Intellectual Property Bill [HL]

Lord Howarth of Newport Excerpts

Wednesday 22nd May 2013 Lords Chamber

[Lord Howarth of Newport]

My Lords, I have no interests to declare. I have no financial benefit from any dealings in relation to intellectual property and I have not talked to anybody seeking to lobby us on this Bill. I say this, which noble Lords may consider to be superfluous, because policy-making in the field of intellectual property is peculiarly beset by lobbying. It is good for the House and it is good for everyone who may take an interest in our proceedings that, as we in this House and Members of the other place take part in the scrutiny of this legislation, we make it clear where we are coming from.

The Minister is a serial legislator. He hardly draws breath between concluding legislating on one intellectual property Bill and bringing in another. We should praise him for his enthusiasm to make progress and for his invaluable helpfulness to all of us across the House. When we come to Committee, I am sure that our proceedings will be greatly enhanced by the participation of the noble and learned Lord, Lord Walker of Gestingthorpe, who made very clear the distinguished background from which he comes. I am sure that with his participation in Committee the proceedings will be, in his words, a most interesting intellectual experience.

It would not be fair to say that this Bill—this pudding—lacks a theme. The themes of simplification, clarification, streamlining and the aligning of United Kingdom law with European Union law are consistently there and are desirable themes. If you put in your thumb, you will extract some very good plums: protection from infringement of private acts, experiments in teaching, the improvement in the right to prior use, the extension of the opinion service, the improvement in the small claims service, accession to the Hague agreement and the part of the Bill that deals with the unified patent court and its somewhat Solomonic partial presence in London. The provisions on the court are a real feather in the Government’s cap. They indicate, by the way, that colleagues in the European Union do expect the United Kingdom to remain as members of the European Union. If the Minister should suddenly withdraw Clause 16, we will know that the paranoia of his party in relation to Europe has entered an even more advanced stage. I trust that that will not happen.

I look forward to the Minister, in the course of our various proceedings, expounding more of his vision of what the Government’s role is in relation to intellectual property and what the principles are that should guide policy development—how we should seek to ensure that it contributes to the promotion of innovation, creativity and growth. The Government did very well to commission the Hargreaves report, which seems to me to be a masterly piece of work. We should also appreciate the recent NESTA report, one of the co-authors of which was Professor Hargreaves. That provides very helpful background to our thinking in this general area.

The Government recognised in their response to Hargreaves that intellectual property is a double-edged sword—that was not their phrase, but it was the purport. For my part, I consider intellectual property to be a necessary evil. The question for us as policy-makers and legislators is whether it is now right to continue to reinforce traditional approaches and build on traditional structures, as this Bill does; or has the time come when we need to rethink more radically how intellectual property policy and legislation should be formulated in the era of the digital economy, when knowledge can instantly, easily and costlessly be transmitted across the globe and when we are seeing that the conventional configuration of policies—not just in the IP field—is producing rising inequality with grievous consequences, not only in our own nation but across the world?

Of course, it is necessary to incentivise innovation and it is just to reward creative advance; there are pragmatic and moral reasons for enabling those who innovate to recoup their investment. The pharmaceutical industry, for example, faces colossal costs in development, not least in testing the safety of new products, and we all want the industry to be successful in producing a new generation of antibiotics. However, let us not forget that the protection of intellectual property is protectionism; it creates monopoly and restrictive practice and restrains trade. Therefore, it should be kept to the necessary minimum. How to establish what that minimum is must be based on evidence of the benefits of protection to the economy, to society and to culture.

I understand that there are now economists within the Intellectual Property Office. That might help their deliberations as they advise Ministers, but I wonder whether they are thinking additionally of recruiting philosophers or artists or people who work in developing countries as the judgments to be made are very difficult. Of course we want a strong pharmaceutical industry in this country; we want new drugs to make the lives of our people better. However, we do not want people who live in much poorer parts of the world to have to go without. There are moral and prudential reasons for seeking to prevent the immiseration of the poorest people in the world, sometimes known a little insensitively as the “bottom billion”.

During the passage of the Enterprise and Regulatory Reform Bill, we had some skirmishes on the subject of furniture design, and I wondered how appropriate it was that the present holders of design rights to Eames chairs should be enabled, for a further considerable period, to profit from that monopoly and prevent people in households with modest incomes having the pleasure of beautifully designed Eames chairs in their homes. We continue to need to reflect on these questions. Was it right that Bill Gates was able to patent his operating system on such terms that, through the iron grip that he had on that industry, he was able to make colossal amounts of money? Would $50,000 have been a good enough reward for his originality? Was it really right that it should have been $50 billion? After all, many others were nearly at the same point of development in that field.

It is a problem with monopoly that it will tend to snuff out other businesses and abort other potential. Would it not be better that we should have many more small and medium-sized enterprises rather than a few giant multinationals with the problems in connection with them that we have recently been reflecting on? We should be seeking a more equal diffusion of wealth and, with that, we will have a more rapid spread of ideas and, all in all, a greater increase in wealth. I agree on this with some of the thoughts that my noble friend Lord Borrie was advancing.

The default position of Governments in this country seems to have been to extend the term of protection. I would have wanted to have seen at least the same energy and emphasis on other aspects of policy development to assist the growth of businesses and the development of our culture, as they intend to do through policy on intellectual property: more emphasis on investment in research and development; more effort to get appropriate sources of finance available to entrepreneurs; more work in developing the necessary skills among our people; and faster creation of the infrastructure that we need. We have tended to rely perhaps too much on the protection of intellectual property.

The period for which intellectual property is protected should therefore be the minimum necessary to achieve the incentivisation of entrepreneurs and to enable them to recoup their investment. The object of policy should not be to enable people to get fat on monopoly profits, however charitable they subsequently may be. We in the West are at risk of adopting some hypocritical attitudes on this matter. The G8, the IMF and the World Bank impose free-market systems on the developing world—and not just on the developing world, but on great areas of the world that are in abject poverty and could not be said to be developing. Yet, historically, in our own economies, we were protectionist. We did not operate free-market systems in the early phases of the industrialisation of our economies. We continue to be protectionist in relation to intellectual property. It is perhaps no surprise that the growth of poor areas of the world—sub-Saharan Africa and elsewhere—has slowed and, indeed, failed altogether in the 30 years since the free-market orthodoxy has been imposed there.

Moreover, attempts at global protection of intellectual property risk being futile because they are unenforceable. Just as this country and other European countries did in the early periods of industrialisation, they show contempt towards the intellectual property rights of foreigners. We have seen the significant recent judgment on Novartis in India where the court took the view that a product that Novartis was claiming was new was not, in fact, new. In other parts of the world, protectionism is not masked, or even decently clothed, by legal formality.

The collapse of the neo-conservative economic model since 1980 has meant, ironically, that we in the West are depending increasingly for our growth on the performance of the emerging economies which are the most flagrant violators of intellectual property. We might mention China, for example; perhaps in some ways it is lucky that it is as cavalier as it is about intellectual property rights.

I do not condone theft, but hand-wringing does not amount to much of a policy. As digital technology becomes increasingly important in the global economy, so enforcement becomes more difficult still. We have seen the predicament of the music industry, the publishing industry and photographers. New digital industrial techniques are spreading fast into other areas of traded goods: 3D printing is clearly enormously ominous for many established manufacturers. So far, the handgun that has been made by 3D printing is only primitive, but it will not be long before those same furniture manufacturers will have to worry that it will be remarkably easy, with the use of a 3D printer, to replicate an Eames chair or anything else.

If our interest is to promote creativity and increase wealth, is it better to protect intellectual property? Or is it better to diffuse knowledge and to minimise barriers to downloading and to copying? Is it right therefore to criminalise the deliberate copying of a registered design for someone’s commercial advantage? Maybe it is, because we are dealing with theft. Perhaps it is a good thing to help an aggrieved businessman not to have to waste time and money going through civil court procedures. However, we worry elsewhere that we have a tendency rather blithely to create new criminal offences, and I am not sure that we should be creating new criminal offences here, particularly with the draconian penalties attached to this one.

Are there other ways in which we can provide the just reward that innovators and creators ought to have? With digital technology, the tensions increase between our desire to maximise profit and our desire to maximise the public benefit. Where the variable costs of replication fall very low—or, indeed, to nil—the greater is the opportunity cost of protection, of inhibiting the market, of postponing the day when the generality of people can enjoy the benefit of the new knowledge and of forgoing the earlier enhancement of human opportunities that the new knowledge could provide.

In debates on this matter at the beginning of the American republic, Thomas Jefferson opposed the protection of intellectual property. He argued that ideas are like air and no one should own them. He lost the argument. Alexander Hamilton, the first Treasury Secretary, inaugurated the tradition of protectionism in the US, and it is far from exhausted to this day.

There was an old view, however, that goods for which the marginal costs are close to zero are inherently public goods. Bridges and roads are cited in this argument: once the capital cost of creating the bridge or road has been incurred, it is to the advantage of society and the economy that as many people as possible should, as quickly as possible, be able to use those bridges and roads. Maybe creators should receive their reward not from a rigged market but from, in some instances, taxpayers or charitable funds on a national or international level—people negotiating to purchase intellectual property or access to it on behalf of the community. I know that that is countercultural and that it may seem entirely fanciful in the fiscal situation in which we find ourselves. We should at least be aware of the costs and disbenefits of protecting intellectual property.

In Committee we should assess the merits of the provisions of the Bill by reference to their practicality and the benefits that they will foreseeably confer on innovation and growth, but also by reference to a wider criterion: the net benefit to the economy and, more broadly, to culture, society and communities across the globe. The interests of the incumbent producer, legitimate as they are, are only one part of what we should properly consider. As the noble Lord, Lord Clement-Jones, said, when we are considering what the reporting duty of the Secretary of State should be, we may want to amend what the Government have so far written in Clause 20 to take his responsibilities beyond consideration only of the effect on,

“innovation and of economic growth in the United Kingdom”.