Patents (Amendment) (EU Exit) Regulations 2018

Lord Clement-Jones Excerpts

Monday 14th January 2019 Grand Committee

The way it has been done here, the instrument aligns the maximum term for this patent-like right to continue to that which would be applicable in the EEA so that it would all expire at the same time. Was that decision taken to make it simple, in particular because of the decision made about parallel imports, so that you were not having to cross-check whether there were different rights applying at the time of the parallel imports? We have already had a discussion about parallel imports and whether that was a good idea. One comes back to the same situation that we have already visited. I am not sure what the starting point is; I am asking whether it was the decision on parallel imports and whether, if we suggested that perhaps that should be time-limited, even if not in this instrument, we should do something quite quickly to make it so. Would that then adjust what was done by the supplementary protection certificate because it follows that you would? When you come to look at the economic terms, there are lots of things to balance: whether you want a longer term of protection, who is paying for it and what benefits there are to the industry and the country. These are very nuanced and difficult, and there are always protagonists on both sides. Normally, I tend to be one of the protagonists against extensions; you should have to fight hard and justify them. However, that is all the more reason for having a much wider and longer exposure of all these rather difficult issues that one needs to come to grips with. I therefore agree with those noble Lords who have been poking around to see how good the consultation has been because these are serious issues. But, as I said, my question comes back to the fact that it is a bit chicken and egg: was the parallel import decision taken first and did everything else follow from that?

[Lord Clement-Jones (LD)]

My Lords, we have to conclude after the debate so far that this SI is holed below the waterline and the Minister will have some difficulty in preventing it sinking. He will have to write a pretty good letter by the time this comes to the whole House to see that it goes through when it comes to a vote there. The powerful speech made by the noble Lord, Lord Warner, has exposed the business issues involved in this. I was interested to hear what the noble Lord, Lord Adonis, said about the legal technicalities on this, and of course the impeccable logic of the noble Lord, Lord Deben, and the noble Baroness, Lady Kingsmill, on the consultation and the impact assessment is unassailable. The Minister will therefore have a great deal of difficulty in persuading us to approve these regulations, whether here or, eventually, in the House.

I am grateful to my noble friend who is a patent expert. My expertise in intellectual property extends to trademarks and copyright but it is very useful to have her unpacking of some of these issues as well. What particularly concerns me about the substance of the SI is not just that it is in the eventuality of no deal but that it has all the signs of something that was planned to take effect at the end of the transition period if the Prime Minister’s deal was going to take effect. This looks as if it is a longer-term arrangement. I think it was enshrined in the White Paper, or at least the outlines of it were, and that makes it of particular significance to get right. If there is any kind of deal then I suspect that this is what will be put into effect. It therefore has a double significance and is not just a fix for this purpose which has not been consulted over and which is not acceptable to a major trade body. I have dealt with the BioIndustry Association and I have a great deal of time for it and respect for the expertise that it embodies. The fact that there has not been adequate consultation over something that is potentially a long-term solution makes this even more questionable.

[Lord Warner]

I am sorry to interrupt the noble Lord further but I want to give a bit of support to what he is saying. In my remarks I drew attention to the fact that the MHRA, the UK pharmaceutical regulator, actually tried to suggest to the BIA that it should wait for a review in two years’ time. That looks remarkably like the timetable for the end of the transition period, so I want to give some support to the arguments that the noble Lord is making.

[Lord Clement-Jones]

I thank the noble Lord for that intervention because that is exactly the impression that I had got.

To add to the Minister’s woes, I want to go off into a completely different subject that he himself raised at the very beginning: the issue of the Agreement on a Unified Patent Court and the unified patent. The unified patent has come up; the Minister has mentioned it and it was included in the technical note in September. There is a big issue surrounding the Agreement on a Unified Patent Court and the unified patent. If the agreement is ratified by Germany and comes into force ahead of any exit date, the UK will need to work out how to remain a member of the UPC or withdraw from the system, which could have a significant impact on business. Of course, at this stage it is not clear if the agreement will come into effect at all, but if it does and if, as a third-party country, the UK then wants to take part, is it not clear—I have a 39-page legal opinion on this subject—that we, the UK, will have to acknowledge the supremacy of EU law and the ECJ as part of signing up to the UPC agreement? What kind of “taking back control” for Brexiters will that be?

What advice have the Government received on this matter? I heard what the Minister had to say: he made the very positive statement that we were going to sign up. Have the Government had any further observations on the UPC agreement and the unified patent? How do they envisage UK legislation dovetailing with both systems, assuming that it is ratified?

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a good debate that has raised lots of issues. I think the noble Lord, Lord Clement-Jones, is right that there are real questions to be asked here, although I feel that we are experiencing a bit of a split focus here. It is like being part of the film “The Matrix” because there seem to be two different levels of debate going on. There are the particularly narrow questions about the statutory instrument as presented, with which I think there are some substantial difficulties, but there are also the wider issues about why we are doing all this and the way that we are doing it. The noble Lord, Lord Deben, and others have focused on the absurdity of a situation where we are trying to persuade ourselves that, despite our best instincts, despite all the training that we have had here and despite everything that we do every other day of our lives, we are quite happy to sit here and wave this through just because it might not happen. That seems to be Alice in Wonderland rather than “The Matrix”, but perhaps they come together in a curious way which I have yet to experience.

The noble Lord, Lord Clement-Jones, commented on the Unified Patent Court, which is an intriguing area of public policy which has yet to have its full ramifications explained. He is absolutely right that the UK has committed itself to ratifying the UPC and intends to join up. I am sure that the Minister will confirm that when he comes to respond. Of course, with that comes the continuing role of the ECJ, because all judgments of the UPC—although there will be a platform of it operating here in London in property which has already been bought and refurbished in premises on a lavish scale which may not have been seen by the press yet, but I am sure that when they are there will be a bit of a scandal—will be absolutely redolent of the way in which the European continuing engagement will have to operate. That is because so many people hold unified patents and will need to have them defended in ways which are important not only here but in the six other areas where the court will be operating. But that is part of the further discussion and debate along with the consultation issues which I agree need to be bottomed out at some stage, but perhaps not today.

I may just stunt the time taken up by other speakers by looking at the other four SIs which are due to be discussed shortly by the noble Lord, Lord Bates, and others. I am sure that he will have read through and inwardly memorised the rather clever phrasing used by HM Treasury which I recommend to the department as it might wish to use it in the future and thus avoid some of the confusion. It states:

“HM Treasury has not undertaken a consultation on the instrument, but has engaged with relevant stakeholders on its approach to Financial Services legislation under the European Union (Withdrawal) Act 2018, including on this instrument, in order to familiarise them with the legislation ahead of laying … The instrument was also published in draft, along with an explanatory policy note, on 31 October 2018, in order to maximise transparency ahead of laying”.


That is wonderful phrasing and I congratulate the Treasury on having found a way out of an apparently insoluble problem. If it can defeat the noble Lord, Lord Adonis, and his assembled minions, obviously it will be well ahead of the game.

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[Lord Henley]

The noble Lord is right to point to the importance of the life sciences sector, and I am grateful he did. One should also re-emphasise—I would be grateful if the noble Lord would do so—just how important the life sciences industry is to us and what a great state it is in at the moment. The noble Lord will be aware of the recent stage 2 of the sector deal in life sciences that we published along with that sector. I am sure the noble Lord very much welcomed the fact that a major multinational—one based in Brussels, for that matter—announced at that stage that it was investing a further £1 billion over the next five years in research in the UK. Obviously Brexit is not putting off certain parts of the life sciences industry, and I am sure the noble Lord will welcome that.

I do not share the noble Lord’s view that there is a policy change. The SI maintains precisely the current calculation of the SPC duration, and at present it is calculated from the first marketing authorisation in the EEA, which includes the UK. After exit, without the provisions we have set out in this SI, the duration of an SPC in the UK would be calculated from the first authorisation in the EEA—but that would not include the UK. That would be nonsensical and is exactly the sort of deficiency that Parliament gave Ministers carefully limited powers to fix within the withdrawal Act. We believe we are complying with the powers we have within the withdrawal Act. That is what the SI does. It shows that after exit, SPCs within the UK will continue to be calculated from the first marketing authorisation in the EEA or the UK, and the status quo is maintained.

Finally, I turn to the point made by the noble Lord, Lord Adonis, about the Explanatory Memorandum. He said that there was little impact. If a measure has a net impact to business of less than £5 million then obviously a full impact assessment is not required. The £5 million threshold, as the noble Lord will be aware as a former Minister, is set out in the better regulation framework guidance, and measures below the threshold must be accompanied by a proportionate analysis. The analysis is summarised, as the noble Lord will be well aware, in paragraph 12.3 of the Explanatory Memorandum.

I used the word “finally” but, if noble Lords will bear with me, I will have one or two more “finallys”. I turn to the concerns about the unified patent court. We have set out our proposals for the future relationship with the EU, including exploring continued participation in the UPC and the unitary patent. In the political declaration, the UK and the EU have agreed to co-operate in areas of mutual interest relating to intellectual property, including patents. The future of the UPC and the unitary patent will be a matter for negotiation. It is therefore rather too soon to be setting out the further dovetailing legislation.

The noble Lord, Lord Clement-Jones, also set out the points made by the law firm Bristows. We are aware of the point that Bristows has made. The patents legislation contains a number of references to the comptroller and the court, and all those references will be modified in the event of the UPC coming into force. The patents legislation will fully recognise the jurisdiction of the UPC.

[Lord Clement-Jones]

I apologise to the Minister but actually it was not the Bristows opinion; the 39-page opinion that I mentioned is actually from Brick Court Chambers, and it is very comprehensive. It makes it very clear that if we are to sign up, or to continue with our intention to sign up, we will have to recognise the jurisdiction of the European Court of Justice and there will be no getting out of that. That is what makes this so ironic in the circumstances.

[Lord Henley]

I look forward to reading the opinion that has emanated from Brick Court Chambers in due course. I was responding, I thought, to the points that the noble Lord had made about Bristows.

[Lord Clement-Jones]

That was the noble Lord, Lord Adonis.

[Lord Henley]

I apologise to the noble Lord, Lord Adonis. I will no doubt study, as will my officials, both the Bristows letter and the opinion from Brick Court.

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

Lord Clement-Jones Excerpts

Monday 14th January 2019 Grand Committee

[Lord Adonis]

The noble Lord makes an extremely important point, and not just in respect of paragraph 2.1. I have before me the whole of Part 2, which has a whole series of statements made by the Minister of State for Universities, Science, Research and Innovation, Sam Gyimah, to the effect that in his view,

“the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018 does no more than is appropriate”.

But, as the noble Lord says, that Minister is no longer in office, so it would be appropriate for the noble Lord, Lord Henley, to tell us whether the new Minister for Universities, Science, Research and Innovation also subscribes to those statements. I should also point out to the Grand Committee that Sam Gyimah is no longer the Minister of State for Universities, Science, Research and Innovation precisely because he resigned in protest at both the Prime Minister’s existing deal and the possibility of the Government contemplating no deal.

Not only has there been no consultation on these regulations; the Minister is not even able to tell us whom the Intellectual Property Office spoke to. At the moment, the only person we know the office has spoken to so far is my noble friend Lord Warner—because he phoned it. The Minister was not able to tell us of anyone else who had been spoken to. He told us that, in an inversion of all the established practices, the consultation on these regulations will take place after they have been approved by the House, not before. The Minister who said that these regulations are proportionate and appropriate has resigned. He resigned specifically because he is not prepared to proceed with Brexit or contemplate no deal. There has been no formal consultation with any other partners. The Government cannot tell the Committee who has been informally approached.

We have no statement from the existing Minister of State for Universities, Science, Research and Innovation that these regulations continue to meet the requirements of the EU withdrawal Act. I would be perfectly happy for the Committee to adjourn while we ask Sam Gyimah whether it is still his opinion that these regulations are proportionate and appropriate. I suspect that it is not, given the statements he has made in the media over the last 24 hours about the huge risks, dangers and costs to the country of Brexit, and a no-deal Brexit in particular. It is a no-deal Brexit that the Government are asking the Committee to approve this afternoon.

The other vital point is that, not only do we have good reason to believe that the business community is worried about these regulations and concerned about the costs, but the relevant Ministers no longer even subscribe to the views they gave when the regulations were being drafted. However, we do now have the benefit of the view of the House of Commons on no deal. Last Tuesday, before we considered these regulations, the House of Commons, for the first time, specifically debated and voted on the issue of no deal. In its amendment to the Finance (No. 3) Bill, it rejected the contemplation of no deal by 303 votes to 296. That is not only a majority of seven against no deal; it was one of the largest votes the House of Commons has conducted on Brexit in any respect. The Grand Committee has good reason to believe that these regulations are being brought forward in defiance of the will of the House of Commons, because that House has said that it is not prepared to contemplate no deal.

In the briefing for her speech today, the Prime Minister said that she now thinks that no Brexit is a bigger risk than no deal. I am perfectly prepared to take that risk; some of us think it is well worth taking. Indeed, we are trying to encourage the Government to enter the supremely risky and dangerous territory of no Brexit. We know how risky it is; we do not need to conduct impact assessments because we are in it at the moment and it is a perfectly tolerable state of affairs. The Government describe it as a risk but, in the last 24 hours, the Prime Minister told us that the risk of no deal is declining. That is the Prime Minister’s judgment, and the House of Commons voted only six days ago, by 302 votes to 296, not to have no deal. We have had no consultation whatsoever on these regulations. In the debate on the no-deal proposition last week, the Exchequer Secretary to the Treasury, Robert Jenrick, said:

“As I made clear, the Government do not want or expect a no-deal scenario”.—[Official Report, Commons, 8/1/19; col. 269.]


If the Government do not want or expect a no-deal scenario, it is wholly within their power to rule one out. The Minister, who is an extremely distinguished and effective member of the Government, could make a contribution to that cause today by withdrawing these regulations in response to what appears to be the overwhelming opinion of the Grand Committee.

[Lord Clement-Jones (LD)]

It looks like we are on, my Lords. There is a great deal that one could say about the way in which the need arises for this SI and indeed for the others in this series. Today my noble friend Lord Tyler has called them “speculative”; last Wednesday I think he was slightly more scathing and called it a possibly wasted exercise, while the noble Lord, Lord Deben, was even more forthright, saying that we could be,

“conniving in what is manifestly a total nonsense”.—[Official Report, 09/01/18; col. 203GC.]

I have some sympathy with that statement, given that no deal, as the noble Lord, Lord Adonis, has explained, is now not the will of the House of Commons. At the same time, though, my noble friend Lord Tyler also referred to the report by the Constitution Committee, The Legislative Process: The Delegation of Powers, which made explicit reference to the critical importance of effective and timely scrutiny of Brexit-related secondary legislation. So I reluctantly accept that we still have to give it proper scrutiny in these circumstances but, whatever the merits of the statutory instruments, the least that we can do is debate them on the Floor of the House in the main Chamber, and I will be supporting that proposition if it is put later.

Each of the statutory instruments is important in itself. Even if they are only preparatory to no deal, in practice they may be indicative of longer-term government and IPO thinking, and may well be intended to take effect even if we have a deal and the transition period comes into effect. I have an enormous amount of sympathy for what my noble friend had to say about the time limitation and the need for a sunset clause, and for what the noble Baroness, Lady Kingsmill, said about it not being explicitly stated that the regulations do not come into effect if indeed there is a deal. There is a large gap in the middle of the regulations.

In the short term, these regulations are a partial solution to the problem of the UK no longer being inside what is called “Fortress Europe” for the purpose of the exhaustion of intellectual property rights. If there is no deal and the exhaustion SI comes into force on exit day, the effect is to implement, as the Minister explained, a modified version of the current regional EEA exhaustion regime. It would ensure that, post Brexit, once a product has been legitimately placed on the market in the EEA, it can continue to be resold into the UK without the rights holder preventing that. What we are doing is unilaterally allowing EU 27 goods already placed in the market there to be exported to the UK. That may be good news for parallel importers but it is not such good news for parallel exporters. It is clear from the Government’s small print that these exporters may well need to seek permission to gain entry into the EU. No wonder it has been called a one-way exhaustion regime.

What are the Government doing to mitigate the situation? It is clear—the discussion earlier elucidated this—that there has not been any formal consultation on this one-way regime. Indeed, it calls into question the statement about the lack of an impact assessment and what the Minister said in his letter about the draft regulations not changing current policy or imposing new liabilities or obligations on any relevant persons. If an exporter has to seek the consent of the rights holder on exporting into the EU 27 after a no-deal Brexit under the regime set out under these regulations, surely that will have a significant impact on that business.

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[Lord Clement-Jones]

The Minister may say that, but he has to answer the question about why the international exhaustion regime is not ruled out in the current SI, a point that both the noble Lord, Lord Stevenson, and I have raised. It is explicitly not ruled out, and that is the uncertainty contained in this SI.

[Lord Henley]

I do not think I can take it any further. As I have made clear to the noble Lord, this is dealing with no deal and it would be wrong to set that out in the no deal. We can now consider the various options and come forward with them in future—as the noble Lord would wish me to do—after we have considered that with appropriate businesses and consumers.

[Lord Clement-Jones]

My Lords—

[Lord Henley]

I am not giving way until I have finished this sentence. As I have made clear—I think I have already said this—this is going to take time and I do not believe there is a compelling reason to rush.

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[Lord Clement-Jones]

My Lords, without putting too fine a point on it, I am arguing that in a no-deal situation it needs to be clear that the international exhaustion regime does not apply. That is not clear. The noble Lord, Lord Stevenson, read out some legal analysis, and I have had the same analysis. The concern is that, although it is stated that the regional regime will come into effect regarding our relationship with the EU, there is no statement on any other application of an exhaustion regime. It is therefore quite possible, in the opinion of many IP lawyers, that the international exhaustion regime that existed before our membership of the EU could again come into effect, and the Silhouette case would not apply. That needs to be addressed.

[Lord Henley]

I will get to the Silhouette case later on. Although I will comment on it briefly, it might be that I need to write in greater detail.

Going back to the SI before us, it is clear that it maintains the status quo as far as possible. Regulation 2 ensures that the domestic exhaustion framework remains the same after exit. That delivers as far as possible a continuation of the current regional exhaustion regime. That is the legal clarity we can provide the moment. I cannot take the noble Lord any further, other than to say that we have been clear that this is a temporary fix and we will revisit it when we have gathered the evidence we need.

[Lord Clement-Jones]

My Lords, I have one final intervention on this point. The noble Lord can take us no further—he is effectively requiring us to make a leap of faith on this SI.

[Lord Henley]

No, I do not believe it is a leap of faith. It provides the clarity that business needs, in the form of a temporary fix. Thereafter—the noble Baroness, Lady Bowles, also asked about this—we will be much more able to consult fully on this instrument than was possible at this stage. At that point, we can take things further.

I will deal with one or two other points. The noble Lord, Lord Adonis, is not in his place so I do not think I need to deal with his points, but if he likes I will write to him on the question of whether “should” should be “would”, for example. The noble Lord, Lord Tyler, referred to comments made by previous Ministers. I assure him that, as always, Ministers speak with one voice and will continue to do so. Those statements reflect the view that the Government still hold.

The noble Lord, Lord Clement-Jones, asked about an impact statement and how it can be said that no impact on business is expected. An impact assessment is intended to look only at the impact of the legal instrument to which it is attached. This instrument does maintain the status quo within the UK and we therefore believe that there will be relatively little impact on business. There will, obviously, be some impact on parallel trade from the UK to the EEA and that will depend on the action of EU rights holders and, more broadly, on what the EU chooses to do on the issue of exhaustion. Those decisions are not within the scope of this instrument, so it is not possible accurately to reflect their impact in the assessment.

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[Lord Clement-Jones]

My Lords, one could easily quarrel with that statement. The regime set up by the SI is, as described by me, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Bowles, an asymmetric or one-way exhaustion regime. How come that is not covered by an impact assessment?

[Lord Henley]

My Lords, I repeat what I said: this is designed, as an exit SI, to deal with leaving without a deal. We want to maintain the status quo and therefore anticipate the impact on business to be relatively small. I will complete what I am going to say before I take interventions.

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[Lord Henley]

I cannot remember whether that is the case with this set of regulations, but the noble Lord is right that, obviously, we do not consult on SIs with an impact of that order. My understanding is that he is correct, in that there is little or no impact in the case of these regulations. That is why most businesses to which I have spoken are broadly in favour of the regional exhaustion regime.

[Lord Clement-Jones]

My Lords, although the Minister has characterised these regulations as simply putting in place the status quo, he will recognise that business will not consider this the status quo. That is entirely the reason behind the argument that an impact assessment should have been done and that proper consultation should have been carried out.

[Lord Henley]

I accept that the noble Lord is right that business would consider a no-deal situation to have major implications. In relation to this issue, I believe that what we have set out in our no-deal regulations will have very little impact. That is the type of clarity that we are trying to give business.

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[Lord Henley]

I do not accept that. What we are trying to do by passing no-deal regulations is to ensure a degree of certainty for the businesses we are talking about. That is why we are dealing with the hypothetical situation, and I am perfectly happy to do that. I am also happy to say that I think it unlikely that there will be no deal, but the noble Baroness and others would think we were being irresponsible if we did not prepare for the eventuality of no deal. That is all we are doing.

I move on to a further question raised by the noble Lord, Lord Clement-Jones, on the exhaustion of rights and whether we should agree to the proposal when British businesses cannot export parallel goods to the EEA. Again, there may be restrictions on the parallel export of goods from the UK to the EEA, and the noble Lord is quite right to point out that that is a consequence of leaving the EU. However, businesses wishing to parallel export goods to the EU will have to check with rights holders whether they need permission so to do. The SI seeks to provide a continuation of the status quo most closely, and would likely therefore have the least economic impact while, as I said earlier, the Government consider the impact of any future change.

I turn to the Silhouette case. We are talking about a ruling from the Court of Justice of the European Union, and it may be that I need to write in greater detail on this subject. That ruling from the CJEU is required to implement a regional exhaustion regime, but there are unclarities—if I may put it that way—as to when the Silhouette case will become retained EU case law under the withdrawal Act. EU case law before exit will continue to apply to the interpretation of EU-derived domestic law after exit under the withdrawal Act. EU case law before exit relating to the effect of this law will, obviously, continue under Section 6(3) of the withdrawal Act. Again, with these SIs, we provide the legal clarity that is needed. However, because anything that comes from the Court of Justice of the European Union frequently requires a little extra clarity, if the noble Lord will bear with me, I would prefer to write in greater detail to him on the Silhouette case in dealing with those points.

[Lord Clement-Jones]

My Lords, I accept the Minister’s offer, because that was quite a confusing response. Precisely because a no deal is envisaged, there is the question of whether CJEU case law will continue—whatever we say about it—with regard to other exhaustion regimes which may or may not spring up. It would therefore be useful to get a letter from the Minister after this SI has been debated.

[Lord Henley]

My legal eagles will be hard at work on producing just such a letter for the noble Lord, and I hope it will provide him with a degree of clarity—to the extent that that can be provided.

The noble Lord also asked about our plans for IP in the future relationship. As we made clear in the White Paper, arrangements on future co-operation on IP would provide important protections for rights holders, giving them confidence and a secure basis from which to operate in and between the UK and the EU. As part of this, the UK will seek to remain within the unitary patent system and the unified patent court. The political declaration states that as part of the future framework, the UK and EU should provide for,

“the protection and enforcement of intellectual property rights to stimulate innovation, creativity and economic activity”,

and co-operate on areas of mutual interest. Obviously, the specifics of that will be a matter for detailed negotiations on the future partnership.

The noble Lord also asked about provisions concerning designs and international systems for trademark and design protection. The instrument before us today focuses on trademarks, specifically EU trademarks and domestic trademarks derived from EU legislation. An instrument setting out our intentions for continued protection of unregistered community designs and international trademark and design rights will be laid in due course. The noble Lord mentioned the draft SI on copyright, and I can give an assurance that we are working hard on the instrument and will bring it forward as soon as possible.

[Lord Clement-Jones]

My Lords, can the Minister confirm that they will be no-deal SIs on the same basis as the other three SIs being put forward today?

[Lord Henley]

If it is necessary that there be no-deal SIs, then yes, there will be a no-deal SI. I am advised that that is the case, so there will be scope for the noble Lord to have another debate on this issue. I look forward very much to that happening. Whether my noble friend Lord Bates looks forward to that is another matter, but he has other matters to deal with.

Finally, the noble Lord, Lord Stevenson, asked about the practical benefits that this SI proposes: why should we agree to this proposal when the EU could get flooded with parallel imports from the EEA? The approach simply ensures that what happens currently will continue after exit day, and allows for IP-protected goods in the secondary markets to continue to be imported from the EU, including medicines. This will ensure continued consumer confidence and resilience of the supply of goods into the UK. That will be the continuation of the current situation; there is no reason to anticipate any increase in parallel traded goods after exit.

I hope I have dealt with all the points that I tried to deal with; I have also given an assurance that I will write on other matters. I beg to move.

Artificial Intelligence (Select Committee Report)

Lord Clement-Jones Excerpts

Monday 19th November 2018 Lords Chamber

Moved by

[Lord Clement-Jones]

That this House takes note of the Report from the Select Committee on Artificial Intelligence AI in the UK: ready, willing and able? (HL Paper 100).

[Lord Clement-Jones (LD)]

My Lords, it was a pleasure and a privilege to chair the Select Committee on Artificial Intelligence. I thank members of the committee who engaged so closely with our subject matter over an intensive nine-month period and achieved such a high degree of unanimity. There were not just the formal sessions but a number of visits and workshops and even a neural network training session, ending with a fair few lively meetings deciding among ourselves what to make of it all.

Despite the limited life of the committee, we have not stopped talking about AI and its implications since, some of us in far-flung corners of the world. I regret that the noble Viscount, Lord Ridley, and the noble Lord, Lord Puttnam, having made such a major contribution to our work, are abroad for this debate.

I place on record a huge thanks to our team of clerks and advisers, without whom this report, which has been recognised as leading-edge nationally and internationally, could not have been written: our clerk, Luke Hussey; Dr Ben Taylor, our policy analyst; Hannah Murdoch, our committee assistant; and Dr Mateja Jamnik, our specialist adviser.

Our conclusions came after nine months of inquiry, consideration of some 225 written submissions of evidence and 22 sessions of fascinating oral testimony. I thank all our witnesses who gave such a great deal of time and commitment to the inquiry. I today thank the Minister who, with the right honourable Matt Hancock, gave extensive oral evidence. Since then, of course, Mr Hancock has been promoted twice. There is clearly a connection.

The context for our report was very much a media background of lurid forecasts of doom and destruction on the one hand and some rather blind optimism on the other. In our conclusions we were certainly not of the school of Elon Musk. On the other hand, we were not of the blind optimist camp. We are fully aware of the risks that the widespread use of AI could raise, but our evidence led us to believe that these risks are avoidable or can be mitigated to reduce their impact.

In considering this, we need to recognise that understanding the implications of AI here and now is important. AI is already with us in our smartphones and in our homes. Our task was,

“to consider the economic, ethical and social implications of advances in artificial intelligence”.

Our 74 recommendations were intended to be practical and to build upon much of the excellent work already being done in the UK, and revolved around a number of threads which run through the report.

The first is that the UK is an excellent place to develop AI and that people are willing to use the technology in their businesses and personal lives. There is no silver bullet, but we identified a range of sensible steps that will keep the UK on the front foot. They include making data more accessible to smaller businesses and asking the Government to establish a growth fund for SMEs through the British Business Bank to scale up their businesses domestically without having to worry about having to find investment from overseas or having prematurely to sell to a tech major. We said that the Government need to draw up a national policy framework, in lockstep with the industrial strategy, to ensure the co-ordination and successful delivery of AI policy in the UK.

A second thread relates to diversity and inclusion in education and skills, digital understanding, job opportunities, the design of AI and algorithms and the datasets used. In particular, the prejudices of the past must not be unwittingly built into automated systems. We said that the Government should incentivise the development of new approaches to the auditing of datasets used in AI and encourage greater diversity in the training and recruitment of AI specialists.

A third thread relates to equipping people for the future. AI will accelerate the digital disruption in the jobs market. Many jobs or tasks will be enhanced by AI, many will disappear and many new, as yet unknown, jobs will be created. AI will have significant implications for the ways in which society lives and works. Whatever the scale of the disruption, a significant government investment in skills and training is imperative if this disruption is to be navigated successfully and to the benefit of the working population and national productivity growth. Retraining will become a lifelong necessity and initiatives, such as the Government’s national retraining scheme, must become a vital part of our economy. We said that this will need to be developed in partnership with industry, and lessons must be learned from the apprenticeships scheme. At earlier stages of education, children need to be adequately prepared for working with, and using, AI. For a proportion, this will mean a thorough education in AI-related subjects, requiring adequate resourcing of the computing curriculum and support for teachers. For all children, the basic knowledge and understanding necessary to navigate an AI-driven world will be essential. In particular, we recommended that the ethical design and use of technology becomes an integral part of the curriculum. I should add that our evidence strongly suggested that the skills requirements of the future will be as much creative as scientific.

A fourth thread is that individuals need to be able to have greater personal control over their data and the way in which it is used. We need to get the balance right between maximising the insights that data can provide to improve services and ensuring that privacy is protected. This means using established concepts such as open data, ethics advisory boards and data protection legislation, and developing new frameworks and mechanisms, such as data portability, hubs of all things and data trusts.

AI has the potential to be truly disruptive to business and to the delivery of public services. For example, AI could completely transform our healthcare, both administratively and clinically, if NHS data is labelled, harnessed and curated in the right way. However, it must be done in a way that builds public confidence. Transparency in AI is needed. We recommended that industry, through the new AI council, should establish a voluntary mechanism to inform consumers when AI is being used to make significant or sensitive decisions.

Of particular importance to the committee was the need to avoid data monopolies, particularly by the tech majors. Large companies that have control over vast quantities of data must be prevented from becoming overly powerful within the AI landscape. In our report we called upon the Government, with the Competition and Markets Authority, to review proactively the use and potential monopolisation of data by big technology companies operating in the UK. It is vital that SMEs have access to datasets so that they are free to develop AI.

The fifth and unifying thread is that an ethical approach is fundamental to making the development and use of AI a success for the UK. A great deal of lip service is being paid to the ethical development of AI, but we said that the time had come for action and suggested five principles that could form the basis of a cross-sector AI code. They should be agreed and shared widely and work for everyone. Without this, an agreed ethical approach will never be given a chance to get off the ground. We did not suggest any new regulatory body for AI, taking the view that ensuring that ethical behaviour takes place should be the role of existing regulators, whether the FCA, the CMA, the ICO or Ofcom. We believe also that in the private sector there is a strong potential role for ethics advisory boards.

AI is not without its risks, as I have emphasised, and the adoption of the principles proposed by the committee will help to mitigate these. An ethical approach will ensure that the public trust this technology and see the benefits of using it. It will also prepare them to challenge its misuse. All this adds up to a package that we believed would ensure that the UK could remain competitive in this space while retaining public trust. In our report we asked whether the UK was ready, willing and able to take advantage of AI.

The big question is therefore whether the Government have accepted all our recommendations. I must tell your Lordships that it is a mixed scorecard. On the plus side, there is acceptance of the need to retain and develop public trust through an ethical approach, both nationally and internationally. A new chair has been appointed to the Centre for Data Ethics and Innovation and a consultation started on its role and objectives, including the exploration of governance arrangements for data trusts and access to public datasets, and the centre is now starting two studies on bias and microtargeting. Support for data portability is now being established. There is recognition by the CMA of competition issues around data monopoly. There is recognition of a need for,

“multiple perspectives and insights ... during the development, deployment and operation of algorithms”—

that is, recognition of the need for diversity in the AI workforce. And there is commitment to a national retraining scheme.

On the other side, the recent AI sector deal is a good start, but only a start towards a national policy framework. Greater ambition is needed. Will the new government Office for AI deliver this in co-ordination with the new council for AI? I welcome Tabitha Goldstaub’s appointment as chair, but when will it be up and running? Will the Centre for Data Ethics and Innovation have the resources it needs, and will it deliver a national ethical framework?

There was only qualified acceptance by the Department of Health of the need for transparency, particularly in healthcare applications. In the context of the recent DeepMind announcement that its Streams project is to be subsumed by Google and, moreover, that it is winding up its independent review panel, what implications does that have for the health service, especially in the light of previous issues over NHS data sharing?

The Department for Education was defensive on apprenticeships and skills shortages and appears to have limited understanding of the need for creative and critical thinking skills as well as computer skills.

The MoD in its response sought to rely on a definition of lethal autonomous weapons distinguishing between automated and autonomous weapons which no other country shares. This is deeply worrying, especially as it appears that we are developing autonomous drone weaponry. I would welcome comment by the Minister on all those points.

Some omens from the Government are good; others are less so. We accepted that AI policy is in its infancy in the UK and that the Government have made a good start in policy-making. Our report was intended to be helpful in developing that policy to ensure that it is comprehensive and co-ordinated between all its different component parts.

By the same token, I hope that the Government will accept the need for greater ambition and undertake to improve where their response has been inadequate. I beg to move.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, every Select Committee hopes for a debate as good as this one. The noble Lord, Lord Stevenson, pointed out the exceptional number of non-committee members who have taken part. That is a sign of the quality of today’s debate and the points made. Noble Lords showed expertise in so many different sectors: healthcare, defence, film, industry, financial services and the future. Not all noble Lords have recently published books on the future, but the contribution from the noble Lord, Lord Rees, was much appreciated.

Nearly all speakers emphasised the need for momentum in developing not only AI but the ethical frameworks that we need. Quite frankly, we are still in the foothills. The issue will become of greater importance as we combine it with all the other technologies such as the internet of things and blockchain. We need to be absolutely clear that our policy must be active. We must also have the means of scrutiny. I hope that the House will come back to this, perhaps in one of the other Select Committees, rather than an ad hoc one. As things move on so quickly in this area, we need to keep abreast of developments. The mantra that I repeat to myself, pretty much daily, is that AI should be our servant not our master. I am convinced that design, whether of ethics, accountability or intelligibility, is absolutely crucial. That is the way forward and I hope that, by having that design, we can maintain public trust. We are in a race against time and we have to make sure we are taking the right steps to retain that trust.

I thank all noble Lords for this debate. This is only the first chapter; there is a long road to come.

Motion agreed.

Brexit: Creative Sector

Lord Clement-Jones Excerpts

Wednesday 20th June 2018 Lords Chamber

[Lord Henley]

My Lords, my noble friend is right to highlight the importance of this sector, and I want to emphasise just how big the creative industries are as an exporting sector and in terms of what they produce in this country. I stress, as I did at the beginning, that much of our reciprocal copyright protection is underpinned by international law, but obviously there are parts that need protection that involve EU-UK law. That will obviously be a matter for our future relationship, and that is a matter for the ongoing negotiations taking place at the moment.

[Lord Clement-Jones (LD)]

My Lords, has the Minister read the document from the Intellectual Property Office entitled IP and Brexit: The Facts? There are no facts in it. It says that the Government recognise the concerns of IP professionals, and recognise that owners of registered community design rights “want clarity”. On trademarks, it says that the Government,

“is looking at various options”,

and similarly on the exhaustion of rights. Is it not high time that the Government showed some leadership on IP matters and delivered some certainty to those who need it?

[Lord Henley]

My Lords, the noble Lord and I, and others in the House, debated this matter when the noble Lord had a Question on it, I think, back in March. As I said then and as I repeat now, this is obviously a matter for the ongoing negotiations. The noble Lord will have to wait for the White Paper, which will be coming out shortly. We can then deal with these matters in the negotiations, but as I made quite clear, much of our protection that is already there is underpinned by international law. As I also stressed, we have a pretty good intellectual property regime in this country as it is.

Brexit: Fashion Industry

Lord Clement-Jones Excerpts

Thursday 15th March 2018 Lords Chamber

Asked by

[Lord Clement-Jones]

To ask Her Majesty’s Government what assessment they have made of the impact on the fashion and other design-based industries of the potential loss of European unregistered design rights for United Kingdom-generated designs following Brexit.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, as expressed in the United Kingdom technical note on other separation issues, where the UK does not have existing domestic legislation to protect certain types of rights, it will establish new schemes. This will preserve the full scope of the unregistered Community design right in the United Kingdom.

[Lord Clement-Jones (LD)]

My Lords, the hard exit from the EU means the loss of EU unregistered Community design rights and of vital protection for designers who first disclosed their design in the UK. This is just the way to lose London Fashion Week. We have discussed the problems with loss of country of origin rights for our broadcasters. Is this not yet another example of why the creative industries want us to remain in the single market?

[Lord Henley]

My Lords, I am not going to get into the wider debate about the EU at this stage, but what I can say, to expand on my Answer, is that we will bring forward various statutory instruments in this country to further our rights here. The negotiations will take place with the EU as part of the leaving process, which we hope will deal with these matters, but there are also, as the noble Lord is fully aware, what I think I can call inclarities in the current EU regulations, which obviously need to be sorted out by the EU itself.

Designs (International Registration of Industrial Designs) Order 2017

Lord Clement-Jones Excerpts

Wednesday 6th December 2017 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I cannot guarantee to be a ray of sunshine this afternoon but I will give it a good try. I was quite surprised that despite the invitation on the consultation being from the noble Baroness, Lady Neville-Rolfe, only 10 responses were actually received. That is a bit sad because it shows that there is not a great deal of understanding about the benefits of this kind of Hague registration, so my first question to the Minister is: what visibility will this have after its adoption, given our ability to have business register designs under the Hague arrangements?

Secondly, this appears to be a bit of an IPO-lite solution. Filing, as I understand it, will not be directly with the IPO but with WIPO itself. I am also a little confused by the response to the consultation in terms of how publication will take place and the search mechanisms that will be in place for those kinds of registered designs. Those will be quite important if the system is to be accessible and if we are to get all the benefits that the Minister waxed so lyrical about during his introduction. I share many of his sentiments because I believe that proper design protection is extremely important. We have had many happy hours debating this over the last two years and I am of course a great believer in unregistered design, as well as registered design.

Moving on, it is clear that whether or not one is a great fan of the Hague registration system, it is not as comprehensive as the registered Community designs right. The fashion industry has been making increasing use of registered Community design because it covers surface decoration and a number of other aspects of design.

The last government word on this—this is a Brexit-related aspect—was that:

“The government is exploring various options”—


that is, how one addresses the fact that we will not be a member of the EU in relation to registered Community design rights—

“and are discussing these with users of the system to establish the best way forward”.

The Minister may not be able to tell me very much at this point, but I wonder whether he has anything to say on the matter by way of a follow-up letter. It is all part of the kind of protection package that designers, and businesses that make use of design and want to protect designs, find extremely important. There is quite a lot of anxiety about it. I will not quote all the commentary on the matter, but one comment I read recently said:

“Without an agreement to the contrary, community rights, such as registered and unregistered community designs and EU trade marks (previously community trade marks), will no longer have effect in the UK. Ultimately the scope of any rights applied for will not include the UK, and there remain questions about what will happen to the “UK portion” of such rights obtained before Brexit”.


There are some quite complicated issues here. My question is whether, as well as doing wonderful things like signing up to the Hague system, the work is apace and those options are really being unpacked in relation to the Community design right.

--- Later in debate ---

[Lord Henley]

My Lords, I am grateful to the noble Lords, Lord Stevenson and Lord Clement-Jones, for their responses. As they said, it will be important that I write with a little more detail on this. I certainly promise to do so. The noble Lord, Lord Clement-Jones, was alarmed about the visibility of the Intellectual Property Office and of these matters more generally.

[Lord Clement-Jones]

I am a huge fan of the IPO. I merely say that it has reduced the fees for registered designs. That made me even more of a fan, but I am concerned about the visibility of the Hague system.

[Lord Henley]

I am grateful that the noble Lord said that because I was going to refer to the exchange between my noble friend Lady Neville-Rolfe and the noble Lord, Lord Stevenson, on the Intellectual Property Office, which showed that it is doing a good job. One should give it credit for that, but I take the noble Lord’s point that this is really more about the visibility of the Hague system. I am not sure there is much we can do other than to continue our engagement with business representatives about these matters to promote the importance of Hague and designs in general. We will continue to do that.

As the noble Lord, Lord Stevenson, asked, we will also continue to promote the benefits of registration. We know that registrations with the UK IPO are rising. Since we reduced the fees in October 2016, as referred to in the most recent intervention by the noble Lord, Lord Clement-Jones, we have seen an increase of more than 100%. There is always more to do to raise awareness, and we will do what we can through programmes of business outreach. We want to get over the message that it is important for businesses to register when it would be of benefit to them, and we will continue to do that.

As I have said, I would prefer to go into greater detail on these matters in a letter to both noble Lords, but I am grateful for their general support and recognition that we want to approve the order today and see how we get on thereafter.

Police Intellectual Property Crime Unit

Lord Clement-Jones Excerpts

Tuesday 28th February 2017 Lords Chamber

Asked by

[Lord Clement-Jones]

To ask Her Majesty’s Government whether they have committed to continue funding the Police Intellectual Property Crime Unit.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, the Government recognise the important role that intellectual property plays in protecting and supporting investment and creativity of all kinds. The Police Intellectual Property Crime Unit plays a vital role in disrupting the activities of those engaged in intellectual property crime. There is no question about the Government’s continuing commitment to the unit. The Government are in the process of discussing how the PIPCU should be funded in future. We shall make a statement in due course.

[Lord Clement-Jones (LD)]

My Lords, “In due course”? We are one month from the beginning of the financial year of this internationally renowned and hugely successful unit in the fight against intellectual property crime and it is still waiting to hear whether it will continue to be funded and to what extent. This is a cause of huge concern to specialist police officers as well as to the wider creative sector and other industries. This is a disgrace. Does it not demonstrate that the Government are not taking intellectual property protection and enforcement seriously?

[Lord Prior of Brampton]

My Lords, I reiterate what I said in my Answer to the Question: we are fully committed to funding PIPCU. As the noble Lord knows, when PIPCU was set up in 2013, the intention was that the Government would fund it for a short period of time and that subsequently it would be funded by the rights holders as the insurance industry organised itself. This is not the case, so we are having to look at alternative means of supporting the unit. However, as I have said, those who work in PIPCU need have no concerns about whether the Government are fully committed to it.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, rising above the considerable intellectual property of the noble Lord, Lord Foulkes, perhaps I may come back to the Minister on the question of commitment. He says that he is committed but that could mean £1 or the full budget asked for by PIPCU. Is he committing to a level of funding no lower than the previous level? Is that what he is really saying?

[Lord Prior of Brampton]

My Lords, I think that since PIPCU was set up we have spent about £5.6 million on supporting the unit, which I believe has 20 full-time policemen, detectives and others. We are certainly committed to that sort of level of funding for PIPCU.

Intellectual Property (Unjustified Threats) Bill [HL]

Lord Clement-Jones Excerpts

3rd reading (Hansard): House of Lords
Tuesday 13th December 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I should like briefly to echo the words of the Minister. This Bill has been a good experience and a novel and, for me, different way of doing Bills—something we might learn from, in fact, as we go forward. The Minister said that there were families of amendments, which was certainly true; and we became a little family as we tried to deal with the rather odd way in which the Bill is organised. That was because, every time we looked at one area, we discovered that we would have to amend the Bill in every other clause as well. We were in some danger of extending the small coterie of your Lordships who actually like IP matters, but that is a danger which I think not many would survive.

Like the Minister, I thank all those who gave evidence both in writing and in person. It was a rich and interesting experience. The Special Public Bill Committee worked very hard, and I would particularly like to thank, in addition to our chairman, the noble and learned Lord, Lord Saville of Newdigate, the representatives from the Labour side, my noble friends Lord Plant of Highfield and Lord Hanworth, who served a noble part on the Committee. I also echo the Minister’s thanks to the Intellectual Property Office and the Law Commission. Lastly, I thank the Minister. She has been rather modest in saying that we had improved the Bill; actually, it was she who took on the burden of heavy lifting not only by daring to go back to her own department and other departments to get clearance for various things, but also by taking on, in full measure, the Law Commission itself—and winning.

[Lord Clement-Jones (LD)]

My Lords, I wish to intervene only briefly in the absence of my noble friend Lady Bowles of Berkhamsted. From the updates she has given me regularly and from reading Hansard, she certainly proved more than a match for the Law Commission in many respects, and indeed she helped to inform the Government as the Bill went through. I know she feels that the Bill is now in a much more satisfactory form than it was when it arrived, and I thank the Minister for the amendments that were made in the course of its passage.

Bill passed and sent to the Commons.

Brexit: Consumer Rights Policy

Lord Clement-Jones Excerpts

Monday 12th December 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, next week the Secretary of State for BEIS is chairing a round table with representatives from a range of consumer bodies and charities, and academics, to discuss, among other things, the impact of EU exit on consumers. These are exactly the sorts of issues that he will want to look at. Of course, the great repeal Bill, which has already been mentioned, will convert EU consumer law into UK law wherever practical, and we will want to ensure that cross-border enforcement is effective, and that our ADR landscape is preserved. These are important aspects of a consumer framework which is very strong: we should be proud of it in this country.

[Lord Clement-Jones (LD)]

My Lords, if we leave the single market, will not some of the real problems for consumers be over online and mail order purchases? When consumers no longer have the right to bring actions here against EU suppliers post-Brexit, what is the Government’s cunning plan? Is it for consumers to run around with small claims in all the other EU member states?

[Baroness Neville-Rolfe]

We will want to work to ensure that enforcement is effective across borders. There is, of course, a mutuality of interest here, because online goes both ways, and there are issues online, such as cyber and counterfeits, which need to be addressed. We are continuing to develop the digital single market in our ongoing work in the Competitiveness Council, and our enforcement regimes are well respected. The noble Lord is right to highlight this area, but I am optimistic that we can find a way forward and that there will be opportunities to do things better, from the studies that we shall be doing and the work that we shall be taking forward.

Waterson Review

Lord Clement-Jones Excerpts

Wednesday 23rd November 2016 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, the Minister has clearly made herself extremely conversant with digital ticketing purchasing software, but the clue is in the name, is it not? Will she confirm that she is favourably disposed towards dealing with bots well in advance of the final government report on and response to Waterson, which, ominously, she describes as coming “in due course”?

[Baroness Neville-Rolfe]

We are certainly keen to get to the bottom of the issue of bots and to find the right way forward. There was consensus in committee in the other place that it was right to try to sort out the bots issue before our formal response. But as I said, the Waterson report is with us and work is in hand on this important issue. I am told that there is a proposed federal law on bots—“better online ticketing service”—although I understand the situation is a little different in the United States.