Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016
Debate between Baroness Neville-Rolfe and Lord Lyell
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, this order forms part of the implementation of the unified patent court agreement and is an essential step in the United Kingdom’s ratification process of that international agreement. The creation of a single patent system has been a long-held desire across Europe. The current European patent system is fragmented. Even if you go through the European Patent Office, you have to maintain a bundle of patents with each patent covering a single country where you want protection. Each patent must be enforced separately in the national courts of each country. For example, around a quarter of the patents litigated in the UK between 2000 and 2008 had parallel litigation in other European countries involving the same parties. This can be very costly and burdensome.
The negotiations to bring about a single patent and court for Europe were finally concluded in February 2013 with the signing of the unified patent court agreement. The UK worked hard during those negotiations to secure changes to the agreement which UK businesses needed. Most notably, my right honourable friend the Prime Minister was personally involved in bringing the part of the court dealing with the pharmaceuticals and life sciences sectors to London. This is good for the pharmaceutical industry, which is very important to the UK economy, and it will further boost the reputation of the UK as a global centre for commercial dispute resolution.
The unitary patent and the unified patent court form a package of European patent reforms which aim to provide a more streamlined and cost-effective option for innovative businesses wanting to protect and market their inventions across Europe. The Government want the UK to be the best place in Europe to innovate, to patent new ideas and to set up and expand a business. The unitary patent and the unified patent court will help us to deliver this goal. Importantly, the whole system can come into effect only once 13 countries, including the UK, have ratified the unified patent court agreement. So far, nine countries have ratified the agreement, and it is likely that the court will be open for business in early 2017.
I now wish to address the matters which the report of the Secondary Legislation Scrutiny Committee has brought to the attention of noble Lords as issues of public policy likely to be of interest. The committee raised a concern that the approach to implementing the software exception appeared to be inconsistent with the European Patent Convention, which requires that European patents are treated in the same way as national patents. I want to reassure noble Lords that there is no inconsistency. The UPC agreement introduces an exception to patent infringement which allows very limited use of computer programs. The exception is intended to allow someone to find out how a computer program works so that they can write another program that works with the original. For example, a programmer wishing to write an app to work on a smartphone needs to know how the phone’s software works to make sure that the app will communicate properly with it. The new software exception would allow the programmer to find out how the phone software works, but if the app still used the patented features of the phone’s software, the programmer would need a licence from the patent owner.
The consultation identified widespread and serious concerns from businesses in the high-tech and ICT sectors about the uncertain scope of the proposed exception. Many responses to the consultation proposed a “safe haven” approach, where the exception would not apply to national patents which are granted by the UK Intellectual Property Office. In the light of these concerns, and after further discussions with concerned parties, the Government have decided that the software exception will be introduced only for European patents and unitary patents at first. It will not apply to national patents, thus providing the safe haven advocated by business. The legislation will then be reviewed within five years of entry into force of the UPC agreement, which is expected in 2017. The safe haven approach is not inconsistent with the European Patent Convention, which allows for contracting member states to make special agreements on any matter concerning European patents which are subject to national law, and the UPC agreement is just such an agreement.
The second matter of interest raised by the Secondary Legislation Scrutiny Committee relates to contributory infringement, where a person knowingly provides another with the means to infringe a patent. For example, providing someone with a part which is essential to making a patented invention without the patent owner’s permission could be a contributory infringement. The Patents Act 1977 already makes adequate provision for contributory infringement of European patents valid in the UK. For such a patent, the infringement can occur only in the UK, because the patent is valid only in the UK. The order amends the Act to account for the unitary patent because infringement of a unitary patent can take place in any country covered by the patent, not just the UK. I wrote to the committee on 27 January to clarify those points, and I note the report of the committee which acknowledges that my letter dealt with the issues raised.
The order amends the Patents Act 1977 and makes changes in three areas: it clarifies where the UPC will have jurisdiction and where the UK courts will retain jurisdiction; it ensures that the Patents Act correctly provides for the unitary patent; and it introduces two new exceptions to patent infringement which are provided for in the UPC agreement but which do not currently exist in UK law. These two new exceptions to patent infringement are an exception to allow plant breeders to use patented biological material to create a new plant variety—the UK is the fourth largest market for plant breeding in Europe after the Netherlands, Germany and France, where this exception already exists—and an exception which allows limited use of computer programs, which I have already spoken about.
The European Patent Convention established the current system more than 40 years ago. The order is a major milestone towards achieving the goal of an even more streamlined and cost-effective system. It allows the UK to ratify the agreement in conjunction with a further order on privileges and immunities, which will be brought before the House later in the year, following a recent international agreement. I commend the draft order to the Committee.
Lord Lyell (Con)
My Lords, I was waiting for the noble Lord who speaks for the Opposition to commend the excellent work and great speech of my noble friend. Your Lordships may be startled to learn that, 39 years ago, I was a young Opposition Whip taking the Patents Bill through your Lordships’ House. One had to be a lawyer and a scientist, and I am neither, but it enabled me to have immense fun, and I am sure that involved in the proceedings—luckily, not today—are issue and action estoppel, res judicata and many other elements.
One particular chunk of that Bill, now an Act, is concerned with compulsory licences. I thank my noble friend very much for her excellent opening speech. I think that it was less than a minute in that she mentioned the pharmaceutical industry, which caused me to pay close attention. There was quite a problem—indeed, a government defeat—on compulsory licences. Will my noble friend be kind enough to write to me to confirm that there is no major change on compulsory licences, which I think are covered from Section 48 onwards?
If my noble friend glances at page 4 of the draft order, she will see mentioned, among the enormous number of entries on the left-hand side, Sections 103 and 105. Perhaps I should have grasped this 39 years ago, but I did not. Why is there an,
“extension of privilege for communications with solicitors relating to patent proceedings”
in England and Wales—I know not about Northern Ireland—but an,
“extension of privilege in Scotland for communications relating to patent proceedings”?
In England, it is communications with solicitors; in Scotland, it is not necessarily so. I do not think that there is a major problem—it may be a legal problem, or it may be something else. As I murmured to my noble friend before we started our proceedings, I recall that two years ago there was a singularly difficult case that will have concerned her department over extradition, and the law of extradition did not cover the territory of Scotland for that particular matter. However, I do not think that compulsory licences and the communications and privilege that we are discussing will be of that gravity.
I thank the Minister very much for setting out the necessity and the reasons for this order. Perhaps she would be kind enough to write to me about Sections 103 and 105 and confirm that the situation concerning compulsory licences is still in order and working. I am very grateful to her and to the Committee.