The intellectual choice
2 May 2005
Ireland is said to have made its mark on IP almost 15 centuries ago as the birthplace of copyright law. Many studies on the topic of copyright commence with the tale of St Colmcille in Ireland, who copied a gospel manuscript which belonged to St Fintan without his consent. St Fintan reported the matter to the High King of Ireland, who decided to hold an ecclesiastical court to rule on the matter; and in a judgment which would have consequences for centuries to come, he stated: "To every cow its calf, to every book its copy."
Times have certainly changed, but Ireland is still making its mark on the world of IP. It is one of the largest exporters of pharmaceuticals in the world and the largest exporter of software. Impressive statistics, but not surprising when seven of the world's top 10 IT companies and 13 of the world's top 15 pharmaceutical companies have substantial operations in Ireland. Ireland is the home of European centres for companies such as Apple, Microsoft, Dell and Oracle, as well as having large-scale research and development (R&D) facilities for the likes of Intel, GlaxoSmithKline, Pfizer and Wyeth.
Ireland's approach to IP is the chief reason that it is so attractive. The IP legislative framework, the enforcement available to IP owners and the fiscal policy as it relates to IP are all significant drivers for multinationals to come to Ireland.
On the legislative side, there is arguably no country in Europe that can say it has a better statutory framework when it comes to IP. All of the core Irish legislation in relation to trademarks, patents, copyright and related rights have been introduced in the relatively recent past. The Copyright and Related Rights Act 2000, dealing with copyright in all the different technologically advanced forms, is one of the most sophisticated pieces of legislation in Europe. This framework gives great comfort to companies considering either creating or managing their IP assets in Ireland.
It is all well and good to have the laws in place, but companies also need to be able to rely on and effectively enforce those laws.
When it comes to enforcement, Ireland is ahead of the game on that front too: a new Commercial Court was established last year and with its introduction came a new IP disputes forum. A division of the High Court, the Commercial Court was set up to deal with major commercial cases with a financial threshold in excess of €1m (£680,000). Interestingly, however, from an IP perspective, there is no financial threshold if proceedings are brought under IP legislation. Historically, cases that would have taken between two and three years to get to full trial, can now be disposed of in two to three months. Given the speed with which cases are dealt with, and the fact that IP disputes are often multijurisdictional, this enables companies to strategically choose Ireland as the jurisdiction in which to litigate based on the likely completion date for trial. In relation to interlocutory applications, a practice has developed in the Commercial Court whereby costs are awarded at the interlocutory stage - a very powerful mechanism in the fight against IP infringers.
The Commercial Court is not afraid of new challenges in this area either. Last year it had before it one of the first attempts in Europe to enforce the unregistered community design right and it impressively took less than four months to progress the contested case to trial.
Ireland is also attractive from a tax perspective and the Irish government has introduced a number of measures to improve its fiscal policy as it relates to IP. Ireland's 12.5 per cent corporation tax regime for profits from trading activities provides a good setting for companies to channel their trading income through Ireland, including income from the exploitation of IP rights. It has meant that a large number of companies are beginning to identify IP that exists within their international business, with a view to relocating it to Ireland. Other attractive features of Ireland's tax code include:
- The tax exemption in relation to income earned from royalties on qualifying Irish patents (ie where the R&D activity leading up to the invention was carried out in Ireland - effectively no tax is paid on income from these patents).
- The recently improved tax credits in respect of expenditure on R&D.
- The double taxation agreement network (Ireland currently has 44 double taxation agreements), which provides protection from double taxation on flows of IP income to and from an Irish company.
- The recently introduced stamp duty exemption on transfers of IP.
In addition to the above, a new Irish holding company regime was introduced last year, which provides for an exemption on capital gains arising on the disposal of shares in subsidiary companies and an exemption on dividends received from foreign shareholdings. These are of great interest to companies with large revenue-generating IP portfolios, which are restructuring the ownership of their IP so as to better position themselves to benefit from the exemptions.
The combination of an attractive fiscal regime and a strong legislative and enforcement regime, together with improvements in the administrative area (the Patents Office having recently improved radically the application to registration timeframes) means that Ireland is now an extremely good location to develop, protect and exploit IP rights.
Ireland is moving away from the historical manufacturing base that it was known for to having a highly skilled workforce in a knowledge-based economy. All of the above factors taken together have been the driving force behind the investment by multinationals, principally from the US, in the Irish economy. Apple started as a manufacturing plant, but moved its operations up the value chain to create centres of excellence across a number of business functions. Microsoft recently celebrated its 20th anniversary here and announced the opening of an R&D facility for highly skilled software developers. Intel is looking at investing €1.6bn (£840m) in the building of a new wafer fab facility. The future is certainly looking bright for the continued creation and exploitation of IP in Ireland.
John Whelan is head of IP/IT at A&L Goodbody