Ireland’s track record in IP protection
Ireland is said to have made its mark on IP almost 15 centuries ago as the birthplace of copyright law. Historical 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 and software in the world. Impressive statistics, but not surprising when eight of the world’s top 10 software 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, Google, Microsoft, Oracle and eBay as well as having large-scale research and development facilities for the likes of Intel, IBM, GlaxoSmithKline, Pfizer and Wyeth.
Rights and enforcement
Ireland’s approach to the regulation of IP is the main reason that it is so attractive to these companies. 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 other 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, as amended on an ongoing basis since its introduction, is one of the most sophisticated pieces of legislation in Europe. The Irish legislative framework gives significant comfort to companies considering creating and 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 Commercial Court was established in 2004 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 and IP cases. Historically, cases that would have taken between two and three years to get to full trial are now generally disposed of in less than one year - offering a much more speedy litigation process than many of our EU neighbours. 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 enforce their rights, based on the likely completion date for trial. In relation to interlocutory applications, costs are often awarded at the interlocutory stage, providing a very powerful mechanism in the fight against IP infringers.
The Commercial Court is not afraid of new challenges in this area either. Shortly after its establishment the Court dealt with 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. In December 2007 the Court issued the first decision in Europe involving an unregistered design right in fashion designs, finding for the rightsholder in that case. It also currently has a number of significant high profile international patent cases before it.
Tax treatment of IP
Ireland is also extremely attractive from a tax perspective and the Irish government is continuously focused on introducing measures to maintain Ireland’s leading position as it relates to IP. Ireland’s 12.5% 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 identifying IP that exists within their international business, with a view to relocating it to and exploiting it from Ireland. Other attractive features of Ireland’s IP tax code include (but are not limited to):
- The recently enhanced R&D tax credit regime in respect of qualifying expenditure on certain R&D activities.
- A regime allowing for the amortisation of IP acquired by a company.
- The ‘key employee’ reward mechanism which allows a company to surrender some or all of its R&D tax credit to its key employees.
- The double taxation agreement network (Ireland currently has signed 69 double taxation agreements), which provides protection from double taxation on flows of IP income to and from an Irish company.
- The stamp duty exemption on transfers of IP.
In addition to the above, the Irish holding company regime provides for an exemption on capital gains arising on the disposal of shares in subsidiary companies and a beneficial foreign tax credit regime for dividends received from foreign subsidiaries. These are of great interest to companies with revenue-generating IP portfolios, which are restructuring the ownership and management of their IP so as to better position themselves to benefit from the exemptions. There has been a notable trend in the recent past of US businesses locating their corporate headquarters in Ireland, confirming the continued attractiveness of Ireland as a headquarter location.
The Irish knowledge economy
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. Intel, which has long had major manufacturing operations in Ireland, recently announced that it would also set up an "Open Lab" at its Irish base to help coordinate its Europe-wide network of researchers. Similar announcements of R&D facilities were made in recent months by many other multinationals. The future continues to look bright for the creation, protection and exploitation of IP in Ireland.