Intellectual Property Bill [HL]
Debate between Lord Young of Norwood Green and Lord Clement-Jones
Lord Young of Norwood Green
My Lords, these government amendments implement the DPRR 3rd report recommendations and we welcome them on that basis. On the Clause 8 orders giving effect to the Hague agreement, the DPRR Committee found that the Bill created a Henry VIII power, and commented that it,
“would therefore expect to see some justification for the negative procedure that is to apply”.
However, the committee did not consider that the case for the negative procedure had been made for orders under new Section 15ZA and recommended that the affirmative procedure should apply instead. We are glad to see the Government accepting that recommendation.
Clause 11(1) inserts new Section 28A into the Registered Designs Act 1949 to provide for the registrar—that is, the Comptroller-General of Patents, Designs and Trade Marks—to give an opinion about matters specified in the regulations with respect to designs of a kind described in subsection (1)(a) and (b). The new section is purely enabling in that the whole provision about the new opinions service is to be set out in negative regulations. Subsections (2), (4), (5) and (7) set out provisions that the regulations must contain—for instance, about protecting the registrar from liability in respect of an opinion and about appeals. BIS explains, in paragraph 13 of the memorandum, that the intention is that the new opinions service will be similar to the existing patents opinions service. That service is provided for in Section 74A of the Patents Act 1977, but it is important to note that almost all the provision appears in the Act, with only one power to make regulations to provide for an exception.
The committee was not convinced by the Government’s argument for a need for flexibility and was critical that they did not explain why more provision cannot go into the Bill—for instance, about the scope of the opinions service. The committee remained unpersuaded that the negative procedure was appropriate for the introduction of this new service entirely by regulations, and recommended that the affirmative procedure should apply on the first exercise of the powers under new Section 28A, which is why we welcome the Government’s decision in this regard. We also welcome the fact that the Government now make it clear that Clause 21 incorporates countries signed up to any Act of the Berne convention by bringing the language of the clause into line with that used in the CDPA 1988. As the Minister assured us, this ensures that countries that have not signed up to the most recent Act of the Berne Convention do not receive any less copyright protection in the UK than those that have, and therefore we welcome the government amendment.
Lord Clement-Jones
My Lords, I join the noble Lord, Lord Young, in thanking the Minister for responding so effectively to the concerns raised on Report. I hope that these swallows which are already evident on Report will mean a summer for the rest of the Report stage.
Intellectual Property Bill [HL]
Debate between Lord Young of Norwood Green and Lord Clement-Jones
Lord Young of Norwood Green
My Lords, I am sure that noble Lords will recall that on 29 October last, the All-Party Parliamentary Intellectual Property Group produced a report, The Role of Government in Promoting and Protecting Intellectual Property, which urged the Government to get a grip on how IP policy is made. The chair, John Whittingdale MP, said in a press release:
“The current system of creating intellectual property policy just isn’t working. IP needs a champion within Government, who will recognise its significance and who will have the influence to co-ordinate policy across different departments. From trademarks to patents, design rights and copyright, UK companies depend on their IP rights to succeed and thrive. In this difficult economic climate it’s especially important that Government backs British businesses on IP. We hope that Government will take note of our proposals”.
In Committee on the ERR Bill, a number of noble Lords called for the creation of a new post of director-general of intellectual property rights, who would have a duty to promote the creation of IP and to protect it where it exists. We have retabled—with permission—the original amendment, which states:
“The Director General has a duty to … promote the creation of new intellectual property … protect and promote the interests of UK intellectual property rights holders … co-ordinate effective enforcement of UK intellectual property rights, and … educate consumers on the nature and value of intellectual property”.
The problem with the present situation, in which we have a Minister—the noble Viscount—and an executive agency, the IPO, is that the IPO may be an efficient registration body for the registration of IP rights but is not, and has never purported to be, a champion of IP. On the contrary, it sees its role as the passive one of holding the balance between creators and users. As the noble Lord, Lord Jenkin, said when he proposed the original amendment, the creators and owners of IP must have someone in government to speak up for them. That was what the amendment was intended to establish.
When he spoke in the original debate, the noble Lord, Lord Jenkin, commented that he had had a lot of support for the proposal from around the industry. He quoted the BPI, which argued that the director-general should be accountable for ensuring a framework for IP that would promote investment in new content, protect the investment from theft and counterfeit, and educate consumers on the importance of UK intellectual property to jobs, growth and the export strength of the United Kingdom.
Intellectual property across copyright, trade marks, design rights and patents is at the heart of the success of a modern knowledge-based economy. It is not sufficient to have one department, one Minister and one executive agency to try to do it all. There should be Ministers and expertise embedded right across Whitehall. If you add in the need to educate people about IP and how it works, the case for a DG in this area seems very strong indeed.
The UK is a world leader in intellectual property. We all agree that how the Government develop IP policy is vital for our economy. The Government should match this ambition and champion IP as much as possible. The IPO cannot remain a passive registrar of IP. It clearly needs to be more overtly a champion for IP. The United States has obviously benefited from having an IP tsar, otherwise known as the Intellectual Property Enforcement Coordinator, who is responsible for national strategy and reports directly to the White House. We offered a similar title to the Minister in an earlier debate, but he seemed unwilling to put on the robes or adopt the persona. I did not think that he looked like Ivan the Terrible; Peter the Great had a more constructive role, both literally and metaphorically, given Saint Petersburg, if I recall. I am sure that the Minister knows that such wonderful casting opportunities do not come too often. This is the second time I have asked him.
Having said that, creating a director-general of intellectual property rights to sit within the Intellectual Property Office and serve as a champion of IP rights within and across government would increase the influence of the Intellectual Property Office across government and also strengthen the hand of the Minister responsible for IP. As the Alliance for Intellectual Property says:
“We believe such a post is needed to ensure that this success is properly recognised, celebrated and built upon to ensure its contribution to growth, employment, culture and society is properly maximised; for IP to be championed in a way it is in other nations”.
I beg to move.
Lord Clement-Jones
My Lords, as someone involved in the All-Party Parliamentary IP Group report of last year, which the noble Lord, Lord Young, mentioned, it would be churlish of me not to take part briefly in this debate. The white horse which I see the noble Lord now sitting on had a pretty good trot during the passage of the Enterprise and Regulatory Reform Act 2013. I do not really wish to reopen the issue with a semi-Second Reading debate on the role of the Minister and the idea of an IP tsar.
It has been quite interesting over the past six months, and is really important, that the Government and the IPO have demonstrated that they have intellectual property holders’ concerns at heart. We are of course in Committee but, in the previous debate, the noble Lord, Lord Stevenson, talked about achieving a balance. Here the noble Lord, Lord Young, is talking about unequivocally championing IP. I am very much at the end of the spectrum: although, as the Minister picked up, I am very keen on having an evidence base, I am still an unequivocal champion of IP so I found what he had to say very attractive.
The issue for me is not so much structures as attitude, increasingly. “By their fruits shall ye know them” is the key to all this. Are the Government going to implement the Digital Economy Act? Are they going to limit the exceptions to those that are really needed in the fields in which they are being introduced? Will they produce the right kind of report about innovation, growth and intellectual property? What is their approach to protecting intellectual property rights in broad terms? A lot of it is about attitudes rather than structures.
Many of us would love to see an IP Minister with the same hat as the Creative Industries Minister. Given that that is a cross-departmental matter, I suspect that it is never going to happen but I believe that the connection between intellectual property and the creative industries is extremely important and should be represented in a single-focus Minister. That would be a great step forward.
I have met the very impressive United States intellectual property tsar, Victoria Espinel, who has a valuable role in the American Administration. However, I am not sure that an intellectual property tsar would play quite such a valuable role in the UK system. I say that despite the fact that I signed up to the relevant amendment but, hell, we can always change our positions. The more the Minister keeps doing what he is doing, the less we will see the need for not an inspector-general but a director-general of intellectual property. However, he probably still has some way to go to convince us that the Government and the IPO really have the interests of the creators of intellectual property at heart.
Lord Young of Norwood Green
My Lords, we have argued in Committee about whether or not criminal sanctions should be introduced to the design rights field. However, even if the Government’s current proposal is adopted, unregistered design rights will remain outside the criminal courts.
It has been argued that the present civil damages regime is ineffective and provides no deterrent to those seeking to infringe IP rights—infringements which, it can be argued, impact on economic growth. The current regime offers little opportunity for organisations to claim back the true costs of the losses they suffer, apart from the often nominal unpaid licence fee, as it takes no account of the profits a person may have made on the back of their infringement. Therefore, given that the only penalty available is an ability to reclaim the fee that should have been paid in the first place, a situation is created that provides an incentive to infringe.
The Gowers report of 2006 stated that:
“Damage awards should act as a disincentive to infringement”.
The 2007 Culture, Media and Sport Select Committee report into new media and the creative industries stated:
“The deterrent effect of the present law in this respect is near zero: it should be substantial, as are some of the illicit profits being made”.
The 1997 Law Commission report, Aggravated, Exemplary and Restitutionary Damages, stated:
“Substantial numbers of consultees considered that exemplary damages do or could have a useful role to play in filling these gaps. They fulfil a practical need. We agree”.
When pressed, the Ministry of Justice points to the fact that the civil regime is there only to compensate, while the criminal regime is there to punish. However, blurring of these boundaries already takes place. In January 2010, a judge awarded exemplary damages in a civil case involving a car insurance scam. In addition to ordering the individuals in the fraud ring to compensate the companies for £300,000 of losses, the judge ordered the ring to pay a further £92,000 as a punishment. The reason, he stated, was to send a clear message that this sort of action would not be tolerated.
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights—TRIPS—requires that members provide enforcement procedures that “permit effective action” against infringement of intellectual property rights covered by the agreement, including,
“remedies which constitute a deterrent to further infringements”.
The EU directive on the enforcement of intellectual property rights echoes the TRIPS obligation. To satisfy the obligations imposed by TRIPS and EU law, many EU member states have adopted strong rules on civil damages for intellectual property infringements; for example, in Ireland aggravated and exemplary damages are available. In other markets, including Austria, the Czech Republic, Greece, Poland and Romania, rights holders can recover multiple damages. Lithuania provides for a form of statutory damages. These remedies are not available in the UK. In addition, Canada, the US and other countries have introduced statutory or pre-established damages.
Can the Minister say whether the UK Government believe that their implementation of the enforcement directive meets the requirement for member states to have “effective, proportionate and dissuasive” civil remedies? It is true that the courts are free to continue to apply their existing approach. A subsequent licence purchase, for example, may be deemed adequate to compensate for lost profits. Technically, this leaves the rights holder with the ability to recover unfair profits by suing the infringer. However, proving such profits can be exceedingly difficult in many cases, especially where the profit is a saved cost.
Much, if not all, of the substantive and common law that concerns the awarding of damages predates the development of the modern, digital-based creative economy. As a result, anomalies, deficiencies and inequities have become increasingly apparent, particularly for copyright interests. The amendment provides the ideal opportunity for these problems to be fixed. I beg to move.
Lord Clement-Jones
My Lords, I was not planning to speak on the amendment but the noble Lord, Lord Young, made such a good fist of the arguments that I wanted to say that this matter needs serious examination. In fact, when one looks closely, one sees that this is a relatively mild amendment because it does not really constitute exemplary damages. It simply rolls up royalties into a lump sum that otherwise could have been awarded by a court. Exemplary damages are rather tougher. Indeed, many rights holders complain that the provisions of the amendment would be inadequate when all they are going to get is just the equivalent of a royalty when, in fact, an infringement has taken place over a long period. One could go a lot further, but as a first step and as a way of stimulating discussion this is an interesting amendment.
Lord Clement-Jones
Noble Lords will be pleased to hear that this is a rather shorter amendment. Amendment 31 inserts a new clause which will increase criminal penalties for digital copyright offences. Criminal offences for online copyright theft have maximum penalties of two years’ imprisonment. Criminal offences for physical copyright theft have maximum penalties of 10 years’ imprisonment. This discrepancy came about because the new offences were introduced by secondary legislation using the European Communities Act 1972 as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal offences introduced by secondary legislation via the ECA are limited to two years’ imprisonment. This was also after my right honourable friend Vince Cable’s Private Member’s Bill that became the Copyright etc. Trade Mark (Offences and Enforcement) Act 2002 and that increased penalties for criminal copyright offences to harmonise them with those available for trade mark offences at 10 years.
I strongly believe that criminal sanctions should not be dependent on whether the offence is taking place in an online or physical environment. Intellectual property is still being stolen, whichever format is being used. The problem that this has created for law enforcement was seen recently in FACT’s significant landmark private prosecution of Anton Vickerman. Vickerman was making £50,000 each month running a website which facilitated mass-scale copyright infringement. He was prosecuted and subsequently convicted on two counts of conspiracy to defraud and sentenced to four years’ imprisonment. This sentence would not have been possible if he had been prosecuted under copyright law.
This amendment does not introduce any new offence. It is simply about addressing an anomaly in the level of penalties available. The maximum criminal penalties for IP offences are: trade mark, 10 years; physical copyright, 10 years; registered designs, 10 years proposed in the Bill; and online copyright, two years. The Government prosecutors are happier using fraud legislation to obtain convictions against online infringers. Given this, there is no appetite to amend the CDPA. Trade associations such as FACT and the BPI anti-piracy unit tell a different story. While they do use the Fraud Act in some instances, it would not be applicable to all cases and offences. Fraud legislation is used because, owing to this discrepancy, there is no other option. The Fraud Act is used as a work-around because of the leniency in the CDPA.
In the Vickerman case, had he not conspired with someone, conspiracy would not have been a possible charge, which would have left a serious offence subject to a disproportionately low maximum penalty. What law enforcement and prosecutors need is a full package of legislative options available to them so that they can consider each case individually and use the piece of legislation that will get them the best result. This discrepancy aids defendants. They are able to point to the fact that the maximum penalty for these offences is only two years, and therefore that they are minor offences and should not be viewed as serious. This is incredibly damaging. Modern copyright law should focus on having a content-neutral and platform-neutral approach to infringement. I beg to move.
Lord Young of Norwood Green
My Lords, we support in principle the amendment of the noble Lord, Lord Clement-Jones, and would be interested to hear the ministerial response.
Intellectual Property Bill [HL]
Debate between Lord Young of Norwood Green and Lord Clement-Jones
Lord Clement-Jones
My Lords, I am indebted to the Chartered Institute of Patent Attorneys for having drawn my attention to the issues on Clause 14. Generally, the institute welcomes this proposal, but considers that it needs to be tightened up. If a product has a patent number or patent application number on it, it is easy for any third party to identify the patent or application and make any such subsequent inquiry as it needs to. If, however, all that is marked on the product is an internet link, it could turn out to be a considerable job even to identify the patent or application. The internet link, for instance, could be to the home page of a company and the patent number could then be buried deep in the sublevels of the internet site. Alternatively, the link could be to a page where all a company’s patents and applications are listed, but in an unsearchable format. This proposal could provide a way for a company to conceal the information that is supposed to be present on the product. To ensure that the internet link provides the required information directly, I hope that the Minister will see the virtues of this amendment. I beg to move.
Lord Young of Norwood Green
My Lords, I know that imitation is the sincerest form of flattery, and I doubt that the contribution of the noble Lord, Lord Clement-Jones, is copyright-protected. However, it would not be very good if, having found the same source, I repeated exactly the same words. We share the sentiments of the noble Lord, Lord Clement-Jones. We think that the government proposal is good but, in this age of the internet, it could be made even more effective. On those grounds, we support this amendment and look forward to the ministerial response.
Intellectual Property Bill [HL]
Debate between Lord Young of Norwood Green and Lord Clement-Jones
Lord Young of Norwood Green
My Lords, in moving Amendment 10, I shall refer to Amendments 12 and 19 as well. Amendment 10 is quite simple. We would leave out subsection (3), which gives a Henry VIII power to the Secretary of State to amend the Act by order. Amendment 12 would implement the Delegated Powers Committee recommendation but goes slightly wider by requiring all orders under Clause 8 to be subject to affirmative procedure. Amendment 19 would also implement the Delegated Powers Committee recommendation, but it goes further by requiring all statutory instruments to be subject to the affirmative procedure. This was referred to in the recent report from the committee.
These amendments were laid before we had sight of that DPRR committee report, but the committee has drawn our attention to the Henry VIII powers contained in this Bill and, as good democrats, we should be careful of approving such powers without good reason. Indeed, the committee went a little further, saying that it would,
“expect to see some justification for the negative procedure”,
that the Government are proposing.
The committee is sceptical of the case put forward by the Government, saying that it detects,
“some inconsistency of approach between what is said in paragraph 8 of the memorandum and the explanations given in paragraphs 25 and 35 about the choice of … powers”.
It would be good to hear the Minister clear up that ambiguity.
The rest of the group, which we share with the noble Lord, Lord Clement-Jones, reflects the recommendation of the Delegated Powers Committee and proposes its solution to the issue, which is that it considers the case for negative procedure has not been made for orders under proposed new Section 15ZA, and that the affirmative procedure should apply instead. I look forward to the comments to be made by the noble Lord, Lord Clement-Jones, and beg to move.
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.