Intellectual Property (Unjustified Threats) Bill [ Lords ]

(Limited Text - Ministerial Extracts only)

Second Reading Committee debate: House of Commons
Monday 16th January 2017 General Committees

[The Chair]

Before we begin, it might be helpful if I remind Members that the Second Reading of this Bill is being debated in Committee, rather than in the Chamber, because it is a Law Commission Bill. Under Standing Order No. 59, Law Commission Bills stand automatically referred to a Second Reading Committee. As this is a Second Reading debate, no Member may speak more than once without the leave of the Committee. Permission is conventionally granted, however, to the Minister moving the motion to do so, at the end of the debate.

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

I beg to move,

That the Committee recommends that the Intellectual Property (Unjustified Threats) Bill [Lords] ought to be read a Second time.

It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the law commissioners for bringing the Bill to the House in this state. It has had a consensual passage through the other place. I recently inherited the role of Minister with responsibility for intellectual property from Lucy Neville-Rolfe, who has gone to the Treasury, and I am pleased to be responsible for introducing the Bill to this House.

The intellectual property regime is crucial to the UK’s economic growth. IP-intensive industries are estimated to generate more than 25% of UK employment and 37% of UK GDP. IP is also vital to protecting and building our strong research base, creating economic growth from our fantastic universities and world-class scientific research. The importance of IP is reflected in our manifesto commitment to make the UK

“the best place in Europe to innovate, patent new ideas and set up and expand a business.”

The Bill is just one of a number of ways in which the Government are taking action to improve the IP regime. We have brought the unitary patent and Unified Patent Court one step closer, giving businesses the option to protect their inventions in up to 25 countries with a single patent. Furthermore, the Digital Economy Bill, which left the House in December, contains important IP provisions, including reforms to the penalties for copyright infringement.

Of course, improving the IP regime is not limited to legislation. The Intellectual Property Office is continually improving its services and increasing the availability of digital IP tools. We also continue to make considerable progress through international harmonisation of IP laws and practice, as well as IP education, outreach and enforcement activities on a number of fronts.

The Bill is of narrow scope but fits perfectly with the Government’s wider work on the IP regime. It gives effect to recommendations made by the Law Commission following in-depth analysis and extensive consultation. The Law Commission is a statutory independent body, tasked with reviewing the law to ensure that it is modern, fair and fit for purpose. Like other Bills resulting from the Law Commission’s work, the Bill follows a special parliamentary procedure that facilitates uncontroversial but important law reform.

I am grateful to colleagues in the other place who have given the Bill their detailed attention. Their enhanced scrutiny, as required by the special procedure, is greatly appreciated. In particular, the Special Public Bill Committee considered detailed evidence from industry, the legal profession, the IP judiciary and others. I am also thankful to the Law Commission and stakeholders who have worked together and with Government to produce and refine these much-needed reforms. As a consequence of those efforts, the Bill comes before us in very good shape.

I will briefly explain the complex and specialist aspect of our IP framework with which the Bill is concerned, namely unjustified threats—that is, a threat to sue for infringement of an IP right where no infringement has taken place or where the IP right in question is invalid. The considerable financial burden of IP litigation means that many businesses seek to avoid it at all costs. Small businesses in particular are disproportionately affected by the drain that such litigation places on their limited time and resources. The mere threat of being sued for IP infringement can therefore drive customers or retailers away from an entirely legitimate business. As a result, unjustified threats can cause significant commercial damage. To combat that, the threats provisions have existed in some form for more than 100 years. They offer much-needed protection and provide appropriate remedies to those affected by an unjustified threat.

Unfortunately, the existing threats provisions are not as effective as they should be. They are overly complex and have developed in a piecemeal fashion across the different IP rights. The law is inconsistent and difficult to navigate as a result, which is why the Government asked the law commissioners to review this area of law in detail in 2012. The Law Commission made a number of detailed of recommendations, which are reflected in the Bill. It substituted new threats provisions for old within the relevant parent Act for the relevant IP rights: patents, trademarks and both registered and unregistered designs. The main clauses repeat the same substantive law across each of those rights.

There are five main parts to each clause. The first sets out a clear test for whether a particular communication contains a threat. The second sets out which types of threat trigger the threats provisions. The third gives guidance on what can be safely said. The fourth sets out remedies and defences. The fifth introduces an exemption so that threats claims cannot be brought against regulated professional advisers acting under instruction.

I hope that the Committee has found that brief explanation helpful. The provisions have been the subject of a great deal of detailed work, including at the Law Commission stage, with a wide range of stakeholders, including the Law Society, and during the Bill’s scrutiny thus far. The new provisions form just one small part of the wider IP regime that is so important for this country’s prosperity, but they are nevertheless worthy and important reforms that will make a real difference to UK innovators, inventors and designers.

--- Later in debate ---

[Joseph Johnson]

This has been a good debate, during which we have been graced by the presence of my hon. Friend the Member for Rugby on his 60th birthday. Inventors and manufacturers in Rugby will have followed our proceedings with interest, and I am glad that they will have heard members on both sides of the Committee express support for the Bill. I am grateful to them for acknowledging that the Government have taken up the Law Commission’s good work. Getting the threats provisions right is important in supporting our creators, innovators and businesses—large and small—and, as I have said, I am grateful to the hon. Members who have contributed to our brief but useful debate.

Turning to some of the points raised, threats to manufacturers or importers and their equivalents rightly will not trigger threats actions. That will allow rights holders to approach the trade source of a potential infringement. Manufacturers and importers are likely to be able to assess whether a threat to sue is justified. Having invested in the product in question, they will also be more willing to challenge a threat, if required. The provisions therefore encourage rights holders to approach the most appropriate person or business while protecting others, such as retailers, from unfair approaches and unreasonable threats. Making threats to primary actors actionable would stifle the ability of rights holders to enforce their rights. We therefore believe that the Bill strikes the right balance, and there is no evidence that stakeholders want that aspect of it to change.

On remedies, the threats provisions are just one crucial part of the wider toolkit available to those seeking to resolve genuine issues, and can be used alongside a range of alternative dispute resolution measures, such as mediation, to resolve disputes without resorting to litigation. For example, the IPO itself provides a flexible, quick and effective IP mediation service, which helps parties who are in dispute to reach agreement. There is simply no evidence that the sensible current remedies are deficient.

Reform of the threats provisions is long overdue, and this small but well-formed Bill will allow us to deliver valuable change now. It will help businesses to negotiate fairly in IP disputes, provide clarity and bring much-needed consistency to the complex area of IP law. I am pleased to have had this opportunity to discuss these issues, and I commend the Bill to the Committee.

Question put and agreed to.