NEW CLAusE.—(Infringement of trade mark by breach of certain restrictions.) (Hansard, 2 July 1937)

§ The Solicitor-General
I beg to move, "That the Clause be read a Second time."
The House, or that part of the House which has paid attention to the meetings of the Committee upstairs, will have noticed that Clause 17 of the Bill as it was originally before the House was the subject of a good deal of criticism, both in the Committee upstairs and on the Floor of the House on Second Reading. The purpose of Clause 17 and of the new Clause is as follows: The Departmental Committee set out, in paragraph 179 and following paragraphs of their report, certain cases of misuse of trade marks. For instance, they quoted a case in which Player's cigarettes were taken out of their cartons and sold in a different kind of wrapping, and cases in which advertisement matter which was not desirable from the point of view of the owner of the trade mark was put upon the package in which the goods were being sold. To meet that situation the Departmental Committee recommended that it should he within the power of the owners of a trade mark to enforce a prohibition against such misuse of the wrapping, or against the character of the material which surrounded the goods that they were selling, and, following that recommendation, Clause 17 was introduced.
It was criticised, as I thought with great effect, on two or three main grounds. The first was that it introduced an innovation into our law with respect to contracts for branded goods. A second ground of criticism was that the contract was not with anybody in particular; it might have been with the office boy; and a third was that the burden of proof was not put upon the person who wanted to safeguard his trade mark. There were various other criticisms, which I need not elaborate. To meet these criticisms we have completely redrafted the Clause. The main differences are that in future the contract will only be, so to speak, the repository of the matters which the proprietors of the trade mark desire to prohibit; that it must be in writing; and that the restrictions are to be enforceable, not against anybody dealing with the goods, but against the person who for the time being is the owner of the goods, and who, having notice of the obligation, does the act or 2355 authorises it to be done in the circumstances set out. A breach of the restrictions imposed by the owner of the trade mark is not in future to be a breach of the contract. The fiction of a contractual relationship between someone who obtains the goods through, perhaps, 16 or 17 different hands and the original proprietor has now disappeared, and a breach of the restrictions will be treated, if the owner of the trade mark cares to take proceedings in respect of it, as an infringement of the trade mark.
These are the main features of the proposed new Clause. It has been put down on the Order Paper in different forms on successive days, because we were anxious to make it conform as nearly as possible to the general wishes of the Commitee upstairs. We have deleted an Amendment which the Committee made upstairs, and which is embodied in paragraph (c) of the existing Clause 17, because when I looked at that carefully it appeared to me to be at any rate arguable that it might have been used to support an attempt to fix prices, and, as it is not the intention of the Government that there should be any ambiguity in the Bill on that matter, the provision was deleted. I hope that with this explanation the House will consider that the proposed new Clause fairly meets the objections which have been raised, and that we may have it in substitution for the existing Clause 17.

§ Mr. A. V. Alexander
I say at once that we are glad that the Government have endeavoured to meet the points which we thought were of substance in regard to Clause 17 as it originally appeared in the Bill. The amendments which have been incorporated in the proposed new Clause are of importance to those who hold the views which I and other Members express. I think, however, I should hardly be doing justice to my own views if I did not say that I still regret that an Amending Trade Marks Bill should include within its ambit a fundamental change in the basis of trade marks legislation, in that it should allow in any circumstances statutory control of conditions to run with the sale. I have been somewhat exercised in my mind as to whether, in view of the obvious good intent of the Parliamentary Secretary and the Solicitor-General, I should still divide on the Clause because of the principle 2356 involved. I think it is true that as the Solicitor-General says, to a large degree the more objectionable features of the original Clause have been removed, and for that we desire to express our thanks. The only point about which I am still not quite certain is exactly how and when an action arises. One of the objections that we had before was in regard to the possibility that the owner of the goods at the time of the first sale by the trade mark proprietor, or the actual user of the goods for the time being, might be proceeded against. Am I quite clear in understanding now that the only place at which an action will lie will be against the owner of the goods under the contract in writing? If that be so, I do not think I need ask my hon. Friends to divide against the Clause.

§ Mr. Goldie
Can the Solicitor-General tell me whether this Clause will in any way affect criminal procedure? A good many years ago these proceedings used to take the form of a prosecution in the police court under the Merchandise Marks Act. I remember a case in which a very well-known firm of brewers found that beer which was not of their brewing was being sold in bottles bearing their registered mark. On several occasions proceedings were taken under the Merchandise Marks Act and were dealt with expeditiously and cheaply. I shall be grateful if the hon. and learned Gentleman will tell me whether or not the Clause in any way affects the alternative remedy which is still preserved in the Merchandise Marks Act.

§ The Solicitor-General
The point to which my hon. and learned Friend calls my attention is not affected by this Clause. I do not think the Merchandise Marks Act is very much affected by the Bill. There are penalties under Clause 21 for acts of the character of fraud—false representation and so on. With regard to the point put by the right hon. Gentleman opposite, what the Clause now drafted enacts is that the restrictions that are imposed must be observed by any person who is owner for the time being of the goods if he has notice of those obligations. That is to say, supposing the goods have passed through an intermediate stage and have been sold and resold and 2357 the second purchaser receives them with notice of the restrictions imposed by the manufacturer on the original sale, if he does any of this limited number of things the proprietor of the mark is entitled, even in the case of a second or third owner of the goods, to enforce the right that he has reserved to himself.

§ Mr. W. Benn
I congratulate the hon. and learned Gentleman on the great care that he has shown in drafting the Clause, because he is a master of accuracy in these matters. Only a few minutes ago he reproved me for drawing attention by mistake to a marginal note in another Bill. I accepted the correction but the Secretary of State for Scotland on another point to which I drew attention said that the reference to the Central Electricity Board was there by mistake, thanked me for drawing attention to it and said he would have it put right.