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Where Does Ireland Sit In Terms Of Innovation?

Where Does Ireland Sit In Terms Of Innovation?

European News 22/02/2024

The World Intellectual Property Organization (WIPO) recently published the annual Global Innovation Index report looking in detail at the innovation performance of over 130 countries.

Ireland is listed 22nd in the global rankings. There was a successive decline in Ireland’s place each year from 2018 to 2022. In terms of how different countries as classified, Ireland is no longer considered to be above the level of expectation or even in line with the level of development. This is a disappointing change as Ireland had been considered to be above expectation in 2022.

There are some positive aspects of innovation recognised in the report. In particular Ireland ranks as first globally in the case of payments and receipts arising from IP. This is a reflection of the successful incentives from the IDA and the tax environment to encourage the on-shoring of the ownership of IP in Ireland based holding companies.

One of the major factors dragging Ireland down in terms of innovation performance is the low levels of patents, utility models (known in Ireland as short-term patents), and industrial designs that originate from Ireland. This is a recurring problem that was previously noted in earlier years.

The number of patents being filed domestically at the Intellectual Property Office of Ireland (IPOI) (or as it was previously known the Patents Office) has been on a dramatic decline for 20 years. In 2022 there were only 89 full 20-year term Irish patent applications filed – the first time this figure has fallen below 100 in modern times. This amount of patenting is extremely low compared to the beginning of this century when a total of over 1,150 Irish patent applications were filed in 2001 alone. Indeed the balance has shifted overwhelmingly to patent filing activities at the European level rather than at the national level with the result that the percentage of patents in force in Ireland is now completely dominated by European patents granted by the EPO which subsequently have effect in Ireland, rather than direct Ireland national granted patents. The statistics from 2022 illustrate this huge shift with the IPOI granting less than 0.1% of the total patents granted in that year whereas the EPO grants account for over 99.9%. A financial consequence of this shift is that the IPOI has become increasingly reliant on the renewal fees from European patents granted by the EPO to maintain an operating profit.

This downward trend of patent filings is repeated in the university sector across Ireland. A recent report from Knowledge Transfer Ireland (KTI) reveals that there was a significant drop of 18% in new invention disclosures from Irish universities in 2022, and also a reduction in patent filings from universities in 2022. Because these university innovations are the source of future licence income and because IP rights such as patents can form the legal basis for licence negotiations, it comes as no surprise that the reduction in patenting activity has had a direct known-on effect to university licensing efforts. There was a major reduction of 18% in university IP licences and assignments in 2022. Irish universities are simply not engaging in the patent ecosystem to any extent compared to international standards. For example there were only 67 PCT applications filed from all Irish universities in total in 2022. This level of activity is a drop in the ocean in comparison to active patent filing universities globally, such as the University of California which filed over 550 PCT applications in 2022.

To turn around this underwhelming innovation performance in Ireland, the recommendation from WIPO is that Government policy needs to prioritise innovation in universities, and provide more support to start-ups and SMEs with intellectual property rights. Universities must be given the necessary financial support to fund innovation in the first place and protect the inventions to allow for a future return on investment.

Previous efforts in Ireland to incentivise innovation with tax supports, such as the Knowledge Development Box, have had very low take-up rates with not even a single application to the IPOI for a Knowledge Development Box certificate in most years. Financial support in the form of grants is already available from the IPOI, the EU Intellectual Property Office, and from Enterprise Ireland to assist start-ups navigate the IP protection environment to fund feasibility studies, IP audits, and IP protection costs. Unfortunately however the grants available amount to only some of the overall financial resources required and start-ups still need to raise finance from other investment sources to adequately engage in the IP landscape. The Disruptive Technologies Innovation Fund (DTIF) from Enterprise Ireland provides larger scale funding for major research projects. The latest round of the DTIF call is expected to be launched in early 2024.