A consultant engaged to advise the liquidator of MediaLab Europe on patents generated while it was in operation bought the bulk of the portfolio for €40,000, the Dáil Public Accounts Committee heard yesterday.
Secretary general of the Department of Communications Brendan Tuohy said this would not have been the normal practice in a Government agency.
MediaLab Europe, the State-backed research laboratory for digital technologies, closed in January last year with the loss of 50 jobs in Dublin after its principal stakeholders, the Government and Massachusetts Institute of Technology, failed to agree on a new funding model.
Correspondence from the liquidator to the Department of Communications, which was partly read into the official record by Green Party TD Dan Boyle, said the advice of Enterprise Ireland regarding a number of outstanding patent applications was generally negative but it had suggested that they could be advertised for sale.
The liquidator said in a letter to the department that legal advice suggested that publishing details of the patents which were not in the public domain could have adverse consequences for the applications and "this could have the effect of destroying any prospective purchaser's interest in the patents".
It added: "At the same time we had engaged Mr Robert Swartz, who had previously been employed by the company, to provide technical advice and to protect the patent applications. Robert advised that the cost of an application would be in excess of €5,000 per patent. I advised Robert that it was my intention to advertise the patent portfolio on the IRC network website.
"A week later later Robert responded and advised that he was endeavouring to put together a group who would put forward an offer to purchase MediaLab Europe's interest in the patent portfolio.
"An offer was received from Robert Swartz on behalf of his group whereby he would pay €40,000 and cover the application and processing costs. After a long delay in finalising the document this sale was completed," the letter to the department said.
Mr Tuohy said once the liquidator had been appointed to MediaLab Europe, the department's hands were tied. The liquidator had to make a call as to whether to keep alive the patents or to let them die. Patents were a risky business and in this case the liquidator secured €40,000.
However, he said it was unusual "to sell to the guy who came in to advise you". It would not be something that a Government department would do. Normal practice would be to put the patents out to tender.
