Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018

Debate between Lord Adonis and Baroness Bowles of Berkhamsted

Monday 14th January 2019 Grand Committee

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I did not come to Grand Committee today expecting to speak on intellectual property. I am here to do financial services but, since I spent the best part of 40 years as a European patent attorney, it is hard not to intervene a little. I remember very well from when I started my training the famous Wella case on exhaustion of rights and parallel imports from the US, and what would happen when we had the single market and exhaustion of rights within the EU. It was a very complicated subject, a wonderful training ground and, I am sure, a huge earner for the lawyers who dealt with it. As patent attorneys, we tended to stay out of things.

[Lord Adonis]

My Lords, I thank the noble Baroness for giving way. Could she explain to the Grand Committee—some of us are not familiar with all the details of this—what parallel exporting is and where the additional costs referred to in the Explanatory Memorandum are likely to arise in a no-deal situation?

[Baroness Bowles of Berkhamsted]

The issue is where something has come from. You could export it under the terms of a licence, but you might have got it from some third country. In the Wella case, it was the US. It became very difficult to determine where the precise shampoo in question had come from and whether it had originated under a legitimate licence or in the US. It could become very difficult to tell when people took off the labels that said where it had come from. Those were the kinds of issues, and I can see that maybe BEIS is trying to avoid replication of some of that vis-à-vis the EEA.

However, the issue of symmetry and asymmetry—which I think is what the noble Baroness, Lady Kingsmill, is referring to—comes up time and again. As a member of Secondary Legislation Scrutiny (Sub-Committee A), I have seen it in, I guess, half the statutory instruments that have come before us. Sometimes you take the symmetrical option, which means you close things down. Where you think the EU’s logical approach will be to close down on it, we close down on it. Then there are asymmetrical cases—which I think this is, and which I think I have seen more of from BEIS—where priority has been given to continuity. The result is that businesses can benefit from knowing where they stand, at least from the UK side, but it may lead to a competitive disadvantage if their exports are not similarly protected. That is an issue.

I wonder why we have a single shot at correcting it in the event of no deal. You could have said that continuity of supply—especially of drugs and so forth—at the point of Brexit is important, and so you will make some provisional means for trade to continue. Then at some point you will have to analyse it and close it down. I have been reading it only very quickly here, but that does not seem to be the approach taken. It looks as if a single shot is fixed in our legislation now, and I think it would give businesses cause for concern. I would have been happier to see some kind of temporary provision put in there, maybe with a sunset clause after three years, by which time we could have sorted things out. Then it would come back in another statutory instrument or in primary legislation for us to say: “Well, okay, what are we going to do? What has the EU done? Have we got some kind of arrangement with them within that three years?” Or are we going to say, “Now we understand a bit better how things have sorted themselves out, we’re going to go for the symmetrical option, not the asymmetrical option”?

I am sure that it is possible within the powers that the Government have given themselves in primary legislation for them to come back and do that, but it would have made things clearer for business and others to have that message put out there in advance, partly to get negotiations going if those were necessary and partly to say, “This is something that you all need to be thinking about”. I would be interested to hear from the Minister how in this instance such arguments have panned out—what has been said on one side, what has been said on the other and whether something is already up the Government’s sleeve to say, “Well, actually, we’ve thought about this and we are going to be coming back in three years’ time”. It would be reassuring to hear that even if in the long term we ended up deciding that it was best to stay with the way this has been adapted now.

[Lord Adonis]

My Lords, with great consideration, the Minister took a number of interventions on his speech and covered quite a number of points. However, a lot of issues are raised by the Explanatory Memorandum and the Commission note of 6 September 2017, which is the position paper on intellectual property rights, including geographical indications, and which the Treasury made available to me for this debate. I want to press the Minister on a number of points.

The section on the general principles under which intellectual property will be handled in a no-deal scenario, on pages 2, 3 and 4 of the note, all the way through uses “should” rather than “will” in respect of the mutual recognition and enforceability of rights. Perhaps I may go through them because these are all very important points. Under the first general principle, which is intellectual property rights having unitary character within the European Union, the paper states:

“The holder of any intellectual property right having unitary character within the Union and granted before the withdrawal date should, after that date, be recognised as the holder of an enforceable intellectual property right … In the specific case of protected geographical indications, protected designations of origin and other protected terms in relation to agricultural products … this principle should also imply that the United Kingdom puts in place, as of the withdrawal date, the necessary domestic legislation … The implementation of this principle should include, in particular, the automatic recognition of an intellectual property right in the United Kingdom on the basis of the existing intellectual property right having unitary character within the Union”.


Under the second general principle, it states:

“Applications for intellectual property rights having unitary character within the Union … should be entitled to keep the benefit of any priority date in respect of such pending application”,


and that, in respect of applications for supplementary protection certificates for an extension of their duration,

“a person should continue to be entitled to obtain in the United Kingdom a supplementary protection”.

This carries on in respect of a whole number of further rights. The Grand Committee and the House would obviously wish to be assured that those rights will continue, but my understanding is that whether they will crucially depends on what our EU partners do in respect of those rights if we leave with no deal. In respect of all these reciprocal rights and their enforceability, I completely understand that the Government are putting in place the necessary changes to UK law for us to do our part to ensure that rights are enforceable and recognised, but where the EU paper uses “should” in respect of all these rights, can the Minister tell us what is likely to happen after the end of May? What situation does he believe will apply if we leave the European Union without a deal?

I am not an expert like the noble Baroness, Lady Bowles, who may indeed be able to give a view on this, but it seems that we have no control over that at all, and that, crucially and solely, that depends upon the action of the European Union itself. These aspirations—which are set out in the Commission paper of 6 September and in the statements the Minister has made to the Committee about there not being an interruption in the recognition and enforceability of these rights—absolutely crucially depend on what the European Union does after the end of March, not just on what we do. Therefore, a vital issue for the Grand Committee and for the House when it discusses these regulations is to know what we expect the European Union to do. If in fact we have no reason to believe that the European Union will continue to play ball in the mutual recognition of these rights and their enforceability, do not all the concerns that my noble friend Lady Kingsmill raised apply in spades? It does not matter whether we agree to all these regulations and do everything that the Government want; all that could be superseded by an inability to have these rights enforced or recognised because the European Union itself will not undertake to do so after the end of March.

Patents (Amendment) (EU Exit) Regulations 2018

Debate between Lord Adonis and Baroness Bowles of Berkhamsted

Monday 14th January 2019 Grand Committee

[Lord Adonis]

In the want of a better solution, I shall recommend to the Government that my noble friend Lord Foulkes should take this on, because on the basis of the debate that we have had so far, we will not have confidence that this procedure will be conducted unless there is an impartial referee to see that it has taken place.

I turn to a new issue of substance in the regulations. Many Members of the Grand Committee will have been briefed, as has my noble friend Lord Warner, by those directly concerned by the issues raised in the regulations and whether, as the noble Lord, Lord Henley, said, they do indeed make minimal changes to the existing regime, allowing for the fact that we are in a no-deal situation. I draw the Grand Committee’s attention to and ask the Minister to respond to arguments being put before Members by Bristows, a law firm which specialises in patent law. It has raised a serious concern about the regulations, specifically the adjudication mechanism. I set that concern before the Grand Committee and hope that the Minister will respond.

Bristows states that the amendments have potential ambiguity in the following respects. They provide that a declaration of invalidity of a supplementary protection certificate may be submitted to the “comptroller or the court”, in the words of the regulation, with the court being the Unified Patent Court if the basic patent is subject to the Unified Patent Court’s jurisdiction under Schedule 4 to the Patents Act 1977. However, under Schedule 4, the UPC has exclusive jurisdiction for invalidity actions of a supplementary protection certificate based either on a unitary patent or a European patent. Therefore, Bristows argues, the court referred to in the context of the “comptroller or the court” in the draft statutory instrument, when interpreted in the light of the Patents Act 1977, will, for those supplementary protection certificates, be the Unified Patent Court.

Further, as stated in Schedule 4 to the 1977 Act, the Unified Patent Court should have exclusive jurisdiction in such cases. “However”, Bristows asks,

“what is the impact of the reference to ‘the comptroller’ in the expression ‘the comptroller of the court’? Does this leave this national UK authority … with jurisdiction as well as the UPC? The natural meaning of the Statutory Instrument … suggests that there remains additional jurisdiction in the hands of the Comptroller as well as the Court … even if this was not intended. In consequence, it may remain possible for SPCs based on unitary patents to be invalidated in the UK”.

This looks to be a serious concern. I freely confess to the Grand Committee that, not being a patent lawyer myself— my noble friend Lady Kingsmill is, so she may be able to add to this—I do not entirely understand the impact of this concern, but Bristows believes it may be serious. The Grand Committee would be very grateful for an answer to Bristows’ concerns when the Minister replies. If he cannot give one in detail today, perhaps he can include it in his written response to Members of the Grand Committee after the debate.

[Baroness Bowles of Berkhamsted (LD)]

Maybe I should start with the last thing; I understand the point but I have not investigated it myself, so I cannot say whether it is a concern or not. However, the gist of it is that if something is a unified patent it should go to the Unified Patent Court if and when that continues, and, if it is a UK matter, it should be a matter for the UK.

Trade Marks (Amendment etc.) (EU Exit) Regulations 2018

Debate between Lord Adonis and Baroness Bowles of Berkhamsted

Monday 14th January 2019 Grand Committee

[Lord Adonis]

He has not sat down, in the sense that he is perfectly capable of answering a question before he concludes his remarks.

He again has not dealt with the question of consultation, which as he knows is of huge concern to the Grand Committee. We would be grateful if, before we come to our debate, he could set out what consultation has taken place, so that we can discuss whether we think that consultation has been adequate.

[Baroness Bowles of Berkhamsted (LD)]

One small point struck me, not having looked at this before we commenced proceedings. I fully understand the transfer of the pending applications and the ability to file a new application and have it allocated the earlier filing date that the European trade mark had. I do not see any legal difficulty with that, but I wonder if there is a legal difficulty in allowing that to claim the priority date of the EU trade mark, in the sense that it would operate under the Paris Convention, which we and many other countries are party to. I used to take great pleasure in reminding the EU that the Paris Convention of 1883 predated the EU treaties and that they sometimes could not do things. But I wonder whether there has been any advice on that, because there is a discontinuity.

To take a parallel example, in the United States, if you file a continuation in part, there are careful rules so that you can ensure that the priority claim can go all the way through in a continuous way. I wonder whether, through the changing from a European office to the UK office, there is a discontinuity here that would mean that priority date was challengeable. If there was a later priority date UK-only national application from an applicant not from the United Kingdom but from another country that was party to the Paris convention, would there be a clash of rights? It is a question that should appeal to lawyers looking at these things. I cannot answer it without having a longer think, so I am asking the Minister whether he can advise me what advice he may have had on that.

[Lord Clement-Jones (LD)]

My Lords, my noble friend has asked an important technical question, given her long-standing expertise in this area. As with the patent statutory instrument, this does appear to be a solution for trademarks, or to take advantage of the European community trademark. It appears to be a solution devised not just for a no-deal situation, but with a deal or the transition period in mind as well. Again that gives this particular statutory instrument a greater significance because it might be there for some considerable period of time in the event that a deal was reached. Moreover, as the noble Lord, Lord Adonis, has pointed out, similar issues regarding consultation and the impact assessment arise in connection with this statutory instrument as well.

It was interesting to hear what the noble Lord, Lord Deben, had to say about the difference in wording between the different Explanatory Memoranda. Asking a,

“small group of trusted individuals with expertise in trade mark law”,

almost means that the question is asked of people who are not going to give you the wrong answer.

Quite frankly, the really important aspect of this is the impact on business. On the impact assessment, the homework has been done in such a way that it answers the question by bringing the impact under £5 million. I cannot believe that that will be the total cost to business once you have added together all the issues such as the legal advice that will need to be taken and the red tape involved. I know this is a solution that is designed to be constructive but there are inevitably going to be costs. Frankly, the importance of brands being what it is, the actual costs involved to business are going to be quite high. I cannot believe that the figure is not going to be higher than £5 million.

The same issues apply to this statutory instrument as much as they do to some of the earlier ones. However, there are other technical questions. My noble friend has asked one set about the priority date, but another important question is which court will have jurisdiction if the validity of the original EU trademark is challenged in the future. We cannot leave business in a state of uncertainty. Then of course the UK trademark comparable right will be a stand-alone right. Does that mean that in those circumstances an applicant will have to challenge a trademark’s validity both in the UK and in the EU? What is the answer to that? One right derives from another. As a result of that, does someone wishing to demonstrate the invalidity of a trademark have to go to two jurisdictions? If that is not an additional burden on business, I do not know what is.

There are a number of questions to be asked here. We have come back again to the circularity of a quick fix that could have long-term consequences and where the procedure, process, consultation and impact assessment have been grossly unsatisfactory.

Financial Services (Implementation of Legislation) Bill [HL]

Debate between Lord Adonis and Baroness Bowles of Berkhamsted

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Adonis]

Before the noble Baroness sits down, I just want to say that all the points she has made, and made extremely well, seem to me to be met by my noble friend Lord Davies of Oldham’s excellent Amendment 7. Most of the problems the Minister has encountered could be solved by him simply accepting it, because what Amendment 7 says is that:

“Regulations made under subsection (1) shall be limited to preventing, remedying or mitigating deficiencies in retained EU law”.


I have not yet heard a good argument put before the Committee, least of all by the Minister, for why we should not accept that amendment. The Minister says he wishes to discuss it further; I am not exactly sure what there is further to discuss, because unless my noble friend Lord Davies or the noble Baroness resile from this amendment, it is a very clear-cut position of principle, which seems to me to be fundamental to the maintenance of our proper parliamentary procedures.

So would the noble Baroness agree that the right position is for the Liberal Democrats and my noble friends to stick resolutely by Amendment 7, and unless the Minister is prepared to meet us on that, we should simply vote on that and seek to carry it, I hope with support across the House, because it is fundamental to the operation of parliamentary sovereignty? On Report, we should not get involved in a long technical discussion about how much additional power we might grant the Minister simply because he has put a proposal on the table in the first instance which is straightforwardly outrageous.

[Baroness Bowles of Berkhamsted]

I thank the noble Lord for his question. He will recall that I reserved my position on that amendment but said that I thought it is the default if we cannot find something workable that gives more flexibility to the Government. I will come on to why there may be a case for flexibility in the next group, where I have a set of amendments related to it, but I can give noble Lords a preview in that I think it is quite difficult to define what that flexibility should be, and so it is going to take a lot of work to better Amendment 7. What the noble Lord suggests as the common position might well come, but we have a duty to explore further. There is more to mine away at within this Bill, and so I will not give an absolute yes to that question. Furthermore, there may be others within the group who want to consider the points. With that, in order that we can move on, I beg leave to withdraw my amendment.

--- Later in debate ---

[Baroness Bowles of Berkhamsted]

My Lords, as I explained, I have three amendments in this group. They fit together as a set, but Amendment 2 can also be a useful standalone provision.

Amendment 2 would delete the words “or any of the provisions” from line 4. On its own, that amendment is intended to prevent the cherry picking of favourite bits of the legislation. Taken to its extreme, such cherry picking would even enable the cherry picking of revocations of prior legislation—such revocations might appear in the schedule because they are amendments to other pieces of legislation. So you might be able to enact them without any kind of replacement.

More generally, EU legislation is interwoven with checks and balances, and if some are left out, the nature of the legislation can be changed or rendered ineffective, for example if penalties are taken out or time limits changed. The DPRRC makes a similar point in its paragraph 17, which says that,

“the overall effect of the legislation might vary quite substantially depending on which provisions are implemented and which … are not”.

Whether on its own or in combination with other amendments, it would be a useful amendment to rule out the prospect of simply cherry picking.

Amendment 4 is a linguistic amendment that links to Amendment 6. It might not actually be necessary, but I tabled it to deal with the kind of omissions that might be necessary—for example, taking out things that are not relevant to the UK. An obvious one would be something to do with monetary union, which is not relevant to us. The amendment’s purpose is to clarify that “adjustments”—that nebulous word; maybe we need something else—includes omissions. Then, whether it is an adjustment, change, omission or whatever we want to call it, all become subject to the same controls I would put in with Amendment 6 and elsewhere. This does not work if you try to do it using the wording appearing earlier in the clause. It looks a bit bizarre to take out the possibility of omissions in one place and put it in somewhere else, but this is just to ensure that one could establish that the conditions imposed apply to all of it. At the time of drafting I thought it clearer to reference “omissions” than “provisions not provided for” or something of that nature.

The more substantive Amendment 6 states that any omission or adjustment made under subsection (1) that is not subject to similar conditions as those in the withdrawal Act—that could be tightened up to refer to a particular provision of that Act—and does not fall under that kind of provision is,

“only to be considered appropriate if the Treasury has at least three months previously laid before Parliament a report on the policy and reasons for omission or potential omission”.

Here I am, as I said I would try to do, crafting something using the ideas of the reports in subsections (8) and (9) so that, if the Treasury comes forward with some proposal, Parliament is not surprised by it because it has been laid out and possibly even debated and understood.

That would be very helpful, but, having put forward this suggestion as to making flexibility, I came to the conclusion that I do not think that that on its own is sufficient. It still gives far too wide a leeway for change because the kind of reporting we get when statutory instruments to do with EU exit are brought before us—the Minister will know that we spend hours on them in this Chamber and in Grand Committee—is a bit perfunctory. Anyway, even if they are reported, it does not mean that they can be stopped. Maybe I have not got this right. My point is that one still needs to have some other overarching provision that stops things going too far, which might come back to Amendment 7, in which case all these other ones would not be necessary, to my noble friend Lord Sharkey’s Amendment 3 or, when we get to the next group, to my Amendment 8.

I am trying to find a way to give the Government the possibility for flexibility, because I know as well as anybody else what EU legislation could look like in the absence of a strong input from the UK. I have said before that I know what it would look like if I had not been there. I concede that we have to have some defences. If the defence is not to be primary legislation, to go through it all again—and I am very conscious of the volume of that—then there need to be some guidelines. It cannot be just a simple free-for-all. We need to know what is going on, and the reporting has a huge input there, but we have to be able to say no if the departures are substantive. I beg to move.

[Lord Adonis]

My Lords, I understand what the noble Baroness is seeking to do: to tease out from the Government whether they are prepared to agree to new reporting requirements, which would be helpful. There is nothing in the new reporting requirements which I think is objectionable. On the contrary, the more the Government are prepared to explain their policy to Parliament, the better. I know the noble Baroness said she and her colleagues are considering what their stance will be when it comes to Report. Can I recommend Amendment 7 in the name of my noble friend Lord Davies of Oldham? It is significantly superior in this respect. It makes a clear distinction of principle between Orders in Council which are,

“limited to preventing, remedying or mitigating deficiencies in retained EU law”,

and, because they are so limited, an Order in Council procedure is justifiable; and changes to the law that go beyond that, and which, as a matter of principle, should be subjected to the primary legislation procedure. The Liberal Democrats do not want to give decree-making powers to the Government, so I cannot see an argument for not subjecting substantive changes in the law that go beyond,

“preventing, remedying or mitigating deficiencies in retained EU law”,

to primary legislation, as my noble friend Lord Davies of Oldham sets out in his Amendment 7. I encourage the noble Baroness and the Liberal Democrats to be true to their liberal principles and not to give dictatorial powers to the Government, and to support my noble friend’s Amendment 7.