TECHNOLOGY:From copyright to patents and from finance to visas there's a lot to play for in the digital world
The new year promises no shortage of issues and concerns for the technology sector at home and abroad. Finance, patents, innovation environments, visas, copyright, data privacy: all sit high on the agenda internationally.
In Ireland, our presidency of the EU and a declared intent by the Government to focus on the “digital agenda” during its tenure means several of these difficult issues will get a working over on home territory, giving Ireland the opportunity to promote discussion and potentially, influence outcomes.
Of many items on the tech agenda, here are five to keep an eye on in 2013.
EU data protection
As Ireland steps into the EU presidency, it will have the opportunity of facilitating – or not – a significant shift in Europe’s data protection legislation that would have an expected international knock-on effect, probably influencing policies in the US and other jurisdictions.
A year ago, European justice commissioner Viviane Reding proposed fresh regulations that would create a “one stop shop” of consistent data regulation across all 27 European member states; allow citizens a unique “right to forget”, where they can ask companies to delete their data if they are no longer using a service such as a social media site; let citizens easily remove and port their data to a new site; and impose significant fines on companies guilty of data breaches.
The proposals have drawn much international attention, for and against, with Ireland already under a spotlight as so many technology companies have European headquarters here. Under the proposed regulations, these would all be regulated from here in future, including several of the big social media companies.
Last September on a visit to Dublin, Reding noted that the regulations, which would replace dated data protection legislation from 1995, “will come to a very crucial, a very sensitive moment during your presidency”. Ireland could give “a gift” of significantly advancing the proposals, she said. Will we, or won’t we?
Copyright changes
Copyright will be another huge “digital agenda” issue during our stint at the helm of the EU. Europe is without a standard copyright law and a long-standing goal of many digital campaigners is to bring in a law that allows “fair use” of copyright material and also takes a clear stand on halting the trend to criminalising copyright violations, rather than viewing them, more sensibly, as a civil offence.
Having more flexible copyright law would – according to evidence from the US, which has more open copyright legislation – open up markets for existing companies and also trigger more entrepreneurship. Compelling statistics in this area encouraged Israel to adopt a more open copyright regime that includes “fair use” provisions.
But while the tech sector by and large strongly supports a liberal copyright environment, many powerful corporate interests in the film and music industries are arrayed against bringing in pan-European change.
Patent trolls and trivial patents
The year ahead is shaping up to be one in which the technology industry tries to tackle the headache of trivial patents (patents granted for vague ideas in the technology area) and patent trolls (officially, PAEs or “patent assertion entities” – companies that stockpile technology patents, including trivial patents).
The idea is that companies will be forced to pay out damages or royalties to those people or patent firms which claim to hold a patent being infringed. The problem, said to cost the US economy alone some $29 billion annually and widely considered to be one of the biggest roadblocks to international innovation and entrepreneurship, arises due to what many claim has been an excessive granting of patents in the tech sector, legal loopholes, the cost of litigation and the abstract claims made by patent trolls.
Huge multinationals, start-ups and every type of company in between can be affected. For young technology companies, without the resources to litigate, a trivial patent claim can damage or even destroy the company, draining critical capital and making prospective investors wary.
Smaller companies have few resources to tackle the issue, but deep-pocketed multinationals have indicated that they have had enough and have started to join together to try to change the system.
In December, a group including Facebook, Google, Dell, Intuit, Red Hat and Zynga filed a brief in the US Court of Appeals in a high profile case between Alice Corporation – a company that holds a large portfolio of patents – and CLS Bank, which Alice claims infringed its patents protecting broadly-defined computer-based financial transactions.
“Many computer-related patent claims just describe an abstract idea at a high level of generality and say to perform it on a computer or over the internet,” the tech giants stated in their 30-page brief. The US Federal Trade Commission (FTC) and department of justice have been holding hearings on PAEs, indicating there may at last be some US government appetite to resolve a problem that is largely US-based.
However, there may be trouble ahead in this area for Europe, which last month finally agreed on a contentious unified European patent scheme. Critics say some aspects of the scheme may open the door to software patent trolls over here.
Tech visas
Irish technology companies can expect to see a considerably better year on the hiring front if, as is currently indicated, the Government brings in a new fast-track technology visa that would reduce the average time it takes to get the nod on employing foreign nationals to a few weeks rather than up to two months. Companies say the long wait to get visas means they lose potential employees.
Barriers to securing visas in Ireland are a problem that the tech sector has been highlighting for years as it struggles to fill vacancies across the industry. Industry bodies have said for the past two years that around 5,000 tech jobs lie unfilled due to problems in finding qualified employees. All of which potentially mean skills gaps in promising tech sectors cannot be bridged, making the State less attractive to companies in these areas.
Minister for Enterprise, Jobs and Innovation Richard Bruton signalled an intention to address the issue last autumn and changes seem to be on the cards for early in the new year. Ireland’s technology companies will watch this one closely.
Venture capital
The big question for 2013: Is there money, or isn’t there? Many companies at home and internationally say they are struggling to find venture funding. Rumours have been circulating for some time that several of Silicon Valley’s best known venture capital firms are on the rocks and it’s said that European VC firms have a hard time going up against the Valley firms.
However, VCs in Ireland, Europe and the US say they have funds looking for suitable companies to invest in. European VC say the European tech industry is reaching a maturity that makes it very attractive for investment, while Valley VCs say the Valley remains the world’s most lucrative and vibrant investment zone.
There certainly appears to be cash for the right companies in Ireland, though not always money for certain phases of development.
It used to be that there was money only for more established companies looking for major expansion. Now, there is a reasonable supply of seed funding.
Where many young companies struggle is in the bridging period, when they need expansion funding.
Enterprise Ireland offers some funding in this area for “high potential” companies, but the State gave a big boost to this space last year by offering to co-invest with established international venture firms through its €500 million Innovation Fund Ireland.
Several partnerships were announced, including deals with US venture firms Polaris Ventures and DFJ. A second call for further VC applicants, concluded last summer, should produce further announcements early this year. Some initial investments have already been made in Irish companies through these partnerships. But the State, and Irish companies looking for capital, will be hoping for further activity in 2013.
On the flip side, international VCs will be looking for Irish exits – for a sign that Ireland has an increasingly mature innovation environment, in which Irish companies grow and regularly are sold or go for initial public offerings.
Without Irish companies consistently proving their viability with valuable exits, no government scheme, regardless of how attractive, is going to lure significant, stable investment here.
