Intellectual Property Bill [HL]

Lord Browne of Ladyton Excerpts

Thursday 13th June 2013 Grand Committee

The noble Viscount has much more to do to persuade the Committee of the case for creating a criminal offence. When he spoke earlier he made his case in terms of the desirability of simplification and presumably of consistency with the laws that apply in the fields of copyright and trade marks. As I also suggested earlier, simplification or consistency are not necessarily paramount virtues, not least in the field of intellectual property, which is highly differentiated and complex, and in which pragmatism and common sense are always required. He suggested that it would be helpful in the enforcement of rights but, as I have said, I am not clear that the state should take over the enforcement of the maintenance of their rights from individual designers and design companies and partnerships. The case has to be made more strongly.

[Lord Browne of Ladyton]

My Lords, my intention in contributing to my noble friend Lord Stevenson’s debate on whether Clause 13 should stand part is to take advantage of the opportunity to ask some very Scottish questions about the nature of this provision and the implications for the devolution settlement in Scotland. Before I do that, I encourage and cannot resist the temptation to engage in the more general debate that has been conducted so far, simply because of the curtailed response of the noble Lord, Lord Clement-Jones, to my noble friend’s opening remarks.

I have some significant experience of practice in the criminal courts. This was perhaps a long time ago, but I practised in the criminal courts at all levels in Scotland for the better part of 20 years before I became an elected politician. The noble Lord, Lord Clement-Jones, is right. One has to have a proper sense of perspective on how courts operate. The burden and onus of proof in criminal prosecution lie and will continue to lie with the prosecutor. Obviously these offences, although complicated and requiring some understanding of design and design rights that I do not have, will require the prosecutor to persuade the court that design rights have been infringed in the way set out in these provisions.

However, I say to the noble Lord, Lord Clement-Jones, with respect—and, of course, when lawyers start talking to each other with respect, there is a sense among others that it is last thing they have for each other—that after 20 years of practising in part in criminal courts, I resist the temptation to describe convictions as technical. There is no such thing as a technical conviction. You break the law, you are convicted and you have, except with a very few limited exceptions, a criminal record thereafter. There is no such thing as a technical crime. For people who are convicted in the criminal courts, but not for lawyers who appear in them, these are life-changing events. The people who are furthest removed from this culture are those who are most affected by it, which is why jailing people for drink-driving has over time been the most effective use of jails for deterrence because that offence tends to be committed by people who would otherwise not be near a criminal court. I make that caveat. If we are using criminal sanctions in relation to commercial practices or commercial operations, that is criminal law impinging on people who are not normally around the criminal courts and who do not have the kind of relaxed attitude to them that some of us who have practised in them sometimes get.

The point my noble friend Lord Stevenson made was not about whether the courts would be able to deal with the issue of mitigation, which becomes relevant only after a conviction, because they are well capable of doing that; I have some experience. His point was about whether a by-product of criminalising this sort of behaviour would be the fear of the stigma of criminal proceedings. The stigma of criminal proceedings can for some people be as significant as criminal conviction. We are used to seeing in the media that people are arrested, bailed, brought back in, charged, bailed and then, sometimes months later, told that they are not to be prosecuted. We see that pattern of behaviour regularly now because of the nature of some of the public investigations that are going on as a consequence of the interaction of the police, newspapers and other organs of our society, including the BBC. We see that, and we see, from interviews that people who are savvy enough to be able to move in the media give, the life-changing effect that it can have on people.

My noble friend’s concern is that the stigma of criminal proceedings, the risk of a criminal record and the possibility of a quite swingeing sentence—these crimes can carry up to 10 years’ imprisonment—will affect the way in which businesses conduct themselves. If the effect is that they become risk-averse in the way that the noble Lord, Lord Clement-Jones, and those who overtly support the sparing use of criminal prosecutions, hope, their judgment becomes more acute and they are less likely to take the risk of doing something that they instinctively know is wrong, that will be a good thing. However, the risk-aversion results in the stifling of innovation because lawyers tell people who are making management decisions that they are running a personal and much greater risk with their liberty and reputation than they would have been before the Bill became an Act of Parliament. Those people might say, “It’s fine if the business has some risk of a civil penalty, we will make a judgment here and go with innovation as opposed to the conservative choice of not touching this product”. However, if they say, “It’s my head that’s on the line”—that is, to some degree, what the Government are trying to do—“It’s my personal reputation that is on the line, and it may surface in the criminal courts”, that may stifle innovation. If the balance goes the wrong way, this will not be a correct thing to do.

There is one more important issue here to which we need to give some consideration when we agree to criminalise behaviour. It is that the rich and the powerful will threaten or imply the possibility of criminal prosecution. Those of us who have been involved in debates and the consideration of legislation in your Lordships’ House over the past couple of years know about the concept of chilling effect. We were dogged in this country, particularly in England and in the courts, because London was the defamation capital of Europe. The rich and powerful threatened court proceedings and had a chilling effect in stifling free speech, publications, scientific research and other areas. There is no question that if we add this possibility of prosecution to what powerful people can threaten or imply then we run the risk that they will again deploy that threat which stifles innovation.

I have not made up my mind whether adding criminal prosecution to this armoury is a good thing. There are others in our debates who know much more about the way this area of commerce operates. I have some sympathy for people, particularly in the fashion industry, whose designs come and go. If something else is not added to this then they must go through the same processes as they do presently. Civil actions are of no use to them because the fashion season moves on and the damage is done. Within minutes of unveiling their dresses or jackets, they appear almost exactly the same in somebody else’s cut-price window. I have not made up my mind about this area but there are serious considerations about whether we should extend the criminal law in this way. It would be interesting to hear what the Minister has to say about these arguments and where the Government think the balance will lie once the Bill becomes an Act of Parliament. How do the Government intend to ensure that that balance stays there and is not exploited by others?

Let me finish by asking my Scottish questions. There is a well established convention now—thanks to the noble Lord, Lord Sewel, and what has become known as the Sewel Motion—that we will not legislate on matters that are devolved to the Scottish Parliament, Welsh Assembly or Northern Ireland Assembly without their consent. The general answer to this is that international property law is not devolved. I welcome that, and as a unionist celebrate that there are still important parts of commercial life that we control on a UK basis. I believe in the union and we should make more about what we do to improve the opportunities for commercial advantage in Scotland when we can by using UK powers. I suggested at Second Reading that I would have liked the Government to have made more of a presence about what was being done in this area of law in Scotland, so that Scottish people knew the relevance of this Parliament and this area of law in their lives, particularly in the present circumstances. That has not been done and I regret that. I wish it had.

In the detail of this particular legislation, there is a provision on page 13 of the Bill for new Section 35ZD—we must find some better way of numbering sections so we do not get these ridiculous references. It introduces new Section 35ZA, “forfeiture of Scotland”, which essentially amends the Criminal Procedure (Scotland) Act 1995. That legislation predates the Scottish Parliament, which started in 1999, but all amendments to that legislation since then have been in the area of devolved law. Criminal procedure in Scotland is devolved. We are indirectly, if not directly, amending an area of devolved law in Scotland. I think that requires a Sewel Motion. It requires the consent of the Scottish Parliament. I am happy to be corrected on that, but it seems to me that it does. If it does, that implies, as far as I am concerned, that there has been some communication between the Government and the Scottish Government on the subject of a Motion being laid by the Scottish Government and passed by the Scottish Parliament, where the SNP has a majority. Therefore, there will have been some discussions on that matter.

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[Viscount Younger of Leckie]

It is not the case that that would never happen but overall it may be of some reassurance to the noble Lord that much consultation has taken place on this. If there were clear indications that the examples he gave were to lead to a chilling effect, that would certainly have arisen during consultation. However, the noble Lord made a fair point and we will review the consultation. I will write to the noble Lord again if we can furnish him with some extra, new information. It is not the Government’s intention to criminalise businesses that use products based on copied designs incidentally in the course of their business but do not profit from any trade in those particular products.

The noble Lord, Lord Stevenson, raised the issue of applying Bugs Bunny to various products and how the law would work. This is probably the first time that anybody has said that Bugs Bunny is a complex issue, but he is and it would be best if I wrote to the noble Lord on the details of that particular point. The noble Lord also asked why it is a proposed offence to copy “exactly or substantially”. It is our intention that very minor modifications—possibly imperceptible ones—should not excuse deliberate copying and the sanctions that would follow. The noble Lord asked if the offence was “appropriate and proportionate”—I think he used those words. We recognise the concerns about proportionality and that is why the defence has been carefully crafted. We do not believe that it will lead to countless people being placed in custody, as can be seen by my previous references to Germany in this particular debate.

In fear of pouring fuel on the fire of the points made on the last amendment by my noble friend Lord Clement-Jones, making comparisons between unregistered designs and copyright and its criminalisation, I will reiterate our position on this. A comparison to copyrighted material, which is also unregistered but attracts criminal sanctions, is unhelpful because the protection for copyright lasts 70 years plus the lifetime of the author. This makes it unlikely that copyright will have expired, and infringement is therefore much more likely to be the result of copying. The shorter period of protection for unregistered design, together with the difficulty of knowing when those design rights came into existence—a point that I made earlier—means that it is more difficult for third parties to be sure they are not infringing. The introduction of criminal sanctions for unregistered rights could lead to a negative effect on business and innovation.

Furthermore, copyright protection is denied to the shape and configuration of industrial designs by Section 51 of the Copyright, Designs and Patents Act 1988. Applying criminal sanctions to an unregistered design right would criminalise some copying that would not be caught under the law of copyright. I am sure that the noble Lord will have some further points to make on this matter but I thought it wise to raise the subject again.

The noble Lord, Lord Stevenson, asked whether the issue of criminalisation was too complicated for magistrates and juries. Provided that it is limited to registered designs, we believe that the criminal courts can decide whether a design has been copied exactly or substantially. Similar issues arise in copyright, as the noble Lord will be aware. The noble Lord also asked why new Section 35ZA includes community designs and asked whether this would cover designs from the European Union. It does, because EU designs have effective rights here in the UK.

The noble Lord, Lord Stevenson, asked whether it is right that the use of a copied design is caught by the provision. The activities which constitute using a design under the offence reflect the definition for use of design contained in Section 7 of the Registered Designs Act 1949. Innocent acts are protected under the clause because it contains the test of knowing, or having reason to believe, that a design is copied.

The noble Lord, Lord Browne of Ladyton, was particularly concerned about those he described as “rich and powerful people” using the threat of criminal sanctions against small businesses. That is a fair point, but I draw on the UK’s experience in relation to other intellectual property rights, which have also been retrospectively subject to criminal sanctions. Although there is no quantitative evidence, the introduction of criminal sanctions for piracy and counterfeiting provides no indication of a chilling effect on creativity, copyright or brand development—trade marks—in the UK. They are generally acknowledged to be in robust health, with the number of trade mark applications at a historic high according to unpublished figures from the Intellectual Property Office.

Finally, I think it would be useful to provide a further response to a point made by the noble Lord, Lord Howarth. He asked how the Government defend setting up more criminal offences. I certainly do not propose to start discussing the wider criminal justice system today—I hope the noble Lord will forgive me for that—but the important point is that there are compelling reasons why we believe this new sanction is right, which I trust I have set out in my response.

I reiterate to the Committee that we believe it is right that deliberate, wide-eyed copying of registered designs is punished.

[Lord Browne of Ladyton]

Before the Minister concludes, will he remember Scotland? At this stage, I only seek an answer about whether this requires a Sewel Motion. All the consequential questions would arise if it does not.

[Viscount Younger of Leckie]

The noble Lord is quite right. I think it is best if I write to him on a number of the points that he has raised about Scotland. I could say something now, but I think a full answer is required. The noble Lord raised a number of questions, and we should give a holistic response.

The Government have sought to create a balance between protecting the rights of design owners and ensuring that innovation is not restricted. We believe that in this clause we have drawn the right balance. I commend the clause to the Committee.