HC Deb 30 March 1984 vol 57 cc568-89

Amendments made: No. 11, in page 11, line 18, after `services', insert `or a description of services'.

No. 12, in page 11, line 25, after 'services', insert `or descriptions of goods and services'.

No. 13, in page 11, line 32, after 'services', insert `or descriptions of goods and services'.

No. 14, in page 12, line 9, after 'services', insert `or descriptions of goods and services'.—[Mr. Dorrell.]

Mr. Dorrell

I beg to move amendment No. 15, in page 12, line 43, after 'or', insert', as the case may be,'.

The amendment brings the provisions of schedule 2 into line with the provisions of schedule 1. I shall explain the purposes of the two schedules so that the House may understand why it is important that the provisions of both should be exactly in line.

Schedule 1 is intended to make those amendments that are necessary to the principal legislation to allow it properly to apply to service marks. Schedule 2 is designed to amend the existing legislation covering trade marks so that the owners of trade marks can properly protect their rights against service marks, and vice versa. Both schedules are clearly part of the overall provision of a system that will protect the owners of service marks and allow the full cross-over process to take place. The amendment ensures that the two schedules are compatible.

Mr. Bottomley

I am anxious to ascertain that the amendment will have the desired effect, and only that. I understand that it is necessary to have a measure which relates to trade marks and service marks in parallel and which has the same effect in respect of both sorts of mark, but what happens if there is a clash between a trade mark and a service mark? Is there any suggestion that there could be a conflict between the holder of a trade mark and the holder of a service mark? Could a misunderstanding arise over whether or not one applied to the other?

Mr. Dorrell

There is a danger that the owner of a service mark may need to protect his rights against someone trading in goods. Similarly there is a need for someone trading in goods to protect or establish his mark under existing legislation against someone who either is trading in a service or would like to do so. That is why it was felt superficially attractive when the Bill was originally proposed to the House to seek not to draw a distinction between trade marks and service marks but to establish a system in which they were of the same nature, and to ensure that to every reference to goods in the principal legislation there would be added "or services", so that the system would be entirely one system.

The approach adopted by the Bill is to establish two parallel systems. Several of the amendments are designed to ensure that the cross-over, as the parliamentary draftsman chooses to call it, is complete. That applies especially to the large batch of amendments which the House has accepted, Nos. 4, 7, 8, 11, 12, 13 and 14. This means that the owner of a trade mark will able to protect his rights against the owners or would-be owners of service marks and the owner of a service mark can protect his rights against owners or would-be owners of trade marks.

The issue raised by my hon. Friend the Member for Eltham (Mr. Bottomley) is covered by the Bill and is an important part of the principles underlying it. I can assure him that if he wants to register a service mark under the Bill he will be protected against any effort by me to take advantage of the opportunity that he has created by trading in goods.

Mr. Bottomley

I shall not delay the proceedings, but it is perhaps worth sharing with the House the idea that when two parallel systems operate in different spheres the situation resembles that which a previous Member of Parliament, Mr. A. P. Herbert, described in one of his "misleading cases." He referred to the towpath at Putney being half flooded so that there was just enough water on the road for cars still to make progress and for boats to be rowed along it. He described an incident in which a boat was coming along, sticking to the right as boats should, and a car was going along the same stretch sticking to the left as cars should. Sadly, they were going in opposite directions and collided. Who was in the right? They had parallel laws behind them so both appeared to be in the right.

I shall not pursue that further now as it is perhaps outside the scope of the amendment, but it might be worth exploring in a little more detail on Third Reading how conflicts of that kind can be resolved.

Amendment agreed to.

10.20 am
Mr. Dorrell

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

As I have said before, I am grateful to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and my other hon. Friends for putting down the motion, That the Question be not put forthwith. I am no expert on formal procedure, but I understand that such a motion is a necessary prerequisite for a Third Reading debate. My first reaction when it appeared on the Order Paper, however, was to ask my hon. Friend what his objection was to my Bill. He assured me that the motion was in no way intended as a hostile act and did not require any retaliation. It derived simply from his concern that, for my best interests and those of the House, we should have a full opportunity to discuss the principles underlying the Bill.

In common with many other private Member's Bills, the Bill was given a Second Reading after what might be described as a peremptory debate and was the subject of relatively short consideration in the Standing Committee. Now that it has been redrafted and is in its final form from the point of view of the House, it is right that we should consider the principles behind it in a little more depth. Although many of the amendments accepted today are relatively obscure in their detail, I believe that the Bill in its present form will have an important effect on the overall economy of this country and the opportunities for service industries within it.

The principal objective as set out in the long title, one of the few parts of the Bill unamended by the Standing Committee, is very simple. It seeks to Amend the Trade Marks Act 1938 to afford registration for service marks. As I said in answer to a question from my hon. Friend the Member for Eltham (Mr. Bottomley), the House will be aware that those who operate in service industries have traditionally not enjoyed the same protection as those who trade in goods. The principal purpose of the Bill is to extend the protection that has long been available for those who trade in goods to cover those who trade in services.

The protection of trade marks goes back a very long time. Well before the first trade marks legislation was approved by Parliament, the principle of protecting trade marks in goods was recognised in common law as an essential part of the manufacturer's interest in promoting the sale of his goods. It was first codified in the 19th century and the present principal legislation dates from 1938. The same protection has never been available to service industries in this country, and in the context of 19th century economy activity it is not difficult to see why. Traditionally, service industries did not promote trade marks. Indeed, many were professionally based and not only did not promote trade marks, but were prevented by their rules from advertising at all.

With the development of a modern economy, the service sector has been a fast-growing area of economic activity. As it has grown, companies offering services have increasingly used a service mark as a medium to promote their services to the public. That is true of the banking and insurance sectors, and of a large number of industrial and commercial services. I cite the example of a company which sought discussions with me about the impact of the Bill on its commercial activity — the provision of roller towels and rented textiles. Here I should declare an interest as a director of a company which supplies that sector. It is a sector that I know well, which is why the interested parties came to see me. A company such as Sketchley or Initial Services which provides towels, workwear and so on to the public cannot protect the use of its name under existing legislation, although the public clearly recognise those names in exactly the same way as they recognise the name Jaguar, which is a protected trade mark, and many other names attached to the sale of goods.

The development of a modern service sector requires protection to be available for service marks to exactly the same extent as for trade marks in the manufacturing sector. The Bill is an important step in righting the balance and ensuring that the protection traditionally available for goods should also be available for services. In parenthesis, I do not regard myself as a paid-up member of the lobby which regards service industries as the great wave of the future and manufacturing as a thing of the past. The Bill is not anti-manufacturing, but pro-service. I believe that our economy requires a strong manufacturing base, but that it is in no sense in the interests of manufacturing industry to discriminate against service industries, and I strongly favour the development of a vigorous manufacturing sector.

Mr. John Watson (Skipton and Ripon)

I appreciate the need for the Bill and congratulate my hon. Friend on his percipience in bringing it forward at this time. I was greatly interested and impressed by the power with which he advocated the need for the Bill. I am therefore the more puzzled to see that it will not come into force until 1 October 1987. If the arguments in favour of the legislation are as great as my hon. Friend has clearly articulated, surely arguments about backlogs and so forth should evaporate in the sunlight of the overwhelming need for legislation of this kind.

Mr. Dorrell

I am grateful to my hon. Friend for his comments. Perhaps he will join me in a delegation to the Minister to make that very case. I agree entirely that the sooner the Bill comes into force the better, but there is a reason for the start date mentioned in the Bill and I shall deal with that a little later.

I emphasise that the Bill is intended to allow service companies to register marks and then to be secure in the knowledge that other providers of services or goods cannot exploit the effort put into building public recognition of those marks to promote the services of those companies.

Perhaps it would be helpful if I went through the Bill's history to enable the House to understand the points that have been raised.

Mr. Edward Leigh (Gainsborough and Horncastle)

I hope that my hon. Friend will forgive me for making what might be considered a lawyer-like remark, but I am a little worried about the definition of goods and services, as goods might sometimes be considered a service, and vice versa. Could he explain them?

Mr. Dorrell

Clause 1(3) deals with when a registration should be regarded as a service mark. It says: A mark falls within this subsection if it is a mark used or proposed to be used in relation to services for the purpose of indicating, or so as to indicate, that a particular person is connected, in the course of business, with the provision of those services, whether with or without any indication of the identity of that person. Therefore, a mark is protected if it is used in connection with services. Services are not defined in the Bill because it is made clear in the principal legislation that a trade mark applies to a physical good. One of the problems with the drafting of the Trade Marks Act 1938 is that it puts clear emphasis on the need to identify a commodity to which a trade mark is linked.

As my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) obviously understands, the concept of a service is much more difficult to define. It is relatively easy to apply a name to a good that one can touch, but the moment one starts to apply the concept of a protective service mark in the service industry all manner of problems arise, not least where a service is delivered. Goods have a physical presence and there is no doubt about where they are, but there is a problem associated with where a service is being offered. Someone buying insurance, for example, cannot be clear whether the service is being offered in the insurance company's sales office, in the home where he is answering the telephone, or in the re-insurance market, where the insurance broker may well be laying off his risk.

A service is an abstract concept, but there is no doubt that people involved in a service industry would argue that it is an important part of economic activity. It is important to somebody operating a service that the public recognise his service and company as distinct from his competitors. To that end he must have the right to promote a service mark that identifies his service.

Mr. Greg Knight (Derby, North)

Does not the common law already protect service marks by way of an action for passing off?

Mr. Dorrell

My hon. Friend is right to draw attention to a passing-off action. He is a lawyer and I am not so he will have experience of such action. A passing-off action also applies to goods. If it is right to improve the protection available on the registration of a trade mark for goods as a backup to action for passing off, I cannot see why it is not right to provide the same protection for service industries. The principle of a register of trade marks, as distinct from a passing-off action, has been accepted for many years in the trade in goods and it seems reasonable that it should apply to services as well.

It is right for both because a supplier of goods or services wants to promote his name. It is important that he be able to protect that identity while the business is being built up. I understand that a passing-off action requires demonstration that the person who is passing himself off has benefited from so acting. There might be no benefit from such action for a person who is just building, up recognition of a mark. If he cannot be given protection in the vital early days, he might not take the opportunity to build up recognition of a service mark. The principle o f a service mark is widely accepted in the vast majority of other developed countries. We are not here introducing something of which no other legal system has experience We are behind rather than in front in this respect.

An examination of the Bill's history will answer the point raised by my hon. Friend the Member for Skipton and Ripon (Mr. Watson) and other matters which I am sure are lurking in the minds of other hon. Members Examination of the report of Standing Committee C reveals that, unusually, I disagreed with the schedule and the principal clause of a Bill which I had proposed and that I was re-writing the Bill before the eyes of the Committee. The Bill started in another place, where my noble and learned Friend Lord Campbell of Alloway took up the issue of service marks in the previous Parliament. He took through the Bill that was originally presented to the House on Second Reading, against the opposition of the Government.

It is instructive to consider the three arguments that the Government used to oppose the Bill, as each is an argument for, rather than against, the Bill. The first was that the EC was considering a draft regulation which would introduce a European system of registration for service marks. The Government argued that it would be sensible for Parliament to await that regulation. Some years ago Samuel Beckett wrote a play which he called "Waiting for Godot", but which he might easily have called "Waiting or the European Community". Our waiting for the EC would have been quite as long as the wait for Godot.

Bearing in mind the importance that I attach to this principle, which my hon. Friend the Member for Skipton and Ripon has underlined and which I have tried to explain to my hon. Friend the Member for Derby, North (Mr. Knight), I felt that waiting for the EC would take too long. Moreover, it is important to have a system before entering negotiations in the EC, or else we go naked into the negotiating chamber. I am sure that we were right to press ahead with the Bill and not to wait for the European Community. Indeed, it would be damaging to the interests of our service companies if we waited for the Community.

As there is no Treasury Minister in the Chamber, I can express the views of most politicians about the way in which the Treasury approaches such matters. The Government's second argument in the other place was an extraordinary example of how the Treasury sees the world. Its argument was that the introduction of service marks would require an additional 40 staff in the trade marks registry, which would involve extra public expenditure. If that were as far as the argument went, it would be reasonable, since 40 extra staff would cost money and the Treasury, as the guardian of public expenditure, is entitled to try to restrain it, but that is not the entire story.

Anyone who registers a trade mark for goods under the existing law, or for services under the law as amended by the Bill, must pay a registration fee. The trade marks registry is no only a consumer of public expenditure, but it makes a profit for the public sector. Not only was the Treasury wrong to resist this measure on the ground that it would need 40 extra staff, but it was passing up the opportunity of having a net revenue earner for the public sector. It is another example of the Treasury's well-established principle of always looking at the gross cost and never at the net cost of any measure proposed to it.

Mr. Watson

I am interested in my hon. Friend's revealing comments. The figure that I had in mind was of about 22,000 product trade mark applications as yet undealt with. My anxiety about that backlog is that the speed of reaction and the flexibility that we have been trying for so long to encourage in British industry remains unreflected in the channels of public administration. If what my hon. Friend says is correct, it stands to reason that everything, beginning with the PSBR, would be the better if more progress could be made in clearing that backlog forthwith.

Mr. Dorrell

My hon. Friend is right to mention the backlog, which the Government used as their third argument. They said that the registry was so far behind in processing applications for trade marks that it was impossible for it to contemplate the introduction of service marks, which would only exacerabate the problem.

The backlog also lies behind the delayed start date of the Bill. As my hon. Friend the Member for Skipton and Ripon said in a previous intervention, the Bill does not come into force until 1 October 1987, or on such earlier day, as the Secretary of State may by … statutory instrument appoint. That alternative is important. The reason for the delayed start date was partly that the trade marks registry needed time to set up the administrative arrangements necessary to provide for the registration of service marks, and partly that it wished to clear the backlog before it introduced a new principle.

When my hon. Friend the Minister and I discussed the Bill last autumn, I suggested that 1 October 1987 should be the last date by which the trade marks registry could reasonably be expected to give effect to the provisions of the Bill, and that there would be arguments in the meantime about whether it was possible to bring forward the start date. In view of the importance of the Bill to the service industries, I am sure that many of them would wish the start date to be brought forward. My hon. Friend the Minister said that he would consider ways of bringing forward the start date if the opportunity arose. I hope that it will.

My hon. Friend the Member for Skipton and Ripon was right to say that if the public sector makes a net profit on each registration there is an opportunity to speed up the registration process, bring forward the start date and save public expenditure. All three are desirable objectives that would be achieved by the same means. However, one problem for the registry is that there is no point in building its capacity to clear the backlog and then leaving it with staff that it does not need once the backlog has been cleared. The management of the registry and my hon. Friend the Minister will deal with that matter in the most efficient way available to them.

I have gone through the Government's arguments in opposition to my noble Friend's Bill in another place, not least because it is interesting to point out, especially to Opposition Members, if there were more of them here — [Interruption.] The hon. Member for Blyth Valley (Mr. Ryman), who is alone on the Opposition Benches, perhaps needs that lesson pointed out to him rather less than do some of his hon. Friends. However, it is interesting to note that the Bill was passed in another place despite Government opposition. It was a useful opportunity to start a principle running in Parliament that would not have existed in the House of Commons because of the greater pressure on the Order Paper and because of the much greater influence that the Government can exercise over the decisions of the House.

After my noble Friend successfully piloted his Bill through the other place, he asked me whether I would promote the Bill through this House during the previous Session of Parliament. I took up the Bill and corresponded with my hon. Friend the Member for Reading, East (Sir G. Vaughan), who was then Minister for Consumer Affairs, but there was no progress before the general election. After the election, and when I was fortunate enough to draw a place in the ballot for private Members' Bills, I visited my hon. Friend the present Minister to see whether we could arrive at an arrangement whereby the Government would accept the Bill. I thank my hon. Friend for his efforts, in his Department and in the Government, to overcome the opposition that was expressed in another place. He has provided time and facilities in his Department and in the trade marks registry to ensure that the Bill, as it is presented on Third Reading, will achieve the result that I and its sponsors wish it to achieve. I am grateful for his support, which I hope he can record to the House today.

The history of the Bill explains the tortuous legislative path that it has taken through the House and its various stages during this Session. The original Bill, which, with the agreement of my hon. Friend the Minister, I promoted in the autumn and which was passed by the House on Second Reading, was the same Bill that passed through the other place last Session. However, with all such Bills, drawn up as it was by private enterprise and without the expertise of parliamentary draftsmen or the trade marks registry and the Department of Trade and Industry, it was found to be defective in several important respects. Consequently, it was necessary to rewrite all its major provisions.

As I told my hon. Friend the Member for Eltham on Report, the approach adopted in the original Bill was to regard trade marks and service marks as the same thing and to try to set up a system in which there was no legal distinction between them. When the parliamentary draftsman considered in detail how that principle could be given statutory effect, he concluded that every time he solved a drafting problem, he created two more, and that he was getting further and further into the mire. He therefore decided that he had to adopt the totally different approach of setting up parallel systems, which I have already described.

I am neither a parliamentary draftsman nor a qualified lawyer, so when the draftsman put his proposals to me, I met him together with my noble Friend Lord Campbell of Alloway, who is a practising lawyer. My noble Friend and I went together, because I felt that I needed an expert to point out any pitfalls into which I might otherwise fall. However, my Friend as a practising lawyer was very complimentary about the drafting of the Bill as it now stands and the amendments proposed in Committee. He said that the Bill as it stands was clearer than many of the Bills that passed through the House. We all know that many Acts can be heavily criticised for their drafting inadequacies, but I am assured that this measure will meet fewer criticisms than the majority of Acts received.

I shall briefly describe what each stage of the Bill achieves. There are only two clauses. Clause 1 is the main active clause and it defines—as I said in reply to my hon. Friend the Member for Gainsborough and Horncastle —a service mark. It then brings into effect the two schedules attached to the Bill. Schedule 1 deals with the modifications of the Trades Marks Act 1938 in its application to service marks. In other words, it seeks to amend the Trade Marks Act so that, read as a result of the amendments in schedule 1, it almost becomes a service mark Act. It provides a statutory framework, separate from trade marks, that will ensure the protection of service marks. That is the objective of schedule 1.

Mr. Leigh

I know that my hon. Friend is anxious not to delay the House, but I have read that the logos employed by banks and insurance companies like Dyno-Rod for plumbing services are an example of service marks. Does my hon. Friend have any information on how the Bill might affect the agricultural sector? He will know, of course, that I represent an agricultural seat.

Mr. Dorrell

My hon. Friend mentioned Dyno-Rod in the context of banks and insurance companies, and I look forward to the appearance of the Dyno-Rod bank or insurance company on the high street of Loughborough.

Mr. Leigh

It will happen.

Mr. Dorrell

Perhaps it will happen in the context not of a bank or insurance company but of an agricultural service company. However, I cannot, offhand, think of an agricultural service industry, although I suppose that the NFU might set out to protect NFU——

Mr. Watson

Does my hon. Friend not agree that Rentokil is a reasonable example?

Mr. Dorrell

In some circumstances, yes. Rentokil, obviously, is a pest control company that is concerned with controlling pests in agricultural buildings. As I was about to say, there are circumstances in which the NFU might seek to promote its logo as a service mark to the agricultural community. I suppose that if some of my hon. Friends had their way and we privatised not only British Telecom but the Agricultural Development Advisory Service run by the Ministry of Agriculture, Fisheries and Food—and I would be strongly opposed to such a move — ADAS would be a major service enterprise which could want to protect its right to its name.

There are many service sectors that serve all parts of the economy. Clearly, banks and insurance companies serve agriculture just as they serve every other part of the economy. When my hon. Friend the Member for Gainsborough and Horncastle is asked by the NFU how he has defended its interests, he will be able to refer to this morning's debate not only because of his own splendid Agriculture (Amendment) Bill—which I am sure will be regarded as important by the NFU—but because of his protection of service marks. After all, they serve agriculture just as they serve other parts of the economy.

Schedule 2 is designed to amend the Trade Marks Act in its application to trade marks for goods. My hon. Friend the Member for Eltham mentioned the point of cross-over. It is obviously important that the owners of existing trade marks for goods should be able to protect their rights against owners and would-be owners of service marks. Since the existing trade marks legislation does not admit of the possibility of a service mark, some amendment as required to the existing legislative framework to ensure that the cross-over applies not only to those seeking to register and operate service marks, but to those who have sought, and will in future seek, to register trade marks applicable to goods. Schedule 2 amends the Trade Marks Act as it applies to trade marks for goods, while schedule 1 re-writes the Trade Marks Act so that it provides a proper framework for the protection of service marks.

I believe that the Bill represents an important extension of our commercial law. It also represents an important new opportunity for service industries in Britain to promote the market recognition that goes with the service mark. I am grateful to those in the Government who have offered their support in bringing the Bill to this stage in its proceedings, and I warmly commend it to the House.

10.57 am
Mr. John Ryman (Blyth Valley)

I welcome the Bill and congratulate the hon. Member for Loughborough (Mr. Dorrell) on all the work that he has done in preparing it. It is supported by both branches of the legal profession and there has been correspondence, which I have seen, between representatives of the Law Society and the hon. Gentleman. I have also received correspondence from the Senate and Bar Council Law Reform Committee strongly supporting the Bill.

I pay tribute to Lord Campbell of Alloway for moving the Bill in the other place. He is a respected and distinguished lawyer with great expertise in this area of law. The hon. Member for Loughborough was very lucky that such a distinguished and respected member of the legal profession should have moved it in the other place.

As the sole representative of any Opposition party in the Chamber this morning, I should place it on record that the Labour party warmly supports the Bill. I do not know what views, if any, the SDP and the Liberals have on it, but I do not suppose that they have any views about it, because it is not a bandwagon that they can jump on, and they show no interest whatsoever in this type of legislation. However, the Labour party warmly welcomes the Bill, because we are, of course, interested in the service industries.

As the hon. Member for Loughborough rightly said, the Bill is in no way against the interest of the manufacturing industries. We deplore the tenor of Government policy in running down manufacturing industry by reason of their asinine economic policies and their deliberate discrimination against manufacturing industry, but we recognise the value of the Bill in helping the service industries that we are as anxious to promote as we are to promote the manufacturing industries.

My constituency in the north-east of England has suffered enormously from the Government's wicked policies against manufacturing industry, especially the abolition of special development areas and the recent introduction of the White Paper on regional policy. At the same time, we are working hard not only to rescue manufacturing industry from the worst features of Government policies, but to create and build up service industries. Those service industries will greatly appreciate the Bill, and the Opposition welcome it.

11 am

The Under-Secretary of State for Trade and Industry (Mr. Alexander Fletcher)

It might be helpful if I intervene now to present the Government's view on this important legislation. I wish to express my pleasure in congratulating my hon. Friend the Member for Loughborough (Mr. Dorrell) on so ably steering this complicated piece of legislation through the House.

As my hon. Friend said, in its original form the Bill was somewhat shorter. When we decided that it should receive Government support, we saw a number of ways in which its intention could be more completely expressed —hence the Bill before us today. Its purpose is to help the service industries, which form a vital sector of our economy, by extending to them much of the help and support already available to the manufacturing sector.

Many of the service industries have expressed strong support for the Bill, which will be of great use to them. Just as the existing legislation system for trade marks applied to goods is flourishing, so I expect great use to be made of the new facility for the registration of service marks.

We cannot over-stress the growing importance of the service industries to the British economy. The latest figures that I have show that services now employ 13.3 million people, against 5.8 million people in the manufacturing industries. Contrary to what the hon. Member for Blyth Valley (Mr. Ryman) said—he was the only member of any Opposition party to attend the debate, but he has now left — about support for manufacturing industries, as against support for service industries, it is a fact that 93 per cent. of my Department's support financing still goes to the manufacturing sector, as against 7 per cent. to the service sector.

Services now provide 56 per cent. of the gross domestic product, as against 24 per cent. from the manufacturing sector, so we can see the growing importance of the service sector to the British economy. Although the Bill may appear to be a modest piece of legislation, it will have a significant effect on the largest sector of the economy.

I agree with what my hon. Friend said about the Bill. It is not anti-manufacturing, it is pro-services. As such, it corrects a serious imbalance in the justifiable protection that industry and commerce have a right to expect. It also brings the United Kingdom into line with the practice of many of our major competitors. That, also, is to be welcomed.

I should say something about the concept of and the background to the Bill. Analyses of the nature of services and of the use likely to be made of service marks showed that although it was both desirable and advisable to introduce protection for service marks by means of the Trade Marks Act 1938, a number of its provisions were inapplicable to or inappropriate for service marks. There are also a number of circumstances in which the coexistence of service marks and trade marks would create a need for protection or control, which was not necessary when the law had been concerned only with trade marks. The drafting for that was done some time before the war.

In some cases difficulties arose because the 1938 Act was built on previous legislation and also on the recognition that the common law afforded to unregistered trade marks. Service marks have not yet been recognised as giving rise to any rights at common law or under statute law. Although, at common law, even before any trade marks legislation came into being, it would have been possible for one person to bring an action against another for having wrongly used his trade mark, no such action can be brought and no remedy is available for the wrongful use of another person's service mark. As a number of my hon. Friends have said, the action would be for passing off one's business or someone else's business, and the fact that someone had used another person's service mark would simply be evidence and would not afford a separate cause of action in its own right.

Throughout the 1938 Act there is a close link between the trade mark and the goods on which it is used—goods being tangible items and the use of a trade mark being a physical use upon those items. Conversely, upon analysis a service can be seen to be simply the performance of an action which may or may not be an action performed upon or in relation to goods. It is a disembodied concept that has no physical existence and does not necessarily produce any physical effect.

For that reason, substantial parts of the 1938 Act drafted by reference to use of the mark in relation to goods require not simply to be verbally amended, but to have the action or use which they were designed to prevent or permit in relation to trade marks and goods analysed and transferred by analogy to actions and uses that need to be prevented or permitted in relation to services. That is a summation of what my hon. Friend said.

Mr. Dorrell

My hon. Friend is to be congratulated on expressing the somewhat complex thoughts that I tried to express, very much more briefly and elegantly than I was able to do.

Mr. Fletcher

I am grateful to my hon. Friend. One has the advantage, as a Minister, of some back-up services that are rather helpful in describing something as complex as this matter.

The amendments that resulted from the analysis of the problem were designed to approach the introduction of service marks in a way that would make the amendments to the Act easier to identify and to implement, while at the same time to deal more fully with the differences that will necessarily exist between the use and manner of use of service marks and the use and manner of use of trade marks.

The amendments also reflect the consideration that the trades marks registry has given to the way in which the registration of service marks would be carried out; to the practical difficulties that would otherwise arise as the result of absorbing into a system designed to deal with marks relating to physical goods, a system of marks that relate to the abstract concept of services and to the need to ensure that goods marks and service marks can co-exist in ways that might create confusion in the public mind.

As examples of the differences between the amendments that have been made and the provisions of the original Bill, I refer to amendments to remove from the Act, in relation to service marks, provisions that are not applicable by virtue of the fact that the law in relation to trade marks at the date of the Act differs from the law relating to service marks.

Amendments have also been made because, upon analysis of the way in which it is anticipated that service marks will be used, it has been necessary to look closely at the use of marks in relation to both goods and services and to all possible relationships between goods and services. Analysis shows that, whereas in respect of trade marks it is sufficient to ensure that there is no confusion between goods and goods, when service marks are introduced the possibility of confusion multiplies. Services can be confused with services or with other services of the same type. The goods could also be confused with services, and types of goods could be confused either with specific services or with types of services. Therefore it has been necessary to erect a series of cross-comparisons between services and goods at every level at which it is possible confusion might be caused by the use of the same mark where permitted.

Amendments were necessitated by the Act referring to concepts that are meaningful in relation to goods but meaningless in relation to services, and these amendments were designed to provide an equivalent protection. Other amendments were necessitated by the Act referring to concepts that need to be wider in relation to services—that is necessary in relation to goods. Amendments arose also from the fact that services could cause problems both from the place where they are used and at the place where they are offered for acceptance. Further amendments were necessitated by the fact that a trade mark exists on goods and identifies the goods as being those of the proprietor, whereas the service mark, although it may be physically attached to goods, makes a statement about an activity.

As schedule 1 provides for cross-relationships to be considered where such consideration is needed in consequence of a service mark, schedule 2 is necessary to make the changes in the Act in relation to trade marks for goods, where such changes are necessary, to enable cross-relationships to be considered in consequence of a goods trade mark application.

The Bill has an operative date of 1 October 1987 or such earlier date as the Secretary of State may appoint. I appreciate the concern shown by my hon. Friend this morning and I hope that we can manage an earlier date of implementation for this important Bill. The trade marks registry is under considerable pressure of work, although I am glad to say that it is making inroads into the backlog. The backlog of unexamined applications is not 22,000, as my hon. Friend the Member for Loughborough suggested, but 17,000, although that is still a hefty figure. The annual current input of applications is 22,000 and we are achieving an examination rate of over 24,000 a year—that is, we are eating into the backlog, and we hope to improve that performance still further. The operative date of 1 October 1987 is based on our reducing them to a level that would not jeopardise the orderly examination of existing trade marks and the introduction of the new service mark system.

Mr. Watson

If my mathematical interpretation is correct, and if I heard my hon. Friend correctly and the current backlog is 17,000, if we are dealing with applications at the rate of 25,000 a year and applications are being received at the rate of 22,000 a year, am I not correct in the belief that it will take seven years to clear the backlog?

Mr. Fletcher

That is correct, on my hon. Friend's premise. I am not questioning his arithmetic. However, we are examining ways to improve the rate of reducing the backlog and that factor concerns me as much as it concerns my hon. Friend.

Mr. Watson

I am grateful for that reassurance, but may I crave my hon. Friend's indulgence by asking for a further reassurance that he will not wait until the backlog is cleared entirely before bringing the measure into force?

Mr. Fletcher

That is why the date of 1 October 1987 is the latest date for implementation. We hope to improve significantly on that date.

We have discussed the backlog, and the extension of the registration system to service marks will require substantial preparation in the registry. Nevertheless, we have to introduce new service marks registration as soon as possible and, I hope, significantly ahead of the cautious target date that we felt obliged to put into the Bill.

I believe that the whole business community supports the Bill and that it will be indebted to my hon. Friend the Member for Loughborough for so successfully piloting the Bill through all its stages. I am glad to be able to give him the support of Her Majesty's Government in bringing this important Bill to the statute book.

11.15 am
Mr. Edward Leigh (Gainsborough and Horncastle)

It is with great pleasure that I rise to support my hon. Friend the Member for Loughborough (Mr. Dorrell) on this important Bill. I must confess that before this week I had not given these important issues much thought, but I have found this morning's debate so stimulating that I feel I must say a few words. There is no doubt that, as has been explained, this Bill will be of importance not only to the industrial and service sectors, but to the agricultural sector, which is of such importance to my constituency.

I understand that there is large and growing support for this Bill both from organisations such as the Confederation of British Industry, the Building Societies Association and the Computing Services Association and from individual companies such as Barclays Bank, the Norwich Union Insurance Group and GKN. I understand that they are convinced that the registration of service marks will help them in safeguarding and expanding their activities at home and abroad.

The United Kingdom is increasingly out of line with the rest of the world. In the EEC, only Greece and Ireland, apart from ourselves, have not introduced service marks registration as proposed in the Bill. Worldwide, there are now more than 60 countries with service mark registration, recent additions being Australia and the Federal Republic of Germany.

The registration of service marks will reflect the increasing importance of the service industry. It is true that common law protection for service marks already exists in this country by way of passing off actions but such actions are difficult and expensive. Further, passing off rights are effective only where reputation is established, and they may prove to have no value to a firm that wishes to expand nationally.

An additional factor in favour of service mark registration is the draft Community legislation to introduce a Community trade mark system. This does not give unregistered rights an opposition right against a Community trade mark application. Even if we are successful in negotiations to give such rights to unregistered service marks, United Kingdom firms will still be faced with the difficulty of proving reputation for the purposes of the opposition action. Moreover, a United Kingdom company that operates in a particular locality may not be able to prevent a foreign rival from registering its mark as a Community mark and using it outside the locality.

Mr. Dorrell

Is it not significant and strange that the strong argument in favour of the Bill being advanced by a large number of its supporters, is that pre-registration will improve our bargaining position when it comes to the European system? It is significant that it was the promise of a European system at some stage in the future that was an argument against the Bill when it was first proposed in the other place. Is it not an interesting reflection on the weakness of the argument against the Bill and the strength of the arguments for it that the prospect of European legislation has been used on both sides of the argument, but much more convincingly by my hon. Friend in support of the Bill than by others against it?

Mr. Leigh

I agree with my hon. Friend, and it is a mark of his parliamentary ability that he has introduced the Bill now and in such an able way. I understand that service mark registration will be entirely consistent with existing and projected European Community legislation.

There are also disadvantages abroad in not having registration in the United Kingdom. In particular, in some ex-British colonies a United Kingdom registration facilitates registration locally, and in the United States lack of United Kingdom registration means that the British applicant has to show proof of use in the United States.

Those are just a few arguments that I have managed to research in favour of the Bill. I warmly commend the measure to the House.

11.20 am
Mr. John Watson (Skipton and Ripon)

I am grateful for the opportunity to make a brief contribution to the debate.

This is a very important piece of legislation, and my hon. Friend the Member for Loughborough (Mr. Dorrell) is to be congratulated on its introduction. By way of an aside, it is a fair commentary on the attitude of the Opposition to the importance of such measures and the need to protect British industry and its ingenuity to the full that their attendance at the moment amounts to precisely nil.

The Bill has a great deal to commend it, for two reasons, although I have one fairly substantial reservation about its possible operation. First, it will tilt the balance between product protection and service protection.

The general sphere of industrial protection that we have in Britain for industrial ingenuity and competence can be broadly described as satisfactory, but until the introduction of the Bill that could not be said for the service industries. The manufacturer of a product normally will look to four specific means to protect his product, in addition to the fifth one available under common law. He can apply for trade mark registration and for patent coverage. He possesses copyright, and he can apply for registered design as well. Until now, only the last two have applied to service industries—copyright and registered design. As we have heard already, the fifth area of protection of the common law right against passing off is limited in its effectiveness because of the burden of proof and the expense of bringing a case.

Until now, the protection available to service industries has rested almost entirely upon copyright and registered design. Until now, it has not been able to rest upon the concept of trade mark. That has put service industries at a severe disadvantage compared with manufacturing industries. What is even more important is that it has put service industries in the United Kingdom at a disadvantage compared with their competitors overseas specifically because copyright and registered design, which are available to service industries, tend to have their greatest power in the earlier years of the development of a product or service.

The real protection of a product which has been on the market for some time is normally that of trade mark. Until the introduction of this legislation, that protection was denied to service industries. Therefore, it is a sensible and fitting introduction of a piece of legislation which restores the balance and enables service industries to compete with the benefit of all the protection hitherto available to manufacturers. That is important, because just as much intellectual ingenuity goes into the development of a new service as ever goes into the development of a product. To deny adequate protection to that ingenuity until now has been a national weakness.

The second reason why I am pleased to welcome the Bill is that it restores the balance between the United Kingdom and most of our competitors in the EEC. As my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) reminded us, the only other nations in the EEC which have not found it necessary until now to have service mark protection are Greece and Ireland. It is worth pointing out that when we first went into the EEC, and even nowadays when people continue to debate whether we should remain a member, one of the principal arguments for British membership is that we believe that our service industries can score heavily in Europe. People draw attention to the facilities of the City of London, banking, shipping, insurance, Lloyd's of London, the commodity markets and all the consultancy services which we have to offer. If there is a future for Britain in the EEC producing a significant balance of payments surplus, visible and invisible, I believe that it will be substantially through the development of our service industries in that market rather than simply the manufactured products which have dominated our exports hitherto.

However, one or two matters which have emerged from the debate have provided substantial reasons for my reservation about how the legislation may operate. I refer again, perhaps inevitably, to the backlog of trade mark applications about which we have heard.

I draw attention to four facts which have emerged. The first is that it is almost certain that the Bill will not come into force for three and a half years because of the backlog of unprocessed applications for trade marks. The second is that that backlog now stands at 17,000. The Minister told us that 25,000 applications were dealt with each year but that 22,000 new applications were received each year. If the backlog is being cleared at the rate of 3,000 per annum, there is no possibility of the Bill coming into force any earlier than the three and a half year statutory minimum laid down in the legislation.

The third factor is the apparent attitude of the Treasury in saying that it cannot do more to reduce the backlog because to do so will involve the employment of 40 additional staff. I find that an astonishing reason. We have 620,000 civil servants. It is astonishing for the Treasury to suggest that in one vital sector British industries should remain unprotected because the provision of protection would involve the employment of an additional 40 civil servants. That is one of the most implausible reasons that I have heard, even from the Treasury.

Mr. Dorrell

Will my hon. Friend pause for a moment to reflect upon the magnitude of his statement? He said that that was an implausible argument even by the standard of argument that emerges from the Treasury. That is a major statement and quite an important criticism of the argument.

Mr. Watson

I have reason quite frequently to reflect upon the magnitude of my statements. I am happy to do so again.

I draw attention to one further fact to have emerged from the debate. It is that the charges made for trade mark applications are not intended, as I had supposed, to be sufficient merely to cover the costs of dealing with applications, but are intended to provide a significant degree of profit.

Mr. Dorrell

Hear, hear.

Mr. Watson

My hon. Friend says, "Hear, hear." I do not believe that that should be the case. If the purpose of registering trade marks is to give protection to British service industries, that should be clearly stated as the objective. In other words, the trade marks registry should regard itself essentially as the protector of the public interest and as an organisation which exists to support British industry. It should not regard itself as an independent profit centre in the Government seeking to produce further reductions in the public sector borrowing requirement.

Mr. Fletcher

It would be quite wrong to overcharge. In the European context we ought not to be able to overcharge and to make an unnecessary profit, but one of the reasons for the backlog is that we need to computerise applications and use modern information technology, and the system is not nearly as up to date as it should be. My hon. Friend will probably agree that in working out the figures and in considering any surplus which the registry might accumulate we must include sufficient funds to provide the up-to-date equipment and services necessary to reduce the backlog and to produce a better service for British industry.

Mr. Watson

I agree enthusiastically that the charges for trade mark applications should include not just the cost of their administration at the moment but some provision for future administration. If that involves the acquisition of a computer, so be it. However, I am astonished to discover that the registry does not yet have a computer.

Mr. Fletcher

It does.

Mr. Watson

I am delighted to hear that. Presumably the registry is on the point of getting a bigger one. I suggest that of the 22,000 people who submit trade mark applications each year, all but about 1 per cent. will have computers. How the nation will receive the news that the registry is not yet fully computerised, I do not wish to speculate.

Mr. Fletcher

It is important, if only for the record, that I should make it clear that the trade marks registry uses computer services and that there is need greatly to expand and bring up to date the use and application of those services, not least for service marks, which is an ideal field for computer application.

Mr. Watson

I agree with my hon. Friend and I shall not labour the point further. He has impressively allayed doubts that were beginning to surface in my mind on that score.

Speed of reaction in British industry is not only necessary now but will be increasingly so if we are to compete in the world in the 1990s and towards the end of the century. If that speed of reaction—which we in Parliament are doing so much to encourage in British industry—remains unreflected in the public sector— in the Treasury or elsewhere—and if the delays of which we have heard continue for a further three or four years, then, beyond the bounds of this Bill, there will be grounds for concern. Therefore, I give the Bill my enthusiastic welcome and I am grateful to my hon. Friend the Member for Loughborough for introducing it.

11.31 am
Mr. Tim Smith (Beaconsfield)

I apologise for not being in my place earlier. It was only recently that I heard that the Third Reading would be taking place. I am an enthusiastic supporter of the Bill and I congratulate my hon. Friend the Member for Loughborough (Mr. Dorrell) on having introduced it, especially as it has had something of a chequered career.

About a year ago I attended an excellent lunch given by the British Franchise Association, an organisation of small businesses concerned with different kinds of franchise operations. Much to my surprise, most of the questions put to me were not about Government small business policy but about the need to do something about registering service marks. Strong feeling was expressed that the Government were dragging their feet on the issue and were not being particularly helpful to those who were sponsoring a similar measure in the last Parliament.

This is, therefore, a welcome Bill, and, in addition to congratulating my hon. Friend on introducing it, I congratulate the Government on the conversion which they apparently have undergone. Now, with the support of the Government, the Bill should make speedy progress on to the statutue book.

Because of a lack of service mark protection in the United Kingdom, at present there is no adequate protection for a large area of commerce. Banking, insurance, entertainment, franchising, printing, restaurant services, repair services and leasing—for example, of cars and television — are only some of the commercial areas which are adversely affected by this lack of protection. That list illustrates the extent of the protection which the Bill will provide.

The inability to register a trade mark for services in the United Kingdom is a serious defect in our law and a considerable disadvantage. Many other countries provide for the registration of marks for services, and Britain is out of step to the disadvantage of its citizens. The lack of service mark protection here hinders the securing of such protection in other countries, especially in countries in which the existence of United Kingdom registration could be helpful, such as the United States.

If a trade mark, whether for goods or services, is not registered, it can enjoy common law rights which can be used to prevent others from passing off their goods as one's own, but—and it is a large but—to enforce such rights one must have acquired an extensive reputation and good will in the mark, and that can be acquired only through considerable use. Further, one must first prove that one possesses such a reputation. Not only is that difficult, expensive and time-consuming, but it is not available to a new or young service company which has yet to make its mark. That point was made to me at the lunch to which I referred, at which most of the businesses represented were new and young and not able to take advantage—as they are not able to take advantage today — of the common law, and that is why my hon. Friend is right to introduce the Bill in its present form.

Last year there was considerable correspondence on this matter. At that time the Government opposed a measure such as this for a number of reasons, the first being that they said that there was no demand for such a Bill. I imagine that in the intervening period sufficient voices have been raised to persuade the Government that there is a demand, both in manufacturing industry and in branches of service industries.

My hon. Friend the Member for Loughborough may be able to help me with another argument that was then used by the Government in relation to staffing implications. There does not appear in the Bill anything about its cost to the Exchequer or the staffing implications.

Mr. Dorrell

That point has been the subject of considerable debate this morning, though I appreciate that, because of an important engagement, my hon. Friend was not able to be present all the time. The employment implication for the trade marks registry of the passage of the Bill is estimated to be the recruitment of a further 40 civil servants, but the fees that will be earned by the registration of new service marks will more than offset the charge to the public sector incurred by the employment of the extra staff. In other words, the consequence of the passage of the Bill will be a small improvement rather than a deterioration in public expenditure.

Mr. Smith

I am grateful to my hon. Friend for his explanation. Last year, one objection to the then measure was that, in addition to the present 200 staff at the registry, an additional 50 would be required. Now, it appears, the additional number required is 40. I am interested to learn, too, that, because the registry will be self-financing, there will be no additional cost to public funds.

It is clear that the objections that were raised last year are no longer valid. I hope that the Bill, when enacted, will provide the protection for service companies that it is designed to provide. I am sure that it will be widely welcomed.

11.37 am
Mr. Bottomley

The Bill has shown what persistence can bring as a reward. The House will wish to pay tribute not only to my hon. Friend the Member or Loughborough (Mr. Dorrell) but to Lord Campbell of Alloway, who initiated the parliamentary push for legislation in this sphere. I welcome what the Minister said and the way in which he said it. It is nice to see Government responding to sustained parliamentary interest in a subject. That is the way in which Parliament should work, and tributes are deserved all round.

Putting the Bill in context, it should be seen not just as a matter of protection for those who establish significant, or even insignificant, service marks, but in the context of competition in that consumers have an interest not only in straightforward competition between different providers of services, as well as goods, in terms of price, delivery and quality, but in competition to establish in the public mind a degree of quality, reliability and dependability.

As enterprises try to establish their names before the public, they should have reasonable protection from others who want to cash in on a reputation which has been gained by the expenditure of effort and money. The Bill will help to do that in a way which will make it easier for the providers of services to establish effective protection for what they have created.

The development of common law has been significant in giving rights to the owners of service marks before the establishment of the Trade Marks Act, which this measure amends. This Government and Parliament—perhaps we should talk more of the Government side of the House because Labour Members appear temporarily to have a lack of interest in service marks and trade marks—are going forward in creating greater certainty in the law and greater opportunity for competition and protection for the rights of those involved in that competition. This is good for providers and consumers of services.

In the international context, it is encouraging that we are, without too much opposition, able to deal with a Bill which is in line with our Common Market obligations. It is a sign of how we can develop within the Common Market. It is in the consumers' interests, not only to solve the budget problem but to develop the Common Market. There is an advantage in having similar legislation throughout the Community. We shall gain by having similar legislation on service marks and trade marks for Birmingham and Bradford. I look forward to the day when the Common Market is developed so that, after reasonable discussion and debate, Community law provides with the same ease for the establishing of services and their protection throughout the European Community. That is what the Community means in an economic and business sense. That is what it means in a consumer sense.

Counterfeit goods from places such as Taiwan with identical or similar trade marks, trade names or packaging are a great danger to consumers. For example, fake or imitation brake linings can pose an enormous danger if they are not up to the right standard. On a less serious note, may I say that an hon. Member visited Taiwan and was proudly shown some suiting which on the selvedge boasted the words, "Made in Hiddersfield". I do not know whether that was an intended distinction or a mistake in the English.

The danger involved in service industries is not quite as great. The danger is more that established companies will not think it important to keep a high reputation. Many firms with household names have built up their reputations for service and retailing. The protection that the Bill extends to them will be welcomed. The Bill will make it more likely for a significant body of consumers to react in the right way to companies which provide services which are distinctly better than those of their competitors. That competitive pressure must be in the long-term interests of consumers.

Later we can discuss whether it would be worth our while for the European trade mark office to be established in Britain. Once the Bill is passed our claim is more likely to be considered and taken seriously. I go further. When we manage to abolish the GLC we should move the European Parliament to county hall so that we may have more influence than we seem to have had in the past. I would not mind taking over the Crown Agents building so that I could work in the same offices as my grandfather did many years ago.

It is important that Parliament has been able to react in the way that it has, to isolate an area which needs improvement and to pay not too much attention to the idea that common law provides protection. The Bill was considered on Second Reading, changed in Committee and again on Report and will pass to the other place. Parliament exists to conduct that type of revision. I am glad that my hon. Friend the Member for Loughborough has persisted with his Bill. He has provided the explanations that the House rightly requires. I am glad that Back-Bench Members and Ministers have co-operated. I hope that the Bill fulfils the purposes ascribed to it and that it will contribute to greater competition and more protection for the providers of services.

11.44 am
Mr. Dorrell

Perhaps I might be permitted to draw together some of the strands of the debate. I am grateful to hon. Members for welcoming the Bill. One or two matters need to be emphasised before the House reaches its conclusion, because this is the last opportunity that we shall have to debate the issue before it goes to the other place.

Several of my hon. Friends and the hon. Member for Blyth Valley (Mr. Ryman) mentioned correspondence from a wide section of the community supporting the principle of the Bill. As my hon. Friend the Member for Beaconsfield (Mr. Smith) said, during the early discussions on the proposals doubt was expressed about the extent of genuine public demand for the opportunity to register service marks. If that doubt existed, there is no room for doubt now about the genuine demand.

My hon. Friend the Member for Beaconsfield mentioned the franchise operators. They are an important, major and developing part of the economy, and under the Bill they will be protected in a way that they never have been before.

The hon. Member for Blyth Valley might have mentioned, as he did in Committee, that among the organisations supporting the principle of the Bill is the co-operative movement. I hope that that will commend the Bill to the hon. Member for Norwood (Mr. Fraser) and to other hon. Members who may take an interest in the Bill even at this late stage.

Mr. John Fraser (Norwood)

I have supported the principle for several years. Sometimes one best helps a Bill by not saying anything in favour of it.

Mr. Kenneth Hind (Lancashire, West)

I have listened to the debate with interest. I am convinced of the need for the Bill, because of the major legal problems. People argue that service marks are protected by common law, but the sheer difficulty of gathering sufficient evidence to bring a case that is likely to succeed is overwhelming. The preparation of such a case is blocked at every turn. I am sure that statistics will show that successful cases are few and far between. We can look forward to offering greater protection to the service sector.

Mr. Dorrell

I am grateful to my hon. Friend for underlining an important argument. He is right. The action for passing off is not an adequate alternative to the right to register a trade mark or a service mark. That has been accepted in respect of trade marks since the end of the last century. I do not understand why it has taken us so long to accept the same principle for services as has applied for many years to trading goods.

I am pleased that the hon. Member for Norwood is such a strong supporter of the Bill. I hope that the correspondence from the co-operative movement will convince those who support the Bill to continue to support it, and others that there is no reason to oppose it. Support for the Bill has come from an enormously wide section of the community.

The hon. Member for Blyth Valley and the Minister said that to be pro-services one does not need to be anti-manufacturing. The Bill substantially improves the position of service industries, but not at the expense of manufacturing. It is a case of "and", not "either/or'. That is vital, particularly for those of us who are interested in the future of manufacturing industry and do not agree that manufacturing is inevitably and irretrievably in decline.

Some interesting points were made about the Bill in the European context. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) pointed out that Greece and Ireland are the only other countries in the Community which offer no protection for service marks. I do not believe that the House wants to line Britain up with Greece and Ireland as countries which do not protect their service industries. We should be the forerunners, not the laggards, in Community law. I hope that that argument commends itself to the House.

My hon. Friend the Member for Eltham (Mr. Bottomley) referred to the importance of this principle in improving the workings of the Community's internal market, especially in the context of the present discussions in Brussels about other aspects that seek to reduce the trade barriers for services. My hon. Friend made the interesting point that, within the Community and the domestic market, the easier it is for the supplier of a service to promote public recognition of that service, the more genuine is competition within the market. The Bill is not only a measure to defend the interests of the providers of services. It is a piece of legislation to enhance genuine competition in the provision of services to the consumer. That is important.

One reservation mentioned in some detail by my hon. Friend the Member for Skipton and Ripon (Mr. Watson) found, I believe, resonance in the House, and it is right that that reservation should be emphasised at the end of the debate. Restricting the ability of the trade marks registry to react quickly to applications for registration impairs the registry's efficiency. There is no doubt, especially because of the evidence given to the House by my hon. Friend the Minister, that the delay largely occurs because of the Treasury's consistent attitude in restricting the ability of the trade marks registry to recruit the staff necessary to perform its proper function. The Government used that argument during the last Parliament to oppose the principle of the Bill, and the residue of that argument remains.

The Treasury is restricting the numbers of civil servants who can be recruited into the trade marks registry, and that impairs the efficiency of trade marks registration. We run the risk that that restriction will impair the registry's efficiency in responding to the wishes of the House on the registration of service marks. This measure will not mean increasing public expenditure, because the cost of recruiting each additional civil servant into the trade marks registry will be more than covered by the registration fees paid by people taking advantage of the registry's services.

A strong argument must be made that the Treasury should look again at its attitude to the resources that it is prepared to allow to the trade marks registry to ensure efficient operation in registering trade marks under the Trade Marks At 1938 and under the principles in this Bill. My hon. Friend the Member for Skipton and Ripon laid great stress on that. I hope that the Bill will commend itself to the House, and even to the Treasury so that it provides the resources necessary to allow the wishes of the House to be carried out.

Question put and agreed to.

Bill accordingly read the Third time, and passed.