There shall be substituted for Section thirty-eight, Sub-section (1), of the principal Act the following words:
(a) It shall not be lawful in any contract made after the passing of this Act in relation to the sale or lease of or licence to use or work any article or process protected by a patent to insert a condition the effect of which will be—
And any such condition in any contract, lease, or licence made before or after the commencement of this Act shall be null and void as being in restraint of trade and contrary to public policy. — [Mr. Wallace.]
§ Brought up, and read the first time.
§ Mr. WALLACE
I beg to move, "That the Clause be read a second time."
I find myself at a considerable disadvantage in arguing a Bill of this nature, not being a lawyer, and I rely more upon the justice of my proposal than upon any advocacy of my own. This Clause is the one which originally appeared in the Act of 1907, Section 38, which was intended to deal with what we regard as the boot-making machinery monopoly existing in this country. The effect of that Clause, however, was completely spoiled by a very ingenious Amendment which was introduced in another place, and the object of this new Clause is to restore the power of the original Clause 38 in the principal Act. I do not wish to repeat what I said when I moved the rejection of the Second Reading of this Bill, but I do not think it will be out of place to remind the House that a very menacing monopoly in the boot and shoe machinery trade does exist to-day; that it extends over 85 per cent. 753 of the total boot machinery employed in this country, and that machinery is used under conditions which I think few self-respecting firms would willingly agree to. This machinery is used under a system of leasing, the terms of which are of a very stringent character, and which have been objected to by nearly all the important boot and shoe manufacturers in the country. I think it is well to remind the House that this is not a dispute between rival firms engaged in the manufacture of boot and shoe machinery, but it is a matter about which the boot and shoe manufacturers, who are in the grip of this monopoly, have protested time and again. I wish to make that point clear to the House.
The terms of this lease are so cleverly drawn that, once a firm or an individual becomes involved in dealings with the British United Boot and Shoe Machinery Company, they find it impossible, as the years go on, to take up, if they so desired, any new invention. If any British inventor put upon the market to-day a new device for the manufacture of boots and shoes, although it would increase the production enormously and reduce the cost, 85 per cent. of the boots and shoes of this country would still continue to be supplied by the machinery of the British United Shoe Machinery Company under lease. That is a humiliating position to British industry.
I now wish to refer to the Section of Clause 38 which, my right hon. Friend informs me, he intends' to retain. In that Clause I wish to point out how that matter was dealt with in Committee. The idea of Clause 38 was to get rid of this onerous restrictive clause in the leases as they exist in America and here, and in order to get over that difficulty this Amendment was brought in, and it provided for an alternative lease, or what was called a free lease, and anyone who signs the covenant in taking this lease over has to admit quite frankly, in very definite terms, that he is quite satisfied with the terms offered to him by the shoe-machinery monopoly. Now, what was the alternative offered to a man or firm who wished to be rid of the restrictive lease? First of all, he has to pay a premium of £100 minimum and a monthly rent of £4 for a term of five years. If he is content with the old restrictive lease, there is no payment of any kind and his minimum monthly rent is £2 11s. 2d. I do not think it will 754 surprise the House very much when I say that very few sensible people took advantage of the free lease, and the Amendment which was supposed to give additional freedom to this trade has become an absolute sham. When this Amendment was discussed in the House the Prime Minister said:He was afraid that if it were accepted it would render nugatory the whole of the Clause, and would enable these people to escape altogether the conditions which the Clause sought to impose.The Prime Minister was right in his view as to the value of that Sub-section which I am sorry to hear that my right hon. Friend proposes to retain. I should like hon. Members to read this lease, although I do not propose to read it to-day. It only contains about 10,000 words, and if any body would like a pleasant week-end reading that document I should be pleased to supply as many copies as they require. Under the sort of provision which my right hon. Friend is making in the event of a man or firm being dissatisfied with the machinery which he has got, and of which he wishes to be rid, this is what happens. A very important case was tried to test the value of Sub-sections (1) and (2) which my right hon. Friend intends to retain. A firm wished to prevent this tied-lease system in regard to a certain machine. The case comes before the arbitrator appointed by the Board of Trade. The value of this machine, upon which all the patents have expired, was, in the open market, £40, but in order to be rid of his lease and his machine, he could not get it done after coming before the arbitrator at a total cost of less than £430.
What is the real difficulty between my right hon. Friend and those of us who wish to have this Clause inserted in the Bill? It is very simple. My right hon. Friend considers that in the amending Bill, as already drafted, there are sufficient safeguards, and he does not wish to specify any definite grievance in the Bill of which we wish to be rid. We consider, on the other hand—and here it is the lay mind against the legal mind—that the safe guards are utterly inadequate to deal with the tied system of the British United Shoe Machinery Company, and we want some thing perfectly definite. In Committee the right hon. Gentleman stated that he did not wish to limit either the power of the Controller or the jurisdiction of the Courts. I suggest to him now that, knowing how we have attempted in past years 755 to deal with this grievance, and knowing the sort of arguments which were put for ward when Clause 38 and these Sub sections were inserted, and how utterly futile all the provisions have been to deal with this grievance, I suggest that he might take the business and lay point of view, and not limit his powers but extend them by dealing in a very definite and drastic way with this monopoly. I wish to impress upon my right hon. Friend that the real demand for the redress of this grievance comes from the general body of the shoe trade itself. I have had many letters on this subject from various bodies interested in the manufacture of boots and shoes, and I should like to read one short one. It is from a very powerful organisation indeed, the Incorporated Federated Association of Boot and Shoe Manufacturers of Great Britain and Ireland:I beg to refer to the Debate in the House of Commons on the Patents and Designs Bill and your speech thereon, and to state that the question which you raised as to the British United Boot and Shoe Machinery Company, and the terms on which its machinery is leased to the boot and shoe industry, has for some time engaged the attention of this Federation. A committee has been appointed to take all possible steps to secure either the repeal of Sub sections (1) and (2) of Section 38 of the Act of 1907. or the introduction of such other Amendments in the law as will give freedom to manufacturers in the purchase of their machinery.That is all that they ask. They only want freedom of purchase and to do away with those unworthy and unbusinesslike limitations which are at presentimposed upon the manufacturers of boots and shoes. I have other letters with which I will not trouble my hon. and learned Friend, but I do hope that he accepts my statement that the grievance in this matter is felt not by the machinery makers but by the actual boot and shoe manufacturers.
§ Mr. J. F. GREEN
I beg to second the Motion.
I feel the more encouraged in doing so because I am sure my hon. Friend (Mr. Wallace) and others will join with me in acknowledging the courtesy and tact displayed by my hon. and learned Friend the Solicitor-General in conducting this Bill through Committee. We are confident that he is as anxious as we are to prevent any of those abuses to which my hon. Friend has referred. It is only because we are informed by those who are concerned in the industry and in the trade that they do not think that the 756 Clause as it stands will protect them against this direct danger that we urge that these words should. be inserted in order to make it perfectly clear. I want it to be clearly understood that we are not making any attack upon the actual machinery provided by the British United Boot and Shoe Machinery Company. It is universally acknowledged that their machinery is of a high standard and of excellent quality. We are not fighting that; we are fighting their attempt—which has been only too successful—to create a monopoly in their machinery. If their machinery is as good as they claim it to be, and as we admit it to be, why should they be afraid of open competition? If their machinery is the best and they can produce better machinery than anybody else, then surely they need not be afraid of competition !
I also want to emphasise that this is not simply a question of competing manufacturers wanting protection against this monopoly. It is the manufacturer and also the worker in the boot and shoe trade. Unfortunately, we are only too familiar in this House with cases in which the employers are not in agreement with the trade unions, but I am glad to say that in this particular instance the employers in the boot and shoe trade and the Boot and Shoe Operatives' Union are in hearty agreement. The union, which I know well, because it has its head quarters in the city which I represent, is a very powerful union, and it is in hearty accord with the desire of those who wish to see this Section in the Act of 1917 strengthened in the way suggested by my hon. Friend. It is claimed by the British United Boot and Shoe Machinery Company that they have been the means of setting up manufacturers in the boot and shoo trade, and that those manufacturers are very strong supporters of the company and do not want it interfered with. That may or may not be true, but it is none the less true that there are a large number of manufacturers who do object to this great trust, and on the broad principle of not allowing anything of this sort to get into the hands of a monopoly which can control the whole of a trade, I support the Clause of my hon. Friend.
§ Mr. W. R. SMITH
I have been associated with the boot and shoe industry on the workmen's side for the past thirty years, and I can therefore claim to 757 speak somewhat officially of the position of the industry in this matter. Ordinarily, it might be felt that as workmen we should object to efficient machinery being brought into the industry, but that is not the position in the boot and shoe trade at the present time. In order to give emphasis to the position of this important industry I would like to refer to the fact that although during the War is was called upon to manufacture boots for practically every one of the Allies, and to manufacture a class of boot which had never been handled before in this country, the under standing between employers and employed is so perfect that not in one single instance was any Government Department disturbed or caused any anxiety so far as the production of the boots was concerned. We have been complimented by the Minister of Labour upon the excellent machinery which we have established for dealing with questions of difference arising between the workmen and the employers. That understanding and that state of affairs has only been possible because both sides have endeavoured to approach these questions from the stand point of what is best for the industry it self, recognising that unless the industry is prosperous, and unless it can hold its own in the markets of the world, the position of neither the employer nor the employed in the future can be in any way satisfactory. Approaching the question from that standpoint, I want to say that both employers and workmen are strongly urging that the Bill should be amended in the direction indicated by my hon. Friend (Mr. Wallace). The restrictions which have been placed, and which will be placed on the industry unless this Amendment is adopted, will seriously handicap the trade in the future. We have been told that one of the most essential things at the period is to be able to re-establish industry in this country and to develop markets whereby our production can be sold and disposed of.
The boot trade is open to very severe competition. One of the centres where competition arises is America. Strange to say, this very question has been disturbing the manufacturers of America, and quite recently they have been successful in obtaining a decision against this same company in America whereby they are now free from the very restrictions we are asking that the British industry should be freed from. What is to be the position 758 of the boot and shoe trade in this country if it is to be hampered by restrictions from which its great competitors are free? How shall we hope to hold our own in the markets of the world? This is a more real grievance than may appear on the surface, because America has the advantage that they touch the leather markets at their source, whereas we have to import leather from America in order to use it in the manufacture of boots and shoes. I do seriously suggest to this House the advisability and the necessity of its doing all it can to leave this industry as free as possible from any restrictions that would hamper it in the future. Operatives and employers are anxious and ready to welcome the most up-to-date machinery that can be devised for the production of boots and shoes in this country. If these restrictive Clauses are maintained, it means that firms, by virtue of these leases, will be deprived of the opportunity of using machines inside their factories that may be developed by other companies. A set of machines for one department may range over six or ten machines, and they are compelled to have the whole of these ten if they want the use of one; and if in regard to one of those operations another machine is more effective, can give a higher rate of productivity, they are unable to use it in connection: with their business: whilst these restrictive clauses are retained in the leases under which they are bound to accept their machinery.
I know the Bill provides that if there is anything unreasonable in these leases there is a remedy, but they have to prove what is reasonable and unreasonable in this matter, which is not always an easy thing, however competent you may make the machinery of law for that particular purpose. Very frequently the difficulty of determining the point lies in the fact that they cannot prove their position until they have had an opportunity of testing the new machine and seeing its advantages over the one already established in their factory, and seeing that they are not allowed to place the machine in the factory, they are absolutely helpless as regards having this point determined. It resolves itself, then, into a question between the rival machinery companies, in which the industry has no concern whatever. As an industry, we are not concerned with this question as between two machinery companies producing machines necessary for the industry. All we ask is that the best 759 this country can produce in the way of machines shall be available and at the disposal of the industry itself. That is a fair and reasonable proposal, and we say the present Bill, as it stands now, and the Clauses in the old Act, do not make this possible, and will in the judgment of the trade seriously handicap it in the future.
I could quote cases where difficulties have arisen. My hon. Friend has already mentioned one difficulty a firm had to face when they wanted to give up machines. The lease stated that they could surrender these machines on compensation to be determined by arbitration. But here was a machine, the total value of which was £40, and the firm had to pay, or it cost the firm, £430 to get rid of that machine in order that they might have a more up-to-date one in their factory. Is that a reasonable condition for an industry to be subjected to? I know of another instance where a firm were using a machine which was most essential for their trade—a class of boot and shoe made in the city of Norwich and also in Leeds. It is made in very large quantities, and this machine is essential to the industry in order that it may successfully carry on. No machine in this country possessed by this monopoly had any reference to this particular machine, but in order to establish their monopoly they imported one from America, and then started proceeding against the firm who were using this machine of their own. They were a small firm who could not de fend themselves, and the machinery company responsible for the production of the machine were also a small firm, and they could not defend themselves at law, be cause the expense to which firms have been put in this respect is enormous, running into thousands of pounds, on account of the manner in which this monopoly can impose itself on the industry as a whole. So important was this particular machine to the city of Norwich that, I understand, employers of labour actually subscribed £100 for each machine used in their factory in order that the firm which produced the machine and the firm which was using it might have adequate protection in the Courts of this country. Fortunately, they won their case; but if it had not been for the fact that the boot, and shoe manufacturers were prepared to help this firm, if it had not been for the fact that this 760 machine was most essential for the industry, and therefore of very great importance, warranting the manufacturers in making this effort, this machine would have been driven from the market and the industry would have been severely handicapped as a result. I do suggest that at this particular time, more than any other, we ought to be careful in the passing of any legislation which is going to continue that state of things. I unhesitatingly say this is not a matter of rival interests; it is a matter of vital importance to a large industry in this country—an industry which has to depend to a large extent upon exports. Some of its export trade has disappeared during the War as a result of other nations being in a more favoured position. The industry has made the strongest effort to get other classes of export trade from the Continent which were previously carried on by enemy nations. Unless they are supported in every way possible, unless they have the freest opportunity to use the best machines that are on the market, they will not be able successfully to carry on their business as they otherwise would.
I was not a member of the Committee which dealt with this question, but I understand the Solicitor-General is of the opinion that the Bill is already effective for this purpose. Let me say to him that the industry, as a result of their experience, are not convinced upon that point; and surely, if we are agreed upon the desirability of freeing the industry from restrictions, there can be no harm in making this Bill so definite and so distinct that there can be no possible misunderstanding upon the matter! Surely it is best to be safe in this respect, and not leave anything to interpretations in a Court of law, which might ultimately decide in a way that would be injurious to the trade itself! That is practically our position in the matter, and I can assure the House that both from the standpoint of employer and employed this is viewed as a most serious question. Recently a referendum was taken of the boot and shoe manufacturers in this country. Theirs is an organisation which I believe embraces within its membership over 90 per cent. of any manufacturers engaged in business in the United Kingdom, and out of the whole of that number there are only seven who were prepared to carry on or to accept the present conditions. All the others who returned their papers, to a very considerable number, were opposed to it. An industry which as 761 so united upon the importance of this question has a right to ask this House to give it every consideration possible whereby its future activities, so far as the production of boots and shoes are concerned, shall not be hampered, and that it shall at least have an equal chance with other countries who may be competing in the world's markets.
§ Colonel Sir A. SPROT
It seems rather odd that the principal part of the discussion on a Patents Bill should be concentrated on the operations of one particular boot machinery manufacturing company. I was not a member of the Committee which considered this Bill, nor have I heard very much of what has passed this morning, but I listened to the Debate on the previous occasion, and I think that the hon. Member for Dunfermline, the hon. Member for South Edinburgh, and others were rather carried away by their enthusiasm for the prevention of monopolies. I have no interest in the boot or shoe trade whatever, but I have a friend—an Army officer who served in the War—who is concerned with this company, and I inquired of him, after hearing that De bate, as to the allegations which were made against this company. One talks of monopolies, but a patent in itself involves a monopoly. I submit, however, that no injurious monopoly is exercised by the company in question. It seems, perhaps, at first sight, rather odd that a company should exercise its trade in the particular way in which this company does. It does not, as a rule, sell the boot machinery which it owns, but it leases it to boot manufacturers, and it insists that the whole series of machines, from one end of the process to the other, shall be of its own particular pattern. I do not see that there is any particular harm in that, after all. It has been stated that it prevents the introduction of the latest inventions and of new machinery. That is not the case. The company itself is responsible. It is always ready to take up the latest improvements, and it guarantees to its lessees that it will introduce, at its own cost, the latest improvements in any particular line of boot manufacturing machinery.
The result has been extremely good. The lessees are satisfied with the bargain they have made, and I was informed some time ago, when I was a candidate for a town in which there were two large boot factories, at a time when American com- 762 petition in the boot trade was beginning to be very severely felt, that the firm which adopted this company's line of machinery prospered and was able to overcome the difficulties entailed by the American competition, while the other company did not succeed in doing so until it fell into line and adopted this particular machinery. That speaks well for the system, which may possibly seem a rather peculiar one, upon which this machinery company conducts its business. There is really no harm done to anybody in this matter, and I have been informed, with regard to the circular which was sent round to the boot trade, that replies were only received from certain places, and that from a number of places no replies were received at all. That is an argument in favour of the idea that the lessees there are satisfied with the state of affairs that exists at the present time. It is a fact that the great majority of the boot manufacturers are satisfied, and object to any change in the system of leasing machines. That is proved by a memorial to the Board of Trade signed by 74 per cent. of the company's lessees. With regard to Scot land, I can quote a letter from the Boot Manufacturers' Association of Scotland, dated 28th May, 1918. It says:We, the boot manufacturers of Scotland, in meeting assembled, hereby declare unanimously that the services rendered by the British United Shoe Machinery Company, Limited, under their system of leases and royalties, has been most beneficial and advantageous to the shoe manufacturers of Scotland. The system has enabled the manufacturers of Scotland to hold their position in the trade, and we do not anticipate any disabilities from the continuance of their system.The point has been made that this is an American company, but that is not the case. The company is registered in Eng land, and a great many of the shareholders are British; and, what is more, a great number of the employés of the company are shareholders in it. I take it that this is perhaps a matter of rivalry between two companies in the trade. [Hon. Members: "No, no!"] We have been bombarded with circulars of a very elaborate description, which some of us have waded through, and I submit that the matter has been altogether exaggerated by those who have spoken on the other side. According to the opinion of the Law Officers of the Crown, the Clause as it stands in the Bill will meet the case of preventing any extension of monopoly.
§ The SOLICITOR-GENERAL (Sir E. Pollock)
I hope that my hon. Friends the Members for Dunfermline and for Leicester will not feel at any disadvantage in arguing this question with me. I am certainly indebted to them for the attention which they have given to this subject, and, I may say, to all other hon. Members who have ventilated it. It is quite obvious that the point is a very important one, and I should be very sorry to think that we had not had an adequate discussion, both on the Second Heading and on the Report stage, of a matter on which not only some hon. Members of this House, but obviously a considerable number of persons outside, feel strongly. I also agree with my hon. Friends that an adequate remedy should be found, but it would obviously be wrong on my part to take sides with either the one party or the other. I was interested when the hon. and gallant Member for East Fife (Sir A. Sprot) read a Scottish resolution in favour of this system, while the hon. Member for Dunfermline read what I think was an English resolution against it.
§ Mr. WALLACE
The resolution which I read covered Great Britain and Ireland. The other is quite a subsidiary matter.
§ Sir E. POLLOCK
I am glad that England, Scotland, and Ireland have all had their views presented. I rather regret that there is no observation from Wales; but perhaps that may be accorded in another place. At any rate, what it means is that different views have been presented. I have had sent to me on this question a letter from the chairman of a body of boot and shoe manufacturers carrying on business in the United Kingdom, and they say:We have been customers of the company for many years and are perfectly satisfied with the manner in which our business has been con ducted; and we strongly object to any change being made in the law for the benefit of individual shoe machinery manufacturers which will interfere in any way with our obtaining the use of the company's machines under whichever form of lease offered by that company we may elect to take.I only read that in order to show that there are two views, and, standing where I do, it is quite obvious that it is my duty to take part with neither side, but to see that both sides have the opportunity of presenting their case at the proper time to 764 the proper tribunals in order that it may be investigated. I look at the matter, therefore, from the general point of view. I am not going to particularise with regard to the boot trade rather than any other trade. That would be open at once, I think, to the observation that, if you find this system of tied leases prevailing in a particular trade, at is quite possible that the same system might spring up in another trade, and I should be very sorry to introduce words in a Bill which might deal with this particular grievance of the boot trade without seeing that the opportunity is given to all trades, if such a matter should arise, for their grievances to be properly ventilated. So I look at it from the general point of view. I am going to make an observation or two which I think will convince the House that this Amendment goes too far.
§ Sir E. POLLOCK
I am obliged to the hon. Member, but I am not unmindful of that. The Amendment as proposed in tends to prevent conditions being attached to the purchase, the lease or the licence of any article or class of articles which may be dealt with by sale, by lease, or by licence. That is the proposition. Can I accept it? May I point out how I think that would work unfairly? There are certain patented goods on which I think a reasonable restrictive condition may be imposed, and is rightly imposed. I had brought to my attention such cases as patented articles which for their success require the user of certain qualities of goods. I do not know that it applies in any case to a typewriter; but we are all familiar with the fact that if you use a typewriter you must use a particular quality of paper. Some of us use some form of what is called a fountain pen, and if you are going to get the best results from a fountain pen you had better use a particular form of ink prepared for that purpose, and I can see nothing unreason —able I take, for instance, a fountain pen quite independent of whether in fact that is so or not; I wish to be quite independent of facts—perhaps my suggestions are all wrong, but I can see. nothing wrong in a pen being sold upon the condition that you shall use in it a particular class of ink, because without you use-that class of ink everyone will throw 765 the pen into the fire, with an expletive or two, on the ground that it is quite useless, and will much regret the expenditure upon it. If the Clause was accepted there could be no condition such as I have suggested to the user of any particular class or quality of goods with the patented article. That would be unfortunate. The Clause goes too far, and cannot be accepted.
May I call attention to this, because it may reassure some hon. Members who are not quite familiar with the matters which have been raised in the Debate, and perhaps have not been so industrious as to read all the material which has been sent to them by post from one side or the other? These leases, I am told, have been in use for a considerable period of time. I do not know how long, but I think I am not overstating it in saying they have been more or less in existence for something like a dozen years. In the course of those dozen years there have been proceedings taken by this particular company to stop infringement, and as Section 38 stands at present, by Clause 4 it is possible now in any proceedings to raise the question, by way of defence, that the conditions which are imposed are of such a nature that they contravene the intention and meaning of Section 38. At no time have the facilities which are granted by that Section ever been made use of, and am I not right in saying this, without trying to go too far, that the House, while quite willing to remedy all grievances, must pay some attention to the fact that so far we have found no person who has been ready to take advantage of the facilities which have been offered? I cannot accept the view that one hon. Member presented that it would be a very expensive matter. I believe a good many persons engaged in the boot trade, some of them who are probably either licensees or lessees of this very machinery, are engaged in very large operations in which their turnover is very considerable. I am not saying it is more than it ought to be at all, but they are in a very large way of business, and for those persons it would not be prohibitive to take proceedings which could be taken in order to test the validity of the lease under which the patent is granted. I have made inquiries since the Second Reading, and no such opportunity has ever been taken advantage of by the persons who are now saying they have been injured.
766 This Clause as proposed goes too far. But in order to restore confidence to the House, if they have an uneasy feeling, may I mention that we have under the Bill, by paragraphs (d) and (e) of Sub section (1), given the right in all cases for persons who are complaining of the licences or of the conditions to go through the ordinary channel—first of all, to the Controller, and then, on appeal, to the High Court, from the Controller, where both sides can be heard—and, after all, there is not a single Member of the House who would wish to condemn any company without it being heard—for these grievances to be tested in the presence of both sides. I have been thinking the matter very carefully over since the Second Reading and also since I had the advantage of listening to some very powerful and useful speeches made in Committee, and it has occurred to me that the fact that in these leases there is the statement made that the lessee or the licensee is satisfied and accepts the fact that he has been granted a sufficient alternative might be taken against him if he made an application to be freed from the lease or from the licence which is granted to him. It might be said, "How can you come here and complain when, under your own hand, or possibly under your own hand and seal, you have admitted that a full alternative has been given and that you have exercised your option in preferring to take the very lease of which you are complaining?" I am very anxious to keep the door open for the whole matter to be properly investigated and have, therefore, put down an Amendment to the Schedule whereby the fact that there has been a signature of a lease or a licence containing words saying that he has accepted the particular lease and that a fair option has been given to him shall not count against a person who is making an application to be freed from the lease. In doing that I have gone a considerable distance, because most of us say that a man who signs an agreement or lease ought to be bound by the terms of the words which he signed. The Amendment is,In any action, application, or proceedings under this Act no person shall be estopped from applying for or obtaining relief by reason of any admission made by him as to the reasonableness of the terms offered to him under Sub-section (1) (i).I, therefore, ask the House to allow me to put that in, and I am sure I shall then have met the point of the hon. Member for Dunfermlinc, that this lease contains 767 words which are misleading, unfair, and even untrue. I hope, under these circumstances, the House will not allow this proposed new Clause to be inserted. I have endeavoured, as far as I possibly could, to look at the matter not only from the points of view of the common law but from the point of view of common sense, and to see that every avenue is open. I believe the real difference between us is this, that he prefers his particular method and I prefer mine.
§ Mr. CAUTLEY
I came here to strongly support the new Clause, but the last few sentences of the Solicitor-General have convinced me that the main difficulty is met. It may be convenient to say a few words as to the history of this matter. In the Act of 1907, as originally proposed, Clause 38 was drawn exactly in the same words as the hon. Member opposite wishes it should now stand. Its effect was to prohibit all tying Clauses in respect of any particular patent. This was brought about by declaring that in any contract for sale, lease, or licence of a patented article any condition prohibiting the purchaser or lessee from using articles supplied or owned by other persons or requiring him to acquire from the purchaser or lessee any other article not in-eluded in the patented article should be null and void. The vendors and lessors of patented articles succeeded in defeating the effect of this Clause by getting the Committee to insert the proviso that the Clause should not apply if the seller or lessor could prove that at the date of the contract the purchaser or lessee had the option of purchasing or obtaining a lease of the article on reasonable terms with out such conditions. And, secondly, that the contract should entitle the purchaser or lessee to determine his contract or, at any rate, the lying condition, on three months' notice and on paying compensation for it by arbitration.
The lawyers at once found a way of meeting that proviso, and it was met in the typical case of this boot machinery company in this tremendously long document which they require every user to accept. In it they set out in full the copy of a dummy lease which they never intend to be really offered—and which never, in fact, was executed by anyone— but owing to the exigencies of the purchaser or hirer or user of this machinery they compel him to sign a statement that 768 he had been offered a lease on reasonable terms and that the terms were reasonable, and they went so far as to compel the purchaser to sign the dummy lease as identifying the lease that had been. offered to him on those terms. The result was that the purchaser, user, or hirer of the machine could never question the reasonableness of the lease, because there was his own signature on the dummy lease and his own statement that it had been offered to him, and it was accompanied by his statement that the terms were reasonable. The statutory provisions as to the three months' notice were observed, but, owing to the terms as to compensation being paid, this has proved in practice unworkable. The document in question is the most ingenious document ever devised, and under it is particularly the practice of making the lease of each machine terminate at a different date, and the pro vision that on breach of any condition all the lessees shall be determined, and that no other machines shall be used but those of the lessor, the lessee is bound hand and foot to his lessor. I should have preferred the Clause to stand as the hon. Member opposite wishes it, and have done away once and for all with all those tying agreements entirely. If the patentee gets a patent granted to him that ought to be sufficient for him; it is monopoly enough, and the patent should stand on its own merit. The Solicitor-General does not desire that, but his Amendment ensures that this statement which the user or hirer of a machine has signed to the effect that he has been offered a reasonable lease, and that the terms in it were reasonable, is not to debar him from coming and raising the point that the whole conditions are clogging and are an abuse. That really meets the substantial difficulty. For all practical purposes that meets the difficuly. I was quite certain as a lawyer and a person of ordinary sense that the pro vision in the Bill was insufficient. I am quite certain that in law as the Bill originally stood the Controller would not have considered under Clause 1 (e) of this Bill the question whether the Boot Machinery Company's lease was an abuse if raised by a single person who signs one of these leases. I am confident that the trade could never have raised before him the question of the validity of this lease. Under the Clause to be moved by the right hon. Gentleman the Solicitor-General I. think this question can be litigated.
§ Mr. WALLACE
I acknowledge the courtesy of the Solicitor-General in making the concession. He says that my Clause goes too far. I am sorry to say that that with this concession it does not go far enough. While a very real concession has been granted the gravamen of our charge against this lease is that for the seller or the lessor it makes it a condition for the purchaser or for the lessee that when they buy a particular machine, they are precluded from buying any other class of machine to be used on the same kind of boots. If that is considered fair dealing I call it by another name. We want to make that sort of thing illegal. It is that point which I wish to press upon the Solicitor-General. That is our whole case, and I think it is a very reasonable case. The House understands it perfectly well, and I do not wish to argue it further.
§ Question, "That the Clause be read a second time," put, and negatived.