Lord Clement-Jones
Main Page: Lord Clement-Jones (Liberal Democrat - Life peer)Intellectual Property Bill [HL]
Lord Clement-Jones Excerpts
Lord Clement-Jones
“35ZE Offences committed by partnerships and body corporate
(1) Proceedings for an offence under this Act alleged to have been committed by a partnership shall be brought against the partnership in the name of the firm and not in that of the partners, but without prejudice to any liability of the partners under subsection (4).
(2) The following provisions apply for the purposes of such proceedings as in relation to a body corporate—
(a) any rules of court relating to the service of documents;(b) in England and Wales or Northern Ireland, Schedule 3 to the Magistrates’ Courts Act 1980 or Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence).(3) A fine imposed on a partnership on its conviction in such proceedings shall be paid out of the partnership assets.
(4) Where a partnership is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of or to have attempted to prevent the commission of the offence, is also guilty of the offence and liable to be proceeded against and punished accordingly.
(5) Where an offence under this Act committed by a body corporate is proved to have been committed with the consent, connivance or neglect of a director, manager, secretary or other similar office of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.”
Lord Clement-Jones
My Lords, in moving Amendment 23, I shall speak also to Amendment 24. Amendment 23 is very straightforward. Really, it is a question for the Minister: as regards the new criminal penalties that apply to registered design rights, why has Section 110 of the Copyright, Designs and Patents Act, “Offence by body corporate: liability of officers”, which ensures that company officers are liable if conniving or consenting, not been replicated here for registered designs? I could read out the relevant offence under the CDPA but I am sure my noble friend is familiar with it. However, it seems odd that everything else replicates what is contained in the CDPA for copyright but not the application concerning the liability of company officers. Considering that so much business is conducted through companies, it seems extraordinary that that provision is not included in the Bill.
I see that there will now be a clause stand part debate. I am not surprised because this is clearly a subject that needs airing. Rather more controversially, Amendment 24 is an attempt to advocate the extension of criminal offences for infringement of unregistered designs. As we know, Clause 13 introduces a new criminal offence of deliberate infringement of a registered design right. While this is a welcome move, to be of any benefit to the vast majority of designers in this country, the Bill needs amending so that criminal sanctions also apply to the deliberate infringement of unregistered designs.
Design is of key importance to the UK economy. There are around 350,000 designers in the UK and UK businesses spend around £35.5 billion on design each year. The majority of the UK’s design community are lone, micro and SMEs, with 87% having fewer than 10 employees and 60% having fewer than four. Approximately 4,000 designs are registered annually in the UK and approximately 5,000 are registered in the EU. However, the great majority of designers rely on unregistered rights.
Each year, between 18,000 and 25,000 unregistered designs are lodged with ACID—which represents designers and was mentioned at Second Reading and in these proceedings—by its some 1,100 members. ACID’s design data bank does not add to any intellectual property rights but provides evidence of the date on which it received a design. It encourages designers to keep an IP audit trail from the seed of an idea to market reality, which provides essential evidence if designs are copied. Extrapolating from that figure of 1,100, it is therefore reasonable to assume that the majority of the UK’s designers rely on unregistered design rights, and on copyright of course.
Why, then, is the new criminal offence limited to infringement of only registered designs? Surely criminal sanctions need to apply to unregistered design rights as they apply to copyright, in order to have any real and lasting benefit for UK designers. The introduction of criminal sanctions for deliberate infringement of registered designs is a progressive step. This is the first time that criminal sanctions have mirrored copyright. While I accept that registration offers designers a longer-term and stronger right, unlike trade marks and patents, there is no extensive examination for registration, so design registration is a very different type of protection.
To register a design costs £60 per design. Regrettably for most lone and micro designers, the cost of registering every iteration of a design would be prohibitive. ACID receives between 18,000 and 25,000 designs annually, so it is clear that informed designers take their design audit trail seriously. However, to ask them to pay £60 would be a real barrier. The majority of ACID settlements have been based on unregistered design rights and the ability to provide a design audit trail held on the ACID design data bank. In its 2010 survey, 89.7% believed that design infringement was deliberate and blatant. In a further survey in 2012, 97% believed design infringement was deliberate and blatant. Given the cost, time and scale of opponents in the majority of these cases, deterrence against copying is critical. Extension of criminal sanctions to unregistered design rights for the majority of the UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trade mark infringement.
Criminal sanctions have been available for copyright infringement since 1862 and for trade mark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Copyright is a property right. A trade mark and an unregistered design right are property rights, as is registered design. Whereas persistent copying of the first two constitutes a serious criminal offence, punishable by up to 10 years’ imprisonment, which exceeds the longest sentence for ordinary theft, currently persistently copying designs is not a criminal offence at all. This is completely anomalous. Persistently copying a 2D drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this 2D work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed, copying that 3D version would not be a criminal offence.
I fail to understand the policy decision behind this. Nearly all designs are copied from the 3D original, not the 2D drawing. How do the Government justify giving a higher level of protection to a 2D design brought than they to the 3D manifestation of that design? A telling point was made by designers when they gave an example of the scale of opponent in the three latest cases involving members of ACID. This demonstrates the inequality of arms between infringers and designers. For instance, one ACID member had a turnover of £50,000 and two employees, and its opponent in this infringement case a turnover of £8.7 billion and 78,000 employees. How on earth can a lone designer gain justice in those circumstances?
In a second case, an ACID member with a turnover of £500,000 and 15 employees was opposed by a major retailer with a turnover of £20.5 billion and 145,000 employees. I will not try the Minister’s patience much further—these are difficult cases, where members are seriously prejudiced—but in a third case, an ACID member with a turnover of £250,000 and 10 employees was opposed by, again, a major retailer with £3.4 billion turnover and 52,000 employees.
If anything, in these circumstances, there are quite honestly stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. I hope that the Minister can elucidate why this is not being done and perhaps give us some assurance that this is under consideration. I beg to move.
Lord Stevenson of Balmacara
My Lords, I am very grateful to the noble Lord, Lord Clement-Jones, for his lucid introduction of these two amendments. As he says, the first seems to deal with an error. We shall wait to see what the Minister says about it, but we would support it if he chose to take it further.
Amendment 24 picks up the debate where we left it on Tuesday. For most of the time we reflected on why the Government have adopted a two-track approach, although unfortunately in this case the tracks lead in opposite directions. In one there is no attempt to simplify the design rights field. The points made by Ian Hargreaves in his report, and picked up by many commentators, seem to have been ignored. I know that it is difficult to eliminate unregistered design rights; nevertheless the fact that we have five different ways of classifying or approaching these designs is still an irritant and source of confusion for the industry. It cannot be effective in terms of building up the creative industries more generally. It is something that will have to be addressed at some point, if it is not dealt with in this Bill.
The second track is this: why should one penalise on the registered design side but not on the unregistered design side? We will be opposing the question that Clause 13 should stand part in the next group, so my position on this is somewhat complex because I would not want to see criminal penalties brought into this area at all. That is not the right direction of travel and I will expand on that when I speak in the clause stand part debate. Parking that for a moment, I accept absolutely the points made by the noble Lord, Lord Clement-Jones. There is no substantive difference in how unregistered and registered designs are treated. The fact that they are registered does not in any sense imply approval or otherwise of them, or give them any status that is different from unregistered ones. The figures are exactly what they are. Most of the people who operate in these fast-moving areas, particularly fashion, tend to use unregistered designs, and those who do so have no real protection when there is a problem.
I was particularly struck by the points made by the noble Lord, Lord Clement-Jones, about the way in which the design copying process might happen. Most people would take the 3D representation of a design, not the 2D design. As he pointed out, the discrepancy in how such malfeasance is then approached by the courts is obviously a stark example of how the process is not working.
The noble Lord’s final point about parity of arms is one that we will return to. It is clear that there is a real danger in the creative industries these days that those with the resources can use the system to obtain advantage in the knowledge that people will not be able to defend their designs. Yet we rely on these individuals and small companies to provide the design initiative that is necessary to grow our creative industries. For all these reasons, I support the noble Lord in his amendments.
Lord Clement-Jones
My Lords, I found the Minister’s reply absolutely fascinating, although the intellectual logic of many parts of it escaped me. He gave a very helpful response to Amendment 23. It just shows that you can trawl through the Registered Designs Act and not find what you are looking for. However, I am impressed that the department found the relevant passages in there. I appreciate that an overlap exists except with regard to partnerships. It is very interesting that there is no reference to partnerships in the existing legislation. Partnerships are interesting bodies. Some of them have unlimited liability whereas others are limited liability partnerships. Therefore, some interesting drafting needs to be done in that regard because LLPs are quite akin to corporate bodies.
Therefore, how does the legislation work? If I divined from what the Minister said that there is intent to come forward with an amendment on Report, I would be extremely happy with that response.
Viscount Younger of Leckie
To clarify, we will give this very careful consideration but I cannot guarantee that we will move an amendment on Report.
Lord Clement-Jones
My Lords, guarantees in Committee are a luxury that Ministers cannot afford. I appreciate the words that he said.
It is a very different kettle of fish with Amendment 24. It is almost difficult to know where to start because the skittles of the argument fall in almost every single case by reference to copyright. On the problematic starting point, the registered design right is of course quite straightforward to prosecute because of the registration but copyright is not so easy. There are relatively few prosecutions for breach of copyright. There would be relatively few unregistered design right prosecutions if my amendment was accepted.
The important thing is the factual basis and establishing the facts. Of course, those prosecuting have the burden of proof on their arguments. That is where it starts from and it is analogous to copyright. There is no register of copyright. There may be one in the States but there is not one here. On the difficulty of knowing when something came into existence, not every 2D document has the date on it saying exactly when it was created and so on. There are matters of fact to be established. Again, it is very similar in copyright to unregistered design rights.
On the point about the inhibiting effect, that is absolutely splendid but I cannot see that that is any greater than would be the case with copyright in 2D. In some respects, you could argue that because 2D is more thematic than 3D, 2D has a much greater inhibiting effect because you can extrapolate from 2D into 3D to a much greater extent. When you spin off and think about software or things of that sort, much of which is covered by copyright, establishing the date, genesis and all those aspects of software creation is fraught with difficult issues but nevertheless people are entitled to the protection of criminal law. That means that those who cynically exploit copyright or design—copyright certainly and trade marks sometimes—are prosecuted.
The fashion industry is not much different from that. I feel quite strongly about this. The Minister mentioned that the fashion industry uses unregistered design but one must think about the economic issues associated with copying of designs in the fashion industry and the cynical way that rip-off retailers take advantage of the original designs by fashion houses and so on. That is an absolutely clear-cut area where the protection and deterrent effect of the criminal law would be extremely useful. I did not make the claim that the voluntary register with ACID would be the killer argument but this is all about evidence. Will it be possible to mount prosecutions using evidence of copied designs or infringement of unregistered designs? The evidence of a register, albeit a voluntary one, would still be extremely useful.
Finally, I am sure that the Minister can recognise that I am somewhat frustrated by the rather circular argument being employed here. The Minister said that this should not apply to unregistered 3D because 2D is not the same, being closer to theft—that is an entirely circular argument. I do not quite see that theft of a 3D design and theft of a 2D design are morally different. In many ways they are not different factually. Why should either of them be closer to theft? I find that a rather interesting argument to mount.
I hope that the Minister will reconsider this issue. It is a matter of huge importance to 350,000 designers, who would cheer the Minister in the streets and bear him aloft through Westminster if he acceded to this, which I am sure would be a great attraction to him. I very much hope that between now and Report he will reconsider but, in the mean time, I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, that was a very interesting debate and prefigured what I am about to say about the question of criminality in this area. The noble Lord, Lord Clement-Jones, has made the arguments and is correct about them, and it is up to the Minister to make the best of if. If the industry is voting with its feet and adopting the unregistered design right as its mode of operation, and if it is true that there is a sense that having criminalisation in this area will improve the quality and quantity of our economic activity in it, it must follow logically that criminal sanctions should apply. However, I shall devote the next few minutes to arguing against exactly that proposition, but then, this is Committee.
Clause 13 introduces a new section into the Registered Designs Act, creating a criminal offence of unauthorised copying of design in course of business. It would apply in respect of UK-registered designs and registered Community designs. As I have said, we are concerned about the fact that this is being introduced as a criminal sanction.
There are two categories of offence, and I shall refer to that as I carry on with my remarks. One is about the making of a product by copying a registered design,
“so as to make a product exactly or substantially to that design”,
and the second offence is dealing in products that have been copied. Both will carry sentences of up to 10 years, which, as the noble Lord, Lord Clement-Jones, mentioned, is very high on the list of tariffs. The arguments for and against criminal sanctions for designs have been extensively aired over recent years, and we should bear in mind that levels of piracy have risen.
To recap briefly, proponents of this move feel that the current civil enforcement is expensive for small innovators and that current civil sanctions are not dissuasive enough for large infringers. Opponents are concerned that unexamined IP rights are a dangerous basis for taking criminal sanctions and that there is a risk of stifling competition in useful products.
We understand the Government’s aim—I have just referred to it—but we worry about whether the proposal for criminal offences in general is the right tool for the job and, in particular, whether it is appropriate and proportionate and would deter those pirates and counterfeiters whose behaviour the public would, I accept, consider to be criminal. There is rather an important discrepancy here. Those who champion criminal sanctions are largely talking about unregistered design rights, which we have been talking about, and, of course, the huge preponderance of design rights are in that category, but the Bill is about only registered design rights and registered Community designs.
Registered design rights are better defined and have a much longer lifetime but, as we discovered, they are not in any sense better examined, so the proposed introduction of criminal sanctions may not work, and I would like to bring some particular problems to the attention of the Committee. The penumbra around a design, which is to be found in the uncertainties about how “exactly or substantially” is defined, makes it unclear what is or is not a criminal act. Unlike parallel trade mark or copyright offences, mere use, whatever that is, of an infringing product, even if no copying is involved, will become a criminal offence. Furthermore, the maximum sentence is very high for what, in fact, could be just a mere business misjudgment without deceptive intent.
The Bill introduces a defence as it states:
“It is also a defence for a person charged with an offence under this section to show that the person did not infringe the right in the design”.
However, the inclusion of the new section contributes to the bizarrely complex nature of the offence. For example, if the prosecution shows that D copies the design, and produces something exactly or substantially to that design, D can attempt to show that the product would not produce, for an informed user, the same overall impression as the registered design. These distinctions are hard for specialist lawyers to comprehend, let alone lay people such as jurors or magistrates. I will return to this point in relation to a recent case. Implied in what I have just said, of course, is the major concern that the courts that will deal with these cases will be criminal courts, which have no real experience at all in design law.
The defence that the registered design was not in fact copied raises difficult questions, as many of the cases on copyright infringements have shown. As already mentioned, there is a concern that the proposed provision could turn into a tool to be used by unscrupulous companies, to the detriment of UK designers. It is reasonably inexpensive to register a design, especially as there is no effective examination, and an unscrupulous company could apply to register designs it copied from a UK designer and then threaten that designer with criminal sanctions for producing his or her own design. The prospect of defending a criminal action might be enough to make the designer give in. What sort of fairness does that speak to?
I have some questions for the Minister on the thinking behind this move. Why does the Bill not state a requirement as to where the act occurs? On the face of it, there seems to be no reason why it should not cover making unauthorised copies elsewhere in the EU, where the acts would infringe an RCD, so the defence that it did not infringe the right in the design would not apply.
Secondly, why does new Section 35ZA define “registered” designs as including “registered Community” designs? Does this not leave open whether the offence might not be committed by copying, or dealing in copies of, a foreign-registered design, for example those with a Benelux registration?
Thirdly, following the implementation of the designs directive, the scope of registered design protection has been broadened. This gives rise to the situation where registered design right is now infringed by use of the same design in different products. Can the Minister confirm that, if a design is registered in relation to one type of product—for example, an image of Bugs Bunny on a mug—that design would be infringed if the person featured it on another product such as a pillowcase? If so, in the latter case, would criminal sanctions be applied?
New Section 35ZA(3) applies to dealers infringing products—both importers and traders. One might wonder how stockists of, for example, Samsung Galaxy phones might have behaved towards what were initially allegations made by Apple in respect of infringement. At that point, if the Bill had been enacted, dealers in those products would have faced criminal liability, and up to 10 years’ imprisonment, if they had made an incorrect judgment call as to whether the Samsung products they were attempting to sell would infringe Apple’s registered design. One can only imagine that this would have done serious—and, as it turned out, unnecessary—harm to Samsung.
New Section 35ZA(3) includes as a criminal act the use of a product in the course of a business and the stocking of the product for use. Does the Minister accept that the word “uses” is an unacceptably vague notion for criminal prosecution? What is the Government’s reason for removing the defence of reasonably believing that the defendant’s design was not an infringement—that the designs were different and would not produce in the informed user the same overall impression? This is often the crux of design infringement cases between competitors. It is worth thinking about what Judge Birss said in the Apple v Samsung case in holding that Samsung products did not infringe Apple’s registered designs:
“This case illustrates the importance of properly taking into account the informed user’s knowledge and experience of the design corpus. When I first saw the Samsung products in this case I was struck by how similar they look to the Apple design when they are resting on a table. They look similar because they both have the same front screen. It stands out. However to the informed user (which at that stage I was not) these screens do not stand out to anything like the same extent”.
If Section 35ZA had been in force, would not Samsung have escaped criminal liability only because it got the judgment call as to infringement—the views of the informed user—right? Had Samsung got that wrong, there would be no defence. Is this what the Government really intend?
Absent either a positive requirement of dishonesty or some sort of broader defence, where a person reasonably believes that they are not infringing, this law could have a significant chilling effect on competition—so much for a Government who trumpet themselves as supporters of competition and opponents of unnecessary regulation.
Lord Clement-Jones
My Lords, I shall be very brief. The beauty of Committee is that entirely opposing propositions can be put forward by the same person. It is only when we get to Report that we have to get serious by being absolutely clear about the propositions being put forward. I therefore do not intend to respond in great detail to the noble Lord, Lord Stevenson, who, I believe, was taking an argument out for a trot. Earlier in Committee, I previously talked about frightening the horses and I am afraid that we are back to horse analogies. It has been an entertaining trot in many respects.
The way that the argument was put together misunderstood what happens in court. It is about the adducing of evidence. It was reassuring that the judge listened to the arguments and evidence and felt as a result that he understood far more about the genesis of the design right. Of course, in a criminal court you add mitigation to all that. It is not worth suddenly locking up people as a result of being prosecuted for design infringement. If you do something reasonable in the eyes of a criminal court in such circumstances, you will be able to mitigate the offence, even though technically you may be guilty of it.
I am afraid that I do not accept the noble Lord’s argument. However, I have wanted to use the expression “a fortiori” for many years in Committee; if you have the ability to prosecute in a criminal court for an infringement of registered design, you should have that ability for unregistered design. If you have it for copyright, you should be able to prosecute for unregistered design. If you have it for trade marks, you should have it for unregistered design. All these intellectual property rights may be complex but they are a vital underpinning for our creators and our creative industries. I am unashamed in my wish for those creative industries to thrive in this country and for their intellectual property protection to be as solid as we can make it, without falling unduly into a monopoly situation, about which the noble Lord, Lord Borrie, is ever vigilant, I am glad to say.
Lord Howarth of Newport
My Lords, the noble Viscount needs to offer us some compelling reasons for the creation of a new criminal offence. It is undesirable in principle to create new criminal offences unless there is a clearly demonstrable need for them. Successive Governments over decades in this country have been promiscuous in the creation of new criminal offences. They have been trigger-happy in this matter. It makes them look as if they are being tough and it is quite popular in certain quarters, but it has not been very good for our national life or our culture. It tends to create a more pervasive culture of distrust, suspicion and fear within our society.
There are also a lot of practicalities to think about. If you have a criminal offence, you must commit policing resources. You are laying another burden on the courts. The police and the courts are already excessively burdened and their resources are diminishing. You must consider the capacity of the prisons, which are bursting. I hope that we will not have to anticipate many people being incarcerated in consequence of the noble Viscount’s measure but that is clearly what it points towards. I do not know what thought the noble Viscount has given to the cost of all this. We understand that the Government are intent on reducing the deficit but he is proposing here a measure that will have clear implications of additional public spending. I can quite understand why the measure is popular with small and medium-sized enterprises in the design field: the burden of the enforcement of rights will be transferred from civil action being taken by them where necessary to criminal prosecution by the police and the Crown Prosecution Service. It saves SMEs troublesome, tedious and possibly expensive activities. I can see why they like that. However, I am a bit surprised that the Minister has been willing to gratify them in this way.
Lord Clement-Jones
“(b) which directly displays clearly the product and its complete trade designation and associates the product with the number of the patent or patents which relate to it”
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.
Viscount Younger of Leckie
My Lords, Amendment 25 would place a requirement on businesses to provide the complete trade designation of the product, alongside the product’s associated patent numbers, on their websites. It is helpful that my noble friend has raised this issue, as it will allow me to set out some more information about how the Government are expecting the marking of products with the web address to work.
The Bill aims to reduce burdens on patent holders by modernising the ways in which they can provide public notice of their patent rights. Allowing patent owners to mark their patented product with a web address will lead to cost savings for business while making it easier for the public to access up-to-date patent information. Under current UK legislation if, in the event that a patent is infringed, a patent holder wishes to be in with the best chance of being awarded damages or other financial remedies, it must mark its product with the word “patent” or “patented”, together with the number of the patent. It is, therefore, in a patent holder’s interest to ensure that it is straightforward for the public to ascertain which patent or patents apply to a particular product. Doing so will ensure that the public is put on notice about the patent rights, making others think twice before infringing that patent.
Clause 14 requires that, if an internet link is used, it must direct the reader to a web page which clearly associates the product with the number of the patent concerned, as is the case under United States patent law. This means that providing an internet link to the home page of a company website will not suffice unless on that home page there is a clear association between the product and the relevant patent number. It also means that the product must be clearly identified and associated with the relevant patent.
Just to be frivolous, I suspect that noble Lords’ mobile phones are switched off; I hope that they are. However, if you were to take them apart you may find—if the manufacturer operates in the United States—a website address with the patent details is provided. I particularly noted that it appears on my battery. Many hundreds of patents are likely to be associated with a single mobile phone, and listing them on a web page rather than on the mobile phone itself is therefore far easier for the manufacturer.
Amendment 25 would add an additional requirement that the web page must provide the “complete trade designation” of the product. I understand this to mean an identification of the exact product concerned, including, for example, any relevant model numbers and variants that exist. This is entirely the intention of the clause, which I believe already caters for this. The clause requires the provision of a web page address that,
“clearly associates the product with the number of the patent”.
The patent holder must therefore clearly identify the product and which patents apply to it. Currently, the Bill allows businesses to do this in a manner that best suits their circumstances to avoid placing an undue burden on business. Again, I remind noble Lords that it is in the patent holder’s interest to ensure that clear information is provided that makes it easy for the public to ascertain which patent or patents apply to a particular product. Doing so will ensure that they can benefit from the maximum protection available during any legal proceedings. In light of this, I ask that the noble Lord withdraws the amendment.
Lord Clement-Jones
My Lords, I thank my noble friend for that useful clarification. I am sure that it will be carefully noted by all those concerned. Given that it is the patent agents and patent lawyers who are heavily involved in this field, he will appreciate that their concerns are worth taking seriously. However, I take my noble friend’s clarification seriously, too, and I am grateful. I beg leave to withdraw the amendment.
Lord Clement-Jones
Lord Clement-Jones
My Lords, I am afraid that this is a much more serious issue and I dare say that my noble friend is already aware of the strong concerns about elements of the clause that have been expressed not only by the patent agents but by the Law Society in a recent briefing paper.
In 2012, the Intellectual Property Office consulted on an amendment to the opinions service. That was responded to by a number of professional bodies. The CIPA agreed that the opinions service could be usefully expanded in some respects but was firmly opposed to the non-binding opinions service being turned into a binding service in relation to the existence of the patentee’s patent. Currently, the opinions service can give rise to four non-binding opinions: first, where the patent is valid; secondly, if the patent is invalid for lack of novelty or obviousness; thirdly, if the patent is infringed; and, fourthly, if the patent is not infringed. The Bill is proposing that one, and only one, of those four opinions should become something more than a non-binding opinion, while the other three retain their non-binding status.
The Bill proposes at subsection (4) to introduce into Section 73 of the Patents Act 1977 a power for the comptroller to revoke patents of his own motion when an opinion is given that the patent lacks novelty or is obvious. It is of concern that this proposal has not been fully thought through and I ask noble Lords to reconsider whether it should be kept in the Bill. The opinions service is very useful. It provides a low-cost forum for obtaining a first view as to the validity or infringement of a patent. The fact is that it is an opinions service, and a non-binding one, meaning that a certain approach is taken to such proceedings and costs are kept low. Moreover, the opinions are a useful commercial tool because the requester and the patentee can enter into negotiations regarding the patent. However, if the patentee knows that the opinion could lead to revocation of the patent, it is unlikely that any negotiations will be carried out on the same basis and it is less likely that settlement will be reached.
Viscount Younger of Leckie
It may be helpful if I clarify for the noble Lord that I was speaking in relation to the IPO’s practice and policy, as stated in the response to the consultees’ comments, in other words, as part of the consultation. However, I will reflect further on the need to tackle the point that he has made, as he has asked me to do.
Finally, my noble friend Lord Clement-Jones asked why patentees cannot recover their costs. If the patentee appeals to the court following a revocation by the IPO and is successful, he may be able to recover costs, but only if the court thinks that that is right.
I hope that I have managed to answer all the questions. If I have not, I will certainly follow up with a letter. I thank my noble friend Lord Clement-Jones for putting so much effort and thought into his range of questions on this important subject. I hope that in the light of my comments, the noble Lord will not press the amendment.
Lord Clement-Jones
My Lords, I am very grateful to the Minister for his very full and careful response. However, the noble Lord, Lord Stevenson, has put his finger on the point. I thought that what the Minister said was entirely reasonable. I heard what he said about TRIPS and two steps. However, when I read the actual wording of the Bill, I do not see that. I see a kind of blancmange where the IPO and the comptroller can take this over and revoke a patent after an opinion without a very clear step between the opinion and the revocation procedure. I am not an expert patent lawyer, and I shall consult a number of organisations, including the Law Society and the Chartered Institute of Patent Attorneys, but it seems to me that they are entirely right to be concerned about the Bill’s wording.
I entirely accept that the Minister, absolutely in good faith, has read out how he and the IPO believe that this is meant to operate. However, we operate on the basis of the rule of law. The Minister, in a way, has made a Pepper v Hart statement whereby, if we were to have a judicial review of the IPO when revocation had taken place and everything had gone pear-shaped for a patentee, the patentee could rely on the Minister’s statement. I would much prefer to amend the Bill, and I cannot for the life of me see why if it is the intention to have revocation proceedings only in clear-cut cases where a patent is invalid for various particular reasons, it cannot be expressed in the Bill.
The bit of the Minister’s response that I found somewhat disingenuous was somewhat like political jujitsu, when he said that this is all for the benefit of SMEs. I thought that that was a cunning reversal of the arguments because, if we are not careful, SMEs will be faced with the power of a determined major company that wants to make sure that it gets opinions in place. It could then bring revocation proceedings that could be extremely threatening to some small patentees. That is not entirely helpful to the SME.
We need to chew over the Minister’s words, but this is a very serious issue for the professionals involved. They really understand the steps that need to be taken. They understand, as I do not, all the intricacies of TRIPS, they recognise novelty and they have to advise on such issues on a daily basis. They are extremely concerned that this is a woolly area that gives the comptroller too much power. However, we will no doubt come back to this on Report. In the mean time, I beg leave to withdraw the amendment.