Viscount Younger of Leckie
Main Page: Viscount Younger of Leckie (Conservative - Excepted Hereditary)Intellectual Property Bill [HL]
Viscount Younger of Leckie Excerpts
Lord Clement-Jones
My Lords, I am sure that the noble Lord, Lord Stevenson, was only trying to be helpful with his first amendments but, from the word go, he has a certain way of frightening the horses. The reaction to his amendment by the design community, perhaps apart from the seven professors who lurk in the background to these and similar amendments tabled by the noble Lord—I am glad to say that we firmly rejected their wise advice on the Enterprise and Regulatory Reform Bill—is that this is a last-minute change to emasculate unregistered design right, which is relied upon by almost every designer, as opposed to registered design. The noble Lord knows the scale of the use of unregistered design rights; more than 100,000 designs annually are protected by them, whereas only some 4,000 are protected by registered design. The whole purpose of unregistered design is to be analogous to copyright. That is what UK unregistered design right is about. It is very long established. The term for unregistered design rights is of course much shorter than for copyright, which was always the intention. However, the noble Lord’s amendment is extremely radical. I am sure that he does not really believe that this is the right way forward. I heard what he said about the Government's approach being merely piecemeal, but this is utterly fundamental at this stage.
I hope that the amendment is purely provocative and designed to have a debate but the noble Lord should know that many individual designers up and down the country would be absolutely horrified if the amendment passed and if unregistered design right did not have the scope that it now has. I will not go into the way in which the test is put forward in terms of whether it is world wide or original and what sort of protections are given. It is sufficient to say that in almost every respect small independent designers would be disadvantaged by the amendment.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, at the outset of Committee, it may be helpful to remind everyone why the Bill is important. The measures in the Bill support business in driving economic growth and innovation by encouraging enterprise and expanding the range of economic sectors in the UK. Absurd maze or not, the designs and patents measures in the Bill will deliver many of the remaining commitments from the government response to the Hargreaves review of intellectual property and growth, which the Prime Minister commissioned in 2010.
The Bill will achieve three things. First, it will make it easier for business to understand what is protected under design and patent law, providing greater certainty for investors and reducing costs for business. Secondly, it will strengthen IP protection, including through the introduction of criminal penalties for copying UK registered designs. Thirdly, it will make the international and European IP system work better, helping UK business to be successful abroad. These measures will help our vitally important IP-intensive businesses and I look forward to the chance to debate the detail over the course of this Committee. I appreciate the sentiments expressed by the noble Lord, Lord Stevenson, and I look forward to continuing to engage with him and all other noble Lords on the substantive and other issues raised during our consideration of the Bill.
Amendment 1 would change the legal definition of the UK unregistered design right to mirror that of the EU Community design, as set out in the Community design regulation. The result would be harmonisation with the European design right. Although I accept that the measure would simplify the design legal regime in the UK, the change would not be welcomed by the UK design industry. I am most grateful for the support given by my noble friend Lord Clement-Jones on that.
There was almost complete support for the retention of the UK unregistered design right, in its current form, in response to the Government’s consultation. In particular, this was due to its application to some functional designs, for which the UK design right is unique. The result of this amendment, changing all elements of the current definition of the UK design unregistered right apart from its duration, would be unpopular with many parts of the design industry, because many of its designs would lose their protection.
Amendment 7 would harmonise the conditions of UK unregistered design infringement with EU law, as set out in the European directive and regulation. These are also the same conditions that apply to the UK registered design. This would be a fundamental and significant change to the application of unregistered design law in the UK. Since its introduction in 1988, a considerable body of case law has built up relating to the infringement of unregistered designs, one of the leading cases being PepsiCo v Grupo. Businesses and the legal profession have also spent a considerable amount of time in building a clear understanding of this case law.
More fundamentally, the Government are concerned about the effect that the change would have in altering the way in which infringement of the UK unregistered design is determined before the courts. The current test has been interpreted narrowly in a number of leading cases. This is in contrast to the test applied in EU law, which is potentially wider in scope. It would be troubling indeed if the change meant that existing designs were suddenly subject to infringement actions from which they were previously free. Furthermore, while the wider scope of the EU unregistered right may be justified given that it has a lifespan of only three years, the Government consider that it would be inappropriate for a right that lasts up to 15 years, as is the case with the UK unregistered design right, to enjoy wider protection. There would be serious concerns about the effect of this on innovation.
The noble Lord, Lord Stevenson, asked what the Government are doing generally to align EU and UK rights. The Government are seeking, through this Bill, to align design rights wherever possible—for example, through the changes proposed to amend the rules on commissioning and defences to infringement as a general clause. The noble Lord also raised some general points on the Government’s proposals in the Bill and their decision not to go for wholesale reform. We listened carefully to stakeholders, who told us that there was value in both the formal registered right and the less formal unregistered right, which enable certain businesses that work in fast-moving fields, such as the fashion industry, to enjoy the right protection for them. On the basis of the arguments presented, I ask the noble Lord to withdraw his amendment.
Lord Howarth of Newport
Perhaps I may probe the noble Lord a little further on his views on what the optimum period for protection for design rights ought to be. It seems to me that, as a principle, protection of intellectual property ought to be for the minimum period consistent with encouraging innovation. There is a very large difference between the position in the European Union and the position under UK law. If the European Union provides protection for up to three years and under our own domestic law we provide protection for up to 15 years, that is a huge discrepancy. Will the Minister help us to understand the Government’s thinking on what really would be the optimum period of protection? Fifteen years seems a very long period. I appreciate that there are all sorts of situations and all sorts of varieties of design, and that longer protection may be more appropriate for some than for others, but what does he think should be the guiding principle?
Viscount Younger of Leckie
I thank the noble Lord for that quite technical question. It is true that there is a clear discrepancy between three and 15 years. I think that it would be best if I write to the noble Lord and copy in other noble Lords with a substantive answer to clarify precisely how these time periods were arrived at and to give some background information on how they came about. I think that that is the best way forward.
Lord Borrie
Perhaps I may pursue this a little further. At Second Reading, I raised the point that in terms of intellectual property the grant of copyright or the grant of registered or unregistered design can result in a big improvement in competition. It encourages creativeness and innovation and it encourages the emergence of new competition. On the other hand, competition generally—meaning competition of new and old, old and new—surely means, to re-emphasise the point made by my noble friend Lord Howarth, that if because of the 15 years or any other substantial period general competition is confined and there is no competition for a particular design or copyright area, then the period is too long. In all the studies that have been made, including Hargreaves and so on, I wonder whether the rather vital matter of whether it should be 15 or 10 years or whether it should be so many months has been considered and reconsidered afresh in order to see how applicable these periods of time are for the future.
Viscount Younger of Leckie
I thank my noble friend for that comment. I think that I said earlier that I would copy in all noble Lords who are in Committee. I can certainly confirm that. The noble Lord, Lord Borrie, made some valid comments. Again, they are on quite a technical question and aligned with what the noble Lord, Lord Howarth, said. It is a difficult equation to get right because there are so many variables. I imagine that it would depend on the type of product being considered; I am sure that there are various other variables. It is therefore better to write a substantive response to cover all these issues. Existing protections have worked for many years and industry seems content with 15 years and, indeed, with three years. Having said that, I accept that there is a discrepancy between the two. In relation to the unregistered design right, a mark has to be copied, but I think the answer is that your Lordships who are in the Committee deserve a full reply. I would be interested to learn more myself.
Lord Stevenson of Balmacara
My Lords, with his usual incisiveness, the noble Lord, Lord Clement-Jones, immediately spotted what I was up to. Far from frightening the horses, which is not in my nature—it may be the first time that that appellation has ever been suggested, as it is usually the other way around, with me running away from the horses—my point was to try to get up a debate about some of the underlying themes. We have just had that, so there has been success.
I would cavil at only a couple of the points made in the initial response. I did not entirely rely on professors, wonderful though they are in supplying us with information. I quoted extensively from the Bench. I would not want in any sense to choose between the two contributions, but I think that their sum was rather powerful. I simply lay that on the table.
The noble Lord, Lord Clement-Jones, ended on an interesting point, which is that it is true that, when analysed back, the unregistered design right is in essence copyright by another name. However, it provides in the design production capacity the same sort of protections that we were debating on the ERR Bill in relation to 3-D objects, which the Government have taken powers to turn away from. I think that, under that design regime, copying more than 50 of an artistic design that was turned into a 3-D object and manufactured gave protection for 25 years. I might be getting mixed up between the rights. Yet that 25-year period has been replaced by the life of the designer plus 70 years. One could ask, but one would immediately run up against the points made by my noble friend Lord Howarth, why they have chosen to retain the design approach—a limited period of five years then five years, plus a further five—for unregistered designs and not taken what might be the logical step of saying, “If it is copyright by another name, why did we not move that way for the whole of this area?”.
Lord Clement-Jones
I need to declare an interest as a member of the Law Society and of the City of London Law Society, because the noble Lord, Lord Young, is probing a very interesting point here. The Law Society itself, as well as the City of London Law Society, makes a rather similar point. Noble Lords may be glad to hear it in a slightly shorter form. I shall read it out.
“The society remains concerned that the proposed amendment puts UK businesses at a competitive disadvantage since it will require the UK to provide protection to entities based in overseas jurisdictions even when those jurisdictions do not offer reciprocal protection to UK entities”.
The society suggests that this is remedied in the Bill. There are similar points there. Obviously, the noble Lord, Lord Young, went into much more detail, but that is the underlying concern in all of this.
Viscount Younger of Leckie
My Lords, Amendments 2 and 5 address various points in relation to the qualification criteria in the Bill. I will first turn to Amendment 2, which would change the definition of qualifying country in relation to the meaning of “original” in Section 213(4) of the Copyright, Designs and Patents Act 1988.
The amendment would change the definition to the United Kingdom and European Economic Area. In practice, that will mean adding Iceland, Liechtenstein and Norway to what is currently proposed and removing a number of countries—I hope that noble Lords will bear with me and not succumb to slumber as I read the whole list. Those that would be removed are: Anguilla, Bermuda, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Channel Islands, Falkland Islands, Gibraltar, Hong Kong, Isle of Man, Montserrat, New Zealand, the Pitcairn Islands, Henderson, Ducie and Oeno Islands, St Helena and Dependencies, South Georgia and the South Sandwich Islands and the Turks and the Caicos Islands.
The amendment would mean that the geographical areas used in the definition of “commonplace”, which is under debate here, and “qualifying country”, which is in Section 217(3) of the Copyright, Designs and Patents Act 1988, would be different. This would create an anomaly in the Act and a level of complexity, which the Bill, on principle, is trying to remove.
I would like to pick up on some points that the noble Lord, Lord Young of Norwood Green, made because he asked for and deserves a more substantive answer on the reasoning behind the decisions that we made. Aligning the geographical coverage and qualification is a logical harmonisation. Legal rights should be subject to the same eligibility tests wherever they arise. Otherwise, examples of unfairness would occur. It will make it easier for a person to know whether they qualify for an unregistered design right and it will help to resolve disputes more quickly. It will be easier for businesses and users to understand how they can qualify for an unregistered design right.
Furthermore, I want to explain why the Government were consulting on changing the definition of “commonplace”, as in Clause 1, to cover the whole of the EEA, even though the Bill is only amending coverage in the EU. Following the consultation and on further reflection, the Government came to the conclusion that an additional layer of complexity to the law would be created in the eligibility criteria for design right if the geographical areas were different for the definition of “qualifying country” and for “commonplace” to which the noble Lord alluded.
Similarly, Amendment 5 would introduce a new definition. It proposes a change to the requirements for businesses that qualify for unregistered design right, specifying that the business must have,
“a real and effective industrial or commercial establishment”,
in any qualifying country.
The current definition of a business that qualifies for the UK unregistered design right includes the requirement that it must carry on a,
“‘substantial business activity’” in a qualifying country”.
The term “substantial business activity” is already used elsewhere in the Act—for example, for qualification criteria for copyright performances in Section 206. The term is not defined in the Act, but does not appear to have been the subject of significant case law, which suggests that the term has not caused problems in practice.
Although the wording suggested in Amendment 5 has its basis in EU law, the Government believe that to introduce this term into UK law could create confusion and uncertainty about the qualification criteria for unregistered design rights. The Bill is trying, where possible, to reduce complexity in the law. The Government believe that these amendments would lead to additional complexity, not reduce it.
The noble Lord, Lord Young of Norwood Green, asked whether there was a definition of “commonplace”. There is no statutory definition in terms of its meaning. However, the word “commonplace” has to be tested objectively in the design field in question. The case of Fulton v Totes puts a gloss on the meaning of the territorial extent of “commonplace”, suggesting that the UK market is relevant. Therefore, the Bill seeks to clarify the territorial scope of the definition of commonplace and align it with qualification requirements. I ask the noble Lord to withdraw his amendment.
Lord Young of Norwood Green
I thank the noble Lord, Lord Clement-Jones, for his contribution, which, in a much more succinct manner, referred to the two key objectives—if we could achieve them—of coherence and ensuring that this legislation does not lead to a UK-business disadvantage. I thank the Minister for his reply but, given the range of his response, I wondered whether, in relation to the criteria that one is trying to establish—not making things more complex than they already are—any registered or unregistered design right had ever emanated from the Pitcairn Islands. No doubt the Bill team can give us that information at some point.
To be serious, we will reflect on the Minister’s answers and, in the mean time, I beg leave to withdraw the amendment.
Viscount Younger of Leckie
My Lords, Amendments 3 and 9 address the transitional provisions associated with the changes to ownership of designs, as set out in Clauses 2 and 6.
I will first turn to Amendment 3, which seeks to amend Clause 2 on ownership of unregistered designs. The clause as drafted changes the default ownership requirement for commissioned designs from the commissioner to the designer, as the noble Lord, Lord Howarth, emphasised. The clause does not apply retrospectively, and designs created before commencement are therefore not caught by the change in the law.
In addition, an exception is made for designs created after the commencement date but under a contract that was entered into before the date of commencement. This recognises that certain enabling contracts would have been entered into before the change in the law and reflects the legal conditions in existence at the time. The Government believe that these exceptions will protect existing contracts and provide businesses currently entering into contracts with adequate time to adjust to the law.
The Government also recognise that this change is significant for the design industry and that raising awareness will be important. I hope to reassure the noble Lord, Lord Young, and all noble Lords that the Government will therefore work with stakeholders to ensure that they are aware of the change before the law comes into force. The Government will ensure that there is sufficient time to educate businesses before the commencement of this clause.
Amendment 9 proposes similar transitional arrangements in respect of Clause 6, relating to ownership of registered designs. The Bill includes provisions in Clause 22 that are broad enough to permit appropriate transitional arrangements to be put in place as and when the relevant parts of the Bill are enacted. These can be used in relation to Clause 6, and the Government therefore believe that this amendment is not necessary.
The noble Lord, Lord Howarth, or perhaps it was the noble Lord, Lord Young, asked what progress was being made in educating business. My officials have been working with stakeholders such as design and legal representatives for some time. We will continue to work through them as we take the Bill forward.
The noble Lord, Lord Howarth, raised an important point about how one might protect the commissioner, as opposed to the default position of the designer. In response to the issue of whether the commissioner should own the rights automatically, we believe that ownership should be a matter of contract. The noble Lord is correct. It is a matter that businesses should decide upon as they commission designs.
As to the matter raised by the noble Lord, Lord Howarth, regarding the commissioner being a sole trader, perhaps he could clarify his point.
Lord Howarth of Newport
I was trying to probe as to whether there was some distinction between the position of a designer who is employed by the commissioner and the position of an outside contractor whom the commissioner contracts to produce a design. In either case, we must be concerned to ensure that the legitimate interests of the commissioner are not neglected in this transition so that the design rights do not in future lie with the commissioner but with the designer.
Viscount Younger of Leckie
The noble Lord again makes a good point. The default position is that it is down to the wording of the contract. However, having said that, I will write to the noble Lord to clarify what further protections there might be for the commissioners. As a matter of clarification, where a designer is employed, the employer will be the owner of the design. I hope that, in the mean time, this provides sufficient reassurance to the noble Lords, Lord Young and Lord Stevenson. I ask the noble Lord, Lord Young, to withdraw his amendment.
Lord Young of Norwood Green
I thank those who have participated in the debate. My noble friend Lord Howarth raised an interesting point about the balance of rights between the commissioner and the designer. We have had some explanation from the Minister, but I welcome the fact that he will write to us, too. The Minister also talked about working with stakeholders to ensure greater understanding in this area. Again, we would welcome more details of the nature of that work. I do not necessarily expect the noble Viscount to have the answer here, but perhaps he could let us know. Finally, we have been talking about contracts. Is there potential for an unfair contracts Act in relation to what we have been discussing? With those questions, I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, this is more in the nature of a helpful suggestion than a probing amendment, although I would be grateful for comments from the Minister when he responds.
In their response to their consultation process, the Government rejected an earlier proposal to amend the Registered Designs Act 1949 to incorporate joint ownership provisions similar to those provided for unregistered design rights in the CDPA. However, they highlighted a related issue about how joint ownership should be treated and enforced and said that they would give greater consideration to the idea of introducing provisions similar to those that exist for patents, which would allow one party to exploit the design independently of the other. However, the Bill does not contain this provision, even though the consultation document states that the Government see merit in the proposal and that they intend to explore the option further. Will the noble Viscount explain what is happening? Is exploration continuing? If so, where have the intrepid explorers reached? May we have a status report on progress? To save a lot of time and fruitless further exploration, our amendment, which is loosely based on Section 36 of the Patents Act 1977, would, if accepted, introduce these provisions. We would like to debate whether the Government are now in a position to consider moving on this.
At present, the joint owners of a patent can each work the invention separately from the others, whereas joint owners of copyright cannot. There is no clarity as regards UK registered designs on this point. For unregistered design rights, Section 259 of the CDPA deals with joint designs and states:
“In this Part a ‘joint design’ means a design produced by the collaboration of two or more designers in which the contribution of each is not distinct from that of the other or others … References in this Part to the designer of a design shall, except as otherwise provided, be construed in relation to a joint design as references to all designers of the design”.
This would be helpful, although I think that in practice it means that the permission of all design rights owners are needed before one can exploit a design, which might be somewhat unsatisfactory and may need further consideration. Again, I would be grateful for the Minister’s response on that point. With that, I beg to move.
Viscount Younger of Leckie
My Lords, the suggested amendments to Clauses 2 and 6 would introduce detailed requirements to set out the legal position for joint owners. The proposed provisions would apply to unregistered and registered designs.
As noble Lords will be aware, the Government’s design consultation asked stakeholders whether the Registered Designs Act 1949 should be amended to incorporate joint ownership provisions similar to those already provided for unregistered design rights in the Copyright, Designs and Patents Act 1988. Although most respondents agreed with this in principle, responses were mixed when it came to the question of whether it was necessary. A number of well respected intellectual property judges who responded to the consultation suggested that existing provisions were sufficient to allow for joint ownership. In light of this and our exploration activities, the Government decided not to change the law in this area.
In addition to our considering it unnecessary at this time to change the law on the issue, there is a legal reason why we cannot accept the amendment tabled by the noble Lord. The amendments as drafted seek to amend or reproduce EU design rights. This is not possible under EU law, as EU regulations directly apply here and the ability of member states to take action is limited. As a result, it would not be possible for the Government to accept these amendments even if they wished to. In light of this, I ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for his response. I think we are agreed in principle that this is something that would be desirable but, contrary to earlier debates and discussions, he feels that the points made by the judges in responses are sufficient and that there is a way round this. I suspect that that is because he is relying on European legislative procedures, and that point is noted.
I accept that what we are proposing may not be satisfactory in relation to that but it still does not remove a lacuna in terms of the provisions for simplification of the processes that the Minister said were at the heart of the Bill. Having said that, I do not wish to pursue this further at the moment and I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, again, this is a probing amendment that emanates from points made in the response provided by the Government to the extensive consultation carried out before the Bill was prepared. Section 53 of the CDPA currently states that acts carried out with the permission of the owner of a UK registered design do not infringe any artistic copyright that might also exist in the article in question. The Government are extending this to community designs but not to unregistered designs. The question therefore is: why is this happening? Can the noble Viscount explain why this decision has been taken and what its implications are?
It is worth recording that the proposal to apply the approach that I have just outlined to the unregistered design right was opposed by a number of respondents. The CIPA stated:
“Firstly, UDR and UK copyright are more or less mutually exclusive at present, so there is no real need for the provision. Secondly, we think it should refer only to registered designs and not unregistered designs, since the presumption arises from the public register which acts as prima facie proof of title”.
The ITMA stated that,
“a registered design is a monopoly right and unless successfully challenged on the basis of an earlier right such as copyright, remains a monopoly. This does not apply to unregistered designs so extension appears inappropriate”.
For completeness, the Government’s response states:
“Given the inherent distinction between UK unregistered right and UK copyright, it is not appropriate to extend the defence to cover UK unregistered right. The alternative of including the EU unregistered right within the defence would seem to add another point of difference, and therefore complexity, in dealing with UK and EU rights. Taking these points into consideration and, as another response mentioned, that the current defence arises through the public register which acts as prima facie proof of title, the Government does not intend to extend the defence to cover any unregistered rights”.
This is a not uncomplicated area and I therefore appeal to the Minister to provide the necessary clarity and lightness that will allow us to follow it through.
However, I should point out that the City of London Law Society, perhaps stimulated by the noble Lord, Lord Clement-Jones, who may wish to speak on this point, referred to the possibility of split ownership in relation to this issue. Indeed, the IP judges who we quoted earlier said that:
“The Consultation asks if there is any reason why section 53 should be extended to unregistered design right, but does not ask if there is any reason why not. Why should the logic be different, at least if UK unregistered design right continues to be substantively different to Community unregistered design right?”,
which of course it would under the Bill.
It seems that there is something in this. It can be unclear whether a design falls to be protected by copyright or unregistered design right. The boundary turns in part on whether the design is for an “artistic work” or for something other than an artistic work, which is rather a narrow point of difference. Identifying whether something is an artistic work such as a sculpture, which, as we now know, does not include a stormtrooper helmet from the “Star Wars” films but which might, I am told, include toy soldiers, engravings—including car floor mats—and works of artistic craftsmanship is a concept over which there is much confusion. This illustrates the points behind the difficulty here.
Section 236 of the CDPA states it is no infringement of UDR to do an act which infringes copyright. If ownership is in the same hands and a person has permission to use the unregistered design right but it turns out that the design is an artistic work, they infringe—although a court might fashion an implied licence with respect to copyright. If the ownership is in different hands, the same problem might arise and there would be no possibility of such a licence. The matter varies, too, with whether Community unregistered design rights are involved. Here there is a closer overlap, as there is no equivalent of Section 236 since a person can infringe both copyright and Community unregistered design right at the same time. One could imagine a grant of a licence to use Community UDR and then issues arising as to copyright infringement, especially as copyright remains national in character and ownership is more readily divided. We would be grateful if the Minister can steer us through some of the issues here and explain why the Government took the view they have. I beg to move.
Viscount Younger of Leckie
My Lords, the amendment seeks to provide an exemption against accusations of infringement of UK artistic copyright for UK and EU unregistered designs. Currently, Clause 5 extends the exemption only to registered Community designs. The amendment concerns the complex issue, which the noble Lord, Lord Stevenson, alluded to, of the balance between the rights of the assignee and the interests of the copyright holder. In general, the copyright holder is entitled to assert his rights against any infringement. However, Section 53 overrides that ability but is currently restricted to registered rights. The exemption is restricted to registered rights because they are in the public domain and therefore already open to public scrutiny and challenge, including by the copyright holder.
The exemption does not include unregistered rights because they are not open to public scrutiny in the same way, there is no official register of rights and therefore copyright holders do not have the same opportunity to see what rights are being claimed and to challenge those rights when they deem necessary. In light of this, the Government do not believe it is appropriate to provide an equivalent exemption of the kind suggested by this amendment.
The noble Lord, Lord Stevenson, asked whether we should just extend this clause to unregistered rights anyway. In addition to the public policy reasons already elaborated upon, there are also difficulties in ensuring that the exception is being applied correctly. For example, one of the conditions is that the person relying on the exception has to be acting in good faith on the basis of the registration. There is no registration for unregistered designs, so this condition cannot be fulfilled.
As a general point on the comments of the noble Lord, Lord Stevenson, Professor Hargreaves in his review of intellectual property identified the complexity of the designs legal landscape as a problem for business. There is an overlap between UK artistic copyright, which covers photographs, sculptures and paintings, and registered design, but sometimes permission is given to use one and not the other. The defence makes sure that businesses that have permission to use a registered design can defend themselves against accusations of infringement of UK artistic copyright. The noble Lord is correct that it is a complex area. I do not know whether I have shed any light on the matter but I ask him to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the Minister for his comments. When we were debating some of the Hargreaves exceptions in the ERR Bill, I was at pains to try to draw out the Minister on various issues raised of a popular culture mode. In the exception on parody, I was able to suggest to him that he needed to update his knowledge of Gangnam issues. I almost demonstrated to him, but of course Hansard is not very good at picking that up. However, I still treasure the moment. I did not get much of a response and therefore thought that today I would try a different angle with a “Star Wars” reference, but again I am afraid he did not pick it up.
The “Star Wars” case was fascinating because it wound its way up through the various levels on what seemed to be a narrow point about whether you could claim that the helmet—I see the noble Lord, Lord Clement-Jones, nodding in his place; I am sure he would be able to enlighten us further on this point—created for the stormtroopers in “Star Wars” was simply a registered design or a sculpture. Coming from a film background, I can imagine even props as being of extreme artistic importance, and I can take the point both ways. I do not think the Minister responded to my jibe that this might be enough to get him going, so perhaps he can write to me.
I understand that the unifying theme here, if there is one, is that the Government wish to go with the market, as it were, reflect the UDR as the decision of choice of most designers and make that regime as simple as possible. As I have said several times, we are not doing our overall regime enough service if we ignore some of the points of comparability and dissonance that exist between registered designs and unregistered rights and the Community moves that are going forward. I would be grateful if the Minister could write to me on this point because this is something to which we might wish to return. I beg leave to withdraw the amendment.
Viscount Younger of Leckie
My Lords, Amendments 10, 11 and 12 would require regulations made under the power of Clause 8 to be subject to the affirmative resolution procedure. In addition, Amendments 18 and 19 would require regulations under the power of Clause 11 to be subject to the affirmative procedure.
Noble Lords will have had the opportunity to consider the report of the Delegated Powers and Regulatory Reform Committee, which was published on 6 June. While the committee accepted the majority of the delegated powers included in the Bill, the report recommended that the powers included in Clause 8, which concerns the Hague agreement, and Clause 11, which relates to the design opinions service, should require the affirmative procedure. I very much welcome the committee’s report and the time that its members have dedicated to scrutinising this Bill. The work of the committee is very important in ensuring that the implications of legislation are fully considered, and I wish to put on the record how much I value its detailed consideration of the Bill.
The report was published only two sitting days ago, so I hope that noble Lords will allow me a little more time to discuss with my colleagues across government the committee’s very worthy proposals in the appropriate level of detail that the report deserves. I have listened very carefully to all comments made this afternoon by noble Lords and I am certain that this issue will be returned to on Report.
The noble Lord, Lord Young, asked why there was a difference of approach with regard to negative versus affirmative resolutions. Traditionally, regulations in design law have been commenced by negative resolution, including in relation to a similar international agreement—namely, the Madrid protocol, which the noble Lord may be aware of. However, at this current time, I hope that I have given certain reassurances and I ask the noble Lord to withdraw his amendment.
Lord Young of Norwood Green
My Lords, I welcome the assurance given by the Minister. In the circumstances, it is perfectly reasonable that he requires a bit more time, and I therefore beg leave to withdraw the amendment.
Lord Howarth of Newport
My Lords, I am grateful to my noble friend Lord Stevenson for raising what I think the Committee will agree is a very important issue. Intellectual property law is infernally complex and difficult. It is labyrinthine, as my noble friend remarked a little earlier this afternoon. For the businesses that the Government rightly seek to assist through this legislation, there are real difficulties in understanding the law.
It is of course a long-standing principle that ignorance of the law is no excuse. However, the department will of course want to facilitate a good understanding of the law. It would be helpful if the noble Viscount would unfold his thinking to us about how this is actually to happen. Does the Secretary of State for Business, Innovation and Skills have the address of every business in this country, including sole traders and the myriad little businesses that come and go, perhaps entering different incarnations, which are very hard for anybody to trace? Of course he does not. Perhaps he expects them to have recourse to the websites of the business department and the IPO: is it envisaged that those websites should provide an encyclopaedic account of intellectual property law? I imagine it is not, although I am sure that the IPO, not least through the opinion service that this Bill legislates for, will always do its best to help people to understand the law as it may apply in their circumstances, and to know what opportunities the law creates for them.
My noble friend referred to the design professions and their representatives. However, I do not think anybody can be confident that the design professions necessarily represent perfectly everybody who practises in the relevant fields. Hard-pressed business people operating from day to day will often find it pretty difficult to know the rules of these very complex games. This debate is useful because government ought always to reflect on the practical impact of their legislation on those whose lives and businesses it will affect. As I noticed and readily acknowledge, the purpose here is to give assistance to business. However, the task of enabling small traders to steer their way through this labyrinth, small and medium-sized enterprises in particular, is massive. I am grateful to my noble friend for tabling this amendment and look forward very much to the Minister telling us a bit more about how the Government see this working in practice.
Viscount Younger of Leckie
My Lords, this amendment would place a duty on the Secretary of State under this provision to report to both Houses of Parliament six months after the commencement of the Bill. The aim of the report would be to notify Parliament what plans the Government had put in place to educate business users about the changes to the law this clause brings about.
I agree with what I believe is the principle behind this amendment: that when changes to the law are made which could impact on businesses or consumers, the Government should provide guidance to users. The Government have already engaged with all key stakeholders through their consultations on the changes now set out in the Bill. I am grateful for the words from the noble Lord, Lord Stevenson, who mentioned that he was aware of this.
This engagement continues as the Bill progresses through Parliament. In addition, the Government will be producing a plain English guide to the Bill, particularly aimed at small and medium-sized businesses, which will be issued before Report. The Intellectual Property Office continues to work through the representative bodies for the design sector to ensure that their members have the guidance they need on the new legislation, if it comes into force.
The noble Lord, Lord Howarth, asked how we can further penetrate the myriad businesses that may be affected. In the letters that we have pledged to write, we will add some information on publicity and distribution, which I hope will be helpful. He also asked further about this issue. I can reassure him that over the past year, almost 18,000 businesses benefited from face-to-face advice from the Intellectual Property Office, which also used online engagement extensively. I am proud to say, as the IP Minister, that it now has 18,000 Twitter followers, more than any other intellectual property office in the world.
The noble Lord, Lord Stevenson, asked whether we could provide more information on what plans there were to educate as well as to inform business. These plans will build on the extensive work that the Intellectual Property Office already carries out through its business outreach programme and through schemes such as the training for business advisers across the UK. I hope these answers help to give some substantive responses to the questions raised by the noble Lord, Lord Stevenson, and the noble Lord, Lord Howarth.
The Intellectual Property Office, on behalf of government, already reports on the support and guidance that it provides to businesses through its annual corporate report and chief executive’s report. Therefore, the Government are not persuaded that a commitment to Parliament to report on this specific area of business support needs to be set out in the Bill. Accordingly, I ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for his contribution and my noble friend Lord Howarth for making additional points in relation to the proposal in the amendment. Behind this short debate lurks the proposal later in the Bill to have an annual report to Parliament on IP work, and it is helpful that the Minister finished on that point. To anticipate that debate, we will be arguing that to draw the report in the rather narrow terms currently specified in the Bill may be too tight, so perhaps we can come back to this issue when we get to that clause because the recent exchange gave us examples of that. It would be helpful to have a better understanding of how engagement with the wider group involved in the creative industries and in design, in particular, is going. Simply reporting on the economy and growth will not get across that engagement in sufficient detail, so this may be something to which we will return.
This matter also raises whether, as was argued during our discussions on the ERR Bill, having an IP Minister is sufficient in relation to intellectual property work and the support of the creative industries more generally or whether something more grandiose than even a noble Viscount, such as a tsar, will be required. I can see the noble Viscount reaching out across Whitehall and drawing things together much in the style of the films of Eisenstein.
Lord Borrie
It seems slightly strange, to put this to my noble friend, that legislation which may have been in existence for many years specifies a particular form and what it should contain. That does not seem very appropriate.
Viscount Younger of Leckie
My Lords, Amendments 14 and 15 relate to the role of the registrar. I will first address Amendment 14, which would remove a power granted to the Secretary of State to specify circumstances where a document could not be inspected online, and the discretion in considering such cases.
Clause 9 is designed to allow users to access information on registered designs electronically whenever they want to—an idea fully supported by businesses in the recent consultation. There may indeed be circumstances in which publication of documents could cause harm, and it is in the interests of applicants to apply an exception in such cases. An example might be where material is commercially sensitive or otherwise confidential. Such exceptions are best made explicit in rules because they can be changed more easily and quickly to reflect the needs of business. The report of the Delegated Powers and Regulatory Reform Committee made no recommendations for changes in relation to the clause.
The power to make such changes will be limited to the circumstances that arise in this clause—for example, if the registrar’s opinion disparages any person in a way that is likely to cause harm or if material were considered immoral or likely to cause offence. This power will be subject to the general requirements of administrative law, and the scope of any rules relating to the registrar’s capacity to withhold electronic publication of documents will be subject to consultation.
I turn now to Amendment 15, which introduces a specific modification to an official form. It allows the registrar to give directions specifying that the form shall include a statement indicating whether or not any associated unregistered design right has been assigned to the same assignee. The Government recognise that this requirement might encourage businesses involved in such assignments to consider ownership of all the potential rights associated with their design, and it may help third parties to more readily track any changes in unregistered designs.
However, Amendment 15 places an additional burden on those seeking to register an assignment by requiring them to go through additional checks on the status of the unregistered design, to establish whether the unregistered right still exists or has expired, and whether it has previously been assigned to a different party. It could, in fact, delay updating the register if those details needed to be checked. Part of the rationale for removing Section 19(3A) was for records to be kept up to date more easily. It does not seem appropriate to require additional information to be supplied instead.
I hope that noble Lords agree that the sobriquet “Ivan the Terrible” does not entirely fit my character. The Intellectual Property Office is always seeking to provide the best service it can to its customers, which includes the amendment and deletion of official forms where these are proposed to the office. This is why Clause 12 on the use of directions removes the requirement to use secondary legislation in relation to forms and instead enables the use of directions, thereby mirroring existing powers relating to similar procedural matters for both patents and trade marks. To refer in the Act to a form in the manner described would undermine the purpose of Clause 12 and the wishes of stakeholders.
However, the noble Lord, Lord Stevenson, raised the issue of the huge majority of rights that are unregistered, which is a fair point. Perhaps there needs to be a better register with greater information included. We welcome these comments. We believe that as far as possible the register should provide more information. As the noble Lord knows, there is a balance to be struck between this and not placing too much burden on business.
In the context of these comments, I hope that the noble Lord feels able to withdraw his amendment.
Lord Stevenson of Balmacara
My Lords, I thank the noble Lord, Lord Clement-Jones, for his support for my second amendment. My noble friend Lord Borrie warned me that he was going to raise this point, so I was not surprised and he is of course right. In an attempt to focus on an issue, we have become too specific in the amendment and I would accept the noble Viscount’s rebuke.
Nevertheless, there is an understanding, certainly in relation to the second amendment, Amendment 15, that there is a balance to be made that will be most effective and helpful in terms of those who wish to understand better where the rights lie in relation to an invention or design and the bureaucratic necessity that would follow. I am a little sad that the IPO felt, on balance, that the voluntary system, which could have helped to build up a register of some robustness and depth, was not taken up. However, I recognise that this is probably not the time to discuss that. Indeed, if we are to return to this issue, as we will at some time, we can further consider the matter. I beg leave to withdraw the amendment.
Lord Walker of Gestingthorpe
I, too, support this amendment. Without condescending to personalities, the prestige of the patents county court is now a good deal higher than it was at an earlier stage. It certainly undertakes work just as demanding as the Patents Court in the High Court.
Viscount Younger of Leckie
My Lords, we understand that this is a probing amendment. It would introduce the patents county court as an alternative appeals body to the High Court and the appointed person. Clause 10 reproduces the appeal routes for the IPO’s decisions in relation to trade marks, which have proved to be very effective and popular. This system provides two routes of appeal, one low cost and one high cost, for those who wish to appeal a decision of the registrar.
On the face of it, the patents county court would introduce another relatively low-cost appeal route. However, although fees are about £135, use of the PCC may involve legal representation, so it is not always the case that this would be a low-cost route of appeal compared with the High Court. In contrast, the cost to business of using the appointed person is currently zero. In addition, because the appointed person is a relatively informal route, businesses have traditionally, in the trade mark field, represented themselves. This means they also avoid the additional legal costs that might be incurred if they went through the PCC or the High Court. In cases sufficiently important to warrant appeal to a court, the Government believe that the PCC offers less flexibility to businesses than the High Court because it places limits on costs that may be recovered and limits hearings to two days. It is likely that this would be too restrictive in complex cases or cases requiring cross-examination. Introducing the PCC as a third route of appeal does not appear to add significant benefits; rather, it simply appears to add another layer of complexity in the decision-making process for business. Therefore, the Government are not convinced that adding this other route of appeal would serve a useful purpose. I ask the noble Lord to withdraw his amendment.
Lord Borrie
My Lords, I very much support my noble friend Lord Young. This idea is that having had an opinion service available for some time in relation to patterns, that is now to be brought over to the subject of designs as well. It seems a most useful device, enabling people to get an opinion for what I believe to be a relatively low cost to the applicant. Having that instead of taking legal proceedings or, at any rate, allowing a certain delay until legal proceedings are brought seems most helpful. However, it does not seem to be appropriate when, as the clause specifies, this is not a decision. My noble friend read out the bits of the clause which are relevant to this. It is an opinion; the clause specifies that. It is authoritative because it is coming from a source that ought to know the answer but, by not being a decision, surely it is inappropriate that there should be an appeal. It somehow takes away from the great value of an opinion, which is to give something straightforward in the opinion of the people who ought to know. Having it without an appeal would enable it to be done quite quickly.
Viscount Younger of Leckie
My Lords, Amendment 17 would remove the right of appeal to an appointed person in respect of opinions given under the design opinions service. The Government believe that the right of appeal is extremely important. In this case, businesses who receive a design opinion from the registrar should have the right to appeal that decision to an appointed person. This ensures that a person who is aggrieved by an opinion is able to get a second view on whether the opinion was arrived at correctly in the first place. In particular, it is an important next step before parties consider formal legal proceedings, which could be time-consuming and costly.
Offering a route of appeal for the design service reflects the principles established in the existing patent opinions service. The patent service has been well used, as has the ability for the opinion to be subject to a review procedure. Furthermore, a right of appeal was considered particularly important in the light of the European Convention on Human Rights: an adverse opinion could affect the value of the right and hence the proprietor’s ability to make use of it in business. It is therefore important to offer an appeal for design opinions to ensure that the necessary safeguards are in place.
Noble Lords commented that the routes of appeal against a decision by the Intellectual Property Office include an additional route of appeal to the High Court. This is because decisions by the IPO can be legally binding and can have an impact on a party’s rights. In contrast, the opinion provided by the opinion service is non-binding—indeed, it is an opinion, as the noble Lord, Lord Borrie, pointed out. That is why in subsection (6) of Clause 11, the proposed new section sets out that:
“An opinion given by the registrar under the regulations is not to be treated as a decision of the registrar for the purposes of section 27A.”
The opinions service is designed to be low cost and non-binding. The route of appeal available—an important principle to uphold, given the underlying economic value of the property right—is also low cost and appropriate to the non-binding nature of the opinion offered to parties. The noble Lord, Lord Borrie, raised an issue of cost. I can reassure the noble Lord that the cost of the service will be subject to compensation. In the mean time, I ask that the noble Lord, Lord Young, withdraws this amendment.
Lord Young of Norwood Green
My Lords, I thank my noble friend Lord Borrie for reminding us that this is a helpful, low-cost route and further testing whether the wording in the Bill is right. I thank the Minister for the clarification but would ask that he checks the wording to ensure that it does not introduce any ambiguities. In those circumstances, I beg leave to withdraw the amendment.
Viscount Younger of Leckie
My Lords, the amendment places a duty on a court to consider a relevant design opinion issued by the Intellectual Property Office if it is awarding costs and damages to a party in a dispute.
The intention of the design opinions service is to provide businesses with access to an impartial view of the strength of their case in a potential design dispute, helping them to decide whether to pursue more formal and potentially costly proceedings. As with the patent opinions service, the Government have established that the service is non-binding. Although, in practice, the opinion may be used as part of a submission to the courts in support of an argument such as expert evidence, it will not hold a legal status. This will help ensure that the courts are not fettered in any subsequent legal actions.
The effect of this amendment would be to change the status of an opinion issued by the IPO and make it more likely to be binding on the parties involved. Having said that, I appreciate the spirit in which the noble Lord, Lord Stevenson, raised the opportunity to debate this matter. I agree that it could be seen to be a fine line. The amendment could place the decision, however, within the jurisdiction of civil law. This is at odds with the policy intention of the service, which is to provide an informal opinion on a design question. Therefore, I ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for his comments. I understand the dilemma that I have posed and why the Government have chosen to be where they are. I have some regrets about it because in some ways this is a good idea which could mean that what the Government are offering through the IPO is of greater value. I will add it to the list of things that I think need to be considered in a broader review of this aspect of intellectual property law and the wider concepts that we have been referring to that need to be picked up and given a broader context within which future policy can be made. With that, I beg leave to withdraw the amendment.
Lord Howarth of Newport
My Lords, while strongly endorsing the thrust of my noble friend’s amendment, I simply ask the Minister when he replies if he will explain to the Committee how we can have confidence that the department and the Intellectual Property Office will be able to maintain the appropriate security of online communications. Also, can he assure us that they will be able to preserve documentation in perpetuity?
Viscount Younger of Leckie
My Lords, Amendment 21 would place a duty on the registrar to encourage the use of online tools and digital platforms in the conduct of design registration. I welcome the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, raising this issue as it is an objective the Government already take seriously. IPO customers have indicated a genuine preference for the convenience offered by such services, and the IPO has further sought to incentivise such behaviour, for example by the use of lower fees for the electronic filing of trade mark applications. Currently more than 80% of trade mark applications occur online and therefore the Government see no reason why this figure cannot be achieved for online design applications. The IPO has recently migrated trade mark registrations to a fully electronic document management system and is starting to develop a similar system for design registration. The latter forms a commitment in the published corporate plan of the Intellectual Property Office, which I signed off earlier in the year.
Given the efforts that the office is making in this regard, I remain to be convinced that a specific duty needs to be set out in primary legislation. I understand the comments and the question raised by the noble Lord, Lord Howarth. The noble Lord, Lord Stevenson, raised this issue too, in terms of ensuring that we can have confidence in the security of the Government’s digital services. I can assure noble Lords in the Committee today that the IPO’s policies for keeping information secure and for maintaining them in line with the Government’s wider commitments in this area are in place.
I hope this will provide sufficient reassurance to the noble Lord and that he will withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for his comments, and I am happy to confirm to him that his words provided sufficient assurance. I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, in rereading my notes for this amendment, I realised that I managed to commit another solecism by specifying a form. I hope that will not prompt my noble friend Lord Borrie to leap to his feet and decry me again.
The drafting leaves something to be desired, but the intention is clear. There is a reference in the consultation document to the way in which applications for registering a design have associated with them a possibility of a limitation or a short period of time before the form is published. This is for commercial and other reasons and works well; there is no reason to change it. However in the consultation the Government floated the idea that it should be 30 months, not 12 months, which is a substantial increase. It was interesting to read the responses to that consultation because the Government felt that they could do that and were suggesting that it would be done in the future. However, it is not in the Bill, and therefore the arrangements are going to be left for secondary legislation. I would be grateful in this concluding amendment in this afternoon’s business if the Minister would give us more and better information about what is intended, the rationale for allowing an extension beyond the 12-month period, if there is to be one, and the conditions under which individuals or companies can request such a deferral of publication so that we can better understand the way in which this operates. I beg to move.
Viscount Younger of Leckie
My Lords, this amendment, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would place a power in primary legislation for the registrar to amend the period of deferment of design applications from one year to up to 30 months.
When a design is registered, the applicant is issued with a certificate and the design is published in the Official Journal. The deferment period allows applicants for registered designs to delay the date of registration where they might want to keep the design confidential. There could be good commercial reasons for this; for example, a business might not be quite ready to market a product and would want the registration, and therefore publication, to coincide with the entry of its product on to the marketplace.
The powers under Section 36 of the Registered Designs Act 1949 enable rules to be made prescribing time limits, including for the purposes of Section 3(5) of the 1949 Act to which this amendment is addressed. In addition, Clause 12 removes the requirement to use secondary legislation to make minor changes in the way the IPO functions. This will enable the IPO to specify by means of directions any necessary changes to the content and layout of forms relating to registered designs. A note explaining what these directions are expected to contain has been made available and placed in the Libraries of both Houses. The note sets out that one anticipated change will be to extend the period of deferment for publication of design applications for up to 30 months. The detail contained in this amendment is more appropriately dealt with in rules or directions. I hope this will provide sufficient reassurance to the noble Lords such that this amendment can be withdrawn.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for his comments. In giving an answer, I do not think he picked up the point I was making, which was that it is not clear why the jump from 12 to 30 months is justifiable. I understand the process, and I am grateful to him for confirming that there will be secondary legislation. Indeed, I had noted reference to that in the document that was circulated prior to the Minister meeting Peers. However, 12 months to 30 months is such an enormous gap. Will the Minister write me a short note about it? Perhaps he can respond now.
Viscount Younger of Leckie
I apologise to the noble Lord because the question of why it is 30 months is important. The answer is that it is to conform to EU law. The general principle is aligning UK law with EU law in this respect.