Community states in 1975. It will not be possible to ratify that convention on the basis of the present Bill because an amendment of the Constitution is required before ratification of this Convention can take place.
The Minister goes on to imply that the Government are preparing such amendment to the Constitution as would be necessary for placing before the people, together with other amendments to the Constitution proposed in the wake of the Maastricht Summit.
He concludes by saying: "I recommend the principle of the Bill for approval of the House." He does not say that he recommends the Bill. That is interesting selective use of language, to approve and recommend the principle but to hold back from suggesting that the Bill is a complete answer to our patent problems. Perhaps the Minister of State, Deputy Harney, can expand a little on this.
I do not know if in consultation with her advisers she might indicate what is the constitutional difficulty or problem; I have never had that explained to me. It now seems that we have overcome two thirds of our difficulties here and yet the remaining one third is described as a constitutional difficulty that may be resolved in the light of some other amendments proposed to the Constitution. It would be useful if that could be cleared up.
In the light of correspondence I had in 1988 and 1989 with various pharmaceutical companies I telephoned the Federation of the Irish Chemical Industry. They indicated that they did not require any further amendments. The extension to 20 years from 16 is one of their principal objectives and they want this Bill on the Statute Book as quickly as possible. For that reason I fully support the Bill.
I listened with interest to what Senator Kennedy said about paragraph 6, in the explanatory memorandum. It seems that the High Court goes one way in its interpretation while the intention of the Bill may be otherwise. I concur with him that if we ask experts to examine patents to see if they meet the test of novelty or originality we should accept their professional judgment and not open it to arbitrary challenge by the Controller. There should be a concession made to the authority of these people. I am sure the Minister will deal with this and other matters raised more properly by Senator Kennedy.
No amount of patent legislation of this kind will completely protect the indigenous ideas and originality of the Irish people. I am sure the Minister is aware of what happened in Waterford three or four years ago which illustrates the point made by Senator McCarthy about the question of research and development by multinational corporations. I cannot now recall the name of the successful computer company involved in Waterford whose parent company in America suffered financial difficulty. There had been a very fine research and development unit in the Waterford Company which had succeeded in developing and patenting new ideas. They were patented by the parent company which, when it got into financial difficulty, closed down the Waterford operation and repatriated to the United States the ideas that had been developed in Waterford. Irish originality was rewarded by being absorbed back into the United States economy with no positive spin-off for Ireland. I am not sure that any legislation can effectively protect the national interest of a small country like ours, and I completely agree with Senator McCarthy when he says that we have people of considerable intellectual originality and ingenuity quite capable of producing inventions that are of benefit, not just to the Irish people, but to humanity at large.
I will end by posing a hypothetical question to the Minister, the reason for which may become clear subsequently. Consider the case of an Irish scientist who developed a drug which had a dramatic impact on the AIDS virus, that could inhibit the trigger mechanism by which the low level of infection is catalysed into the full-blown AIDS infection. In order to acquire financial support the interest in their invention might be sold to a company, perhaps a multinational company, which decided, cynically, despite the global implications involved, that it was in their financial interest to defer production of this new drug until market conditions met their financial requirements. Is there any means by which some international, supernational, global agency such as the World Health Organisation or the United Nations could act in the interests of humanity to break that patent? The world is facing the challenge of AIDS. A country like Uganda may lose the best educated of its population to this disease and many other countries are faced with similar problems. Whatever the legal ramifications, there is a moral obligation on the world community to ensure that this tragedy is not compounded. This may be a very complicated question and I would not expect the Minister to be able to answer it off the top of her or his head but it is a problem that may arise — if not in this country then in some other country.
The rights of patentees should not supersede the rights of humanity as a whole and I would like if the Minister could direct some attention to this problem in communication with other European countries and perhaps with the United Nations and the World Health Organisation. In the Waterford case an invention that would have benefited the Irish people was repatriated to America. No profits accrued to the Irish people. There was no reward, no recognition of the original genius of the Irish people. It would be an even greater tragedy if, for example, some breakthrough was made in the field of AIDS prevention, or in the inhibition of the spread of the virus, and for purely commercial reasons this was not made available for the benefit of humanity.
Having made these general points I welcome the Bill, although I regret it has taken so long to introduce the measure. Other speakers have spoken about the time scale and I look forward to the completion of this process because, as I have indicated, there is a clear suggestion at the end of the Minister's speech that this is not an ultimate solution to the problem but that a remaining difficulty may only be resolved by a constitutional amendment.
I welcome the Bill before us, another Bill which is finally making its way before the House because of obligations binding upon us by European conventions. Nevertheless it is welcome.
The processing of patents in this country has been much too slow for years. The Bill should streamline the processing of patents across Europe which would spare companies and inventors much effort in relation to unnecessary repeat applications for patents.
I express a certain level of concern about our capacity to process patents. I understand that in December 1990 a backlog of 20,000 patents awaited processing while over the past number of years staff numbers in the Patents Office have decreased significantly.
A number of points were raised in the debate on this Bill particularly in the other House in relation to the extension of the period of patents from 16 to 20 years. That has been a matter of concern to various elements of the Irish pharmaceutical industry. Companies such as Penn Chemicals who have been in contact with Senator Norris are anxious to secure a 20-year period for patents. Certain other companies in the generic drug industry in this country are also anxious to see that period of 20 years reduced to 16 and maintained at that period.
I am somewhat agnostic on the issue. The case may be argued either way and will depend on one's point of view, on the balance of circumstances and perhaps on the drug or invention in question and the amount of money spent on its development, etc. It is imperative that the drive for new and better inventions continues. That is particularly true in the case of disease but also in relation to 101 other different aspects of life.
In relation to the development of drugs, the pressures placed on drug companies at international level are absolutely enormous and merit our concern. The dangerous consequence of such great pressure may be that international drug companies will cut corners in new product development, testing and marketing. Large numbers of pharmaceutical products are constantly coming on the market, many of which are basically the same. Large numbers of products do not add anything to the efficacy of treatment, we would be better off if much of the futile effort put into that kind of carry on were directed towards new products and new ideas. The same principle applies to other areas of industry. Over the last number of years in this country we have had a rash of these "me too" products. One of the best examples was the production of "imitators" of Baileys Irish Cream. There seemed at one stage, to be 101 different types of Irish creams. Now most of them have duly faded away and the people who developed the original product continue to dominate the market. This development is an indication of the way industry work and think. Some of the resources utilised in producing imitation products which usually fail in the long term should be diverted towards the encouragement of new ideas and their development.
The provisions in the Bill to allow for small inventions to be protected by short term patents is welcome and should encourage small-time inventors now coming up with ideas to continue to do so. While this development is welcome, I sympathise with people in Eolas — what was the IIRS — who have to deal with some of these inventors because a number of their inventions are bonkers, nutty and totally off the wall. Some people in Eolas had their hands full dealing with people who came in from the street with new inventions which were a load of rubbish and, rather like many politicians, there were not in a position to tell people so directly. Nonetheless, among many useless ideas will come some useful ones and encouragement is needed to develop those which would be of lasting benefit.
The Bill should bring about, to some extent, an improved climate for research and development in Ireland, the levels of which are much too low at present. It should be a matter of considerable concern to everybody that a recent survey of international industrialists rated Ireland as twenty-second out of 23 industrial nations in terms of our technological capacity. These are among the delightful facts one finds in the new industrial policy review report produced recently which I welcome. Most of it is very encouraging and worthwhile and I am delighted to see it being published. That report draws attention to the fact that in terms of the amount of money invested in R and D, expressed as a percentage of our gross domestic product, the Irish proportion is considerably lower than all but two or three other European countries.
Given that the Irish economy is a small economy compared to most other European countries one realises how inadequate our effort is in relation to research and development. I am not one who believes that from research and development everything else will flow. I envisage research and development as part of a broader industrial policy and if we hope to expand industrial development we will need greater investment in research and development. We will need it, not only in the high tech industries, where its need is patently obvious, but also in low technology industries where it is essential that new processes be developed together with new ways of dealing with different aspects of industry and new ways of processing material and so on. It is essential that we develop and patent new ideas there.
Senator Norris was stimulating as always and raised some interesting matters in relation to drugs which might treat AIDS and possible complications about the patenting of such drugs, the moral obligations to put these drugs on the market and so on. It is a sad reality that market conditions are a key factor in deciding when new products which have been patented are released on to the market. I do not doubt that many companies release products on the market simply to maximise their profits and that is particularly regrettable in the area of drugs.
There is also the question of what happens to Irish inventions and Irish ideas. I would imagine that if some Irish person or group of scientists developed a good idea and had it patented, the most likely outcome would be that sooner or later they would be bought up by a multinational company with enormous resources. Innovative Irish inventors and scientists can expect to encounter much the same phenomenon as promising young Irish footballers, who play for one or two years for some of the clubs here and sooner or later are bought by the money available for the international market. That is what happens in this country and there are precedents to bear that out.
This trend is also part of the wider brain-drain phenomenon which affects not just new inventions but many other aspects of Irish life. It is also happening in the United Kingdom where many of the better and more successful British scientists are now being offered enormous amounts of money to go to America so that their ideas can be used there.
There is one other aspect that I would like to mention briefly arising from the remarks of Senator Norris in relation to drugs for the development of AIDS and so on. There are all sorts of very interesting moral questions here, such as the need for investment and the obligation on countries and on international agencies to ensure that drugs are developed to treat conditions not prevalent in western society and, accordingly, for which little money is made available. A classic example of this phenomenon took place in this country in the fifties and sixties when the late Dr. Vincent Barry in the medical research laboratory of Trinity College developed a useful drug for the treatment of leprosy. The drug could not be made viable on the international market and people who suffered from leprosy did not have the money to pay for the drug. Accordingly the drug never reaped the rewards for the group which had genuinely come up with a useful product.
On those few thoughts I welcome the Bill which I hope will go through the House rapidly. I hope it will provide a stimulus to encourage Irish inventions and to encourage more research and development in Irish industry.
I am intrigued at Senator Upton becoming an agnostic. Various areas of our private lives are now apparently being displayed in public. Senator Upton is following in the Conor Cruise tradition of the Labour Party.
In some other senses I am not an agnostic.
Having one of the self-confessed agnostics presumably is an asset at this stage.
This Bill, of course, is welcome. We will talk about some of the arguments in detail in a minute, but it is worth reflecting a little on the extraordinary situation where we have taken between 19 and 22 years, depending on which of the two, the treaty and the convention, that we sign. In a country that has had since about 1979 a succession of Governments who have talked about an enterprise culture and about the need to create — as Senator Upton's colleague, Deputy Michael D. Higgins, has often talked about — the meteorological conditions for enterprise, the climate for enterprise, we have taken 22 years to sort out something as fundamental as protecting the rights of ownership of innovators.
It is always easy to think about inventors as somewhat disorganised individuals operating out of their back shed with mysterious bubbling bottles pouring out under the door and sending noxious smells into the next door neighbour's sitting room but an enormous amount of patenting is done by large corporations, whether multinational or national, who spend large sums of money in the pursuit of innovation and new ideas. One of the realities is that this is driven as Senator Upton quite rightly said, by the market but it is also driven by a perception of (a) whether your idea would be secure for commercial development afterwards and (b) whether the system of securing that would be half reasonable in terms of time scale. I am intrigued by the state of our institutions which imagines that 22 years is a reasonable time to sort out the practicalities of securing the rights of an individual or of a corporation or of any company to an idea which its has developed. That is an appalling reflection on us.
I must say that the priorities we have in this State seem to have been turned on their heads. We are now in the ridiculous situation where we have a large number of our institutions which are groaning with their inadequacy to deal with what the country needs, the classic example being the one we are now reforming, the Patents Office, which everybody knows was a nightmare for anybody with an idea. It was not the fault of the people there; it was the fault of the law, the fault of the lack of resources. Nobody is disputing the work of the people there. At the time when we were letting that run down because of a zealous crusade to reduce public expenditure, we have daft tax policies being landed on us which in yesterday's budget will leave the likes of myself and my spouse better off by a sum of money every week that this State is prepared to give a married couple to live on.
I have no idea where people get the idea that that sort of a daftness is more important than the reform of our institutions so as to encourage innovation and enterprise. I have no idea why we did not model ourselves on some of the other countries like, say, Germany, which has a remarkable record for innovation and enterprise and which now dares to actually take more tax from people than we do. That country is not, that I am aware of, going down the tubes; it is not going broke; it is not lacking in enterprise, because they make their institutions work. Nothing could be a more shame-inducing testimony to the appallingly inadequate nature of all of our institutions than a 22-year gap and our failure to ratify an important international convention. It is one-third of the life span of the State. We have left something sit and wait to be ratified. That defies all logic and seriousness. The State is riddled with legislation that is out of date in many areas and it is causing enormous problems to people.
The debate — at least the parts I read in the Official Report of the Dáil — considered at great length the relative problems of the multinational sector of the chemical industry and the indigenous sector which was largely though not exclusively dominated by the production of generic drugs. There were problems identified about the extension of 16 to 20 years. It would not be wise to over-emphasise the relative importance of the multinational sector. The multinational sector is, first of all, what it says, multinational, and therefore a considerable proportion of the wealth it creates is exported — hence this country's dubious record as the greatest exporter of repatriated profits in the entire OECD by a factor of about four. We have a scale of repatriation of profits which in some years even exceeds by a factor of four payments on the foreign part of our national debt.
I do not have any great problem in principle in the world we live in with multinationals making a lot of money, because money that is made is used for something. However, if profits that are generated are reinvested in Puerto Rico or in Mexico or in some other country with even lower wage rates than we have, then I am not sure what good it is doing. When you add into that the appallingly low level of linkage development between many multinationals and Irish suppliers of goods and services, you are further reducing the significance of that sector in the Irish economy. By contrast the indigenous sector of the chemical industry, while it may employ only a fraction — and I understand the proportion is about 8:1 in favour of the multinationals — perhaps only about one-eighth of the numbers, it is indigenous. It is, therefore, largely domestically owned and the wealth it creates remains in circulation in the Irish economy, hopefully by way of investment or else in some other way. It will be more inclined to resource various commodities at home, if for no other reason that it will not have the multinational tentacles to resource them elsewhere.
It would be a worthwhile study to look at the multiplier effect of an indigenous chemical industry, admittedly producing lower added value generic products, and to compare that with the allegedly hightech multinationals, which at the same time are not really integrated into the Irish economy and which are exporting a huge proportion of the wealth they create without any of it being left behind to show any benefit to us.
That is where the argument about the 16 to 20 years comes up, but I do not think it is an enormously important issue. There may well be some hiccups in the indigenous chemical industry as a result of this but if they had not been aware of the various conventions which have existed for the best part of 20 years in both cases and were not making some provision for the possibility of us catching up on the rest of the world eventually, then they probably would not have survived in business anyway. I do not think we have a huge problem there.
There is an interesting question on this as to whether the multinational side of the pharmaceutical industry — I have a certain interest in this — is as beneficial as we imagine. In terms of patent law and in terms of what this is supposed to do — which is to improve the service available to people who want to secure their rights to an invention — we would want to remember that there are bigger forces than simply an unscrupulous individual wanting to steal an idea. One of these forces is the increasingly recognised economies of scale which large scale industry — for instance, in mainland Europe — have which give them such enormous competitive advantages that even if an idea is developed here they will still have the capacity not to steal it, but to buy it on such favourable terms that no sane indigenous manufacturer here could refuse.
The NESC report on Ireland and the EC developed this point to an extent that should cause alarm to anybody who is worried about the future of the country. It is not enough to develop ideas here; we have to make sure that the ideas once they are developed are actually produced and marketed from this country. That is an extremely difficult issue. A large part of the difficulty is not with financial terms but with the extraordinary creaking and groaning of large sections of the institutions of the State.
I want to throw a few queries at the Minister. Some of them are perhaps more appropriate to Committee Stage, but I do not want to delay him too long on the Committee Stage or to delay myself for that matter. In regard to the decision — and I realise that it is a European decision — to define what can be patented, there is a logic to it, but some of the terminology might not be clear, particularly section 10 (b) which deals with "a plant or animal varieties or an essentially biological process for the production of plants or animals other than a micro-biological process or the products thereof". The way genetic engineering is developing, the way biotechnology is developing, I am not sure that he is going to succeed indefinitely maintaining a distinction between a biological process and a micro-biological process. It is contained in the Bill as a specific distinction and one that may well produce problems in the long term.
I am also not a little amused, because it turns up at the strangest places, at the prohibition on the patenting of an invention "the publication or exploitation of which would be contrary to public order or morality". I always had this funny feeling that whenever the drafters of legislation — and not just in this country but generally — want to cover themselves against things they have not imagined they stick in a clause on public order and morality in case someone comes up with something nobody wants. I presume this might include weapons. I cannot imagine — perhaps my imagination as I get older is becoming more limited — given the definition in the Bill, the sort of patents that people would come up with that might be contrary to public morality, but I suppose it might have to do with abortifacients and things like that. Nevertheless, I am always a little tickled at the obsession with certain things and the way they pop up in the most extraordinary bits of legislation.
The Bill is most welcome and given what I have said about its delay I suppose I should not delay it further. I was intrigued by the Minister's reference at the end of his speech to constitutional problems dealing with the Community Patent Convention, and maybe he will elaborate on that in his reply. The best thing we can do now is to get moving and get this legislation passed. Perhaps the Minister can tell us what he knows about the efficiency of the European Patent Office. What sort are the delays? What are the time delays involved there? Are we still way behind them or have they developed a system of examining patent applications from which perhaps we could learn something; or is it simply that they are better resourced and better funded and have more staff? What is the case? There is definitely a huge problem there and I trust this legislation will meet the problem.
I sincerely hope — and Senator Kennedy made this point — that we are not writing into this Bill a relationship between the Controller and his staff which is different from the relationship which exists in many other State agencies in terms of the rights of the staff vis-á-vis their immediate boss. With that said, what can anybody else do after 20 years but belatedly welcome the legislation and hope it provides the necessary stimulus to Irish enterprise and to Irish inventiveness.
I welcome enthusiastically the broad thrust of this long overdue Bill. The five main provisions are: (1) to update current legislation on the grant of patents as contained in the Patents Act, 1964, thus harmonising laws applying generally in other European countries, especially by EC member states; (2) to enable Ireland to ratify the European Patent Convention and the Patent Co-operation Treaty; (3) to establish more expeditious procedures in respect of examination of patent applications; (4) to provide for the protection of smaller type inventions by introducing provisions for the grant of a short term patents; and (5) to establish that the Controller is the sole authority in relation to all matters concerning the grant of patents.
The Bill contains new provisions as to what constitutes a patentable invention, what the term of a patent shall be, the effect of a patent and a patents application and the grounds on which a patent may be revoked. On these aspects the Bill follows the corresponding provisions of the European Patent Convention. Other European countries which have ratified the EPC have adopted similar provisions in their domestic laws.
The EPC was signed by Ireland and 14 other European countries in Munich in September 1973. It has since been ratified by all EC member states, including Portugal, and also by Sweden, Austria and Liechtenstein. The principle of the EPC is that anyone seeking to protect an invention in a wide number of European countries may do so by simply making one application to the European Patent Office in Munich, designating any or all of the countries privy to the EPC in which protection is desired. Previously it was necessary to file separate applications with each national patent office and comply with each country's separate national stipulations. When granted by the European Patent Office, the European patent will have the same status in each of the designated states as if a national patent for the invention had been granted by the respective national patent offices. The effect will be identical in each state and ratification of the patent by the national authority will be possible only on the grounds specified in the Convention. The duration of a European patent, 20 year term, will be the same in each state.
If this Bill is enacted in its present form, contingent on ratification of the EPC, it will be possible for patent applications to include Ireland in a list of countries in which protection is sought when making an application to the European Patent Office, thus avoiding the need to make a separate application to the Irish office.
The Patent Co-operation Treaty was concluded in Washington DC and signed by Ireland in 1970. The treaty has been ratified by all EC member states, except Ireland and Portugal. It has also been ratified by the EFTA countries, the USA, Canada and Australia among others. The primary objective of the PCT is the streamlining of patent applications, filing and search procedures for applicants wishing to obtain patent protection in countries around the world. Applicants may make one central application, generally to the local Patents Office, designating countries in which patent protection is required and the novelty search is carried out by the international search authority, whose report of the search is then furnished to the national office of each relevant country. Final examination and grant are performed by the various national offices. This system economises considerably on the volume of work an applicant would otherwise have to do to satisfy the multiplicity of individual national requirements.
Let me address the Bill in greater detail. Part XII of this Bill is important in the extreme. Application of Article 119 affords Irish and foreign companies the opportunity to designate Ireland along with other member states of the EPC in one single patent application. Such a single patent application, with a single examination in a single language and with a single fee, will enable patent rights to be established across Europe in a cost effective, efficient and timely fashion. Happily, it will no longer be the case that firms will be obliged to make separate applications in Ireland, with all the attendant time delays which the current system imposes. Ratification of the EPC and the PCT will undoubtedly enhance Ireland's potential for industrial investment. The proposed system will be of significant interest to those companies which form an integral part of the exporting sector of Irish industry and which accounts for in excess of 75 per cent of manufacturing output.
The new system is also advantageous in that it will reduce substantially the pressure on the Irish Patents Office, which has now, I believe, a backlog in the region of 18,000 patent applications. The immense volume has resulted in the patent process being excessively protracted. It has been the experience that it has been taking from six to eight years for examination and grant of an Irish patent. In this context the current proposed legislation is welcome and should be music to the ears of those who have engaged in a tortuous patent process.
Provision for the extension of the patents life from 16 to 20 years in harmony with the 1973 convention now brings this country into line with the system prevailing in the rest of Europe and indeed internationally. This extension and consequent harmonisation is of the utmost significance in circumstances where, for example, countries are committing large expenditure on research and development and where there is a natural expectation that Ireland would offer the same time frame for recovery of that investment through subsequent commercialisation of any product developed. It is important that the same regime should apply throughout Europe and internationally.
Section 63 of the Bill provides for the introduction of a short term patent of ten years duration which provides a sufficient, inexpensive method by which small industry and inventors could obtain effective protection for inventions and innovations. It has been brought to my attention that a flaw exists in the Bill as is currently drafted. It appears that all that is required to establish the validity of a short term patent is mere novelty of the invention. There is no provision included in the Bill to require any inventive step.
There is every likelihood that this will have grave implications for Irish industry in so far as it will mean that many patents will be granted for trivial alterations which may manifest pure novelty but which will not have any inherent ingenuity. Such patents could potentially become a vociferous nuisance to industry, particularly if there is any frivolous or vexatious aspect, and would certainly serve to undermine the repute of the patent system. However, I would have to say in favour of the short term patent provision, given that it comes within the definition of a patent under the term of the Bill, it will presumably also qualify as a patent for the purpose of relief from income tax under the provisions of the Finance Act, 1973, as they stand. The rapid procedure for obtaining grants of a short term patent will be extremely helpful in securing tax relief in the early stages and development of an invention.
Some reservations have been expressed regarding the First Schedule to this Bill, which outlines the transitional provision applying to its enactment. Patents which expire after commencement of the Bill will not be permitted any extension of the term. Under the provisions of the transition arrangement, a patent expiring before commencement will be entitled to an extension only to a term of five years. This may occasion very serious problems. Heretofore extensions of up to ten years were granted under defined conditions. In my view all patent petitions outstanding at the date of commencement should, of right, receive the due protection proposed for all patents that are extant at the date of commencement of the legislation, like an automatic four year extension.
The Bill indicates that during the last two years of the extended term third parties will have the opportunity to engage in particular activities related to the invention patented, excluding importation or placing on the markets of a patented product and being exempt from liability in respect of patent infringement. Such a measure would have consequences in that it could alter retrospectively the position and right enjoyed by patent holders under the 1964 Act. In practice, a patentee would be placed at a singular disadvantage under the proposed legislation and it would effectively discriminate against him. The positive aspect is that companies such as those engaged in the pharmaceutical or agrichemical fields who wish to obtain product authorisation prior to the expiry of patents are placed in a position where they may launch a generic product shortly after a patentee's exclusive rights have ended. However, the rights of the existing patentee must be adequately protected and the legislation must be reconciled with that in the 1964 Act.
In general I welcome the Bill and perhaps the Minister would be good enough to clarify some of the points I have raised.
I would like to welcome the generally very positive attitude shown by Senators towards this Bill. I know it has been a long time coming. I think this is of some benefit in many ways because we have been able to introduce into the Bill many useful provisions which might not have been apparent some years ago and I think Senator McCarthy adverted to some aspects of that. The short term patent system which is being introduced will be particularly useful, less costly and quicker for smaller inventors in particular as opposed to the large companies who spend a great deal of money on the registration of their patents. The question of the dissemination of patent information will become an important new activity for the Patents Office in future when the backlog of patent applications is eliminated under the new more economical provisions which exist in this Bill for examination of applications.
I would like to refer to some of the points made by individual Senators, if I may, and any points I do not cover I can cover on Committee Stage if necessary. Senator Kennedy raised a query about the question of inventions by employees, but in reply to that I would say this Bill leaves it to the contract of employment to determine, as between employer and employee, who will have the right to an invention made by an employee. That is the case under the 1964 Act and I think will continue to be the case when this Bill is passed. We have had no representations in the Department to change this and we have, therefore, no reason to believe that this approach, which is inherent in the 1964 Act and again in this Bill, is not working well. It seems to me it probably is and it seems to be the most sensible way to deal with the question rather than laying down rules that would apply irrespective of agreement between employer and employee.
Senator Kennedy raised the question of the patent examiners and their position. I have deliberately decided not to give the examiners any particular statutory or specific legal status because of the problems which this has caused under the present law where, because they are independent to some extent and in some respects, no management directives about the performance of their work can be given and that was apparently confirmed in a High Court case some years ago. They can, therefore, work at their own pace and in their own way. A significant backlog has built up as a result, at the moment there are approximately 20,000 cases. Applications are being lodged at the rate of 4,700 per year and the number dealt with is approximately 1,000 with the result that the backlog is getting significantly bigger each year. Obviously this cannot continue. Under the Bill all matters including the examination of patents or applications, are to be the responsibility of the Controller and he will have authority to lay down guidelines as to the performance of examination tasks by the examiners. The examiners will still do the actual examination.
Senator Kennedy suggested that we might look at the question of a new court to deal specifically with patent applications or patent litigation. This Bill provides that a certain jurisdiction will be given to the Circuit Court, particularly in regard to infringement proceedings under short term patents and this will help to reduce litigation costs which in the High Court are appallingly high and can act as a deterrent to the people involved. I do not consider that there should be a separate court or division in the High Court. I do not think that is necessary. That is not the way the High Court operates because they do not have a Chancery division. Any judge can hear any case, although in practice, for the most part, certain judges hear certain types of cases. There is not enough litigation in this country at the moment to warrant having a separate court. Hopefully, there may be less litigation here in the future if much of it is dealt with in Europe.
Senator Norris made a point about a new drug to fight the AIDS virus. The position would seem to be that if the company holding the patent refuse to work the invention they can be compelled to grant licences to others to do so. Under the Bill the State can step in and take over the working of an invention in the interest of the public good.
He also raised the question of the Community Patent Convention and the constitutional problem to which I referred at the outset. The difficulty about ratifying this Convention lies in the fact that the instruments involved in bringing it about are outside the legal framework of the Rome Community Treaty and, consequently, certain provisions in the Convention, particularly those conferring jurisdiction on the European Court of Justice and those relating to the Community Patent Appeal Court which will be established under the agreement, in the opinion of the Attorney General, suffer from constitutional infirmity as they are not blessed by the exemption for which the 1972 Third Amendment to the Constitution provides. The House will recall that the words used there are "acts necessitated by membership" rather than the words originally proposed, "acts consequent on membership".
This question will have to be looked at this year before the referendum on the Maastricht Treaty. My preference would be to have a referendum wide enough to encompass not just the Maastricht Treaty but other treaties and conventions often of a purely technical nature which will arise from time to time consequent on our membership of the Community and this Patent Convention is a good example.
It would be difficult to justify having a referendum purely on the question of the ratification or otherwise of the Community Patent Convention. I do not think we would be able to generate a high poll on such an esoteric topic. It would be difficult to draft but, if at all possible, we should try to have what I might call an omnibus type amendment that would cover this matter specifically and others of this type that are likely to arise in the future.
Senator Kennedy inquired about the question of constituting the Patents Office as a separate office. I referred to this before. I said that was the ultimate intention but we cannot do it until this legislation is passed. Then we will be able to sit down to work out the mechanics of making the office autonomous or quasi-autonomous at least, and release it from the control on staff numbers which apply to it as a Civil Service office. This office is self-financing. It will not be a drain on the revenue.
Even in its limited form of operation at the moment, the Patents Office is profitable from the State's point of view and will become, I hope, a great deal more profitable as a result of the passing of this legislation and the ratification of the European Convention. Senators will be aware that in the recently published review by the Culliton committee on industrial policy they recommend that this might be done. I can also see scope for doing something similar in respect of the Companies Office and the Government have decided that when things are straightened out there, most of that office will be decentralised to Kilkenny. I am not certain that we would yet be able to decentralise the Patents Office, which is rather more complicated.
Cashel would be fine for that.
Patents might not lie easily under the Rock of Cashel, but we will see.
Senator McCarthy inquired about the prospects of getting one or other of these offices for Ireland and I concur with his sentiments. However, this Government and previous Governments made numerous efforts in this respect without any great success. One of the arguments put to us is that ten or 20 years ago, unfortunately, we were foolish enough to accept a Community office of some description, which exists in Ireland at the moment; it is extremely small and is not of any consequence either in Irish or European terms. I am not even sure what it does but it is quoted as a reason we should not consider ourselves in the running since there is at least one other member state which has not any such office. The Patents Office would make a major contribution to the Irish economy if it were located here because I understand that 4,000 highly paid officials are employed in it in Munich and the numbers are increasing because the volume of applications and work is constantly increasing. The European Community is not subject to the strictures on public expenditure and on staff numbers to which we in this country are subject. As well as the 4,000 people who are directly employed, it generates a great deal of employment among patent agents, lawyers, engineers and advisers of all kinds who would locate themselves within the general area of an office of that kind for the purpose of advising applicants and representing them in contested cases and so on.
The question of the location of the Community's trademark office is under preliminary consideration at present and the Government have applied to the Community for it to be located in Ireland. It would not be as lucrative from an employment and investment point of view as the Patents Office but nonetheless it would be, in Irish terms, a significant provider of well-paid employment. I am sure that at the very least many hundreds of officials and advisers would locate here.
Senator McCarthy referred to how little R and D is done by companies here. In particular he referred to multinational pharmaceutical companies and I accept that historically that has been the case. There are a number of reasons for it, the principal one being the taxation regime that existed here. It did not make sense from a taxation point of view to use Ireland as a cost centre as opposed to a profit generating centre. With the changes that have taken place in taxation in the past couple of years and aided by what was done in the budget yesterday, that position is changing and from a taxation point of view Ireland is now a less unfavourable location for R and D. Ireland has available many well-qualified graduates and PhDs who could do this type of work at a more reasonable rate than might apply to people with equivalent qualifications in other countries. I am very hopeful that the increase in R and D which has been perceived in the past few years will gather pace and become much more significant in the years to come.
The passing of this Bill will give greater protection to inventions and the speedier registration of inventions will make a significant contribution towards establishing Ireland as a worthwhile location for research and development of all kinds not just in pharmaceuticals but in many other forms of activity.
Senator Ryan inquired about the difference between biological and micro-biological processes. In so far as I understand it — and my understanding is finite on these matters, I emphasise — biological means breeding and crossbreeding practices to achieve new varieties, for example, both of animals and plants. Microbiological involves scientific intervention to change the essential character of a product, for example, a technique which could make a plant more disease-resistant. This could not be brought about by ordinary cross-breeding methods.
Senator Ryan raised some questions on the possible conflict that exists in respect of the transitional provisions in the Schedule to this Bill as between what one would broadly call the generic interest in this country and the broader interest of large pharmaceutical companies. There is a very definite conflict of interest as between the two. We tried manfully and I believe successfully to try to balance the two interests there. Nearly all the various interests recognise that the best possible job was done in trying to look fairly on the welfare and commercial interest of both groups.
The extended period of patent protection which is not unique to Ireland but will be common to the whole of Europe, could, I suppose, be seen as in some way detrimental to generic interests but those who are in the generic industry here will realise that we are 12 years behind the rest of Europe in adopting the 20-year patent. They have had a substantial period where the normal rule did not apply to them. The extension of four years is balanced by the fact that the extension periods that are allowed for at the end of a patent period under the 1964 Act of up to ten years on application to the court are being abolished so that the possibility of a 26-year patent period under the 1964 Act is now finally done away with. Those two provisions in contradistinction to one another in the way I have explained is an example of how we have tried to balance the conflicting or competing interests fairly. The majority of those involved on either side of the fence would agree that the efforts that have been made to act fairly as between the two have, by and large, been reasonably successful.
I have dealt with most of the points raised in the course of this debate. I thank Senators for their approach to the Bill and join with them in looking forward to its early enactment which will be of great benefit to the country.
Question put and agreed to.
Committee Stage ordered for Wednesday, 5 February 1992.