HC Deb 13 December 1968 vol 775 cc802-28

Order for Second Reading read.

2.45 p.m.

Sir Edward Boyle (Birmingham, Handsworth)

I beg to move, That the Bill be now read a Second time.

This is my first success in the Ballot for a Private Member's Bill during 18 years in the House, although I have probably spent as many hours as have most hon. Members in such matters, sometimes supporting controversial Private Members' Bills in the night watches.

In introducing the Bill, I should like first, to acknowledge the very considerable help which I have had from Mr. Alan Campbell, Q.C., who has made a special study of the legal position of industrial security and who advocated as long ago as last December the setting up of a Royal Commission to examine the law as it affected industrial spying. He is also consultant expert on this subject to the Legal Affairs Committee of the Council of Europe.

As the hon. and learned Member for Dulwich (Mr. S. C. Silkin) pointed out in his helpful letter to The Times yesterday, a good deal of this Bill derives from information of a European scope obtained by that Committee in the course of its researches. The Committee hopes to produce a model law which could have European significance. The whole topic of industrial espionage is only one aspect of the more general topic of the invasion of privacy which the Legal Committee is also studying.

We have all been told for many years, by such writers as Professor Bronowski that effective human action depends on foresight. Of course, that is true. But effective human action also depends to a much greater extent than we sometimes realise on accurate intelligence. Perhaps I can give one or two examples. I recall a series of articles, in, I think, the Observer, a year or two back, on the subject of portfolio investment, stating that from the point of view of the investor, the very first rule of portfolio investment is that there is no substitute for genuinely inside information. I am certain that that is true.

In the same way, thinking of accurate intelligence in a wartime context—I bear in mind that this is a subject about which many of us still must exercise considerable discretion—I recall Sir Winston Churchill confirming in the House a remark of mine that the general public still knows little or nothing about a number of individuals who made a unique contribution to the winning of the Second World War. That is one respect in which wartime histories may be lacking one very important dimension when compared with the more accurate and fuller version which one can often obtain of peacetime historical events.

Turning to the industrial aspect in intelligence, the human and mechanical factor of error is always present, but the great technological advance in photographic and electronic devices over the past 10 years has rendered the means of obtaining, storing and retrieving information much more efficient. When we speak of information we still tend to think that it is predominantly measured in terms of book culture. We think of reference books, memoranda and printed specifications. Yet within a few years from now industrial information may no longer be thought of primarily in terms of written imprints in a book or blueprint drawings, but rather as holes on cards, magnetic fields on tapes and discs, electrical impulses moving through the memory core of a computer, or even radiations generated in vats of complex chemicals.

Furthermore, when computer systems are interconnected by some of the modern communications vehicles, like television, satellites and laser beams, we will have the capacity to move large quantities of information over vast distances in units of time so imperceptible that they are difficult fully to comprehend.

If anybody says that all this sounds rather like science fiction—I am not against science fiction; at its best it is thoroughly enjoyable reading—I would suggest three answers. First, even in the realm of basic science we in this House underate the speed of developments since 1945. We often forget that the study of chemistry and physics has more than doubled. Dr. Beck, in America, has said that the Middle Ages in biology ended in 1950, the year when I first entered the House. We know that, in economics, many people are studying today as part of an ordinary first degree course work which was at the frontiers of knowledge only 10 years ago. Thus, even in basic and social science we often underrate the speed of development since 1945.

Secondly, I am sure that we hopelessly underrate the speed of development of new technologies. This is particularly true of the United States. I had the experience a few years ago of addressing the British Association on this theme. I pointed out there that it is not just a question of new applications of technology, but new technologies which are growing up rapidly. What is now commonplace—things like the maser and laser effects—were not even thought of 10 years ago.

Thirdly, young people are living in the world in which I have been describing to a much larger extent than is recognised. I am impressed with the fact that today one discovers children who have a remarkable grasp of the basic principles of computer arithmetic, punch cards, and so on, even when they are still at primary school. I could identify for hon. Members schools in, for example, Manchester and the North of England where remarkable understanding is shown of many of the basic aspects of our modern technological society at an early age.

An unwelcome by-product of these developments is the emergence of the menace of industrial spying, which brings me to the question of the law in this context. The rule of law seeks to safeguard a number of fundamental constitutional entitlements for the subject. It seeks to safeguard personal freedom, freedom of conscience, justice between man and the State and natural justice as well.

Just how far these constitutional entitlements should go—for example, whether we should consciously legislate in the interests of minority groups—is a matter for legitimate argument in the House. Although not relevant today, this is the sort of subject which we discuss on matters like the Race Relations Bill.

I am saying in the Bill that the time has come to extend the rule of law and the basic principles with which we are familiar in order to control the means whereby industrial information is obtained. There is at present no effective legal control or sanction, apart from the necessity of obtaining a G.P.O. licence, and there are no restrictions on the manufacture, use or sale of a number of what will become increasingly relevant devices. I will give a few examples of the sort of devices I have in mind.

Hon. Members will know about the "bug". It is powered by a battery the size of a small tablet and it can be hidden in pens, inkwells, or desk lamps. It can pick up whispered conversations 20 ft. away and transmit them up to 100 yds. There are directional microphones which can be used in conjunction with telescopic cameras. Those are only two examples of the many devices which will become more frequent over the years. That is the setting of the Bill; the growth in the realisation of the great importance of accurate intelligence, the very rapid growth of new technologies and the growth of new devices.

Before coming to the details of the Bill, it might be helpful if I answer two questions which may be in the minds of hon. Members. The first is: what is the present state of the law, and the second is: is legislation really urgent? On the first—the present state of the law—I wish to make it clear that I am not, and never have been, a lawyer; so that, if I am wrong in this, I apologise in advance.

As I understand the present position, we in this country already have a law for civil remedies where there is a breach of confidence. That is, there is a civil remedy by which there may be an injunction against a third party recipient of confidential information. This prevents a subsequent employer from making use of information which has been improperly given. Many people are beginning to question whether this existing civil law is adequate in the circumstances of today and whether we do not need to legislate against not just the civil wrong of information which is improperly disclosed, but also the criminal offence of industrial theft.

In this context, I quote from an article which Mr. Alan Campbell wrote in The Times in December of last year on this subject: … if a well trained industrial spy obtains a set of duplicate keys and enters premises without causing any damage and photo-copies industrial documents no 'arrestable offence' is committed. The office breaking provisions of sections 26 and 27 of the Larceny Act, 1916, are still of no avail, notwithstanding the abolition of the distinction between Felonies and Misdemeanours by the Criminal Law Act, 1967. That is not altogether surprising. In 1916 there were no 'Minox' cameras, no electronic 'bug' devices, no directional microphones, no telescopic cameras, no automatic telephone tape recorders and no computers. The industrial spy seeks and obtains his information by use of these devices in circumstances where theft in the legal sense of the term is rarely involved. As regards the photo-copying of documents the last thing he would wish to do is to 'permanently deprive the owner (possessor) thereof: this could only add to the risks of detection. I am asking whether the law is adequate, whether the time has not come when we should add to the provisions in the law against civil wrongs and whether we do not now also need provisions against the criminal offence of industrial theft. It is not too much to say that we live in a country where, in Mr. Campbell's words, the theft of the board room table is punished far more severely than the theft of the board room secrets.

Secondly, is industrial spying yet a major problem? I would agree that it is not yet a major problem in this country, though it would be a mistake to suppose that it was not a problem at all. My hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) wishes, if he catches your eye, Mr. Deputy Speaker, to raise a matter in one particular industry. I, too, with great respect, also say that, while I agree that evidence from trade associations and bodies like the C.B.I. is important, there are disadvantages in these cases in relying too much on what one might call organised opinion in industry.

But industrial spying is a problem in some other countries. According to Sir Richard Jackson, a former president of Interpol, it is worrying the authorities in a number of countries, especially France, Germany and the United States. In any case, it is much better to consider the subject before it becomes a major problem. It is, clearly, something that we should consider well in advance of its becoming a major issue.

I turn now to the details of the Bill. As I have said before, I am not a lawyer. I realise, however much help one may receive from outside, the pitfalls into which laymen may fall when entering into a new area of the law.

Clause 1 defines the offence of misappropriation, and I agree that it is quite a wide definition. I would be prepared at once to consider one matter which, however, has two aspects. In this connection, I would be prepared to agree, if the House thought it right, that the words "guilty intent" should be included. I realise that, otherwise, a third party, such as a new employer, could be guilty under the Clause as it stands, but without intent. And, of course, I recognise the legitimate interest of the Press in connection with the Bill and the importance of protecting the journalist who might come into possession of industrial information quite innocently in the course of his duty, yet without the consent of the rightful owner.

Clause 3 defines industrial information. With respect to the House, I regard this as the most important Clause, in the sense that it raises the most critical and crucial issues we have to consider. I am conscious that, in terms of English law, it breaks some new ground, and I express my acknowledgements to my right hon. and learned Friend the Member for Chertsey (Sir L. Heald), who has been courteous enough to give me notice of some of his anxieties on one or two points that he would like to raise.

It seems to me incontestible that there are two main categories of industrial property. The first category includes things like patents, trade marks, registered designs and copyright. These are already protected by law, and it is fair to say that the Board of Trade is well used to handling them in a legal context. There is no difficulty about handling them in the context of the law.

The second category is that which M. Feaud, of Interpol, has described as the … intellectual components of the wealth of industry. It includes industrial information, such as know-how, research data, formulae, calculations and price structure—the intellectual components of the wealth of industry. With respect, I believe that to be a good definition, but perhaps one that comes more easily from the mouth of a Frenchman than of an Englishman.

I realise the difficulty here from the point of view of English law, which has always resisted too generalised a concept of property. Perhaps it would be fair to say that English lawyers are instinctively more at home with the idea of property in the board room table than property in a trade secret. On the other hand, I put it seriously to the House that we are faced here with a legal issue which will sooner or later have to be faced by Parliament and by lawyers generally.

I yield to no one in my admiration for what some of the founding fathers of modern British society—men like John Locke, in the 17th century, with a deep sense of property as the foundation of the civilised order—have contributed to our traditions of personal liberty, but, after all, philosophers and, perhaps even more, psychologists—all those concerned with men—have come to realise that nice 18th century analogies like "the furniture of the year" are not adequate to describe human experience. So, in the same way, lawyers will have to come to accept a wider definition of what can properly be said to constitute industrial property. I admit that this is a difficult point, and I do not in any way play down the importance of our British traditions of law relating to property, but there is a real issue here raised by Clause 3 with which Parliament and the legal profession will, I am sure, have to come to grips.

One or two other points arise on Clause 3. On second thoughts, I feel that it should include information about customers, and I am not sure that the expression "lists of customers" is right. Perhaps the reference should be to names, addresses and requirements of customers. But that is a detail which could be considered later.

Mr. Eric Lubbock (Orpington)

Before the right hon. Gentleman leaves his consideration of the interesting matters raised by Clause 3, will he say whether the definition there could include computer software?

Sir E. Boyle

The hon. Gentleman has usefully pinpointed another of the difficult questions regarding just how much should be actually listed in Clause 3. At first sight, I accept that the hon. Gentleman could put up quite a strong case for words to some such effect, if not exactly those words.

Now, Clauses 5 and 6. I agree with those who say that the new provision for criminal action should be defined in such a way as to make clear that existing civil rights under previous enactments are totally unaffected. I am told by those more learned in the law than I that there is nothing exceptional in having a Clause like Clause 6 which provides for both a civil wrong and a criminal offence.

I realise that the Bill breaks new and, in some respects, difficult ground. I do not claim that the drafting is perfect, although I have taken skilled advice on it. An hon. Member presenting a Private Member's Bill does best to follow the example of those authors who acknowledge their indebtedness to those who help them outside but take full responsibility for all the defects. That is exactly how I feel in regard to the drafting. I am certain, none the less, that the Bill deals with a problem which, sooner rather than later, we shall have to face in the House. It is a Measure dealing with some of the implications of industrial innovation, and a greater responsiveness to innovation is vital for our nation's future. More rapid innovation must entail the need for some change in the legal framework of industry. I do not see how it can be otherwise.

It is fair to say that the Board of Trade has, on the one hand, a tradition of being a Department which has a rather strong attraction to laissez-faire—rather too much so, for some hon. Members on both sides, perhaps—while, on the other, having a long and honourable tradition of wanting to see proper rules of the game. I make this further comment about the Board of Trade. When it takes the view as a Department that some new topic must be dealt with—one thinks of the law relating to monopoly, restrictive practices or resale price maintenance—no Department in Whitehall has more skill at making a really adequate job of its new responsibilities. I must not dwell on this at length but, looking back, I think that the Resale Prices Bill of 1964, which I strongly supported at the time, reflected great credit on my right hon. Friend the Leader of the Opposition, who was then Minister, and reflected real credit also on the Department.

I believe that I am here raising issue on which we shall in this country need a change in the law to catch up with the pace of innovation. To quote again the hon. and learned Member for Dulwich, I echo the words with which he concluded his helpful letter: I sincerely hope that the Government will at least be able to promise its sympathy and support in principle for this Measure". We have this afternoon embarked on our debate at a quarter to three. The Bill deals with an important projected change in the law, and it raises a subject on which my right hon. and learned Friend the Member for Chertsey and, I dare say, many other hon. Members will wish to speak. I do not suggest necessarily that the House would wish to take a favourable decision on the Second Reading quite so quickly this afternoon.

I should, however, deeply regret it if the House were to decide to vote this Measure down this afternoon. That would be completely wrong. Therefore, if, as I believe, a number of hon. Members wish to speak, it might be best for us to debate the Bill today and for the debate to become automatically adjourned at 4 o'clock, so that other hon. Members may have the opportunity to take part in further discussion of the Bill later in the Session. I thank the House for its attention.

3.10 p.m.

Mr. Eric Moonman (Billericay)

I am grateful to be able to follow the right hon. Member for Birmingham, Hands-worth (Sir E. Boyle) and to support him in his Bill. The right hon. Gentleman has suggested a procedure to deal with industrial information which, one hopes, will be accepted. This is an important subject. One might say that it is an astonishing reflection on the complexity and scale of modern technology that there is need at all for a Bill of this sort. As the right hon. Gentleman has rightly pointed out, however, the Bill arises because of the need for greater innovation and because of the great build-up in the specialist areas of science and technology.

We are concerned in the Bill with checking and safeguarding industrial information. I regard this as vital. Another rather astonishing feature of the background to the Bill and to the subject is that within the last 12 months, according to my own inquiries, 15 jobs have been advertised in the national Press under the heading of "Industrial Investigator" and with a job description which is a combination of hard realism in industry yet also requiring the attributes of 007. There is an increasing recognition within industry of the need to establish proper security systems to ensure that there is no serious loss of information.

There is, of course, another side to the Bill which is revealed by the size of the problem. It is estimated that poor security and loss of information is costing British industry up to £70 million a year. This figure does not include the sums of money at risk as a result of the use of industrial espionage at times of mergers and takeovers. Indeed, there is evidence in the case of two mergers in recent years of a theft of industrial information which certainly had an effect on their outcome.

In one case, a firm took advantage of the information and the bid was timed to coincide exactly with the period when the company taken over was in financial difficulty. The company in question was at least able to fight off the offer because it later revealed to the company taking over that a secretary had been working for the bidder for two years and had been passing on vital information.

In the second case involving a takeover bid, a company official similarly passed on information to a smaller company which was interested in a takeover bid. The bid was timed for when the directors of the target company were away on holiday, so that they would have the least time to work out counter-strategy. Later the directors met in a room convenient to the official, and the fight-back terms were recorded and passed on to the bidders, who were successful.

This Bill is a modest attempt to put some of these things right. I agree that Clause 1 may surprise some members of the public and, perhaps, horrify the majority that it is necessary to be quite as precise in itemising the way in which information could be made secure. Of course, the references to any computer, data bank, memory core, laser beam satellite … have been shown to be necessary in experience from the United States in "think tanks" on the West Coast and there are, possibly, many more items which could be included if we wish to do justice to the enormous changes which are taking place in industry. Possibly, at a later stage of the Bill, we might be able to add to this list. I am sure that the right hon. Member for Handsworth would be willing to consider representations on these grounds.

It is sufficient to say that the point of discussion on a matter of this nature is clearly not only to put something right but also to alert public attention to the enormous pace of change. It seems to me, therefore, that the items listed in paragraph (b) of Clause 1 are sufficient to be going on with, but we will need to include many of the other techniques which have already been in operation in the United States. There has been a great deal of concern both in that country and in Japan.

There is no doubt that the whole point of this Bill is to try to involve the State, through the mechanism of the law, right across the board, but I would hope that management of individual firms would also examine their practices. This Bill would cover vulnerable areas, but there is a responsibility on management in individual firms to minimise risks to their own security, and this means that each firm should decide its sectors of information which are of a vital character and those should be given close and harsh protection—counter-espionage, if hon. Members like. That is no exaggeration. As is shown by Mr. Peter Hamilton in his book, "Espionage and Subversion in an Industrial Society", the situation which many of us have already found to exist in industry is not exaggerated.

Peter Hamilton lists 21 principles of security and I think there is no doubt that security is fast becoming a science, and a practical one at that. Let me mention a few of the principles which the Ministry ought to be looking at. There are protective measures which must be so designed that when documentary information is stolen or copied or photographed the fact becomes known as quickly as possible, and many of the technique 5 operated today make this extremely necessary. It is certainly important to establish how a company should operate when information has been stolen or has gone astray.

Another principle of security is that all security systems should contain an element of surprise for the spy or thief. Another point is concentration of risk. Vital information should be concentrated into as small an area as possible, and this demands effective classification of material and, which is something which has not been given sufficient consideration by some companies, the creation of a secure area within the premises. A system of record analysis is worth considering.

Mindful of the fact that a number of hon. Members want to take part in the debate I will only say that in supporting the Bill I do so in the knowledge that where managements of individual firms are not able to withstand the pressures and the intrigues of this new animal of industrial life, the investigator, it is necessary for the Government to act. The right hon. Gentleman has attempted to provide a blanket cover. Therefore there will be no doubt at all about individual responsibility, and the rôle of the State.

The right hon. Gentleman has certainly shown by this Bill his usual keen insight into the less popular causes, and he deserves our support.

3.17 p.m.

Sir Lionel Heald (Chertsey)

I should like first to say that I appreciate the action of my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) in raising this subject, which is one of immense importance, and I agree with him that action is certainly necessary However, it is one thing to approve of a principle and quite another to support a Bill which is designed to carry it into effect, and I am bound to say that I feel that the Bill as it stands is one to which in principle there are very serious objections.

The hon. Gentleman the Member for Billericay (Mr. Moonman) has just said that it gives a blanket cover. Well, that is what it does; the width of it is extraordinary; and there are some grave legal difficulties in it. It was said that it creates a new legal offence and right of action in what is called a tort, but it also creates an entirely new form of property, and a very dubious one in some respects.

It does not do so in any kind of legal language that I understand. In Clause 7 we find that the test is any person who at the time of the alleged misappropriation had a bona fide de jure claim". I have never seen that expression before in any Statute, nor do I think it could be found in any decided case. It surely will be necessary to define what it means. One would think that in this construction that meant something which was already now recognised as a de jure right, but that immediately lands us in great difficulty. At present the essential basis of any right in this connection is the fact that the information is confidential and the word "confidential" does not occur here. It covers information of the commonest knowledge, and there is no limitation whatever.

The implications of that are very serious. No doubt it is very desirable to extend the law in order to protect our industry and exports, but we have also to consider such things as the freedom of the individual. We have to remember, for example, that for 200 years it has been regarded as a restraint of trade that any employee should be bound by a restrictive covenant preventing him from making use of all his ordinary skills, experience and ability and carrying them forward to somewhere else. Is it intended to destroy that altogether? Apparently it is. If an employer says that he does not want an employee, who is to be employed by somebody else, to be able to carry with him any of the ordinary matters which he has learned during the time he has been doing that work, he will be able to do so. I do not suggest for a moment that that is what is intended, but that is what the Bill does.

Let us consider the people who are to be able to claim. They will be not only the owner of the imaginary property, much of which at present is not the subject of property, but the possessor. Anyone who at any moment possesses industrial information will be able to prevent or forbid anyone he chooses from using the information, or from doing any of the other many things mentioned by the Bill. I do not believe for a moment that that is what is intended, but the legislation would have that effect.

For example, let us suppose that a newspaper were interested in some great company's extension of its business so as to include a field which it had not yet entered and in which there were secrets but about which much of the body of know-how was common knowledge. If that newspaper had an account from a man who in his daily work worked for that company and he included anything whatever that was secret or confidential, the newspaper could be prevented from publishing it. One wonders whether that has been appreciated.

Clause 1 (a) also says that anyone who reads the information shall be guilty. It may be intended that "reads" should mean reads with photographic or electronic devices, for the word would not be appropriate on its own. There is this rather disjunctive sentence which is intended to cover reading, copying, receiving, or recording with photographic or electronic devices. It is a matter of English.

However, let us see the length to which that goes. If someone copied a formula in a drawing office on a nice day in the summer when the windows were open and a breeze blew the copy out of the window, someone who picked it up and read it would be committing an offence. This would be extraordinary.

The explanation may be that the proposal emanates from the Council of Europe and some Continental lawyers. On the Continent the law operates differently from ours. An area of law is enacted to a large extent and within that area men are not prevented from doing this, that or the other. Under our law, what people must not do has to be prescribed unambiguously. What is covered by legislation must be enforceable by law. That is not the case under the Bill.

I could say much more in that vein. It is not unfair to say that the Bill sets out the problem and suggests a method of approach. I believe that the draftsmen would agree that it is not seriously thought that it could pass into law as it stands. If that be accepted, I would go all the way in supporting my right hon. Friend as regards the need to deal with these serious points about technical information. I think that my right hon. Friend will agree that, as the Bill stands, it is not anywhere near restricted to that problem. We must, in our desire to introduce modern legislation, ensure that we do not, in the process, destroy ancient individual rights.

Mr. Moonman

I am in somewhat of a quandary. It may be possible for you to help me. You began by saying that you accepted the principle. You then gave us some comment on details—

Mr. Speaker

Order. The hon. Gentleman must address the right hon. and learned Gentleman through the Chair.

Mr. Moonman

I wonder if it might be possible to have some clarification as to whether the right hon. and learned Gentleman is saying, putting on one side his criticisms of detail, that he is in favour of trying to deal with the problem in the way which has been outlined. This is the guts of the whole problem.

Sir L. Heald

On the general lines, yes. If it is found that what is involved is the creation of a new offence, and for that purpose the creation of a new right, I should think that even the hon. Gentleman would agree that that produces a serious obstacle to accepting the Bill. It does not mean that the matter should not be inquired into. I agree with my friend, Mr. Alan Campbell, who has studied this matter with great care, that great effort should be made by means of a Committee or a Royal Commission to tackle this subject and pass legislation. That will not be done by the Bill. I doubt whether the structure of the Bill is capable of being adapted in Committee to do it.

3.28 p.m.

The Minister of State, Board of Trade (Mr. Edmund Dell)

Without attempting to close the debate—indeed, the right hon. Member for Birmingham, Handsworth (Sir E. Boyle), suggested that it would be helpful if the debate were continued on a future occasion—I think that it would be useful if the House were made aware of the Government's attitude to the Bill. I apologise to the right hon. Gentleman for intervening in view of the time, so early in the debate.

I congratulate the right hon. Gentleman on introducing to us a most interesting subject and one which may well be of increasing importance. He said that the Board of Trade was, or had the reputation of being, a laissez-faire Department. The Board of Trade is now under new management. Today, it is one of the leading interventionist Departments of the Government. The right hon. Gentleman should not concentrate, in his understanding of Board of Trade activities, on what may have been true in the past.

The first question to be considered is whether industrial espionage is currently a serious problem. The right hon. Gentleman said that perhaps it was not yet, but it could in due course become so and perhaps become so very rapidly.

The right hon. Gentleman referred to the speed of development in technological matters. I accept everything that he said on that subject. There is always a rapid speed of development in technological matters. This has happened for a long time. The right hon. Gentleman will remember that Macaulay referred to the fact that any schoolboy at his time knew what it had taken the genius of Newton to discover. Certainly there is rapid development.

I accept that, even though it may not yet be an important problem, it could so Indeed, my hon. Friend the Member for Billericay (Mr. Moonman) gave evidence to suggest that it may be a currently important problem.

There is a conflict of evidence on the subject. We see newspaper articles describing alleged cases of industrial espionage involving enormous sums of money. Such an article appeared only the other day. We have the fact that the Council of Europe believes that it is important to consider the whole question of industrial espionage, though it has not yet made any recommendations.

On the one hand, we have evidence that this is a currently serious problem—and I understand that the hon. Member for Warwick and Leamington (Mr. Dudley Smith) has certain things to say on that point—but, on the other hand, we have certain contrary facts. First, there have been no representations to us by the C.B.I. that this is a currently important problem, though I accept that this may not necessarily be the best channel of information.

Secondly, there is little evidence and few complaints presented to the Board of Trade that this is a serious problem.

Mr. Dudley Smith (Warwick and Leamington)

Is it not a fact that a number of companies have asked the Board of Trade what the incidence is, and the Board of Trade has said that it has had very few complaints of industrial espionage? Are not the number of inquiries considerable, but reports reaching the Board of Trade are minimal?

Mr. Dell

We have had complaints. Indeed, we have had representations from Members of this House. We have tried to follow up these complaints. We have tried to secure evidence supporting them, and have failed to obtain any. It may be that this is an area—there are other areas like it—in which it is difficult to secure evidence. It may be that firms are not prepared to provide evidence concerning their losses, because they do not want to reveal inadequate industrial security. We have little evidence that there has been significant damage to companies in this country, as yet, resulting from industrial espionage.

Another interesting, but far from decisive, fact bearing on whether this is a currently important problem is that, so far as we have been able to discover, few countries have yet thought it important to legislate in this area. That does not mean that we should not take a lead if this is an important area in which to legislate. I accept the point that, although it is not a serious situation now, it could become serious.

I suppose that industrial espionage, to some extent, has always existed. Today, information is, in one sense, easier to come by, but, in another sense, it can often be more difficult to use when obtained. It is easier to come by for the reasons the right hon. Gentleman gave—the invention of various electronic devices, laser beams, which enable a person to detect what is being said inside a telephone booth. It may be useful if a man is waiting outside and wants to know whether his exclusion is justifiable. Undoubtedly the increasing use of these instruments could lead to an incursion into privacy. On the other hand, we have to bear in mind that the kind of information which may be discovered as a result of the use of these methods can be more difficult to use, because many processes are capital intensive and need considerable resources devoted to putting them into production.

In addition, production these days does not just depend on processes and cannot just be duplicated by reading documents. A lot depends on the know-how of men on the job, scientists, chemists or engineers, and marketing men, whose know-how may well be quite as important in getting a production process into operation as anything in a document. This may serve to restrain industrial espionage and its value. Nevertheless, it is true that information about one's competitors is always useful, although much of the information that firms collect about their competitors is innocently and correctly collected, and they would be in default in their competitive activities if they did not strive to collect it.

The most useful thing for a company to know is what its competitors intend to do. It is often of extraordinary use to know, not how to do a thing, but simply that it can be done. If one knows that, and one has research resources, one can set about independently establishing how to do it. The fact that someone else has succeeded indicates that one will not be wasting one's time searching for a route to a particular result. One clear example was the atomic bomb. The most important information about the atomic bomb that was of use to other nations was the fact that it was possible to make such a bomb.

To give an example from my own experience, about 10 years ago I.C.I. discovered that it was possible to make reactive dye-stuffs. Immediately these were marketed, within a matter of two or three years, every major competitor of I.C.I. was marketing reactive dye-stuffs because they had been supplied with the essential information—it could be done. The spread of information, the knowledge that something can be done, can be of vital importance to a company. For these reasons I accept that industrial espionage, although it is not now a serious problem, could become so. I therefore accept that it is right for Parliament to consider legislating to protect industrial information.

I now come more specifically to the Bill itself.

As is inevitable in a Private Member's Bill, there are drafting problems. This is not unusual, and I believe that it is held in some quarters that even Government Bills are not perfect in all respects when they are introduced. I do not want to talk about drafting problems, because they can obviously be corrected in Committee, and would not justify me in opposing the Bill.

What I want to consider are the criteria that legislation should meet, in other words, questions far beyond drafting problems, and how far the Bill meets them, or could be made to meet them. The first criterion is that what we do in this area must not endanger proper privacy or personal liberty—the cure must not be worse than the disease. I immediately acquit the sponsors of the Bill of any intention on this score. I find that easy to do, bearing in mind who they are. On the other hand, the House must bear in mind the very serious remarks of the right hon. and learned Member for Chertsey (Sir L. Heald). There are dangers here of making the cure worse than the disease, and we must ensure in any legislation that we introduce that this is not the case.

There are always dangers of over-enthusiasm in matters involving espionage of which any legislature must take care, although I suspect that these dangers of over-enthusiasm exist far more in an industry's administration of its own security than through anything that we might do here.

The second criterion relates to our approach to the problem. It must be the right approach. Here we are in an uncharted sea. Little consideration has been given to the way in which we should tackle this problem, and we need to have careful thought as to what should be done. We need to distinguish between the guilty and innocent collection of information. We need to distinguish between information which is and which is not secret or confidential.

Mr. Dudley Smith

I appreciate that point, but if I wilfully copy a document which I believe will be of value to a rival, and sell it or give it away, in spite, to a rival company, I am guilty of an offence, and that should be punishable by law.

Mr. Dell

I agree that there are problems and certain matters which it may be right to bring within the criminal law. I am indicating certain criteria which such legislation should meet and certain distinctions which it should make.

The definition of information in Clause 3 is rather obscure. The words "drawings", "results" and "conclusions" would lead to considerable difficulties of interpretation in the courts. The phrases "unregistered or incomplete patent", "trade mark", and so on—and here I am not speaking as a lawyer—have no meaning at the moment. Speaking more generally, the approach of the Bill seems to be based on the 1968 Theft Act. In a sense, that seems logical. It seems logical that it should be a crime to steal information just as it is a crime to steal property. That may be the right approach, but we must accept that there is a considerable difference between information and property, and that that approach might not be the right one. We must consider this point seriously before we legislate.

The Bill's general conception of what should be prevented is probably about right but, without wishing to be dogmatic, I believe that it goes too far in one or two respects. First, subject to the provisions of Clause 8, it seems to create absolute offences. There may be good reason for doing this, but proposals for creating offences where there is no guilty intention should be accepted only where there is an overwhelming case in favour of doing so, as the right hon. Member for Handsworth agreed.

Secondly, an offence is committed whether or not the information in question is secret or confidential. In terms of the offence of misappropriation created by Clause 1 this may be right, but it is more questionable in relation to the offence created by Clause 2, which deals with receiving, using, handling, and so on. Here there is something to be said for limiting the offence to information which is either secret or confidential.

The next criterion we should have to consider is whether the Bill covers the whole area of the guilty acquisition and use of information. In order to be successful it is necessary that it should do so, because to the extent that it does not it indicates lines which spies would take to get round the Bill's provisions.

The Bill does not deal adequately with improper disclosure by a dishonest or disloyal employee which is probably as serious an offence as disclosure by the more dramatic devices of "bugging" and the use of lasers, or cameras fitted with telescopic lenses. While this is a gap that ought to be closed the task of closing it without going too far looks like being rather difficult. The experience of the courts in civil cases dealing with confidentiality and restrictive clauses in contracts of employment has shown that it is not always easy to draw the line between the use by an employee or an ex-employee of the skill, experience and general knowledge he has acquired in the course of his employment and the disclosure or other improper use of his employer's trade secrets. The need to draw a precise line is obviously greater in penal legislation but the task of drawing it is no easier. That is the point that the right hon. Gentleman was making, with greater experience than I could possibly bring to bear on this subject. I hope that people will not be charged with disloyalty every time they change their jobs. In this country there is too little staff mobility, not too much.

Another criterion is, will the legislation be enforceable? To make it enforceable the Bill has to have a clear meaning which the courts will be able to interpret, and firms must be prepared to come forward and co-operate with the police. We do not know whether they will do so. I know of the lack of preparedness so far to provide evidence in this matter. We already have Acts of Parliament which are virtually unenforceable because evidence is unobtainable.

Then there is the question of penalties. About the penalties in the Bill I only say that if the extent of the offences is as great as some newspapers have suggested and these offences have been responsible for the passage of information worth many millions of pounds as newspapers have often suggested, I doubt whether the penalties would be adequate, but evidence as to the extent of these offences is lacking. The protection of know-how is likely to be one of the subjects considered by the Banks Committee which was set up in May, 1967, to examine the patents system. It might be as well to have the Banks Committee's findings before proceeding on the general question.

None of the comments I have advanced are reasons for a final categorical rejection of the general approach adopted by the Bill. On the other hand, they constitute reasons for taking time to think. Very considerable redrafting of the Bill would be required and the Government have not sufficiently clarified their mind on the subject to be able to help. For these reasons the Government cannot now support the Bill. We accept that there is a problem—of what dimensions we do not know—possibly an increasing problem. The Government propose to consider it. I hope that the fact that we have had this debate will bring forward people with knowledge. We are prepared to discuss the problem with them and the C.B I. if that should be their wish.

3.47 p.m.

Mr. Dudley Smith (Warwick and Leamington)

I should like to congratulate my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) on the typically lucid way in which he moved the Second Reading of his Bill. In practice very few private Members are able to spotlight a problem which will be growing as months and years go by and it is relevant that we should be considering this subject today.

I was interested in the comments of the Minister of State, who I thought poured cold water on the enterprise which my right hon. Friend has shown. As I said in an intervention, I believe that a large number of companies from time to time have made representations to the Board of Trade about the incidence of this problem, but the Board of Trade has said that to its own knowledge there have been very few complaints. It may be true that many companies have not reported thefts or duplicity on the part of employees, ex-employees or outsiders because they did not wish to spotlight their own cases. Nevertheless, one hopes that the Board of Trade will be in the vanguard of thinking on this subject because it is an entirely new dimension in the age in which we live and it is a subject which requires legislation.

With the increasing complexity of industry and technological and scientific development there must be provision for the protection of industry when new discoveries are made. I should have thought industrial espionage was at the moment not particularly widespread, but we are on the threshold of it becoming so. There are reports that it is a fairly well-known activity in the United States and also in other parts of Europe. It may be that before long we shall have it in this country. One of the greatest difficulties is that we do not yet know how prevalent the problem is in this country. Perhaps it is rather exaggerated at the moment because of the number of companies which are coming to the fore offering their services to guard against industrial espionage.

I must declare an interest in that I am concerned with a large industrial undertaking in this country, but I should emphasise that industry as a whole is anxious about this problem and feels that measures ought to be taken by the Government to protect the interests of industry, which are also the interests of the country. Many of these espionage activities can benefit other nations if they are carried to an extreme.

If I, as an individual, steal a file of documents, and I am discovered, prosecuted and convicted, I may be fined only a nominal amount because the value of the actual material involved may be only 30s. But in know-how the file may well be worth more than the money stolen by the Great Train Robbers. Surely that situation is wrong. On the other hand, if, instead of stealing the file, I have it copied by photographic, duplication or other means, and then sell it, although I may be dismissed by my employers, apart from any civil action which may be taken I am not committing a criminal offence under the present law. Surely that also is wrong.

We know that the way in which secrets may most easily be conveyed is by the movement of employees from one firm to another, and I agree with my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) that we must protect the individual. But the transfer of know-how can vary considerably. It may result, at one extreme, from the movement of an employee from one company to another. That employee may be asked, "How did your previous employers do this?" and he may explain. At the other extreme, we may have the transfer of formulae or of information about secret processes which can materially benefit another company.

The time has come when the Government ought to take far more positive action than has been indicated by the Minister of State. The company for which I work is a leading pharmaceutical manufacturer actively engaged in reseearch and spending millions of pounds a year on research. Its employees are people of repute who would never consider transferring information, but if a renegade employee were introduced one day and who transferred information to another company, surely that would be of considerable embarrassment to the firm for which I work. My company has spent vast sums of money over the years in achieving complete security. If, however, it discovered an employee who was guilty of misappropriation, it would have very few legal remedies against the person committing that act.

Even though we are becoming far more conscious of the problems of espionage in this country, we need a lead from the Government to make sure that, as industry becomes more and more oriented towards technology and science, protection is provided for individual companies, as well as protection for the employee who is fully loyal to his own company.

I therefore support my right hon. Friend's objectives—perhaps not with the idea of getting the Bill on the Statute Book in its present form, but at least with the aim of bringing the problem far more into consideration than has been the case so far. Even if the Bill fails in this Session, we may look forward to the Government bringing forward their own legislation on the subject, trying to protect industry in this country. Judging from the comments made today, there is a general will on both sides of the House that something should be done about it. Action is badly needed.

3.55 p.m.

Mr. Alexander W. Lyon (York)

Since for two years I have been trying to raise in the House the problem of industrial espionage as an aspect of privacy, I welcome this debate and I congratulate the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) on having initiated it. However, this Bill illustrates the fallacy of trying to tackle the problem of privacy in a piecemeal fashion. Already in this Session three Private Members Bills are down to be debated, each on a different aspect of the same problem.

Although the right hon. Gentleman couched the problem in the language of modern technology, there is nothing new about spying on one's neighbour, whether the neighbour be a big industrial company or the person next door. This is no different a problem from that of the Peeping Tom, about which there was some legislation in the fourteenth century. The trouble is that our present legislation is inadequate to deal with the whole problem of privacy. We need a fundamental review of the nature of privacy and the way in which we regulate intrusions into it.

That is the cause of the defects in the Bill, which were spelled out in detail by the right hon. and learned Member for Chertsey (Sir L. Heald). If one has an understanding of what the area of privacy should be, both for an industrial company and for an individual, one must try to decide how far it should be reasonable to intrude into privacy. For example, one should not make the mistake of drafting a provision in the way in which Clause 1 is drafted—which, as has been accurately pointed out, means that anybody who accidentally reads any industrial information—whatever that may mean—anywhere is guilty of an offence for which he might be convicted and sentenced on indictment to two years' imprisonment. That is obviously not what the right hon. Member for Hands-worth had in mind.

I doubt whether Amendments made in Committee could solve the problem. The right hon. Gentleman has failed to face the question of who should be entitled to extract industrial information and in what circumstances in a modern society that entitlement should apply. An excellent example was given when reference was made to whether a newspaper should be entitled to print information which it had obtained from an employee of a company. Equally accurately, the Minister pointed out that there were reasons why one could say, on considering the whole problem, that an industrial company was right to try to obtain some knowledge of what its competitors were doing since that was desirable in the interests of society generally and the economy in particular; so that perhaps one should protect that sort of intrusion.

Unless one deals with the whole problem as one, one will fall into the sort of pitfall into which the right hon. Member for Handsworth has fallen, and my fear is that as we begin to take each small segment of the question of privacy into account and legislate for it, we will end up with a ragbag of legislation which will fall between two stools.

The problem and its answer seem fairly simple. We should try to bring about a new statutory tort, something akin to the tort of negligence which has such a widespread application in all areas of society; tort which deals with the problem of the snail in a lemonade bottle and all other aspects of our life, from inaccurate advice given by an accountant to his client to an accident on the road, from unreasonable conduct to inflicting injury.

That sort of tort would enable us to deal with this problem as a whole, because I do not think that a criminal penalty will ever be a real inducement to stop industrial spying. What will deter industry spies and their customers is the knowledge that if the information which they obtain is beneficial to their employer, that will immediately cost the employer a great deal of money in damages in a civil suit, and therefore—

It being Four o'clock, the debate stood adjourned.

Debate to be resumed upon Friday next.