Intellectual Property Bill [HL]

Lord Howarth of Newport Excerpts

Tuesday 11th June 2013 Grand Committee

[Lord Howarth of Newport]

Perhaps I may probe the noble Lord a little further on his views on what the optimum period for protection for design rights ought to be. It seems to me that, as a principle, protection of intellectual property ought to be for the minimum period consistent with encouraging innovation. There is a very large difference between the position in the European Union and the position under UK law. If the European Union provides protection for up to three years and under our own domestic law we provide protection for up to 15 years, that is a huge discrepancy. Will the Minister help us to understand the Government’s thinking on what really would be the optimum period of protection? Fifteen years seems a very long period. I appreciate that there are all sorts of situations and all sorts of varieties of design, and that longer protection may be more appropriate for some than for others, but what does he think should be the guiding principle?

[Viscount Younger of Leckie]

I thank the noble Lord for that quite technical question. It is true that there is a clear discrepancy between three and 15 years. I think that it would be best if I write to the noble Lord and copy in other noble Lords with a substantive answer to clarify precisely how these time periods were arrived at and to give some background information on how they came about. I think that that is the best way forward.

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[Lord Young of Norwood Green]

Noble Lords will be relieved to know that this will be a much briefer contribution.

In their consultation, the Government stated that they would introduce safeguards and transitional provisions for third parties which had commissioned designs, but they failed to do so. This amendment would require the Secretary of State to introduce transitional provisions for commissioned designs for a period of six months after the Act comes into force. Clause 22 allows transitional provisions to be brought forward, but this is an issue of considerable concern in the design community and it seems right for this provision to be in the Bill.

In the consultation document, the Government raised the question of whether there should be “statutory” safeguards for commissioners for a transition period. Why the change? Why not have this on the face of the Bill? The consultation document also acknowledges the concerns about changing the status quo and says that,

“the IPO will work with bodies representing and promoting designers, as well as IP legal advisers to publicise these and other changes to the law, and their potential impact”.

It expresses the view:

“This should help alleviate some of the concerns about this change in particular”.

Can the Minister say what progress has been made with this laudable initiative and with whom the IPO has been working, and can he give us an assessment of the IPO’s success in alleviating the concerns that it recognises exist in this area? If this work has not yet started, can he outline the proposed programme and the time it will be likely to take? I beg to move.

[Lord Howarth of Newport]

My Lords, I have one question for the noble Viscount. In legislating to effect this change, how does he intend to secure the position of people who have commissioned designs? They have invested capital and made an important personal commitment to commissioning a design. In future, the design right of that design is to be vested in the designer and not the commissioner. I do not object to that in principle but I should be grateful if he would clarify how the commissioners’ interests are to be secured in this new situation. Is it to be by way of contract between the commissioner and the person he employs? If so, what ought the commissioner to stipulate in the contract of his employee? However, supposing that the designer is freelance or an independent contractor, how strong will be the protection for the entrepreneur who has commissioned the design and whose interests I think none of us would want to see neglected?

[Viscount Younger of Leckie]

My Lords, Amendments 3 and 9 address the transitional provisions associated with the changes to ownership of designs, as set out in Clauses 2 and 6.

I will first turn to Amendment 3, which seeks to amend Clause 2 on ownership of unregistered designs. The clause as drafted changes the default ownership requirement for commissioned designs from the commissioner to the designer, as the noble Lord, Lord Howarth, emphasised. The clause does not apply retrospectively, and designs created before commencement are therefore not caught by the change in the law.

In addition, an exception is made for designs created after the commencement date but under a contract that was entered into before the date of commencement. This recognises that certain enabling contracts would have been entered into before the change in the law and reflects the legal conditions in existence at the time. The Government believe that these exceptions will protect existing contracts and provide businesses currently entering into contracts with adequate time to adjust to the law.

The Government also recognise that this change is significant for the design industry and that raising awareness will be important. I hope to reassure the noble Lord, Lord Young, and all noble Lords that the Government will therefore work with stakeholders to ensure that they are aware of the change before the law comes into force. The Government will ensure that there is sufficient time to educate businesses before the commencement of this clause.

Amendment 9 proposes similar transitional arrangements in respect of Clause 6, relating to ownership of registered designs. The Bill includes provisions in Clause 22 that are broad enough to permit appropriate transitional arrangements to be put in place as and when the relevant parts of the Bill are enacted. These can be used in relation to Clause 6, and the Government therefore believe that this amendment is not necessary.

The noble Lord, Lord Howarth, or perhaps it was the noble Lord, Lord Young, asked what progress was being made in educating business. My officials have been working with stakeholders such as design and legal representatives for some time. We will continue to work through them as we take the Bill forward.

The noble Lord, Lord Howarth, raised an important point about how one might protect the commissioner, as opposed to the default position of the designer. In response to the issue of whether the commissioner should own the rights automatically, we believe that ownership should be a matter of contract. The noble Lord is correct. It is a matter that businesses should decide upon as they commission designs.

As to the matter raised by the noble Lord, Lord Howarth, regarding the commissioner being a sole trader, perhaps he could clarify his point.

[Lord Howarth of Newport]

I was trying to probe as to whether there was some distinction between the position of a designer who is employed by the commissioner and the position of an outside contractor whom the commissioner contracts to produce a design. In either case, we must be concerned to ensure that the legitimate interests of the commissioner are not neglected in this transition so that the design rights do not in future lie with the commissioner but with the designer.

[Viscount Younger of Leckie]

The noble Lord again makes a good point. The default position is that it is down to the wording of the contract. However, having said that, I will write to the noble Lord to clarify what further protections there might be for the commissioners. As a matter of clarification, where a designer is employed, the employer will be the owner of the design. I hope that, in the mean time, this provides sufficient reassurance to the noble Lords, Lord Young and Lord Stevenson. I ask the noble Lord, Lord Young, to withdraw his amendment.

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[Lord Clement-Jones]

My Lords, the noble Lord, Lord Young, has encapsulated the argument pretty well. It merely takes a reading of the report from the Delegated Powers and Regulatory Reform Committee to see that, although on slightly different bases and for rather different reasons, it is not happy at all with negative procedure for either Clause 8 or Clause 11. In addition to the amendments tabled between us, I have some sympathy with Amendment 10 as well. I very much hope that the Minister will be able to give either convincing reasons for continuing with the negative procedure or will accept the fact that the committee has delivered a pretty strong opinion, particularly in terms of being able to amend primary legislation, and that therefore he will accept or put forward his own amendments to change it to the affirmative procedure in the case of both clauses. Simply reading the committee’s report is pretty persuasive by itself.

[Lord Howarth of Newport]

When the Minister comes to reply in a second, will he give the Committee some indication of the volume of order-making that he anticipates? If these orders are to be subject to the affirmative procedure, will we be meeting every Tuesday and Thursday afternoon?

[Baroness Whitaker]

I add to noble Lords’ wariness of this power. I have a particular question. It seems to me that a sweeping power like this is particularly inappropriate when, as the noble Lord, Lord Howarth, said, we must create a balance between protection and innovation. It is very hard to achieve that by a virtual fiat by the state. Why in this case does he want this power?

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[Lord Stevenson of Balmacara]

My Lords, this follows on from the discussion that we have been having in relation to the willingness of the Government for the United Kingdom to join, in its own right, the Hague agreement. It refers to the fact that in the consultation process the majority of respondents were in favour of the UK becoming a member of the Hague agreement in its own right. In a sense, that is very good because, as I understand it, the Hague agreement will be a very effective way of progressing the ability of those who originate materials and wish to earn from them to secure that right across territories and, increasingly, across the world, as the agreement is not limited to the United Kingdom or indeed to the European Union. Therefore, it is an important step.

However, as was pointed out by one of the respondents, the UK simply joining the agreement in its own right may not be sufficient to take the trick in this area, as the agreement is very little known and there would be a steep learning curve. The Government agree that there is work to be done here and they have confirmed that the IPO will work with a range of interested parties to publicise these and other changes to the law. Our amendment would put a little weight behind that by giving the Government a six-month window in which to get their show on the road.

As with a previous amendment, I wonder whether the Minister could put some flesh on what the IPO intends to do. I understand from some of the documentation we have seen that there is regular contact with designers, representatives of the design professions, and legal and other advisers. However, this is something where a bit more hearts-and-minds activity is required, and it would be very helpful if, in responding, the Minister could, as I said, put some flesh on that by explaining what is going to happen on the ground. I beg to move.

[Lord Howarth of Newport]

My Lords, I am grateful to my noble friend Lord Stevenson for raising what I think the Committee will agree is a very important issue. Intellectual property law is infernally complex and difficult. It is labyrinthine, as my noble friend remarked a little earlier this afternoon. For the businesses that the Government rightly seek to assist through this legislation, there are real difficulties in understanding the law.

It is of course a long-standing principle that ignorance of the law is no excuse. However, the department will of course want to facilitate a good understanding of the law. It would be helpful if the noble Viscount would unfold his thinking to us about how this is actually to happen. Does the Secretary of State for Business, Innovation and Skills have the address of every business in this country, including sole traders and the myriad little businesses that come and go, perhaps entering different incarnations, which are very hard for anybody to trace? Of course he does not. Perhaps he expects them to have recourse to the websites of the business department and the IPO: is it envisaged that those websites should provide an encyclopaedic account of intellectual property law? I imagine it is not, although I am sure that the IPO, not least through the opinion service that this Bill legislates for, will always do its best to help people to understand the law as it may apply in their circumstances, and to know what opportunities the law creates for them.

My noble friend referred to the design professions and their representatives. However, I do not think anybody can be confident that the design professions necessarily represent perfectly everybody who practises in the relevant fields. Hard-pressed business people operating from day to day will often find it pretty difficult to know the rules of these very complex games. This debate is useful because government ought always to reflect on the practical impact of their legislation on those whose lives and businesses it will affect. As I noticed and readily acknowledge, the purpose here is to give assistance to business. However, the task of enabling small traders to steer their way through this labyrinth, small and medium-sized enterprises in particular, is massive. I am grateful to my noble friend for tabling this amendment and look forward very much to the Minister telling us a bit more about how the Government see this working in practice.

[Viscount Younger of Leckie]

My Lords, this amendment would place a duty on the Secretary of State under this provision to report to both Houses of Parliament six months after the commencement of the Bill. The aim of the report would be to notify Parliament what plans the Government had put in place to educate business users about the changes to the law this clause brings about.

I agree with what I believe is the principle behind this amendment: that when changes to the law are made which could impact on businesses or consumers, the Government should provide guidance to users. The Government have already engaged with all key stakeholders through their consultations on the changes now set out in the Bill. I am grateful for the words from the noble Lord, Lord Stevenson, who mentioned that he was aware of this.

This engagement continues as the Bill progresses through Parliament. In addition, the Government will be producing a plain English guide to the Bill, particularly aimed at small and medium-sized businesses, which will be issued before Report. The Intellectual Property Office continues to work through the representative bodies for the design sector to ensure that their members have the guidance they need on the new legislation, if it comes into force.

The noble Lord, Lord Howarth, asked how we can further penetrate the myriad businesses that may be affected. In the letters that we have pledged to write, we will add some information on publicity and distribution, which I hope will be helpful. He also asked further about this issue. I can reassure him that over the past year, almost 18,000 businesses benefited from face-to-face advice from the Intellectual Property Office, which also used online engagement extensively. I am proud to say, as the IP Minister, that it now has 18,000 Twitter followers, more than any other intellectual property office in the world.

The noble Lord, Lord Stevenson, asked whether we could provide more information on what plans there were to educate as well as to inform business. These plans will build on the extensive work that the Intellectual Property Office already carries out through its business outreach programme and through schemes such as the training for business advisers across the UK. I hope these answers help to give some substantive responses to the questions raised by the noble Lord, Lord Stevenson, and the noble Lord, Lord Howarth.

The Intellectual Property Office, on behalf of government, already reports on the support and guidance that it provides to businesses through its annual corporate report and chief executive’s report. Therefore, the Government are not persuaded that a commitment to Parliament to report on this specific area of business support needs to be set out in the Bill. Accordingly, I ask the noble Lord to withdraw his amendment.

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[Lord Stevenson of Balmacara]

My Lords, we believe the Government to be supportive of the general concept that all procedures and processes should, where possible, be digitally routed and that the activities of the Government themselves and their dependent functions should encourage people to migrate to the digital world as quickly as possible. I have already picked up enough stick by referring to a form in paper style, which my noble friend Lord Borrie immediately picked up was inappropriate, but I think that he also had in mind that this was redolent of an earlier age of quill pens and ink on forms completed in triplicate and dispatched by pigeon post around various offices, before being collated in compendious storage areas that could be permanently trawled by clerks bound to that paper. I am sorry for the flight of fancy, but it has been a long afternoon.

At the heart of the amendment is a proposal that we should, wherever possible, encourage those for whom the Government are responsible to think digitally. Therefore, the amendment would ask the registrar to centre the work of the IPO and in relation to the design opinions service and all parts of that around a digital platform. The development of all interactions or communications with clients should be digital. The online tools and digital platforms that will be created would be a huge advantage to those operating in this field because they will reduce costs, encourage quick responses and improve the quality of the advice and information exchanged.

The amendment has an impeccable pedigree and a wish to see the Government performing better, and I hope that it will commend itself to the Minister when he responds. I beg to move.

[Lord Howarth of Newport]

My Lords, while strongly endorsing the thrust of my noble friend’s amendment, I simply ask the Minister when he replies if he will explain to the Committee how we can have confidence that the department and the Intellectual Property Office will be able to maintain the appropriate security of online communications. Also, can he assure us that they will be able to preserve documentation in perpetuity?

[Viscount Younger of Leckie]

My Lords, Amendment 21 would place a duty on the registrar to encourage the use of online tools and digital platforms in the conduct of design registration. I welcome the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, raising this issue as it is an objective the Government already take seriously. IPO customers have indicated a genuine preference for the convenience offered by such services, and the IPO has further sought to incentivise such behaviour, for example by the use of lower fees for the electronic filing of trade mark applications. Currently more than 80% of trade mark applications occur online and therefore the Government see no reason why this figure cannot be achieved for online design applications. The IPO has recently migrated trade mark registrations to a fully electronic document management system and is starting to develop a similar system for design registration. The latter forms a commitment in the published corporate plan of the Intellectual Property Office, which I signed off earlier in the year.

Given the efforts that the office is making in this regard, I remain to be convinced that a specific duty needs to be set out in primary legislation. I understand the comments and the question raised by the noble Lord, Lord Howarth. The noble Lord, Lord Stevenson, raised this issue too, in terms of ensuring that we can have confidence in the security of the Government’s digital services. I can assure noble Lords in the Committee today that the IPO’s policies for keeping information secure and for maintaining them in line with the Government’s wider commitments in this area are in place.

I hope this will provide sufficient reassurance to the noble Lord and that he will withdraw the amendment.