Passing referendum on EU patents court could lead to €1.7bn GDP boost, says Ibec

Monday Insight

The new EU body, the Unified Patent Court (UPC), will allow firms to protect their innovations in 24 countries across the EU. Photo: Stock image

Sarah Collins

Irish-based companies are backing a move to hold a referendum on a new EU patent court.

A survey of 49 Irish-based firms by business group Ibec found that 70pc want a vote in the first half of next year.

The new EU body – the Unified Patent Court (UPC) – is due to open its doors next April after nearly 10 years in the making.

Although Ireland signed up to the court in 2013 and the Government recommitted to joining in June, it requires a referendum because it transfers some powers from the High Court for litigating patents. The Government has pledged to hold a vote by May 2024.

The court is the final step in the EU’s single patent regime, which covers 24 countries (Spain, Poland and Croatia have decided not to join).

The regime allows companies to register one patent across the EU, which they can then defend in any of the UPC’s local divisions – 17 of which have ratified it so far, not including in Ireland. It cuts down on the cost of translation, legal costs and fees, with discounts for individual investors, universities and small companies.

“If Ireland doesn’t ratify that, the SMEs in Ireland will not have access to that,” said Triona Walsh, a patent lawyer with the Association of Patent and Trade Mark Attorneys. “If you’ve invested in creating some piece of technology or something that is of value to industry, if you’ve put money into that, you want to basically protect that. That is critical for business.”

Translation costs, annuities and other fees for a typical life sciences patent currently amount to around €160,000 in its 20-year lifetime. That could be slashed to around €35,500 under the unitary patent system, Ms Walsh estimates.

The Ibec survey found that 80pc of Irish-based companies own patents.

Larger firms tend to hold more patents overall, including Europe-wide ones, which they currently have to apply for, country by country. The top sectors for European applications last year were medical technology companies, electrical machinery and energy firms and the pharmaceutical sector.

Tech companies are more likely to apply for European- wide patents only, and shy away from going down the national route. The survey found this was the case for a fifth of large companies that had more than 12 European patents.

But the survey also revealed that 68pc of small and medium-sized enterprises (SMEs) hold European-wide patents, while only 44pc had national ones.

Patent-owning firms tend to be larger and more profitable than non-patent active firms, according to Aidan Sweeney, Ibec’s head of enterprise and regulatory affairs, making more revenue and paying higher wages.

The survey found that 78pc of firms would increase patenting activity on the back of Ireland’s participation in the system, rising to 83pc for firms with 10 people or fewer. One US-listed pharmaceutical start-up that is developing depression treatments said its management “would not have been able to raise a single red cent had they not got some early patent applications filed”.

Around 20pc of respondents said they had no patents, largely due to complexity and cost. One company said the current system is “too fragmented, too expensive, too inflexible, and not inventor-friendly”.

Another said, “Anything that would simplify and reduce the time and expenditure involved in patenting would be a great help in increasing our patenting activity particularly as much of our business is exported to the EU.”

Naoise Gaffney, chair of Ibec’s corporate intellectual property (IP) group, said: “The majority have said they will use the system if it’s available to them. It really needs to happen sooner rather than later.”

Ibec estimates the court could add €1.7bn a year to Irish GDP, particularly in sectors such as chemicals and medical devices.

If Ireland were to win a bid to host one of the court’s key central divisions – a seat dealing with life sciences, which was promised to London before Brexit – that could add as much as €1.25bn to the economy per year, Ibec said.

More companies doing patent litigation here could help rehabilitate Ireland’s reputation as a hub for IP shell companies, Mr Gaffney, a Trinity professor of patent law, said.

“Anything that puts more substance to the extent of IP activities in the country actually brings the debate away from exactly that criticism. It follows, therefore, that more international companies start housing a lot of their IP management functions in Ireland and, with that, the gravitational effect might suck more R&D activity here.

“It very much goes to solidifying the foundations that people currently allege may not be as solid as perhaps they should be, given the amount of taxation revenue we’re deriving from corporates that are pushing most of their IP revenues through Ireland.”

“It’s a question of making it more legitimate.”

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