Department of Finance publishes KDB consultation feedback

The Irish Department of Finance has published the results of its consultation into the implementation of a “Knowledge Development Box” in Ireland. One of the key issues that arose during the consultation was the definition of “qualifying assets” i.e. those intellectual property rights for which a lower corporation tax rate applies to the associated profits. This definition is controversial since the OECD has mandated that favourable tax treatment of intellectual property related profits can only apply where there is a nexus with real research and development activity.

The proposal from the Department of Finance limits the qualifying assets to patents, software copyright, supplementary protection certificates and plant breeders’ rights that result from research and development activities. Marketing related intellectual property is specifically excluded. The document states further that “The scope of patents and copyrighted software that may be included in the definition of qualifying assets is under active consideration.

The document details a possible approach as follows:

One possible approach is that the following definitions could determine what is a qualifying asset:

‘qualifying asset’ means an asset which is intellectual property, other than marketing related intellectual property, which is the result of research and development activities;

‘intellectual property, other than for the purposes of the definition of acquisition costs,’ means:

(a) a patent granted under the laws of the State or under any corresponding provisions of any territory outside the State,

(b) any copyright or related right within the meaning of the Copyright and Related Rights Act 2000, or any corresponding provision of law of any other territory outside the State, in relation to computer software,

(c) any supplementary protection certificate issued under Council Regulation (EC) No 469/2009 of 6 May 2009 (OJ L152, 16.6.2009, p 1) concerning the supplementary protection certificate for medicinal products,

(d) any supplementary protection certificate issued under Regulation (EC) No. 1610/96 of the European Parliament and of the Council of 23 July 1996 (OJ L198, 8.8.1996, p 30) concerning the creation of a supplementary protection certificate for plant protection products, or

(e) any plant breeders’ rights within the meaning of section 4 of the Plant Varieties (Proprietary Rights) Act 1980, as amended by the Plant Varieties (Proprietary Rights) Amendment Act 1998;

‘marketing related intellectual property’ includes trademarks, brands, image rights and other intellectual property used to market a qualifying asset; ‘research and development activities’ means systematic, investigation or experimental activities in a field of science or technology, being one or more of the following—

(i) experimental or theoretical work undertaken primarily to acquire new scientific or technical knowledge, with a specific practical application in view,

(ii) applied research, namely, work undertaken in order to gain scientific or technical knowledge and directed towards a specific practical application, or

(iii) experimental development, namely, work undertaken which draws on scientific or technical knowledge or practical experience for the purposes of achieving technological advancement and which is directed at producing new, or improving existing, materials, products, devices, processes, systems or services including incremental improvements thereto;

It doesn’t look like there will be any further formal consultations at this point. The Department has said that it will continue to consider the issues until the end of August at which point it presumably will begin to finalise a proposal for inclusion in October’s budget.

Major study of intellectual property use by Irish business published

The Department of Jobs Enterprise and Innovation (DJEI) today announced the publication of a major study into the use of the intellectual property by Irish enterprises. The study which followed on from an earlier in-depth analysis of IP usage by Irish business has made several recommendations in respect of the various public bodies which have responsibility for enterprise policy development and delivery. The key recommendations call for the drafting of a National IP Statement and the appointment of a National IP Champion as well as various measures to strengthen supports and education in IP matters.

According to the consultants engaged by DJEI:

The creation of a national IP Statement and assignment of an IP Champion are key recommendations, and implementation will need to be driven by DJEI. Given the focus on IP as a platform for increased innovation and growth we would recommend DJEI be responsible for the establishment and implementation of the IP Statement. As part of the development of the IP Statement, further consideration of the remit, resourcing and hosting of the IP Champion function would be required. The IP Champion needs to be an experienced, high-calibre individual with the authority and political skill to drive change and will need to be supported with communications, tool development and operational activities. The IP Champion will have a key role in promoting IP management capability amongst the firm base in Ireland, and should work through appropriate agencies and offices of DJEI.

The launch of a national IP Statement and the creation of an IP Champion would improve visibility around IP and IP inter-service coordination immediately, and provide a focal point for IP information and tool development. This will in turn provide the platform for strengthening the IP commitment and capacity of key public sector actors in the innovation system in Ireland and will also provide the wherewithal for those actors to bake-in IP advice to their wider service offer.

Fred Logue represented the intellectual property law committee of the Law Society of Ireland on the expert IP advisory group which worked with the consultants and DJEI staff to produce the report.

The reports may be downloaded from here.

Lessons for everyone from NAMA v. Commissioner for Environmental Information

“This is a long drawn out and contentious dispute conducted between two public bodies at public expense, which is one further illustration of the truth that some disputes are so bitter because the stakes are so low. The increased public availability of information held by official bodies in relation to the environment is part of the international trend towards both greater sensitivity to, and protection of, the environment and greater disclosure of information, transparency if you will, in relation to public bodies. In Ireland, this development can be traced to international roots, and in some cases to specific provisions of European law. It is important therefore, in seeking to understand the provisions of Irish law, to set them in their European and international context.”

Thus opens the judgment of O’Donnell J giving the unanimous judgment of a five-person Supreme Court in National Asset Management Agency v. Commissioner for Environmental Information which concerned the issues as to whether NAMA was a public authority and therefore subject to the European Communities (Access to Information on the Environment) Regulations 2007. Readers will recall that this regulation gives effect to Directive 2003/4/EC on access to environmental information, a right of access mandated by the Aarhus Convention which has been ratified both by the EU and Ireland.

While the opening paragraph perhaps does not do justice to the importance of access to information as a tool of environmental protection it clearly expresses the Court’s dissatisfaction with many aspects of this case which comes five years after journalist Gavin Sheridan asked NAMA to grant access to environmental information. A less than satisfactory transposition, the Commissioner’s long and unsatisfactory procedure and undue narrowing of the issues by the parties in court all came in for criticism by judge O’Donnell. Too many rules of thumb, incorrect application of domestic statutory interpretation rules to EU law and poor litigation tactics combined to make life difficult for the Court forcing it in the end to decide the issue on an interpretation that was by agreement not argued by the parties.

The Court emphatically held that domestic rules of statutory interpretation do not apply in the case of the transposition of laws arising under international treaties such as the Aarhus Convention since these laws necessarily involve concepts and rules which must apply in a harmonized way over a broad range of legal systems and traditions and in the case of the Aarhus Convention extending beyond Europe itself. In such cases, the Court said, the domestic implementation must be interpreted in the context of the directive and treaty in order to achieve the purpose of the international instrument.

“10. While it will be necessary to address the specific questions of interpretation arising here in some detail, it is necessary to make some general observations at this stage on the approach to interpretation of a statutory instrument introduced in to Irish law pursuant to the State’s obligations to implement in national law the provisions of a directive of the EU which itself was adopted in compliance with an obligation undertaken by the EU (and Ireland) under an international agreement. It does not seem to me to be possible, and if possible, would not be correct, to approach the question of interpretation solely through the prism of national law, and the sometimes elaborate approach to statutory interpretation in Irish law in particular. There are rules for the interpretation of legislation introduced implementing an international treaty. In particular, this specific obligation undertaken by Ireland as a member of the EU requires that the courts approach the interpretation of legislation in implementing a directive, so far as possible, teleologically, in order to achieve the purpose of the directive. But furthermore, the language used in this statutory instrument, and in particular subparagraphs (a) to (c) is derived directly from Directive 2003/4/EC addressed to member states and intended to take effect in different national legal systems. That language is in turn derived from an international treaty negotiated between and agreed upon by a large number of international states with different legal systems.
11. In this particular context, it is important to bear in mind that the concepts of administrative law and public law can differ substantially between countries, and in particular between common law systems and civil law systems. It does not appear possible, or indeed lawful, therefore to address the meaning of this statutory instrument in isolation from that context. In particular, even the provisions of subparagraphs (i) to (vi), while clearly terms introduced by the Irish legislator, must nevertheless be understood as implementing the provisions of Directive 2003/4/EC (and indirectly the Convention) and for the reasons touched on above, ought not to go further (but not fall short of) the terms of that Directive. If even as a matter of purely domestic interpretation, the provisions of those subparagraphs might appear to either fall short of what is required by the Directive, or go further, an Irish court might be required to adopt another interpretation which is consistent with the provisions of the Directive, if that is possible. Accordingly, in order to understand what the statutory instrument means and does in this case, it is necessary, perhaps first, to understand exactly what the Directive does and means, which in this case may also mean interpreting the provisions of the Convention. I propose therefore to outline the essential facts of this case before addressing the specific issue of interpretation which has arisen.”

In the end the majority of the judgment is concerned with the correct interpretation of laws which derive from EU and international law and in particular the pitfalls that arise if such laws are not implemented through primary legislation. The judgment also sets down clear indications that where there is uncertainty as to fundamental concepts an early CJEU reference should be made by a lower court or tribunal (including in this case the Commissioner) rather than waiting for a lengthy domestic court process to conclude at appeal stage that such a reference is necessary. The court also found that an agreement by the parties to narrow the issues was particularly unhelpful to the Court and would likely have lead to a narrow judgment with little precedential value and the possibility of further lengthy and expensive litigation between two publicly funded bodies.

The Court observed that but for the decision of the CJEU in Fish Legal which was delivered during the Supreme Court hearing it would have referred questions to the CJEU for a preliminary reference concerning the correct definition of public authority under EU law.

In the end the issue was decided in a mere paragraph (2% of the judgment) where the Court had no difficulty applying Fish Legal to the issue. The Court said the issue was clear since NAMA was a creature of public law and had been granted significant special powers in the context of the state response to the recent financial crisis.

“50. If the law stood as it was at the time of the High Court decision I would have considered it necessary to refer a question to the ECJ as to whether a body such as NAMA was a public body for the purpose of the Directive which exercised public administrative functions. The definition section of the Directive is unclear, and it is also necessary to consider the Aarhus Convention. However the decision in Fish Legal provides an authoritative interpretation of the Directive, and moreover does so in the context of a common law system. Applying that test it is clear that NAMA is indeed a public authority exercising public administrative functions. Although like the water companies in Fish Legal, it is obliged to act commercially, it is undoubtedly vested with special powers well beyond those which result from the normal rules applicable in relations between persons governed by private law. If anything, the case is clearer here. The water companies in Fish Legal were companies established in private law whereas NAMA is established pursuant to a statute which confers upon it substantial powers of compulsory acquisition, of enforcement, to apply to the High Court to appoint a receiver and to set aside dispositions. The Act also restricts or excludes certain remedies against NAMA. The establishment and operation of NAMA is a significant part of the executive and legislative response to an unprecedented financial crisis. The scope and scale of the body created is exceptional. Indeed if it were not so it would not be in a position to carry out the important public functions assigned to it in the aftermath of the financial crisis. Accordingly, for the reasons set out above, I would dismiss the appeal.”

FP Logue Solicitors acted for the requester

Breaking: NAMA is a public authority under AIE

Judge O’Donnell gave the unanimous judgment of a five judge supreme court this morning holding that NAMA is a public authority and there is subject to EU and International access to information on the environment rules.

It’s a nuanced and detailed judgment concerning the interpretation of these rules in the Irish context and how requests should be handled proceduraly.

The judgment is available here and commentary will follow shortly.



UNAPPROVED Judgment of O’Donnell J Delivered 23 June 2015 (Text)

Is NAMA a public authority?

Is NAMA a public authority?

That’s the question that will be answered today by the Supreme Court of Ireland – more than five years after the question was asked.

It’s hard to believe that NAMA which was created by the state to take over and manage the toxic property debts of the Irish banks is anything other than a public authority given the circumstances in which it was established and the degree of control exercised over it by the state. Both the Commissioner for Environmental Information and the High Court said it was a public authority but it now falls to the Supreme Court to have the final word on the issue.

Surprisingly the issue that has ended up before five judges of the highest court in the land boils down to the meaning of the words “and includes.”

So what’s at stake?

Well  if NAMA is a public authority it must provide public access to information on the environment that it holds. Simple as that. At this stage with NAMA in wind down mode and with it now under the Freedom of Information regime there is probably less at stake for it and the public than was the case five years ago. Nevertheless it is an entity that is plagued with allegations of lack of transparency in how it manages its portfolio of assets.

In the wider context the Supreme Court may take the opportunity to clarify which bodies-as public authorities-come under the Access to Information on the Environment regime (called AIE by those in the know). This is an EU law flowing from the Aarhus Convention which obliges public bodies and other entities with environmental responsibilities which are controlled by public bodies or given special powers by them to provide public access to environmental information.

Additionally if NAMA is a public authority Anglo Irish Bank (now IBRC) will also be and therefore subject to AIE. Notably IBRC is not subject to FOI and its activities are themselves now the subject of a Commission of Enquiry arising out of access to information provided under FOI and parliamentary questions to Catherine Murphy TD.

Anyway all will be revealed shortly at which point we will update you.

FP Logue solicitors acts for the requester Mr Gavin Sheridan.

Why don’t Irish companies patent more?

Why don’t Irish companies patent more?

This is a perennial question particularly amongst policy makers and politicians. It is rather uncontroversial that we need to have strong industries to support a vibrant, internationally competitive economy. Technology companies obviously form a significant part of the industry base that Ireland requires to provide the wealth required to maintain and grow our standard of living. Indeed there are many state incentives in place to support the development of this sector.

Our analysis consistently shows, however, that patenting by Irish domiciled applicants is primarily driven by subsidiaries or head quarters of foreign multinationals in the first place and state-funded research performing organisations (primarily universities) in the second place. There are very few indigenous Irish companies with strong portfolios and an enormous “long tail” of local companies with insignificant portfolios. The problem with this view of the “national patent portfolio” is that although the gross numbers look OK, the R&D activity which feeds into the foreign multinational portfolios by and large takes place outside of Ireland and is more a reflection of tax optimisation than a vibrant wealth-generating domestic technology sector. Secondly the university portfolios do not reflect underlying wealth generating economic activities but are a consequence of state subsidised R&D and patenting. Technology transfer from the third level is insignificant in relation to the amounts spent on patenting meaning that the investment in this part of the portfolio by the state will never generate a return.

So why don’t indigenous Irish companies feature in the national portfolio?

In my view there is only one answer: Size. We do not have enough large indigenous companies with sufficient revenues and R&D budgets to merit the costs of patenting.

Patenting is expensive. From filing to grant a US patent costs in the region of $30,000 in attorney and official fees. Therefore a company needs to have a certain scale in order to maintain a portfolio.

What is that scale?

Well according to Larry M Goldstein, in  his book “Patent Portfolios: Quality, Creation, and Cost” a typical technology firm spends approximately 10% of its revenues on R&D and a reasonable patenting budget is 1% of the R&D budget. Putting these figures together means a technology company must have revenues of more than $30 million to justify the costs of patenting. Of course a well architected portfolio requires depth and consistent coverage over time and so annual revenues north of $100 million are needed for a company to generate a patent portfolio with significance in its sector.

And of course the costs of patenting are incurred outside of Ireland since the Irish market is tiny for most technology companies and certainly for the ones that wish to achieve revenues greater than $30 million. The largest market in the world is the USA which means the costs of patenting are generally completely outside of the control of any Irish intervention since they rely primarily on the fees of the US Patent and Trademark Office and the professional fees of US patent attorneys.

The challenge, therefore, is for Ireland to generate technology companies with annual revenues greater than $30 million rather than to focus on patent filings per se. This requires focusing effort on identifying companies that have made significant technology advances and supporting them to scale internationally as quickly as possible rather than trying to subsidise the costs of patenting for everyone.

 

FP Logue advises on one of the most important European Ombudsman cases of 2014

European Ombudsman, Emily O’Reilly, today launched her annual report for 2014.

The report gives specific mention to the “Trichet Letters” case which concerned a request for access by Journalist, Gavin Sheridan, to correspondence sent by the then President of the European Central Bank, Jean-Claude Trichet, to the Irish government in late 2010 at the height of the financial crisis.

We provided legal advice to Mr Sheridan in relation to his submissions to the Ombudsman.

In a video feature, the official who conducted the investigation, Mr Lambros Papadias, describes this case as one of the most important of 2014 since it demonstrated the pragmatic approach of the Ombudsman and the new willingness of the ECB to be more transparent in relation to its monetary policy activities.

 

 

It had long been suspected that the ECB put pressure on Ireland to accept a bailout and had threatened to withdraw support for the Irish banks thereby presenting the possibility that the Irish economy would collapse unless the Irish government accepted a bailout.

The Ombudsman conducted a lengthy investigation and considered that the ECB was justified in refusing access at the time of the request but at the conclusion of her investigation in early 2014 she recommended that the letters should be released given that the threat to the financial stability of the eurozone had now receded. The ECB refused to accept this pragmatic recommendation maintaing that a release would destabilize eurozone economies and would be harmful to euozone fiscal policy. However several months later the new president of the ECB, Mario Draghi, decided to review the position and finally agreed to release the letters to Mr Sheridan.

In a final twist to the tale the letters were then leaked to the Irish Times on the eve of their release to Mr Sheridan.

Irish courts slowly opening access to documents

One of the fundamental pillars of the justice system in liberal democracies is that in general justice must be administered in public. This principle is enshrined in Article 34.1 of the Constitution. It means, for example, that our laws are publicly available, trials take place in public and judgments are published.

Crucially, however, in the Irish legal tradition this principle does not extend to public rights of access to documents presented in open court. This meant that a member of the public must attend court or else rely on the press reports to find out what takes place in our court rooms. Court filings are not considered to be particularly confidential and are often to be found lying around empty court rooms or can be acquired by a journalist in the know from lawyers, however the courts administration would never disclose a document to a member of the public.

Of course it doesn’t have to be this way. Consider the United States which has a common law justice system similar to ours. It publishes all court filings online as soon as they are filed. The system, called Public Access to Court Electronic Records (PACER) provides online access to scans of original documents for a fee. So through PACER it was easier for the Irish public to find out what was going on in the American trials of David Drumm and Sean Dunne than it was in relation to similar actions being taken in Ireland.

That been said the system is slowly shifting towards a more open access to Court documents.

In March 2013 Judge Gerard Hogan (then a High Court judge) ruled in AIB -v- Tracey (No 2) [2013] IEHC 242 that under Article 34.1 documents opened and effectively read into the record of the court should be available to the public without needing permission from a judge. Hogan J stated:

22. The open administration of justice is, of course, a vital safeguard in any free and democratic society. It ensures that the judicial branch is subjected to scrutiny and examination and helps to promote confidence in the fair and even handed administration of justice. Any system of secret court hearings could pave the way for judicial arrogance, overbearing judicial conduct and abuse.
23. In these circumstances the public are entitled to have access to documents which were accordingly opened without restriction in open court. This is simply part and parcel of the open administration of justice which the Constitution (subject to exceptions) enjoins. Entirely different considerations would naturally arise in respect of material which was not opened in open court or which was protected by the in camera rules or by reporting restrictions imposed, for example, pursuant to s. 27 of the Civil Law (Miscellaneous Provisions) Act 2008

Unfortunately judge Hogan’s ruling has yet to be implemented by the Courts Service or indeed followed by some of his former High Court colleagues (see Lowry -v- Mr Justice Moriarty [2014] IEHC 602).  Perhaps we will have to wait and see given that the Tracey judgment is now under appeal to the Supreme Court – a court which incidentally itself directed that the public be provided with access to filed submissions once the hearing in a case had concluded.

To prove the point I successfully accessed written submission in an NAMA -v- Commissioner for Environmental Information (Supreme Court No. 159/2013) an appeal concerning access to environmental information. Although the documents appear to have been held electronically by the Supreme Court Office I had to pay a €40 fee (including €1 per four pages for copying) and collect them personally in Dublin.

So here they are in case any member of the public wants to exercise their rights under the Constitution to access written submissions to the courts. (NAMA submission, CEI Submission)

CEI_Submission
NAMA_submission

The nine most terrifying words in the English language

Post updated on Monday 26 January

“I’m from the government and I’m here to help”

In 1986 President Ronald Reagan quipped that these nine words are the most terrifying in the English language.

Well, as the state begins to harvest huge quantities of personal data and to build all-encompassing databases, another nine word phrase is about to strike far more terror when you hear it.

The state has come late to the big data game but it is now making up for lost time and is embracing it with enthusiasm. The scale of each new project is matched only by the controversy generated when the public learns how their personal data will be obtained and processed – usually after decisions have been made and the project is about to be rolled out.

We have Irish Water and PPSNs, the Irish genealogy database which published the birth records of the entire population on the web and proposals for data sharing and governance legislation to facilitate the sharing of personal data between state bodies.

Unfortunately the enthusiasm for collecting personal data has so far not been matched with a similar effort to comply with data protection law. Many projects are developed without privacy impact assessment and are presented as faits accomplis leading to inevitable clashes with the public and the independent Data Protection Commissioner.

Most recently comments by the Minister for Education that the Data Protection Commissioner was satisfied with the Department of Education’s plan to build the Primary Online Database lead to the Commissioner being forced to publicly contradict the Minister indicating that discussions were ongoing.

https://twitter.com/Tupp_Ed/status/559071463647739904

So what nine words could possibly strike terror into the hearts of a population that survived the crash of the Celtic Tiger? Well they are:

I’m from the government and your data is anonymised

From recent reports it mow appears that the Department of Education is discussing anonymisation of the Primary Online Database with the Data Protection Commissioner.

Well someone should ask Mayo TD Michelle Mulherin how anonymisation is working for her.

The Sunday Times reports that Ms Mulherin was the only TD in the Irish parliament on the dates when expensive phone calls were made to a mobile number in Kenya. The details of the calls were released under the Freedom of Information Act in an “anonymised” database. While it must be said the fact that Ms Mulherin was the only TD present on those occasions does not prove she made the calls – the reporting in the press is now raising the possibility that it was her.

From a data protection point of view this is a perfect example of the difficulty with anonymisation. Data protection rules apply to personal data which is defined as data relating to a living individual who is or can be identified from the data or from the data in conjunction with other information. Anonymisation is often cited as a means for processing data outside the scope of data protection law but as Ms Mulherin has discovered individuals can be identified using supposedly anonymised data when analysed in conjunction with other data.

In the case of the mysterious calls to Kenya even though the released information was “anonymised” to protect the privacy of public representatives, the phone log used in combination with the attendance record of public representatives and information on social media was sufficient to identify individuals and at least raise evidence of association between individuals and certain phone calls. While this may be well and good in terms of accounting for abuses of the phone service it also has worrying implications for the ability of public representatives to conduct their business in private.

The bottom line is that anonymisation is very difficult if not impossible as Ms Mulherin has learned to her cost. It certainly is a lot more complex than simply removing names and other identifying features from a single dataset. The more data that there is and the more diverse the sources the greater the risk that individuals can be identified from supposedly anonymised datasets.

In fact true anonymisation is a hard problem mathematically and to make a claim of anonymisation a data controller should be required to provide formal proof that anonymisation has been achieved. I suspect this is impossible in all non-trivial cases.

The Open Data Institute in the UK has published a truly excellent presentation from Ross Anderson who takes the view that it is impossible.

Update: The Irish Independent is reporting this morning the Ms Mulherin has admitted making the calls to Kenya but that they were not personal calls.