Viscount Younger of Leckie
Main Page: Viscount Younger of Leckie (Conservative - Excepted Hereditary)Intellectual Property Bill [HL]
Viscount Younger of Leckie Excerpts
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, following the gracious Speech, predictably and understandably, there was considerable interest in the Bills which were read out. One major newspaper chose to use a scaling system of one to five to describe the importance of each Bill in terms of its impact on our lives, with a crown motif. The Intellectual Property Bill was given no less than three—perhaps best described as the triple crown. Three crowns are worth having, and so are the measures in the Bill.
The Government recognise the importance that intellectual property rights play in our economy. Total annual investment in IP rights represents 4.3% of UK GDP. We are always looking to clear obstacles that stand in the way of investment in IP-intensive businesses and innovation. That is why we have introduced the Bill.
I will set out the background to the Bill. In November 2010, the Prime Minister commissioned a review of intellectual property and growth—the so-called Hargreaves review. It examined how the intellectual property framework could better contribute to UK economic growth. The Government responded in August 2011, broadly accepting the recommendations and committing to bring forward policy proposals. Some of these require primary legislation, others secondary legislation, and some can be handled outside the legislative framework. A number of proposals were brought forward in the Enterprise and Regulatory Reform Act 2013, which was given Royal Assent last month, as your Lordships will know.
Professor Hargreaves called on the Government to take action on the important and growing design sector and to deal with the “patchwork” of intellectual property rights for designs which puts it at a disadvantage in comparison with other sectors. The Government’s call for evidence on the UK design legal framework in September 2011 led to further thinking and analysis. This was followed by a formal consultation in September 2012. I am now pleased to bring to this House a Bill which seeks to implement the results of that consultation.
With Hargreaves in mind, the Bill before your Lordships has three broad aims: first, to simplify and improve design and patent protection to help businesses and, in particular, small and medium-sized enterprises; secondly, to clarify the intellectual property legal framework; and, thirdly, to ensure that the international IP system supports UK businesses effectively. The Bill proposes changes to help businesses to better understand what is protected under the law, reduce the need for costly litigation and to provide greater certainty for investors in new designs and technologies. Cutting red tape and helping to speed up the granting of patents internationally will help businesses protect their innovations more easily. These reforms are vital to helping Britain to succeed in a competitive global market.
I turn to the issues facing businesses which the Bill seeks to address. Businesses will benefit from greater legal certainty and clarity over what can be protected. This will allow investment in new design, with lower risk of copying, and a potential for an increase in trade. Greater certainty over legal rights could lead to a reduction in the use and cost of legal services to business.
Design owners, particularly small businesses, have told the Government that their designs are often blatantly and deliberately copied. The Government want to increase protection for registered design holders and to reduce the scale of design theft. Design rights should be given the same level of protection as copyright and trademarks. The armoury of enforcement agencies should be increased.
To this end the Bill introduces a new criminal offence for deliberate copying in the course of business. To clarify: if a person deliberately copies a registered design without the consent of its owner in order to profit from it, they would be subject to criminal sanctions. A conviction would require the high standard of proof necessary in any criminal case. In addition, enforcement agencies would bring proceedings in criminal cases only if it were in the public interest to pursue a conviction.
Extending criminal sanctions to registered designs would create a coherent approach to enforcement and protection. Infringers do not divide up the rights they plan to steal. If criminals produced a fake product, for example a golf club, they would steal the golf club design as much as the trade mark and any copyright existing in the instructions for use and the packaging. The sanction would act as a deterrent and provide proportionate punitive measures. A criminal offence will only apply to deliberate and intentional copying of a registered design. Where someone has infringed a registered design right unintentionally it would continue to be up to the parties to pursue any case with the civil courts if they chose to do so. We will have ample opportunity to discuss this particular matter further in Committee.
In addition, the Government are also seeking to simplify the law and intellectual property framework to provide better support to businesses. This will include making it easier for businesses to enforce their design rights and to understand who owns what. The changes are intended to help reform the system by harmonising it, where appropriate, with international regimes. In particular, we want to make it easier for small businesses and individual designers to use and navigate the system.
One example of this is the provision for the United Kingdom to join the Hague international designs registration system. Joining this system will allow businesses to include the UK in an international design application. This will streamline the registration process for businesses which want to register in a number of countries and will lead to direct savings. A legal firm has estimated that the cost of registration in six countries is currently up to £7,500. In contrast, the same number of registrations would cost less than £500 under the Hague system.
In addition to reducing costs for business by streamlining processes and registration systems, this Bill also seeks to reduce costs for business in the area of litigation. At present the cost of IP litigation is seen by many as prohibitive. For example, a small or medium-sized enterprise responding to our consultation told us that it had received advice that it would cost it £100,000 to bring revocation proceedings against a competitor’s patent. The potential for this level of cost meant that it was unable to challenge in court a patent that it believed to be invalid. In this Bill we are expanding the patent opinions service and introducing a new design opinion service. The services will provide low-cost alternatives to costly litigation.
Since the Intellectual Property Office launched the non-binding patent opinions service in 2005, nearly 200 opinions have been issued. The service enables parties to resolve disputes without the need for costly litigation. Users of the opinions service are primarily small and medium-sized enterprises, but a number of large businesses, such as Dyson, have also used this service. The expansion of the patent opinions service and creation of a design opinion service are part of the Government’s wider strategy to enable them to support businesses to enforce their IP rights.
Other positive changes include the introduction of a small claims track into the patents county court for copyright, trademark and unregistered designs cases, for claims of up to £10,000. Many rights holders who could not previously afford to go to court can now do so. The small claims track provides a cheap and swift resolution to their IP disputes. The extension of the opinions services seeks to build upon this by providing an alternative route for resolving disputes.
I now turn to the other changes being made to patent law. The Bill proposes a number of changes to aspects of patents legislation, to provide clarity and legal certainty to users of the patent system. An example of this is enabling the Intellectual Property Office to share information on unpublished patent applications with its counterparts in other patent offices, on a strictly confidential basis. This will help clear existing backlogs and speed up clearance times.
An additional year of waiting, also known as “patent pending” time in the USA, Japan and Europe, has been estimated to reduce growth, due to lost innovation and enterprise, by up to £7.6 billion in the global economy. By reducing duplication of work and speeding up the patent granting process overseas, UK businesses applying for European, US and Japanese patents in addition to UK patents could increase the value of their patents by £4.2 million per annum. The Bill seeks to bring about these economic benefits to business.
Let me now turn to the reform of the European patent system, which this Bill will enable. This will allow UK businesses to apply for a single patent to be administered across Europe. The change could bring about direct savings to UK businesses of up to £40 million per annum in translation costs alone. The proposed creation of a unified patent court will mean a single regime for enforcement of patents in almost all EU countries. In February this year, my right honourable friend the Secretary of State for Business, Innovation and Skills signed the agreement which will lead to the establishment of the court.
In the Bill we are making an amendment to UK patent law to enable the Government to give effect to this agreement at a future date. We shall bring forward an order for the approval of this House and the other place. This is a key step towards the establishment of a unitary patent court, part of which will be based in London. According to independent estimates, hosting part of the unified patent court in London could also bring a benefit of around £200 million to the UK economy.
I now move on to the changes being made to the Freedom of Information Act. This Act currently protects research information held by public authorities which are subject to the Act, but other than in Scotland there is no dedicated exemption for information obtained during a programme of study. The Bill introduces a new exemption into the Freedom of Information Act to protect continuing programmes of research intended for future publication by public authorities. This will achieve parity with Scotland.
The change was recommended in the Justice Committee’s post-legislative scrutiny of the Freedom of Information Act, and ensures public sector research bodies, including universities, can where necessary protect their research findings pre-publication. This will provide public sector researchers with clarity and certainty. It also provides the opportunity to validate and analyse research results before putting them into the public domain, or before any related patent application has been filed.
I turn to the Secretary of State’s duty to produce an annual report to Parliament. The Hargreaves review stressed the importance of intellectual property for innovation and growth. It noted, however, that IP policy development was characterised by an incomplete evidence base and strong lobbying activity. This requirement is intended to act as an incentive to improve the way in which policy development takes account of innovation and growth. It will also increase transparency and enable a wider range of stakeholders to scrutinise the IPO’s activity.
In summary, the measures contained in the Bill are designed to help SMEs, larger businesses and the research sector. They strengthen and simplify intellectual property law. Following the Hargreaves review, and before the bringing-forward of this Bill, the Government consulted extensively with stakeholders. The formal responses to the relevant consultations have been placed in the Libraries of both Houses. We continue to engage with the wider IP community, and are thankful to the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys. They have organised a seminar in early June, which my officials will attend. As IP Minister, I have met the CIPA and ITMA myself and found their feedback on the Government’s consultation very instructive.
This is a technical Bill and I am certain that noble Lords will wish to scrutinise these measures in more detail in Committee. To assist with this, my officials have produced a text highlighting the amendments proposed to the relevant legislation, which I shall place in the Libraries of both Houses. In addition, the Government will make available documents in advance of Committee stage which will clearly set out the details of what related secondary legislation will include. I look forward to engaging further with your Lordships as the Bill progresses. Before the Committee stage I shall be holding a meeting for all Peers in Committee Room 2A at 4 pm on 4 June to which, of course, you are all most welcome.
I particularly wish to welcome today the noble and learned Lord, Lord Walker of Gestingthorpe, on his return to the House of Lords. The noble and learned Lord has a long and distinguished legal career and, I am certain, will bring great expertise to the House. I look forward to hearing his maiden speech in the debate today. I commend the Bill to the House and beg to move.
Viscount Younger of Leckie
My Lords, I thank all noble Lords who have taken part in this debate. It has certainly been wide-ranging and interesting, and I particularly welcome the support for the Bill from all sides of the House. Many points were raised and I shall do my best to address them all. If I am unable to do so, I shall write to the Peers concerned.
I first pay tribute to the noble and learned Lord, Lord Walker of Gestingthorpe, for a splendid maiden speech. He clearly demonstrated to the House his long and distinguished legal experience and knowledge with the wise words that he spoke on the unified patent court. I am delighted that he has chosen the Intellectual Property Bill as a platform from which to relaunch himself into this House. We look forward to hearing more from him in Committee and onwards.
I thank my noble friend Lord Sheikh for his supportive comments on the purpose behind the Bill and how its provisions support that purpose. He raised the issue of an opinions service for designs and asked whether this might be extended to cover unregistered designs. I welcome his support to this effect. The law has been crafted in such a way as to allow this service to cover both registered and unregistered designs. As my noble friend will appreciate, details of how the service will operate will be set down later in secondary legislation. On this subject, the noble Lord, Lord Borrie, asked me to confirm that the cost of an opinion would be a “modest” £200. I welcome his positive comments about the opinions service. As he mentioned, the Government’s response suggested that a fee of £200 would match that for the existing and well used patent opinions service. This will be subject to consultation, as will other details of how the service will operate.
My noble friend Lady Buscombe, in giving broad support to the Bill, made some interesting points about some of the powerful players in our digital age—she referred to them as “content aggregators”. The clear message is the need, which I agree with, to improve the quality of the content. They should have a responsibility and a moral duty to run their businesses reputably.
In respect of the search engines and creators it is important to acknowledge the value of both. The Government are in discussions with the industries, with both groups, to tackle online infringement of copyright, including responsible online advertising. I therefore value the points that my noble friend Lady Buscombe made today.
I thank the noble Lord, Lord Browne of Ladyton, for his many comments. He made an important point about celebrating this IP Bill as an important area of law that affects the whole of the UK, and I welcome his comments about the importance of the union to Scotland. This Bill is UK-wide and the Government hope that people across the UK will welcome the benefits to business that it will bring.
The introduction of criminal sanctions for the deliberate copying of a UK or EU-registered design was mentioned, which resulted in a lively debate. The noble Lord, Lord Stevenson, raised the question of the rationale for criminalising design theft and asked why the existing remedies are not enough. Extending criminal sanctions to registered designs will give them the same level of protection as the infringement of copyright and trade marks. This will create a coherent approach to enforcement and protection and also recognises that the creativity of design is as important to the UK economy as music protected by copyright and brands protected by trade marks. Creating a criminal offence for the copying of a registered design could help to reduce the scale of design theft in the UK. It will do so by acting as a deterrent against those who deliberately copy the designs of others.
The Government recognise that this is finely balanced and that there are arguments on both sides. Indeed, the noble Lord, Lord Howarth, alluded to that balance in his fine speech. Nevertheless, we believe that the Bill as drafted will provide strengthened protection for the design sector but in a measured and clearly defined way that does not prevent follow-on innovation by those genuinely seeking to create new designs.
The noble Lord, Lord Stevenson, and my noble friends Lord Clement-Jones and Lady Buscombe asked about the rationale of the policy for not including unregistered rights. The offence covers registered designs because the existence of a registration certificate gives a particular starting point, including what the designs looked like, who they belong to and when the right started. That information is not so readily available, as noble Lords might appreciate, for unregistered designs, making it more difficult for the designer to prove and for the authorities to act on.
My noble friend Lord Clement-Jones raised a concern about the level of penalties for certain offences and asked why the Government had not addressed certain discrepancies in the level of financial payments available in magistrates’ courts for trade marks and copyrights. Sections 85 to 87 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 make provisions to raise the maximum fines available in magistrates’ courts. The Government are working to implement these provisions, which will take effect with regard to all offences.
My noble friend Lord Clement-Jones, supported by the noble Earl, Lord Erroll, raised the issue of 2-D and 3-D and asked specifically whether the Bill would mean that 2-D works would be treated differently from 3-D works. This situation arises because copyright protection, which is currently covered by criminal sanctions, applies to, for example, a design drawing but not to a design made from that drawing. In proceeding in the way that we have, we have recognised the difficulties associated with proving matters such as subsistence and in relation to those rights, but there are also other issues not associated with copyright that need to be considered. For example, unregistered design rights can be exploited legitimately subject to licensing agreements by third parties for the last five years of their existence. This could be jeopardised if criminal sanctions applied before that period. For example, we know that 2,097 applications to use designs in the last five years were filed in 2012.
My noble friend Lord Clement-Jones asked rather mischievously whether the motivation behind introducing criminal sanctions for registered designs was to increase the income from the Intellectual Property Office by encouraging registration. I reassure the House that that is not the case. The measures in the Bill will protect designs registered both in the UK and through EU Community-registered design.
The noble Lord, Lord Stevenson, raised the matter of the unified patent court and asked whether this would not be an area where my right honourable friend the Prime Minister would seek an EU opt-out. I suggest that the noble Lord, Lord Howarth, was encouraging me to give a broader view of our European position, but I will not be drawn on that particular matter. The unitary patent is an important part of the Government's internal market and growth agendas. The Prime Minister has made it very clear that he wants Britain in the EU and he wants to maintain our influence in shaping the debate on the things that really matter; for example, reducing burdens on business and encouraging growth. The unitary patent court agreement is an agreement negotiated by all member states that have chosen to be part of it. The Government have signed up to the agreement because we believe that it would be good for UK businesses—clearly, I have been drawn on that to a certain extent after all.
The noble Lords, Lord Stevenson and Lord Browne of Ladyton, raised an interesting point about Scotland and the unified patent court. I can assure them both that the Government are working very closely with the devolved Administrations to ensure that the needs of users throughout the United Kingdom are considered. Ensuring local access to justice is a key element of the unified patent court and that is why the agreement makes provisions for setting up local divisions of the court. These local divisions are in addition to the central division, part of which will be hosted in London. I believe that the noble Lord, Lord Browne, alluded to that in his speech. The UK could host a local division and it would be possible to host more than one if the level of case work is high enough to require it. The UK would be expected to pay for the facilities such as the building, IT equipment and administrative staff of any division that we host.
The noble Lord, Lord Stevenson of Balmacara, raised the question of copyright and root-and-branch reform. I want to address this particular question because it was raised by the noble Lord, Lord Howarth, as a broader, more overarching matter relating to our intentions for intellectual property. I am grateful to the noble Lord, Lord Stevenson, for his acknowledgement that the intellectual property framework must change to promote innovation and protect creators. In that important interest, he suggests that root-and-branch reform of copyright is needed with proper consideration of evidence. What he proposes, however, is a major undertaking and the Government, in the light of the Hargreaves review, have committed not to undertake any further major review into intellectual property in this Parliament. We want to make progress with the measures that we have already put forward.
My noble friend Lord Clement-Jones expressed concern over the Intellectual Property Office’s ability to revoke patents, which the Bill will allow through the patent opinions service. The power will be to initiate revocation proceedings against the patent if an opinion concludes that it lacks novelty or an inventive step. That does not mean that the patent will be revoked straight away, and a provision is made so that the patentee can request a review of the opinion as well as an appeal of any review. The patentee will also have the opportunity to make observations and amendments to the specification and any decision to revoke a patent will be appealable to the High Court. The power will mirror the power that the Intellectual Property Office already has to revoke patents under Section 73(1) of the Patents Act 1977.
My noble friend Lord Clement-Jones and the noble Lords, Lord Stevenson and Lord Browne of Ladyton, raised the issue of the annual report of the Intellectual Property Office, spoke of the proposals in the Bill for reporting and suggested that the scope for reporting is somewhat narrow. There were suggestions that the clause on the Secretary of State’s reporting duty could contain an explicit commitment that the Government will report on how the IPO's activities have supported IP businesses with a focus on growth. I can reassure noble Lords that the Government will report on how the IPO's activities have supported IP-owning businesses whether through legislative changes or the delivery of services to help businesses protect and exploit their IP more effectively. The annual report will need to have a wider scope than the support of IP businesses. This is why the clause refers in broad terms to innovation and economic growth in the United Kingdom. It will therefore be important to ensure that the scope of the report is not drawn too narrowly in legislation.
The noble Lord, Lord Browne of Ladyton, raised the question of the proposal to expand the reporting duty to other areas of policy and asked why assurances on copyright-licensing issues will not be in the report and not reflected in the Bill. The report will cover new legislation and policy developments in the field of intellectual property, as has been made clear. During the debates on the Enterprise and Regulatory Reform Act I gave an undertaking that the report will also cover policies and services that impact on the licensing of intellectual property. One example is the Copyright Hub which noble Lords will be aware is currently under development.
The noble Lords, Lord Stevenson and Lord Borrie, and my noble friend Lord Clement-Jones raised the question of responsibility for intellectual property policy across government. The issue of responsibility for the creative industries was also raised. I am, as noble Lords will know, the IP Minister, and I can assure the House that I take this role very seriously. I also work closely with my colleague in the other place, Ed Vaizey, who has responsibility for the creative industries and their funding, and we are working together closely to deliver support for all UK businesses.
The noble Lord, Lord Browne of Ladyton, asked what communication had taken place with the Scottish Crown Office and the Law Commission about the value of the criminal sanctions to Scotland. He also asked what level of consultation had taken place with the Scottish Government. I can confirm that my officials have been in discussions with their Scottish counterparts, particularly in relation to the important point made about criminal sanctions. The clause dealing with this issue makes specific reference to the position in Scotland, given the different legal systems there.
My noble friend Lord Clement-Jones raised an important point about the parity between sanctions in relation to online and physical goods. The Government recognise that there is a discrepancy between the two offences. However, as this is an economic crime, it is right that the emphasis should be placed on fines. The issue was addressed in the Digital Economy Act, which increased financial penalties on conviction for digital and physical copyright theft of up to £50,000 so that they are now the same. Prosecutors also now use fraud legislation to obtain convictions more effectively. Increasing sanctions under the CDPA is therefore unnecessary at present although the Government will certainly keep the issue under review.
My noble friend Lord Clement-Jones raised the issue of unfair contracts for creators. During the proceedings on the Enterprise and Regulatory Reform Act a commitment to look at this issue was made. On the issue of contract terms, I am happy to repeat the precise commitment that I made to the House then to discuss this important and complex matter further. To that end I intend to meet my noble friend Lord Clement-Jones and the Creators’ Rights Alliance.
The noble Lords, Lord Borrie and Lord Howarth, and the noble Earl, Lord Erroll, raised the matter of intellectual property and competition and asked whether the period of intellectual property protection was right and why there are differences between intellectual property rights. If the period of intellectual property rights is set correctly, the protection afforded can reward innovation and creativity properly without being anti-competitive. The Government believe that the various periods referred to for different rights are, on balance, the right ones. They reward creativity and innovation while encouraging the sharing of information. This allows others to innovate further, but in a fair and balanced way. This issue mirrors some of the points that the noble Lord, Lord Howarth, made.
The noble Lord also raised the question of whether the Government were focused too much on intellectual property rights and whether they should turn their attention to skills, research and business support. That is a fair point. However, this Bill is only one part of the Government’s agenda. I agree that it is just as important to focus on research, skills and other business support. It is a point well made.
My noble friend Lord Clement-Jones also asked about extending the public lending right to remote e-loans. It is a matter—I was in the Chamber myself—that was raised in an Oral Question in the House earlier today. I can reassure him that the Department for Culture, Media and Sport is giving careful consideration to the extension of the public lending right to onsite loans of audio books and e-books. This is following William Sieghart’s review of e-lending in public libraries. The department is considering, for example, the implications for public lending right funding in the context of the number of remote loans of e-books. The department is also awaiting the results of research led by the Society of Chief Librarians. As a result, and as my noble friend will be aware, no decisions have yet been made. I therefore hope that he will agree that it seems too soon to legislate on the matter now.
I would like to raise a point concerning the speech of the noble Lord, Lord Howarth, who raised a number of interesting and important points in relation to the Bill. As always he gave an engaging speech and I thank him. I agree with him that there is an important balance to be struck between the rightful benefits to owners of intellectual property and the impact on others in the economy and in society. I look forward to having further discussions with him on this matter.
In speaking to Clause 19, my noble friend Lady Brinton, supported by the noble Baroness, Lady Warwick, and the noble Lord, Lord Stevenson, raised the issue of a newly qualified exemption for pre-publication research in the Freedom of Information Act. I thank noble Lords for their clear and cogent examination and explanation of the purpose and benefits of Clause 19. The Government have always said that they would look carefully at the evidence. We recognise the strength of the case identified by the Justice Select Committee and have included this provision in the Bill as a result. We hope that it will provide reassurance and clarity, and to those working in the publicly funded research sector in particular.
Noble Lords may have raised some further points which I have been unable to address and of course I will write to them on those. We will have the Committee stage in a few weeks’ time, when, after a well deserved break for your Lordships over the Whitsun Recess, we can return refreshed to discuss the more detailed points. I look forward to that process. As your Lordships know, my door is always open, as is that of my officials, to listen and to provide as much information as possible. With that, I commend the Bill to the House.