Intellectual Property (Unjustified Threats) Bill [HL]

Viscount Hanworth Excerpts

Wednesday 9th November 2016 Other Business

[Viscount Hanworth (Lab)]

I shall speak to Amendment 20, which has already been spoken to by the noble Baroness, Lady Bowles. This is a residue of an amendment to new Section 21A(2) proposed by CIPA, the Chartered Institute of Patent Attorneys. Its concern, shared by other witnesses, is that the Bill does not make adequate provision for infringements of rights that are common in e-commerce.

It was agreed that CIPA’s amendment was opaque and misplaced within the text of the Bill. The witnesses from the BBC, which is involved in such commerce, have offered alternative amendments that I have undertaken to propose. The noble Baroness, Lady Bowles, has proposed similar amendments, which I think we more or less agree are interchangeable. Those amendments are in the fourth group and I shall speak to them later.

Amendment 20 declares that a threat is not actionable if it relates to the kind of infringements that are common in e-commerce. It is a counterpart to later amendments that deal with permitted communications and provides a necessary link to them. That is why I have tabled Amendment 20.

[Baroness Wilcox (Con)]

This is the point in the Bill where I think I can best make a contribution. The Intellectual Property (Unjustified Threats) Bill is legally satisfactory, but its difficulty lies in how it will operate in the real world. Specifically, for the many good changes that it contains to operate effectively, businesses must be fully aware of them and confident about their application. This is a problem particularly for SMEs, which often struggle to understand the complex law in the field of intellectual property. In the area of threats, it comes down to exactly what they can and cannot do and why.

The lack of engagement by SMEs with the Bill, especially an absence of written evidence, is a concerning indication of the difficulties that they face in the area. I have had my own SME and have personal experience of what it is like to receive an unexpected telephone call from a large company telling me that what I am doing is not quite right and that they would be happy to help me out and even to give me a payment for my trouble. So I understand the fact that most people running a small business are not reading all sorts of bits of paper to see what comes next for them. They cannot afford secretaries or legal fees while they are getting their businesses going. It is important for us to get small businesses going and up to that medium size where they are more secure and able to take the advice that they need.

I have one or two potential solutions that the Minister might like to think about. First, I would insert an amendment before Clause 7 reading: “Communication. The Intellectual Property Office shall take steps to ensure that the changes to the law relating to unjustified threats made by this Act are communicated to businesses in the United Kingdom, with a particular focus on communicating them to small and medium-sized enterprises in the United Kingdom”. This would be helpful, for example, in notifying businesses that professional advisers should no longer ask for indemnities to write to an alleged infringer or help them understand the permitted communication provisions of the Bill by setting out the examples listed.

A second solution might be the appointment of a champion for small businesses—we did this with the ombudsman for the grocery business. I am sure that the Minister does not want to find herself having to invent something, but if there is not good representation on the face of the Bill, the chances are that very little of it will feed down to small businesses. The appointment of a champion for small businesses in the field of intellectual property would be welcome. Such a champion could ensure that SMEs are fully aware of their rights and what they can and cannot do in the area of threats, and that big business could not exploit its superior understanding of intellectual property law to gain unfair advantages over SMEs.

Thirdly, a designated lead in the IPO to offer advice to small businesses about approaching and dealing with the threats provisions, while stopping short of offering actual legal advice, would also be welcome. I worked with the Intellectual Property Office when I was a Minister for Intellectual Property. Prior to that, back when I was running a small business, it was one telephone call I made to the Intellectual Property Office when I was told, “Sign nothing. Say nothing. We’ll send someone”. That is exactly the sort of help I would hope for. A small business that is approached or attacked by a large business would find that they could make a phone call and somebody would be there to answer.

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[The Senior Deputy Speaker]

I call Amendment 9 next.

[Viscount Hanworth]

I wish to speak not to Amendments 9 and 10, or to the other amendments of the same nature that are replicated for the series, but to my own amendments, which are more or less equivalent. They are Amendments 11, 28, 46, 64 and 80. They relate to permitted communications, namely—

[The Senior Deputy Speaker]

Somebody needs to move Amendment 9.

Amendment 9

Moved by

[Viscount Hanworth]

9: Clause 1, page 2, line 42, at end insert—
“(d) take-down from a digital platform by a notice of an infringement sent to or by the platform.”

[Viscount Hanworth]

I shall move Amendment 9. To continue, Amendment 11 relates to permitted communications, namely,

“giving notice to or by an information society service provider of the infringement of a patent”.

The amendment has been provided by the BBC and by BBC Worldwide Ltd at the instance of the Committee. The problem that it addresses was also recognised by the Chartered Institute of Patent Attorneys. It provided an amendment to new Section 21A(2), which had the same purpose as the present amendment. However, it was agreed that the text of its amendment was tortuous and that amendments to the same end were required in other places in the Bill, which is why we find them in five places. To that end, the BBC has provided five amendments that are to be placed throughout the Bill. They concern, respectively, patents, trademarks, registered designs, design rights and community designs. The wording of these amendments is virtually identical and so it is appropriate for me to speak to all of them together. As we proceed through the list of amendments, it should be clear which ones these are.

I should briefly describe what the problem is. It arises when a rights holder contacts an internet service provider, such as eBay, to assert that there has been an infringement of its rights. Someone may be advertising goods for sale using its trademark or infringing its brand. An example that was provided by the BBC concerns the sale of bespoke “Doctor Who” birthday cards, but there are many other similar cases that one can imagine. The action of the brand owner or the rights holder would be to contact the internet company—eBay, for example—requesting that it takes down the offending advert. The internet company would do so, while contacting the party responsible with information concerning the putative infringement and providing it with an opportunity to contest the action. In a contested case, it would encourage the parties in dispute to open negotiations.

A point that has to be stressed concerns the huge volume of such incidents. They have to be handled in a routine manner by dedicated teams within internet companies, which would be severely constrained if they were liable to the charge of making unjustifiable threats. Moreover, it is unclear in many cases whether the putative infringer would be regarded as a primary infringer, to whom it is legitimate to send a threatening letter, or a secondary infringer, to whom it would not be legitimate to send the letter. The Bill makes an allowance for this in cases where all reasonable steps have been taken by the claimant to determine whether the infringer is a primary infringer or a secondary infringer. However, in the cases that we are considering, which concern high volumes of low-value trades, the requirement to take all reasonable steps to determine the matter seems to be excessively onerous. We will come to this point on a later amendment.

The question of whether a notice issued by the complaining rights holder or by the internet company can constitute an unjustifiable threat is still undecided in law. These amendments attempt to clarify the matter. There has been some pushback from the Law Commission, which seems to be loath to allow any interference with its handiwork. Its comments have been addressed to the amendment of the Chartered Institute of Patent Attorneys rather than to the offerings of the BBC, which it may not have seen. It has made two arguments. First, it has suggested that the matter can be dealt with adequately in the Explanatory Notes that accompany the Bill. It has also proposed, more generally, that any outstanding matters can be settled by case law. I do not regard these as adequate responses to the genuine difficulties that are arising. I beg to move.

[Lord Lucas]

I am very sympathetic to these amendments. The internet is an international community, it has developed an international and agreed method of dealing with infringements and it would be daft of us to try to insist on a separate method of dealing with them just for the UK, even if we may be in that sort of mood as a country at the moment. This is a moment to try to swing behind an international system that works.

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[Baroness Neville-Rolfe]

I am grateful to the noble Viscount, Lord Hanworth, for his clear explanation of these amendments. I liked his example of the Doctor Who birthday cards, which I look forward to researching.

It is true that the internet is growing. It is increasingly international and it is very important, but I am not sure that that necessarily means that we should be changing the Bill. The amendments seek, in various ways, to include the sending of an online infringement notice in the list of permitted purposes, the result being that such notices can be used to communicate with an online secondary actor, without fear of a threats action being brought. Unfortunately, such amendments would completely undermine the protection for secondary actors provided by the Bill. Noble Lords will remember that Mr Justice Birss was clear in his oral evidence that these forms should not be made an automatic exception from the law of threats. He noted that he was aware of the notification process being used in exactly the way the threats provisions aim to prevent. Furthermore, the amendments would distort the policy behind permitted communications, which, of course, is to encourage a conversation to resolve a dispute. If an online form is used, rightly or wrongly, and the product listing is taken down, then the rights holder has prevented further trade in the item, so that closes the door to discussion.

Amendment 11 defines the new permitted purpose in relation to the e-commerce regulations 2002. These regulations do not specify how the notification must be made or what it should contain. There is no conflict, as we see it, between the Bill provisions as they stand and these regulations. It is possible to send a communication which fits within both the requirements of the regulation and the permitted purposes. Given the undefined nature of an e-commerce notice, the range of communications exempted by this amendment would potentially be large. That could create a gap in the protection for secondary actors.

Amendments 9 and 11 in particular would allow malicious and unjustified threats to be made to a secondary actor simply because a particular online form is used. The parties damaged by that threat would have no form of redress. That cannot to my mind be the right outcome. A rights holder facing a threats action as a result of using such a form can take advantage of the defences set out in the Bill. One defence available is that “all reasonable steps” have been taken to find the primary infringer. What is reasonable in the case of high-volume online infringement, to which the noble Viscount referred, is very likely to be a lower hurdle than in other situations. If a step is reasonable, then I see no problem in expecting a rights holder to take it. In light of this, the permitted purpose set out in Amendment 10, with its explicit reference to the impracticality of finding a primary actor, is not necessary. A suitable defence already exists.

The other defence for a rights holder facing a threats action is that the right has in fact been infringed. As the BBC noted in its evidence, it is very well aware, before it makes contact, of who is permitted to use its brand, and therefore whether others are infringing. The provisions as drafted in no way prevent rights holders from legitimately enforcing their rights. Sir Colin Birss says about not including standardised/online letters in his evidence:

“I would not include them in the exemption. That kind of thing can cause real damage. … I would be wary of a draft that went too far the other way and simply excluded that kind of thing altogether. That would be unfortunate. It is a place where SMEs can get damaged”.

Finally, I will try to pick up a couple of the points made by the noble Baroness, Lady Bowles. As I am sure she knows, the list of permitted purposes is based on the current threats provisions where it is permitted to notify a recipient of a right or, for patents only, to give factual information about the right or make inquiries to find out if a right is being infringed and by whom. That is not changing. Also, mere notification, to which she referred, is the first of the permitted purposes, and notification is not a threat to the platform.

These are complex matters. They have obviously been discussed at length with the Law Commission. I hope that, on reflection, the noble Viscount will feel able to withdraw his amendment.

[Viscount Hanworth]

I shall consider carefully what the Minister has said, as recorded in Hansard. Therefore, I beg leave to withdraw my amendment. I wish to give notice that I may bring it back on Report, in collaboration, I would expect, with the noble Baroness, Lady Bowles.

Amendment 9 withdrawn.

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Moved by

[Viscount Hanworth]

15: Clause 1, page 3, line 29, leave out “person who made the threat (T)” and insert “person (T) who made the threat”

[Viscount Hanworth]

Amendment 15 is a trivial amendment. It says,

“leave out ‘person who made the threat (T)’ and insert ‘person (T) who made the threat’”.

I have observed that, in the subsequent text, T denotes a person rather than a threat. It occurs to me that it would have been better to denote the person in question by a capital P instead of a capital T. Even a capital C might be used to denote the complainant who makes the threat. This is a rather clumsy piece of illogic in the text, and I think it brings it somewhat into disrepute. These remarks apply also to Amendments 32, 50, 68 and 84, which are absolutely identical in their content. It is not the threat T that is instanced in the subsequent text; it is the person T that is instanced, and therefore there is a piece of illogic in the Bill. I think that should be expunged. I beg to move.

[Baroness Bowles of Berkhamsted]

I agree with the noble Viscount. I think it would have been less ambiguous if you had used P for person, but that might be used in another part. However, I observed that in the Digital Economy Bill, where there was the same kind of phrasing, they put the person, followed by a letter, who did something or other, so I think that the noble Viscount, Lord Hanworth, is right.

[Viscount Hanworth]

I have to say that mathematicians instantly spot this, so there are three of us who hold that opinion rather strongly. Others, who are of a different culture, cannot see what we are driving it.

The other amendment in the group is Amendment 16, which is replicated in Amendments 33, 51 and 85. We have already been over this ground, but I repeat that the amendment seeks to leave out “all”. This amendment relates to the requirement that the person T, who has made the threat, should take all reasonable steps to identify those who are ultimately responsible for the infringement, before they can claim that their threat is justifiable. It is argued that this places an onerous burden on a rights holder, who is subject to an infringement of e-commerce. Therefore, the word “all” should be deleted. We have been here before because it has been suggested that, instead of the phrase “all reasonable steps”, we should allow only steps that are practicable. I think the basic point is that the onus falls too heavily upon the claimant, in the case of e-commerce, of infringement.

[Lord Saville of Newdigate (CB)]

I entirely agree that the word “all” sets too high a test and should be removed.

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[Lord Lucas]

My Lords, I would be grateful if, between now and Report, the Minister could write to me with some examples of cases decided on the basis of “all reasonable efforts”, so that I can get a real grip on what that means. It is a very uncertain phrase in English. If I wrote to Tesco asking, “Who made the cornflakes?”, and it said, “It’s not our policy to divulge that information”, would that be “all reasonable efforts”, or should I ask five or six times? If I cannot find a way on the website to communicate with somebody who appears to be selling products off a platform, are no efforts “reasonable efforts”? Particularly in the context of being asked to give way on Amendment 11 or whatever comes back on Report, knowing that, for example, the things that we are asking the BBC to do in defence of “Doctor Who” are actually reasonable and are not a ridiculous burden in defence of a 20p commission on a Doctor Who birthday card is something that we as a House should do. I would be grateful for an opportunity to see the sort of evidence that a court will see, against which it will judge whether a particular course of action involves all reasonable actions rather than just reasonable actions.

[Viscount Hanworth]

Yes, indeed, in my perception, “all reasonable” goes far beyond reasonability. I think that is a substantial point, although we are talking about just one word. I beg the Minister to take this matter away and consider it. I shall withdraw the amendment, but assure her that I shall raise it on Report if we cannot find any better way of phrasing this onerous demand.

Amendment 15 withdrawn.