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Our patents system needs a shake-up
Sunday, December 07, 2008
With a sharp focus setting on public-spending commitments, is scientific research and development in Ireland a black hole for taxpayers’ money? Adrian Weckler reports.

Despite state agencies such as Science Foundation Ireland (SFI) being given hundreds of millions of taxpayers’ euros annually, Ireland still lags near the bottom of the pile for filing patents and other statistics used to determine scientific progress.

Research and Development (R&D) has become a huge spending commitment by the state, and the government has pledged €8.2 billion for scientific and technology research until 2013 in the National Development Plan.

At an annualised rate, that’s between a third and a half of the overall €2.5 billion spent each year in Ireland on research and development. To give a further boost to R&D, the recently-published Finance Bill has given an additional tax break for firms investing in research.

State funding for scientific R&D is divided mainly between agencies such as Science Foundation Ireland (SFI), the IDA and Enterprise Ireland.

The rest of Ireland’s annual R&D spending is carried out mainly by larger companies and multinationals, with very little conducted by small to medium-sized companies (SMEs).

So far, €760million has been spent by the state’s largest research funding body, SFI. It has pledged a further €400 million in grants. Last year, it granted €365 million to 570 college research projects, or roughly €600,000 per project.

But the question is: what, if any, return is the taxpayer getting for this investment? The most obvious measure of progress is in the number of patents that emerge from state-funded research. Ireland is struggling on this count.

In total, just 415 European patents were filed from Ireland last year, far off what similarly-sized countries such as Denmark (1,408 applications), Austria (1,379 applications) or Belgium (1,900 applications) filed.

Even then, a considerable number of the patents came from subsidiaries of multinational companies, leaving a question over what progress Ireland is making in scientific research.

‘‘Most people use patents as an indicator of research and development activity,” said Cathal Lane, a partner in patents specialist Tomkins.

‘‘Based on this, we’re near the bottom of the pile.”

Since 2001, about 200 patent applications have been filed by SFI-funded researchers, making the cost of investment just under €4 million per patent. So is this giving the taxpayer value for money? In June, the Department of Enterprise, Trade and Employment published a report on the issue.

The report by consulting firm Indecon, concluded that the SFI was doing a ‘‘positive’’ job and that ‘‘SFI programmes hold out the prospect of delivering value for money’’.

Aside from looking at metrics such as patents, the report based its CONCLUSION on ‘‘the contribution of the Foundation to the development of human capital in research and the performance and quality of research outputs which have emerged to date’’.

Other points made by SFI include the time-lag between investment and return and the contribution made by SFI-funded research groups to other economic investment.

‘‘If you look at the recent investment announced by the IDA and IBM, that was helped substantially by the existence of three major research groups funded by SFI,” said a spokeswoman for the agency. ‘‘An IP [intellectual property] application can take anything up to five years, so there’s a time difference between a funding grant and a patent.”

Within SFI’s funding process, some institutions, such as DCU’s biomedical diagnostics institute, are making measurable progress. In 2005, it received a five-year grant from SFI of €17.6 million. Last year, that unit filed six patent applications. Should that remain its output, that’s a taxpayer contribution of €430,000 per patent filed.

But not everyone agrees that the number of patents filed is a reliable guide to scientific progress. ‘‘Patents are a start, but licensed patents are what really counts,” said Tom Flanagan, head of technology transfer at DIT, which filed six patent applications last year. ‘‘There are a lot more patents than licences. A patent is only an indication of the novelty aspect, but not necessarily its commercial viability. We don’t patent things that we can’t licence.”

Some in the legal profession agree.

‘‘Research and development doesn’t necessarily lead to patent filings,” said Michael O’Connor, a partner in the legal firm Cruickshank. ‘‘In many ways, patent numbers are a bad indication of research and development activity, as they are merely a technological solution to a technological problem. But they could be rubbish, they could be worthless.”

In a country dominated by small companies, filing a patent application can be prohibitively expensive.

‘‘One of the problems with the patent system is that you have to incur fairly large costs at a relatively early stage in the developmental life of the product,” said Michael Sharp, head of Enterprise Ireland’s intellectual property unit.

‘‘Small companies would be trying to maximise the amount they have to spend on technical features and sales, so most don’t have the extra money to spend on a patent.”

According to Eurostat figures, Ireland’s national expenditure on research and development is equivalent to 1.5 per cent of gross national product. But that is still regarded as low by international standards, with Forfas’s latest annual report describing it as the performance of a ‘‘third tier country’’. Denmark and Germany invest 2.5 per cent of GNP in research and development, while Sweden spends 3.8 per cent of GNP on research.

But even with increased taxpayer billions, can Ireland drag itself up to the standard in research and development terms set by other advanced European countries? Michael O’Connor believes that it is not just a lack of state involvement that makes countries like Denmark far outstrip Ireland.

‘‘Their technology is modern and high tech, whereas, if you look at Ireland, you think of Kerry Foods, of Guinness or of Waterford Crystal,” he said. ‘‘In Ireland, you’re not talking about cutting-edge technology or major technological advancement. We are very articulate and very good at sales. But we do not have the same kind of advanced industrial context that Denmark has.”

If an advanced industrial environment is to emerge, Ireland needs to rethink its strategy of investing in services at the expense of manufacturing, say entrepreneurs.

‘‘Manufacturing has become almost a dirty word,” said Stephen Grant, founder of Grant Engineering, which holds 40 patents and dominates the oil-fired boiler market in Britain. ‘‘If we’re to get serious about this, that has to change. They’ve pursued the same strategy of services over manufacturing in Britain, and they’ve lost their skillset badly there.”

Unfortunately for privatesector researchers, the funding pot for the private sector is a shadow of that available to colleges.

‘‘The amount of money we’re giving in patenting is very small,” said Sharp. ‘‘In our preliminary scheme, we’re providing about €10,000.We’re helping between 40 and 50 companies with this at present, while we fund about 500 college patenting applications.”

Even with this small sum, the ‘‘vast majority’’ of grant recipients’ projects wouldn’t make it to the patents office, said Sharp.

Even for those that do, there appears to be little to bridge the funding gap between the hundreds of millions allocated to third-level institutions for research and the thousands on offer to indigenous companies.

‘‘There’s huge support in the state for the higher education institutes, but not much for small businesses,” said Cruickshank’s Michael O’Connor.

‘‘The government has come to this game late, and we’ve got to catch up. Without incentivising research and development, we can already hear the doors of the multinationals closing.”

Tom Flanagan of Dublin Institute of Technology (DIT) agrees. ‘‘The gap in the market is definitely SMEs,” he said.

‘‘From my own day-to-day experience, the universities are starting to use research funds well, and multinationals too, to a certain extent. But the SME sector is behind.”

Tanaiste Mary Coughlan recently said that Ireland should become the centre of IP in Europe. On the evidence, we have some way to go.

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