Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020

Lord Callanan Excerpts

Monday 14th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020.

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

My Lords, this instrument, which was laid before the House on 13 July 2020, seeks to ensure that the UK’s intellectual property system functions effectively at the end of the transition period. Intellectual property plays a vital role in the UK economy. IP supports creativity, ingenuity and innovation and provides incentives for research and development. It is no surprise that the UK is a global leader in innovation.

Earlier this month, the World Intellectual Property Organization placed us as the fourth most innovative country in the world. UK research and development is at the forefront of the efforts to combat coronavirus, as seen by the progress made by the Oxford Vaccine Group and AstraZeneca, but that does not mean we should rest on our laurels. The instrument before us today ensures that we have a firm footing to look forward and take advantage of the opportunities available to us as a sovereign, independent nation to bolster our strength as a science superpower.

Last year, as noble Lords may recall, a number of statutory instruments on intellectual property were brought before the House. I shall refer to these instruments as the “original legislation”. These instruments ensured that retained EU law on IP operated correctly and that IP protection in the UK would be safeguarded if the UK left the EU without an agreement. However, as we know, that situation did not occur. The UK left the EU on 31 January, and the transition period provided by the withdrawal agreement means that EU law continues to apply in the UK until 31 December this year. Hence EU-wide IP rights have continued to apply automatically in the UK during this period.

The agreement obliges the UK to ensure the preservation of intellectual property rights which have effect in this country by virtue of our membership of the EU. Of course, this is a task which the original legislation had already taken up. We were always going to ensure that valuable IP rights were not lost, but we must now ensure that we do so in the context of the withdrawal agreement and the transition period.

The instrument before the Committee today therefore has three objectives. First, it will update the original legislation so that it reflects the application of EU law until the end of the transition period, fixing some small errors identified during the process of updating it. Secondly, it will ensure that any new EU law which has come into force since that original legislation works as retained domestic law. Thirdly, it will implement any obligations on the UK in the withdrawal agreement, where these differ from our approach in the original legislation.

The instrument is designed to amend the original legislation before it would come into force at the end of the transition period, which I acknowledge may make the drafting somewhat complex. Nevertheless, the aim remains the same: to ensure that the intellectual property system continues to function and that the valuable rights it provides remain in place. I shall focus on two of the more detailed areas in the instrument: the granting of equivalent UK rights in respect of EU trademarks and designs and new EU law on supplementary protection certificates.

In relation to trademarks and designs, the original legislation ensured that an equivalent UK right would be created for any EU trademark or design in force on exit day. This instrument moves the creation date of the new rights to the end of the transition period because, as I mentioned earlier, EU IP rights continue to apply in the UK until that date. This means that as many as 200,000 additional rights granted between exit day and the end of the transition period will be safely protected in the UK.

In addition, where legal action is being taken to challenge an EU right and a decision is still pending at the end of the transition period, the withdrawal agreement requires us to apply the outcome to the equivalent UK right once the decision has been made. The instrument sets out the process for dealing with the outcome of any such decision. It means that third parties will not be put to the expense of having to launch a separate action to challenge the equivalent UK right.

Turning to supplementary protection certificates, or SPCs, these provide an additional period of protection for patented medicines and pesticides, which must be approved for use before they can be placed on the market. These are highly valuable rights for the life sciences sector, which has consistently been the largest investor in research and development in the UK, investing more than £4.5 billion in 2018. The SPC system works as a balance between supporting innovation in new drugs and ensuring that those drugs become available cheaply, through generic competition, in good time. This enables the NHS to benefit from both.

The SPC system derives from EU law. The original legislation ensured that the system would function in the same way before and after exit day, preserving the pre-existing balance and avoiding changes which might affect when drugs enter the UK market. Last year, some adjustments were made to EU SPC law. Regulation (EU) 2019/933 created what is known as the “manufacturing waiver”. This allows third parties to make SPC-protected medicines in certain specific circumstances while the SPC is in force, without requiring the permission of the SPC holder. This instrument therefore accounts for this new law and ensures that it functions properly in a UK context. It keeps the circumstances in which the waiver can be used the same. This was the clear view of the stakeholders we consulted in a public call for views last year. Again, this preserves the current careful balance of interests in the existing SPC system.

There are also a small number of provisions in this instrument relating to copyright, database rights and the principle of exhaustion of rights. Changes in these areas are technical updates to the original legislation to reflect the existence of the transition period.

In conclusion, these regulations finalise the work carried out last year, providing certainty for holders of IP rights and users of the IP system at the end of the transition period. I commend these regulations to the Committee, and I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to this debate on this important subject. This instrument is vital to ensuring that the IP system is effective and operable from 1 January 2021. Failing to address these issues would put valuable rights at risk and force businesses to go to the expense of litigation to clarify what can and cannot be done.

Innovation and creativity have never been more important or more valuable. This Government have pledged to increase UK investment in R&D, with the goal being to reach 2.4% of GDP by 2027. The fact that we have the world’s most intensive science and technology clusters in Oxford and Cambridge—as determined by the World Intellectual Property Organization—shows the strength of UK science and innovation. Our R&D road map puts science and technology at the forefront of our economic and social recovery. Intellectual property is a crucial part of that effort, so that great research and ideas can be turned into great businesses.

The UK IP system is consistently rated as one of the best in the world, and the UK IPO is widely regarded for its expertise and international influence. To continue to be world-leading, we must be at the forefront of understanding how advances in technology affect the IP framework. Last week at London Tech Week, the IP Minister, Amanda Solloway MP, launched a call for views on the implications of artificial intelligence for the IP system, exploring how the framework may need to evolve with IP being created or infringed by AI.

We must keep leading on international discussions on these issues and more so that the global IP system works effectively for British businesses and those businesses have confidence that they can enforce their rights when they need to do so. International harmonisation is key to ensuring an approach to IP that benefits all nations, and we must continue to deliver high- quality rights granting services here in the UK so that the same confidence and effectiveness apply to our home market.

The noble Lords, Lord Berkeley of Knighton, Lord Clement-Jones and Lord Stevenson, all asked about IP lawyer representation rights. I do not think there is any disagreement between the Government and users about what the law means, but there is an ongoing matter concerning representation rights in the EU for UK IP attorneys and reciprocal rights here. The Government have taken on board the concerns raised by UK attorneys about their loss of rights of representation at the EUIPO and the unfairness they say will result in the UK. The IPO recently finished an online call for views on this issue and unsurprisingly received more than 1,000 responses. We are considering whether to reciprocate by requiring a UK-only correspondence address before the IPO, which would address the concerns noble Lords have raised. The withdrawal agreement does not affect this, other than in relation to the EU rights given equivalence in the UK under that withdrawal agreement.

Turning to the noble Lord’s remarks on copyright, which the noble Lord, Lord Clement-Jones, also asked about, the UK and all EU member states are party to the international treaties on copyright. They give rights holders cross-border protections for all their creative works. This will not change at the end of the transition period. On the future of EU copyright legislation, also raised by the noble Lord, Lord Stevenson, the UK has now left the European Union. The transition period will end on 31 December 2020, as I have said. This means the UK is not required to implement the copyright directive, and the Government have no plans to do so. Any change to UK copyright legislation would come only after detailed consideration and assessment, including consultations with all of the relevant stakeholders.

On the Japanese-UK FTA, the noble Lord also asked about new protections for the UK creative industries. British businesses can now be confident that their brands and innovations will be protected. We have gone beyond the EU on provisions that tackle online infringement of IP rights such as film and music piracy. I cannot comment in more detail until the text is formally laid before the House, but I am grateful for the detailed comments made by my noble friend Lord Naseby on the Explanatory Memorandum.

My noble friend asked about international registrations. This does indeed refer to protections that are applied for through the World Intellectual Property Organization. He asked about decisions taken by EU bodies. Those relate only to decisions that are pending at the end of the transition period, although of course it can take several years for such cases to finally conclude. On the cancellation actions, in most cases the relevance of a decision under UK law will be clear. An example is an EU right that is invalidated because of an earlier national right in an EU member state. Guidance will be produced on what types of grounds may not apply.

I was asked about the duration of supplementary protection certificates. The key to the SPC system is the balance between encouraging innovation in new medicines and ensuring that drugs become available to patients cheaply through generic competition in good time. In that way, the NHS benefits from how long the SPC lasts, which forms part of that balance. How the landscape for medicines develops in the future will determine whether any further changes are needed.

My noble friend asked whether we are ready to go. The IPO is working hard and we are confident that it will be ready to administer the incoming IP rights effectively and correctly. There will be extensive further guidance for users on the updated official forms and other processes over the coming weeks and months. This will include written information, webinars and other materials. As I say, we will publish clear guidance. My noble friend will receive a copy and we will explain how the law is going to change in December and what preparations businesses may need to make. We will update the guidance to reflect the content of this instrument once it has been approved by Parliament. There will be many other outreach activities and we will make sure that any changes to IPO practices are notified in advance.

The noble Lord, Lord Clement-Jones, asked about discussions with the WIPO and protections for international registrations. The Government have worked with the WIPO to see whether we could retain international rights within its system. Through this work we have established that the safest approach for rights holders was to provide them with UK rights, and this is what we have done. He also asked about the Unified Patent Court. In view of the UK’s withdrawal from the European Union, the UK no longer wishes to be a party to the Unified Patent Court system. Participating in a court that applies EU law and is bound by the CJEU would, in our view, be inconsistent with the Government’s aim of becoming an independent, self-governing nation.

The noble Lord also raised the exhaustion of IP rights. This is a complex and indeed contentious area. Under the arrangements we have made, there will be no change to the existing exhaustion of intellectual property rules affecting the import of goods into the UK from EEA countries. However, there may be new restrictions on the parallel export of goods from the UK to the EEA. Businesses undertaking such activities may need to check with the appropriate rights holders to see whether permission is needed. The Government are considering options for a future exhaustion regime and we will consult again with the relevant stakeholders before any decision is made.

The noble Lord, Lord Stevenson of Balmacara, asked about the negotiations on the free trade agreement with the EU. We are seeking an IP chapter that will secure mutual assurances to provide high standards of protection for IP rights which both the UK and the EU already have. I do not recognise his characterisation of the role of the IPO. It is renowned for and will continue to provide high-quality rights, granting services to support businesses in understanding IP and to take an active role in shaping the global IP environment. It remains a world-leading and highly influential IPO that plays its part fully in the UK’s high ranking in the Global Innovation Index.

In conclusion, this instrument will ensure the smooth functioning of the IP system as we exit the transition period. It will provide certainty and security for businesses which can be confident that their valuable rights will continue to be protected here in the UK. I commend the order to the Committee.

Motion agreed.

Committee adjourned at 7 pm.