§ Order for Second Reading read.4.35 pm
§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)
I beg to move, That the Bill be now read a Second time.
The Bill, which comes here from another place, is, as every hon. Member can see, lengthy and complex. It has 285 clauses and eight schedules. Its subject matter—copyright, designs and patents—is highly technical. It will probably be a great disappointment to some hon. Members to know that, as far as I am aware, it is devoid of any party political controversy. It is, nevertheless, a Bill of great significance to many people. Its effects will be felt to a greater or lesser degree by almost every sector of the economy. It will affect the music industry—composers, musicians, music publishers, record companies—which generates more than £1,000 million each year. It will affect those engaged in the publication of books and newspapers. It will affect the design effort in British industry. It will provide a legal framework for broadcasting and cable transmission. It will also affect the computer software industry, the film industry, the pharmaceutical industry and many more industries.
The effects of the Bill are not confined solely to business and industry. It has implications for education, the library service, the theatre and even the Great Ormond street hospital. It takes within its compass the artist painting at his easel and the designer of a semiconductor chip, the local operatic society in the village hall and the signals beamed from a television satellite.
I am sure that we are all agreed on the need to promote and protect creative talent. The House has to begin by accepting that a man's idea is as much his personal property as his more tangible assets, such as his house and his car. In some respects, indeed, a man's ideas are an even more important part of his personal property. That concept underlies all intellectual property law, whether it is copyright protection for artists and authors or patent protection for inventors. By establishing a property right in the idea, the law gives protection against those who would steal another man's ideas.
§ Mr. Roland Boyes (Houghton and Washington)
As the right hon. and learned Gentleman well knows, one of my major interests is photography and the interests of photographers. The Bill has a quite severe effect on photographers in certain areas and I hope that the right hon. and learned Gentleman—not necessarily in his speech, but later—will look into that. The Lords did change some parts of the copyright to enable a photograph to enjoy the same rights as literary works, but I should particularly like the right hon. and learned Gentleman to look at clause 30, the new wording of which would destroy the livelihood of many photographers, clauses 73 to 85 on moral rights and clause 156 on territorial waters. All those clauses greatly affect photographers. All I ask of the right hon. and learned Gentleman at the moment is that when 526 the Government put amendments in the Bill they will try to give as full protection to photographers as to any other artists or thinkers.
§ Mr. Clarke
I accept what the hon. Gentleman says. He is right in saying that I could have added photographers of all kinds to the list of people that I just described as being affected by the Bill. We have to get the balance correct between the rights of the photographer, those who employ the photographer, those who commission photographs, those who publish them, and so on. Some extremely difficult issues are raised. The hon. Gentleman will know, as he has probably followed the debates in another place, that it is difficult to get the balance right between the conflicting interests. Important issues for photograhers will be raised in Committee when we get to those sections of the Bill that deal with ownership of copyright or the so-called moral rights of the photographer, which I will come back to in a moment when I deal with the moral rights of authors and others covered by the Bill. As the hon. Gentleman's intervention underlined, we are talking in every part of the Bill about a person's basic property rights in his own ideas and his own artistic work.
Our system of legal protection for ideas has served us well, ensuring dissemination of ideas with a proper degree of protection for the innovator. But it has become apparent recently, particularly in copyright and design protection, that the law needs looking at again, especially in the light of technical developments that have taken place in various fields and were not always anticipated when the law was drawn up.
The Bill is the result of a very long period of consideration and consultation with all the interest groups affected, dating back to the Whitford report of 1977. Since then we have had three Green Papers and the 1986 White Paper, entitled "Intellectual Property and Innovation". The Government have changed certain ideas about policy even since the White Paper. Before coming to this House, the Bill was extensively considered in another place and a number of amendments were made there after further consideration of its details.
The Bill sets out to restructure the law on a more logical and consistent basis than the existing legislation and in a way which takes account of the advances made in the past 30 years. Where possible we have tried to anticipate future developments. The House will not wish to come back to this subject for some time, having passed such comprehensive legislation. Our overriding objective—hon. Members who have the pleasure of serving on the Committee will sometimes find this difficult to achieve—has been to ensure a fair balance between the need to encourage creativity by providing strong protection, and the justifiable desire of society and consumers to have access to and the use of the products of creativity. We are seeking to ensure a balance between protection and fair competition. We are seeking a system with bureaucracy reduced to a minimum. The Bill seeks to provide the means for those with ideas to get a fair reward for their work, without placing unfair burdens on the public at large.
The Bill is in seven parts, and I can be of most help to the House by briefly describing their main contents.
Part I is by far the biggest, making up more than half of the Bill. It sets out the law of copyright in a more ordered and logical way than the existing statute, the Copyright Act 1956, which is to be repealed. Part I is subdivided into no fewer than 10 chapters. Chapters 2 and 527 3 cover clauses 16 to 72. Chapter 2 sets out the rights which the copyright owner is to enjoy, of which the most fundamental is contained in clause 17: the right to prevent copying. The rights are extensive and we recognise that they must be tempered. There is a balance to be struck between the rights we are asking Parliament to grant to creators to encourage creativity and the effect that the full exercise of those rights may have on others. While it is right that copyright owners should be able to exploit their works to the full, it would not be right to confer rights which could be used oppressively. So chapter 2 protects the copyright owner.
Chapter 3 sets out a series of exceptions from copyright. These will ensure that copyright considerations do not unduly obstruct research, education, the library service or public administration. All these are areas where we think that the House will judge that the public interest is that the work may be used within clearly defined limits, without recourse to the copyright owner.
§ Mr. Michael Grylls (Surrey, North-West)
My right hon. and learned Friend mentioned that a reason for the Bill was to bring up to date the law as it affects some of the newer industries, and that is absolutely right. Is he aware that clause 63 seems to have a loophole which would allow for software theft, which has been estimated at about £50 million a year, by allowing firms to rent out software after a year? Will he agree to consider that in Committee? Many people feel strongly that if it is not put right it will restrict and damage investment in both computers and computer software industries. I am sure that my right hon. and learned Friend, of all people, would not want that to happen and that that is not his intention. If he would undertake to consider that, it would be greatly appreciated.
§ Mr. Clarke
My hon. Friend raises a serious and difficult issue. The Government are not altogether satisfied that we have the balance right. This part covers the so-called rental rights whereby after a given period someone can be free to hire out a product without recourse to the copyright owner of that product. We are all used to that in our daily lives with videos. Perfectly legitimate businesses have sprung up which rent videos which are somebody else's copyright, without anybody thinking that that gives rise to hardship to the copyright owner or that there is anything illegitimate about it. Businesses may spring up to rent compact discs which are almost indestructible. People will borrow them, make a perfect copy and return them without paying the full cost to the manufacturer or the composer. My hon. Friend raises the equivalent case for computer software designers. If after a year software can be hired out, once again a copy can be made without paying the full price to its author. It is extremely difficult to get the balance right. We do not want creators to exploit their copyright to an onerous extent on consumers who may want access to it, but strong reservations are held about the Bill as it stands.
My hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry will take the Bill through Committee and he has been in charge of the main policy issues. He will certainly continue to consider the matter and it is his duty to get the balance right in the end. He tells me that he is meeting the British Computer Society next 528 week to discuss the implications for those who design computer software and he will consider my hon. Friend's point. As the Bill passes through the House we shall have to consider it carefully to ensure that the results are correct.
§ Mr. Tim Smith (Beaconsfield)
Does my right hon. and learned Friend think that the difficulties that he has identified in clause 63 may result from the fact that the period of protection given by record rental is only one to two years? As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) suggested, perhaps we should consider a longer period, for example seven to 10 years.
§ Mr. Clarke
A period of one year is specified in the Bill and we could have an interesting debate on the proposition to extend that. I am sure that that will give rise in Committee to debates about how long music remains exploitable from the date that a record is made. Different considerations may arise for computer software and videos, and it would be nice to draft a clause that served the public interest properly for all times of copyright subject to rental right.
Consideration of the protection period is only one possible approach. Ministers have already canvassed a variety of propositions in our discussions and we look forward to having further propositions canvassed in Committee.
Chapter 4 introduces another new concept to our copyright law—the so-called moral rights of authors. The authors of certain classes of copyright works and the directors of copyright films are to have the right to be identified as the author or director and the right to object to distortions and mutilations of their works. Obviously, it may be damaging to the reputation of an author, photographer or any artist if his work is used in a deliberately distorted or mutilated form. His reputation is damaged by the use of something that began as his work. There are two versions of these so-called moral rights. They are usually known in jargon as the paternity right and the integrity right, and they will help authors and directors to establish and defend their artistic reputations. The introduction of moral rights, together with other technical amendments in the Bill, will also allow us to ratify the latest text of the Berne copyright convention. That is the most important of the international copyright conventions and it is our declared intention to ratify the Paris text once the Bill is on the statute book.
Chapters 9 and 10 cover clauses 148 to 169 and contain technical provisions and various definitions. My hon. Friend the Member for Orpington (Mr. Stanbrook) is about to rise. Having seen what he said in business questions last Thursday, I can anticipate the point that he is about to raise.
§ Mr. Ivor Stanbrook (Orpington)
I commend my right hon. and learned Friend's foresight. The clause does something which the House of Commons should not possibly allow: it deprives the House of its right of control over its property. Therefore, it breaches that fundamental principle of our constitution which provides that the House of Commons is independent of the Crown and should not in any way allow the Crown to control its proceedings.
It would make a mockery of our traditional claim of right by Mr. Speaker at every opening of Parliament, for the independence of the House of Commons with regard 529 to its own domestic affairs. I hope that my right hon. and learned Friend will say that at the Committee stage this part of the Bill will be amended so as to leave intact the integrity of the House of Commons.
§ Mr. Clarke
I am glad that my hon. Friend the Member for Orpington has not yet moved on to another point. He is still dealing with the one that he helpfully raised in business questions last Thursday. We have become aware, and I am grateful to my hon. Friend for raising this, that the effects of clause 157 on the House and on another place could well be undesirable. Discussions have been taking place between officials of my Department and of the House, and I can say to my hon. Friend that we shall soon be in a position to table amendments, which I am sure will meet his legitimate concern. I can say yes to my hon. Friend's final question.
I expect that other representations on the Bill will not be so easily met. It is a feature of the Bill that on most issues that it raises there are two conflicting arguments coming from two conflicting interest groups, and hon. Members will tend to divide their support. With regard to the interests of the House, I am glad to say that we are all on the same side and we can meet the concern of my hon. Friend.
Part II is concerned with performers, who are a distinct category of creative talent. Under the existing law performers have no copyright or statutory civil right in their performances. The Performers' Protection Acts from 1958 to 1972 treat the making of unauthorised films, sound recordings, broadcast or cable transmission of performances as a criminal matter only.
It is far from satisfactory that the only protection for a performer is to contemplate a criminal prosecution of someone making unauthorised use of his performance. It was criticised by the Court of Appeal in a recent case concerning film performances by the late Peter Sellers. Although Peter Sellers' widow was successful in that case, the Court of Appeal pointed out that the present state of the law was far from satisfactory.
Part II retains the existing criminal provisions but supplements them with a clear statutory framework of civil law for the protection of performers. New rights are also provided for those with whom the performer has an exclusive recording contract, since they are also adversely affected by unauthorised or "bootleg" recordings. All this will put the law on a more sensible and enforceable basis for performers who are adversely affected.
Parts III and IV deal with designs. The protection of designs has been a very difficult and contentious issue for many years. We believe that we are now near to striking the right balance in the Bill. We start from the basic premise that all original designs deserve limited protection. It is not only wrong if a new product can be copied in its entirety as soon as it comes on the market, but it discourages the design effort needed to make a new product if a competitor can in any case copy it straightaway. We are, therefore, providing a new right for original designs, which will give protection against copying for a five-year period and a right to remuneration for a further five years after that.
But as with copyright, so with design right. The right must not be one that can be used oppressively or unduly against the interests of the consumer. We must not stifle fair competition, particularly in spare parts. Because spare parts have to fit the product for which they are intended, 530 they must to some extent be a copy of the original design. An unfettered design right could be used by the manufacturers of original equipment to ensure that only they could supply spare parts. That would give rise to a near monopoly for some spare parts, which would be wrong.
On the other hand, it would be equally wrong to allow totally free copying of all spare parts. The Bill will, therefore, allow copying where there is no design freedom for either functional or aesthetic reasons. When I say that there is no design freedom, certain basic things have to be put into a spare part if it is to fit and match the product for which it is intended.
Where there is full design freedom, competitors will have to create their own designs. That will apply to all articles, whether or not they are spare parts. The result will be that copying will be allowed where necessary, and where competition can still occur, but designers will be protected from those who would copy when there is no need for them to do so.
The Registered Designs Act will be amended so that protection will be available only for truly aesthetic, stand-alone designs. Competitors do not need to be able to copy such designs to compete effectively. The term of protection for registered designs is to be increased from a maximum of 15 years to 25 years. All this will ensure that design effort is encouraged without stifling competition, or leaving consumers open to the exploitation of a monopoly position.
We are making changes in parts V and VI to open up the intellectual property system and make it more accessible to its users. The restrictions on who may act for inventors and other applicants in dealings with the Patent Office are to be lifted. The constraints on mixed practices—for example, of patent agents and venture capital advisers—will be relaxed. At present, patent litigation is conducted in the High Court. Many small and innovative firms find that High Court proceedings are so expensive and complex that their patent rights are effectively worthless because they cannot afford to enforce them.
It is of course pointless for Parliament to pass legislation that makes it so expensive to pursue a remedy in the courts that no one cart use it, except the very large firms that are adversely affected by some unfair competition. Because only the High Court has jurisdiction, inventors find that sometimes they cannot afford to seek the protection of the law. Similarly, small firms sometimes find it difficult to defend themselves against a large competitor that brings an action against them for an alleged infringement of a patent. I am glad to say that we have established in clauses 267 to 272 the basis of a patents jurisdiction in the county court. We believe that this will significantly reduce cost and complexity, thus enabling smaller firms to compete on a more level footing with larger companies.
The House may be aware that a Bill introduced in the previous Parliament sought to lift the licence of right provisions of the Patents Act 1977 as they applied to patents for pharmaceuticals granted under the Patents Act 1949. That Bill,. which had Government support, fell on dissolution and we have taken this opportunity to reintroduce its provisions.
Finally, part VII contains a number of miscellaneous, but none the less important, provisions. The Government, and I trust the whole House, are firmly opposed to counterfeiting and piracy and we want to stamp out those 531 practices. Those who steal other people's property or who hitch a free ride on the reputations of established businesses will not get any support from the Government, or this House. We know that several British firms suffer from piracy of their products, and often it is the most blatant imitation of their products where the quality of the original is nowhere near matched by the inferior imitation that is put on the market.
Clause 279 introduces substantial new criminal provisions which will prove an invaluable weapon in the fight against product counterfeiting. In particular, I am glad to say that we are taking the opportunity to make the fraudulent use of a trade mark a criminal offence, which will make it very much easier for companies to defend themselves against cheap copies from overseas, particularly from the far east. These changes, taken with the improvement in the sanctions against copyright piracy and bootlegging in parts I and II of the Bill, will, I hope, eliminate these very real threats to legitimate industry.
The Government are continuing to press the case for the European Community Trade Marks Office to be sited in London. In my opinion, it is clearly the best location. Clause 281 provides the necessary statutory authority for financial assistance to be given to the office if sited here.
§ Mr. Iain Mills (Meriden)
I am sure that my right hon. and learned Friend has seen the new site of the office where we intend to house the Trade Marks Office at St. Katharine's by the Tower, but has he seen it recently?
§ Mr. Clarke
I have been there recently. I know that my hon. Friend has been leading a campaign on the matter for some time. The Government wholly support it and we are seeking to impress on the Commission and other members of the Community the case for establishing the European Trade Marks Office in London. There is no doubt that the various contenders are all offering financial support for the office, whether it be in London, Munich or Madrid. For that reason, I am sure that my hon. Friend will welcome clause 281, which gives us a statutory authority to match the financial provision that is being offered by rivals.
My brief review of the Bill's provisions would be incomplete without at least a passing reference to clause 280. Great Ormond street hospital is to enjoy a perpetual right to a royalty in respect of certain types of exploitation of "Peter Pan". The Bill ensures that sick children in Great Ormond street will continue to benefit, in spite of the fact that the copyright in the play bequeathed to the hospital expired at the end of 1987.
The Bill does not contain any provision for a blank tape levy. I expect that some of my hon. Friends will be disappointed by that. Whether there should be a levy on blank tape, to provide an income for owners of copyright who think that they are deprived of revenue because copies are taken of their work, has aroused strong feelings for some time. There have been frequent changes of mind by most of those involved. However, we have finally decided that it would be wrong, indefensible and going beyond the principles of the rest of the Bill to try to introduce a blank tape levy that the Government would impose on purchasers of tape and distribute to aggrieved copyright holders.
Although I accept that copyright is difficult to enforce against people who use blank tape to copy, imposing a levy 532 would go beyond the principle of the Bill, which is that we are passing legislation providing legal protection for the intellectual property of the creative artist. It is a step beyond that to say that if the creative artist has difficulty in enforcing copyright, somehow we must levy a new tax to provide a compensating fund that will be distributed to artists who feel aggrieved. If we had a levy, it would involve the Government in the collection of a whole new tax to provide the copyright owner with a financial reward. A new bureaucracy would have to be set up to collect and distribute the proceeds of the levy. The administration cost of any such scheme would almost certainly be disproportionate to the amount of money that was raised.
We were also unhappy about the rough justice element of the levy proposals. Not every blank tape is used to record copyright material, so a levy would be an unfair imposition on many people. Many of those who look to benefit from the levy would be happy to see an element of rough justice imposed on those from whom the money is to be raised, but all attempts to compensate for the rough justice element did not prove workable. Even if one had had a system that enabled some people to have a rebate on the levy if they could demonstrate that they were not copying copyright, they would have been put to the needless inconvenience of making a claim for the rebate. That would have been particularly hard for the blind and visually handicapped, who make extensive use of blank tape in their everyday lives.
We are also not sure whether the whole benefit of the levy would have gone to the performers and the record companies that had a legitimate interest in pressing for it. A levy could have been marked up in the retail chain, with the result that the burden on the consumer would have been considerably more, with those in the retail chain standing to gain almost as much as those for whom the levy was intended.
For all those reasons, the Government have decided not to proceed with the levy. I accept that it is a matter of balance, which is why the Government changed their mind collectively once or twice, as did several hon. Members. But we have come down firmly on the side of the consumer against a levy proposal that we believed was not on all fours in principle with the remainder of the Bill and would have been a costly bureaucracy, creating some unfair burdens on purchasers of blank tape.
As a consolation to my hon. Friends and Opposition Members who might still be attracted by the levy, we have undertaken to table an amendment to the Bill outlawing so-called anti-spoiler devices, which override signals intended by the copyright owner to prevent copying. Copyright owners are seeking to protect themselves against the problem that they face by devising spoiler devices, which would stop anybody using blank tape to copy the original article. As technical advances are made, it is predictable that people might try to put on the market anti-spoiler devices, so that copies could be made of material that the vendor intended should be proof against copying. If the copyright owners are successful in producing spoiler devices, we shall be content to amend the Bill to make sure that the sale of anti-spoiler devices is rendered illegal.
As I am sure I have adequately shown, the Bill is extremely long and sometimes complex, but it has implications for almost every walk of life. I am sure that those attending the debate realise that this aspect of 533 intellectual property is as important as any other sort of property. It is important to a modern economy that we protect human creativity properly.
People in this country will continue to have ideas, with or without the Bill, but if we are to get the best from those ideas we need an environment in which they can flourish. The Bill provides a framework of legal protection, which should cultivate and nourish creativity. It will provide a fair balance between the providers and users of intellectual property. It will set out the law in a much clearer way than before. It takes account of the rapid pace of technological advance. It makes the intellectual property system more relevant and accessible to the needs of British business. In short, the Bill will encourage creative talent, enterprise and fair competition. I commend it to the House.
§ 5.5 pm
§ Mr. Bryan Gould (Dagenham)
As the Minister claimed, the Bill is a welcome, not to say courageous, attempt to reform a complex and difficult area. I think that everybody recognises that the present state of the law is unsatisfactory. out of date and needs reform. For example, the Copyright Act 1956 has been described by a High Court judge as labyrinthine. No one will disagree with that. Whether the present Bill, with its 285 clauses and eight schedules, can easily he acquitted of the same charge we have yet to see.
It is clear that the ground has been prepared carefully by Governments of varying political persuasions over a long period. As the Minister said, perhaps the beginning of that process was the Whitford report of 1977. There have been Green Papers and a major White Paper since then. At various stages, Governments and others have changed their mind on important matters that arise in the attempt to reform. I make the modest prediction now that further and, indeed, substantial changes are yet to come, perhaps not least on some of the matters that the Minister touched upon in his speech.
It may be asked whether all that effort is worth while. The answer that we in the Opposition give, which I am sure is the same as the Minister's, is that of course it is worth while. It is an extremely important industry. It is sometimes difficult to define, but it is undoubtedly important. Estimates of its economic importance vary. A useful small study was carried out by the Common Law Institute of Intellectual Property. I think that Jennifer Phillips was the author. It was published in 1985 and was called "The Economic Importance of Copyright". Jennifer Phillips' estimate was that the copyright industries, which she defined very narrowly and modestly as industries that directly and substantially depend on copyright for their commercial viability, accounted for 2.6 per cent. of gross domestic product, which meant that in importance they exceeded both the motor car and food manufacturing industries. It should be noted that that definition excluded the functional design aspect of manufacturing and the rapidly growing computer service industry. A more generous view of the importance of the industry was taken last year by the Confederation of Information Communication Industries, which estimated a total turnover of over £20 billion, which it put at over 7 per cent. of GDP.
Perhaps the most important aspect of the industry is not just its current importance to our economy, although that is substantial, but the potential that it holds for our 534 future economic development. I think that there are few people who would look to a successful British economy without seeing that economy developing in the direction of new technologies, particularly information technology, computers and data processing, as well as building on our well-known successes in the older and better established copyright industries such as publishing, films, music and so on. In other words, it is important—we in the Opposition recognise this—to make it clear that we see a future for the British economy that is not the low-tech, no-tech future that the Chancellor of the Exchequer notoriously, on one occasion, professed to see as the way forward. We shall perhaps carry the whole House today in recognising that great efforts are required to ensure that our future lies in the high-tech, science-based industries—industries that call upon the talents and skills of our people.
If we are to do that, of course we have to provide an appropriate legal framework so that those ideas can be developed. We must ensure that the research is done. We must give priority to the spirit of inquiry and to the pursuit of knowledge which has served us so well in the past. However, we must do more than that. As the Minister said, we must establish a climate in which such enterprise can flourish. Let me widen the debate for a moment. We need not just a legal framework but Government support and the provision of resources. In that context, today's news that the Science museum has at long last been compelled by Government parsimony to propose entrance charges—the last of the south Kensington museums to do so—sits ill with the Minister's commendable concern for providing the right framework for the development of scientific and other knowledge.
The proper regulation of copyright involves a great number of difficulties, most of which the Minister identified, and we entirely agree with him on them. However, our interpretation may differ a little at times. The first problem is that the whole business of developing knowledge, conducting research and taking the fruits of that research has become increasingly international in nature. The sale of the products of the older industries—the publishing, film and music industries—is increasingly international, and the use of computers and information technology means that it is yet more difficult in today's climate to grapple effectively on a national basis with the problems thrown up by the unfair or illegal exploitation of people's property in an international context. That is why we welcome the emphasis that the Bill places on the need to ensure that not only do we establish our own legal framework but that this country—traditionally a pioneer in these matters—shows the way to others and ensures that they can follow that way. That is why we welcome the Minister's declaration of intention on the Berne convention and strongly support his proposed measures to stamp out some of the abuses that arise, not so much in this country—although they do arise here—but overseas.
The confederation estimates that copyright piracy alone costs more than £500 million per annum. My friend's in the Open university are very clear that there is an extremely fruitful and profitable trade open to them through the sale of their excellent educational materials around the world if only they could be sure that those materials would not be pirated and sold off with no return to them. Because that happens, they are denied that lucrative market. It is important that we should establish not just a domestic but an international framework in 535 which such abuses can be dealt with. It is also correct to say that the problems of copyright are matched entirely by problems of patent protection, which is why we very much welcome the measure on counterfeiting.
The real problems in regulating copyright arise from a number of difficulties peculiar to the kind of property that we are discussing. The first of those problems bedevils much of the Bill and no doubt accounted for many man and woman hours of drafting and deliberation. It is the problem of defining the property that we are trying to protect. In 1709, it was possible to say of the first modern Copyright Act, the Act of Ann, that it was forthe encouragement of learned men to compose and write useful books.It is not only the sexism of that description that is outdated. While the principle remains the same, we have now moved into an era in which the products of human skill and ingenuity take many different forms. We preserve those products in many different ways. It is not just the printed page but the computer disk, not just the work of art but the sound or video recording to which we must now give the protection of the law of property. New technology and fresh developments in knowledge have produced new forms of property, and one of the major problems to be dealt with in the Bill is the definition of that property and those whose interests in it deserve protection.
New technology has thrown up another range of problems. It has ensured that that new form of property can be passed from hand to hand, traded in and exploited and can have its benefits appropriated in a whole range of ways which were not available 20 years ago and which are certainly not possible for other forms of property. The technology that has made this property and the benefits to he obtained from it almost infinitely capable of reproduction—the photocopier, sound and video recordings, the personal computer and the floppy disk—places in the hands of each of us, at virtually no outlay and with very little chance of detection, the means of taking the benefits of property created by and belonging to others.
We come now to the most interesting aspect of the Bill, from a more general point of view. The developments to which I have referred have brought even the Government to the realisation that there are problems that simply cannot be left to market forces alone. Let us be clear that the Bill is a massive exercise in intervention in the market. We approve of that; we are glad that the Government have recognised the need to intervene. However, it is worthwhile accepting and identifying the respects in which the market does not solve the problems. The point that I make is very similar to the one that the Minister himself conceded; it is the language that is different, and perhaps less acceptable to Conservative Members.
The market at present, if left to its own devices, poses two main and contradictory dangers. First, there is the danger that if excessive protection is provided to private ownership of the property of ideas, it will frustrate and inhibit the advance of knowledge to the very general disadvantage. In other words, it would allow the person who got there first to prevent the rest of us from following and it would allow restrictive practices to arise and to become a bar to further inquiry and the development of knowledge. Clearly, left to itself, the market is incapable of resolving that difficulty.
536 On the other hand, an inadequate protection of property rights would mean that there would be an inadequate return—perhaps none—to those prepared to invest time, money, skill and effort in the advancement of knowledge or the perfection of talents. That would prejudice the continued production of such property. The very property whose production the market was meant to stimulate would therefore be jeopardised.
We are dealing with a clear case of market failure. The need for intervention shows clearly that the market has its limitations—both in the individual's and in the public's interests. It also reveals one further element in the market, sometimes concealed in the more far-flung rhetoric of Conservative Members—the fact that the market is not a God-given or natural law institution that operates with a hidden hand to dispense justice or exercise moral judgments but a man-made social institution, created by rules that we, among others, make and have made. It is an institution that depends for its operation on rules to do with people's property rights, the sanctity of contracts and so on. The Bill is no less welcome for the fact that it makes that aspect of market operations clear.
The Minister concluded by referring to one possible candidate for inclusion in the Bill that did not make the final draft. The problem illustrates the difficulties to which I have just referred. On occasions, the market breaks down. It simply fails to reward those who produce the valuable property in a given area. Over recent years we have paid particular attention to the problems of the music industry. I want to say a word about that in a moment, but there are similar breakdowns in other spheres. In some cases, but not all, the Government have recognised the problem and have tried in varying ways to deal with it. There are problems in respect of photocopying and the copying of software; the hon. Member for Surrey, North-West (Mr. Grylls), who intervened in the Minister's speech, pointed out that clause 63 gives cause for concern. There are problems about the recording of video productions and broadcasting cinematic films on television.
In all those cases the market breaks down in that, often because of a technological intervention, it fails to reward those who produced the property. Either the reward is never paid or it goes to somebody different. The Government are rightly aware of the danger that the incentive to go on producing is lost. Therefore, some means has to be found of rewarding those who are responsible for production so that production continues.
The view is widely held that the problem occurs most acutely in the music industry. It is easy sometimes for hon. Members to underestimate the importance of the music industry to the economy. I have the advantage of having been a lifelong fan of what is called, sometimes pejoratively, pop music. If over recent years my interest has flagged slightly, it has been rapidly revived by the insistence of my teenage children on playing such music loudly in our home. So in a sense I am compelled to continue my interest. Mostly it is an enjoyable pastime.
Pop music is not just the preoccupation of many younger citizens but is of considerable economic importance. The industry sold over £2 billion worth of goods in 1985. One in four of worldwide hit records originates in this country. The industry has produced overseas earnings of £400 million. It employs 26,000 people. In many respects it is a breeding ground for new 537 small businesses and for new talent. It is exactly the sort of industry which the Government have always proclaimed they wish to help.
The Government understand the problems which home taping cause for the music industry. It is difficult to quantify exactly how great the problem is, but I suspect that most of us are aware personally of instances where records are taped for the use of people who might in other circumstances have bought the records themselves. Sometimes, perhaps more justifiably, the purchaser of a record will tape it so that it can be played in a cassette recorder in a car, for instance. That is equally a denial of the return to which the producer of the music is entitled.
The Government cannot at this point say that they have changed their mind on the fundamental of the debate, which is that at one point they recognised that there was a substantial loss, difficult to quantify to the last pound, which unfairly prejudiced not only individuals and firms within the industry but the overall future of the industry. If the problem exists—as the Government were prepared to recognise in the Green Paper and in the White Paper—it is likely to get worse because the technology which created it will develop.
We already have compact discs. We will have digital audio tape. The rental business is flourishing. When the Bill was given a Second Reading in another place, the noble Lord Winchilsea and Nottingham painted a graphic picture of what he had seen in Japan, where people in huge numbers go to super-stores where they borrow for a small fee compact discs to record on their own cassette tapes; then they return the discs for other people to do likewise. No doubt that business will spread to other countries.
The problem has been recognised by the Government and it will get worse. In their White Paper the Government proposed the solution of a levy on blank tapes. No one would dispute that in many respects that is objectionable. We understand exactly what the Minister had in mind when he talked about the rough justice of that solution. But he did not adequately address the problem of the rough justice which is suffered by musicians and others who produce the music. That solution is also objectionable because it would prejudice various people such as the blind and educational institutions. If it is pursued, special arrangements would have to be made for some categories. We agree with the Minister's view that the collecting arrangements leave something to be desired. Certainly we would examine critically any solution which meant that money was passed back to major record companies but did not find its way to those who deserve the support and on whose efforts the future of the music industry depends. If a means were found of making a return to the producer of music, we would want to ensure that it encouraged small and new performers of innovative music and the parts of the music business which are inadequately rewarded but whose ingenuity has to be stimulated and encouraged if the industry is to have a future economically and culturally.
We share the objections to a levy on blank tapes. We do not want a system which merely makes Madonna richer but does not do anything for the creation of music. Having marched themselves up to the top of the hill, having reached the top of the hill, having got a clear view of the problem and having accepted that it is a difficult problem with which the music industry needs help, the Government cannot say. "We are turning our back on the problem; we shall march back to the bottom of the hill and leave things exactly as they are." The Government cannot go away 538 from it without attempting to deal with the problem. Apart from the interests of the music industry, the Government seem to have no intention of changing the law or of ensuring that the illegal taping done by millions our fellow citizens is brought to an end.
I do not dispute for a moment that it is a difficult problem, not just as it affects music. I urge the Government to recognise that they have a responsibility which they have not yet discharged. In Committee and on the remaining stages of the Bill we shall do what we can constructively to help the Government to reach at least a partial solution. I suspect that in this and other areas perfect solutions are not available and are not on the agenda, but the Government cannot be allowed to get away with offering no solution.
Let me now point to a further instance of the difficulties which arise in the Bill. The Minister drew attention to the provisions which attempt to deal with the issue of a design right. That has exercised many of us in the House and. indeed, people outside the House and in the other place. The problem arises because of the uncertain state of the law, which was left even more uncertain by the decision of the House of Lords in British Leyland v. Armstrong and by the intervention of the EEC Commission in the case of my constituent, the Ford Motor Company.
The problem is how to protect what is called in the Bill a design right. Although it is dealt with generally in the Bill by clause 198 and succeeding clauses, a particular problem arises in respect of spare parts. Let us be clear that. that is the case. On the one hand, a range of manufacturers, such as Ford and Hoover, take one view while, on the other hand, the specialist manufacturers of spare parts. quite understandably, take a different view.
The principles are very familiar. On the one hand, we need to protect the consumer against market abuse, but guard against excessive protection and, on the other hand, we must ensure that the originators and designers of products are given fair protection so that they continue to furnish the market with their products.
I assure the Minister that I do not intend to be critical, because we have no better solution to offer, but the Government's answer is a partial protection of design right, as contained in clause 198 and succeeding clauses. It is fair to say that the definitions have caused some difficulty. They caused extensive debate and difficulty in the other place, particularly in respect of what have become called the "must fit" and "must match" requirements—for example, the treatment of constituent parts of the whole item, such as a dinner service. We believe that the Government understand the problem and have made a genuine attempt, in good faith, to deal with it. However, as the Minister showed, the phrase "striking the right balance" is likely to figure largely in our deliberations on the Bill.
§ Mr. Andrew Hunter (Basingstoke)
Before the hon. Gentleman leaves this point, will he comment on the proposition put forward by the Confederation of British Industry and others to the effect that design copyright should not be excluded, but should exist alongside design right?
§ Mr. Gould
There are some obvious difficulties with design copyright, because it is a more extensive concept than design right. It swings the balance in favour of protection, as against free entry to the market. Those are 539 some of the points that Opposition Members—and members of the Committee—wish to look at carefully to strike the right balance. I made the point that, in the attempt to strike that balance, the Government have not convinced us that they have identified the right criterion. Whether a design must fit or must match another article is not self-evidently the issue which should decide whether a design secures protection or otherwise. What we are inclined to argue—we shall certainly return to this issue in Committee—is that it may be that the Government have approached what is undoubtedly a difficult problem from the wrong viewpoint. I offer the thought to the Minister—my hon. Friend the Member for Sedgefield (Mr. Blair) will wish to develop it in Committee—that it may be more effective and constructive to look at the problem in the same way as do other countries with similar problems. It is a problem of fair competition and of dealing with restrictive practices, rather than a problem relating to the protection of property rights
The Bill bristles with specific problems, but we accept that the Government have made an effort to resolve many of them. There is much in the Bill to be welcomed, which is why we do not propose to vote against it. We recognise the importance and value, for example, of the chapter on moral rights. That is a welcome change. That chapter provides moral rights for all kinds of authors and film directors. In view of earlier events in the Chamber this afternoon, one could wish that moral rights were provided also to the authors of the resolutions of the national executive committee of the Labour party. We have a moral right to ensure that the terms of such resolutions are not distorted when they are reported to this House.
We welcome also the attempt to grapple with new problems—for example, computer-generated designs, works of art and program. It is refreshing to see this legislature getting to grips with that problem ahead of anybody else in the world. We are the first legislature to recognise the advent—not here yet, but coming—of artificial intelligence.
We recognise also that a special balance has to be struck where the needs of education institutions are involved. We believe that the Government, broadly speaking, have that balance about right in respect of schools and libraries. However, that will not preclude us from tabling amendments that may improve those provisions.
I have mentioned already that we welcome the change in the law with regard to counterfeiting and the creation of a new criminal offence to deal with the wrongful use of trade marks. I am glad to offer again my support for the campaign in which the hon. Member for Meriden (Mr. Mills) has taken the lead, but in which we have both been involved. It is a campaign to establish a Community Trade Marks Office in this country. I had hoped that the Minister would have been able to offer, not only more information, but perhaps a slightly more optimistic assessment of our chances of obtaining that institution in Britain.
Some of our noble Friends in another place deserve credit for what has been become known as the "Peter Pan" clause. Given the perpetual nature of the rights obtained by the Great Ormond street hospital, it is an appropriate description of that clause, which we support.
I have said enough to show that there remains much that needs to be scrutinised critically, for example, clause 540 63 which was raised earlier. We argue again that the provision of a one-year protection for computer software programs is not likely to be enough.
§ Mr. Boyes
The Minister has given me an assurance that photography will be carefully considered by the Under-Secretary of State for Industry and Consumer Affairs, the hon. Member for Coventry, South-West (Mr. Butcher), in Committee. I understand that my hon. Friend will not be dealing with the Bill in Committee, but will he mention to our hon. Friend the Member for Sedgefield (Mr. Blair), who will be leading for the Opposition in Committee, that among the many things that have been mentioned as needing special scrutiny are several important clauses on moral rights, relating to photography? As many hon. Members, who have their photographs taken up and down the country know, photography is an important profession. It is important that we look carefully during the Committee stage at what has been taken away from photographers, as well as what has been given to them. I hope that my hon. Friend will give me that assurance.
§ Mr. Gould
I am in the happy position of being able to respond to my hon. Friend with the same generosity as was shown by the Minister. I can give him an assurance on behalf of my hon. Friend the Member for Sedgefield that, when he takes the Bill through Committee, he will give attention to this important point, along with the others we wish to scrutinise.
In conclusion, we give a general welcome to the Bill. We do not think it is a perfect Bill by any means. Its imperfections are evident. It may be that, despite our best efforts, the imperfections cannot be adequately remedied. However, we shall do what we can to ensure that they are given proper debate and scrutiny. We shall play our part in trying to remedy the defects that we can identify. It will be our intention to ensure that the Bill, despite its existing values and virtues, emerges as a better Bill than it is now. If we can get proper answers to some of these difficult questions and make this a better Bill, we shall have done something for the intellectual life and economic future of this country.
§ Sir Geoffrey Pattie (Chertsey and Walton)
This is an important Bill on an important subject. It is such an important subject that it is regrettable that there are not more Opposition Members present. I accept that the title, Copyright, Designs and Patents Bill, is not likely to cause a street demonstration in the United Kingdom. However, it is no exaggeration to say that income to major companies in this country from licence fees and royalties is important, and will become increasingly important. It may be the difference between the success and failure of a commercial enterprise.
The Copyright Act 1956 is widely recognised as being in need of replacement. It has protected broadcasts since then, but that was before Telstar was launched. It restricted the circumstances in which photocopies could be made, but it predated the launch of the plain paper copier. It covered computer programs, but when it was passed a computer was virtually the size of a house and could perform only simple arithmetical tasks. So the Bill is here 541 to replace a 32-year-old Act which has done its best, labyrinthine though it may have been, to protect emerging technologies.
I pay tribute to the officials in the Department of Trade and Industry and in the Patent Office, who have laboured long and hard on the White Paper, for putting up with me and for preparing the Bill.
My first concern about the Bill is whether it adequately prepares the way forward to cover developing technologies. The speed of change in the past 32 years is as nothing compared with what is happening now. People to whom I have spoken in the computer industry have said that if, for any reason, they had to leave that industry for even only three years they would have to retrain completely. I am worried that the language of the Bill is still the language of the 1956 Act, although lip service may have been paid to new technology.
For example, nowhere in the Bill—I stand to be corrected—can I find a definition of computer software, which I should have thought was an important item to be defined in 1988. I understand that in the information technology industry work is being done on what might be described as the legal implications of information technology. Such work should be broad enough in scope to embrace evolutions in technology. No one expects the Government to go in for futurology to such an extent that they can anticipate what technology may throw up in the next 10 or 15 years, but somehow the Bill must find a way of providing a framework to cope with problems as they develop. Perhaps the Secretary of State will be able to do that by order.
In recent years there has been a need for private Members' measures, such as the one introduced so successfully by my hon. Friends the Members for Corby (Mr. Powell) and for Luton, South (Mr. Bright). However, I question whether we should rely on private Members' activities, important and successful though they are, given that we are introducing legislation as fundamental as this. If new technology is to be fully protected, several subtle issues must be dealt with, and they do not appear to have been addressed in the Bill.
For example, is a program stored in a computer an idea because it is intangible in form? How should access to software be defined to prevent unauthorised copying and unauthorised use? There is a danger that unless the Bill is significantly amended to deal with the areas I am discussing we shall create a legislative Maginot line, around which future technological developments will flow with ease.
I want to examine one or two of the terms used in the Bill. The term "adaption" is used. Adaption meansInfringement by making adaption or act done in relation to adaption.That definition is extremely narrow and must be inadequate to cover the adaption of a data base by selection rearrangement or paraphrase. Not enough attention has been given in the appropriate quarters to embracing the concept of what a computer data base is. Throughout the Bill the language is orientated towards literary works—copying and reproducing them—and whether authors will receive their benefits, and so on. Yet we are talking now about technologies that need protecting. Elsewhere in the Bill the term "reprographic copying" is used. Are those terms sufficient definitions to cover down-loading? Probably not.
542 The word "electronic" is also used. It is almost a sop; in some appropriate corner, the word electronic was thrown down as an inadequately sized blanket to cover any known future device. But electronic must be only part of the story. It does not embrace all types of machine-readable information.
The hon. Member for Dagenham (Mr. Gould) gave the Bill credit for discussing computer generation, and said that we were the first legislature to examine artificial intelligence. Is the definition of computer generation in the Bill clear enough? Is there a distinction between computer-generated and man-generated? Data bases can be generated by computers, and that is the real problem for the future.
I shall not detain the House with more examples, but I am sure that the Standing Committee will need to examine these matters carefully. Copyright is a broad and simple concept. It is infringed by anyone who appropriates the intellectual creations of another. The Bill has missed the chance to state that basic principle simply, but it should contain powers to add by secondary legislation new forms of infringement. If the Secretary of State had such powers, he would be able to define new forms of infringing acts as advances in technology called for them.
Technological change is not the only impetus towards reform. The 1956 Act got into a rare mess over industrial designs. It is inconceivable that when the House passed that Act any hon. Member thought that he or she was establishing a regime for the protection of exhaust pipes, but, for reasons too complicated and arcane to go into here, functional designs such as exhaust pipes have fallen within copyright and received protection for the lifetime of the designer plus 50 years. That is far too long, and something must replace copyright as the means of protecting functional designs.
The White Paper promised a new form of protection lasting 10 years, with the provision that in the second five years licences should be available as of right. That was a reasonable compromise, although many thought it was a fair-weather umbrella giving protection only during the early part of a product's life, when there is no market for spares. The Bill includes what are known as the "must fit" and "must match" exceptions—the antithesis of the well-known maxim in copyright circles: if it is worth copying, it is worth protecting.
The Government must understand that this means that manufacturers of goods that require spare parts—not only motor cars but many other mechanical products, including domestic appliances—will have to load all their development costs on to the products themselves, allowing for the reimbursement that they would have received for spare parts. Spares will have to be priced on a cost-plus basis to compete. The consumer may be able to get parts for his car more cheaply, but the car will cost him more to begin with. According to a recent CBI study, if the Bill is enacted along those lines, protection in the United Kingdom will be substantially less than that available to our competitors abroad in their domestic markets.
§ Mr. Tim Janman (Thurrock)
I agree with my right hon. Friend's observations. Does he also accept, on the question of copying spare parts such as body panels, that the copiers will tend to concentrate on those parts for which there is a high demand and that the price of those body panels on more outdated models, which tend to be vehicles used by people on lower incomes, will increase 543 because only the original equipment manufacturer will still have any interest in making them available in the market place?
§ Sir Geoffrey Pattie
I agree with my hon. Friend. However, it is not the matters that are in the Bill which most concern me, but those that are not in the Bill.
The White Paper promised that the Patent Office would be hived off and removed from the constraints of the Civil Service within which it plays a role not unlike that played perhaps by Siberia within the Soviet Union. The Government have now concluded that it is not a paying proposition, because so much of its work is now diverted under the European patent convention to Munich instead it will be sent to Newport.
It would be much more to the point to hive off the Trade Marks Registry which at present forms part of the Patent Office. The two are in no way interdependent. The Trade Marks Registry makes a healthy profit from renewal fees. The registry could be left in London and the most could be made of whatever slim chance remains of having the Community Trade Marks Office in this country. I support my hon. Friend the Member for Meriden (Mr. Mills) who has slogged long, hard and admirably on the matter and I hope that his efforts are rewarded with success.
On the question of the levy, one is inevitably drawn back to consider the White Paper of April 1986. Paragraph 6.1 states:When the present Copyright Act was enacted in 1956 relatively few people had the facility to make recordings in their homes. Since then technology has advanced rapidly and inexpensive recording equipment is now readily available. Today most homes have at least one piece of audio recording equipment, typically a cassette recorder facility forming part of a hi-fi or music centre. Video recorder ownership is also widespread.In paragraph 6.3, the White Paper goes on:The copyright interests have long expressed concern that their rights are unenforceable in practice. Attempts to prevent home taping by spoiler systems have not proved feasible. Nor have the copyright owners been able to obtain what they consider to be appropriate levels of remuneration in respect of home taping through voluntary licensing schemes because consumers did not take these up in sufficient numbers. It is argued that the only way copyright owners can be remunerated is by introducing a levy on recording equipment … and/or on blank recording tape.Paragraph 6.4 goes on:The 1985 Green Paper discussed the issues involved. It commented that while home recorders had become commonplace, the benefits of the new technology had accrued solely to the general public and tape and recorder manufacturers, and that home taping was a major use of copyright material for which copyright owners received no payment. It went on to invite comments on the proposal that there should be a statutory requirement for the payment of a levy on the sale of blank tape, and perhaps also on recording equipment. Comments were invited both on the principle of a levy and on details of a suggested scheme for administering it.The first Green Paper was produced and, after consultation, the Government made their decision, which is set out in paragraph 6.6 of the White Paper:After giving full and careful consideration to all the opinions expressed in response to the 1985 Green Paper, the Government has concluded that:Paragraph 6.7 continues:
In reaching these conclusions and in determining what legislative provisions should be introduced, the Government has had particular regard to the need to put the law on a sensible and—as far as possible—enforceable basis, as well as the need to balance the interests of copyright owners and performers with those of the public at large. While it has no wish to deny consumers the convenience of modern recording technology, the Government considers that copyright owners and performers—and not merely the manufacturers and importers of blank tape and recording equipment—should obtain some economic benefit from home-taping. It should be noted that a number of other governments have reached the same conclusion. Thus, legislative provision for a levy on blank tape has already been introduced in the Federal Republic of Germany, France, Portugal, Austria, Finland, Hungary, Iceland, Norway and Sweden. The introduction of a levy is also under active consideration in a number of other countries.
- (a) copyright owners and performers should be remunerated for the use of their material and
544 performances by those who tape them at home to the prejudice of the legitimate interests of copyright owners;
- (b) there is no realistic alternative to a compulsory levy on blank recording tape as a means of providing such remuneration; and
- (c) any levy scheme should give the public an entitlement to record for private purposes.The Government does not accept the suggestion that private copying should be legalised without any provision for a levy. It is likely that this would be incompatible with the United Kingdom's current obligations under the Brussels text of the Berne Convention and with the Paris text of that Convention which the Government intends to ratify. The fact that rights cannot be enforced at present is not a justification for their removal; rather it is an argument that the law should be amended to ensure that the owners of rights are able to derive benefit from them.Paragraph 6.9 states:It has been argued that whilst a levy might have been justified a few years ago when the record industry was in difficulties, the industry is now profitable and does not need further subsidy. However, the levy will be neither a subsidy nor compensation for lost sales or reduced profitability: it will be a payment of the right to use property—namely the right to make recordings of copyright material for private purposes—and will thus be totally independent of the profitability of the record industry (or indeed the financial standing of composers, lyricists and performers).One could ask what external legal event, what judgment by the House of Lords and what further additions to the Berne convention have happened since April 1986. The answer is none. There has been the arrival of the Secretary of State for Trade and Industry who is not legally qualified.
§ Sir Geoffrey Pattie
I meant that he is not legally qualified in a practising sense. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster is not only highly qualfied, but is learned in the best sense of that term.
When I was a law student at Cambridge, I used to read those journals in which people would say, "Go away and consult the authorities on this matter." They did not mean the local authorities, but, in contract, Cheshire and Fifoot and, in real property, Megarry. My right hon. and learned Friend does not claim to be an authority on that subject, but he has formed a judgment about the rough justice and believes that it falls on the other side of the line to that which the Government upheld in April 1986. I do not agree with that. The hon. Member for Dagenham said that he would not press the House to a Division and, with the absence of his hon. Friends, I can well understand that. However, if he had done so, I would have been unable to 545 support the Government's proposal on the levy, although I like many aspects of the Bill. This is an important principle and one must recognise that differences of opinion exist.
I have enumerated the countries that have already taken the view that a levy is a sensible way forward. We await—goodness knows when—a Green Paper from the European Commission. We appear to have been waiting for it for rather a long time and, when it arrives, we suspect that it may well recommend a levy. With the Department of Trade and Industry's harmonisation campaign for 1992, one must have the uncomfortable feeling that, at some stage, there will be a need for the Government, whether in 1992 or 1993, to come back to the House and put the matter right.
In the past 10 days there have been some changes in the Government's position. They have been known to amend their view. Such changes used to be called U-turns, but that is a rather unfashionable term now. However, as a result of its complexity this subject has understandably become something of a U-turn charter. Differences have occurred between the Green Paper, the White Paper and the Bill. On the fair dealing provisions, the Secretary of State has taken one view, changed his mind and then considered changing it back again. I am not criticising him, because these are difficult issues.
As the hon. Member for Dagenham said earlier, we are likely to see various changes not only to some of the parts that have been specified today, but of the sort that I hope will make this legislation as good as it needs to be because of the reliance of British industry, commerce and business on the protection of our intellectual property.
§ 6 pm
§ Mr. James Wallace (Orkney and Shetland)
The right hon. Member for Chertsey and Walton (Sir G. Pattie) said that he would probably not support the Government on the levy on blank tapes, so he might be considered to be a dangerous Member to put on the Standing Committee. However, it would be disappointing if he were not appointed, because he obviously has considerable knowledge of this complex subject and this detailed and complex Bill.
I give the Bill a general welcome. Its updating of our copyright law is generally welcome on both sides of the House. It is clear that, although the Bill as a whole will not be contentious, some parts of it will generate some contention and discussion. Hon. Members who have spoken so far have already identified the areas which will give rise to debate.
The right hon. Member for Chertsey and Walton referred to the difficulty of coping with what is inevitably a continually changing scene. We must make laws today for events and developments in the year 2000 that we cannot imagine now. The very nature of intellectual property means that today's legislation will have to be continually updated. We are dealing with a continually developing market, with new technologies and new ideas emerging all the time.
I want to deal with various items in three categories—those which we welcome, those on which the Government have probably not gone far enough or on which the position is somewhat unclear, and the levy on blank tapes, on which the Bill is unacceptably silent.
546 In common with other hon. Members, I welcome the strengthened measures against counterfeiting. The provision for the continuation of the "Peter Pan" royalties to the Great Ormond street hospital will be welcome throughout the House. They are no substitute for adequate funding for the National Health Service, but they form an important part of that hospital's income and their continuation is welcome.
Contrary to some previous speakers, I generally welcome the steps that the Government have taken on the so-called "spare parts" provisions. I hope that the Government will stand firm on the inclusion of exemptions to the proposed unregistered design rights—the so-called "must fit" and "must match" exemptions, despite the considerable argument and pressure which there will no doubt be.
A considerable number of jobs are at stake among car body panel manufacturers. My impression from what the Minister said was that designs that were subject to exemption were such that they did not involve much in the way of inventive mind or imagination. Therefore, I do not accept the CBI's argument in its circular that no protection could mean no new products. We are not dealing with areas where there is considerable imagination and inventiveness. The competition that could be engendered through such exemptions could lead to benefits to the consumer and to the safeguarding of many thousands of jobs in the motor spare parts industry.
Let me deal now with areas where the Bill is not entirely satisfactory. The inadequate protection for computer software programs in clause 63 and the single year of protection given to record rentals have already been referred to. Record rentals have not yet caught on in a big way in Britain, but I understand that in countries such as Japan that is a big industry, particularly since the arrival of compact discs. The amount of record rental arid recording there is substantial.
As the Minister said, how long music is marketable is a matter of judgment, but there is a general feeling in the record industry that one year is not long enough. It does not give adequate protection to people who have invested their creative skills and talents in producing music and I hope that, as the Bill progresses through the House, some longer period of protection will be given.
Clause 36 and the special provisions for the photocopying of material for local education authorities is another area that I should like to see amended. As I understand the present position, there is a voluntary agreement between the local education authorities and the copyright owners—the co-called copyright licensing agency licence—where it has been accepted that education establishments may copy up to 5 per cent. of a book per annum. Under clause 36, that would be reduced to 4 per cent. per annum, in quarterly batches of 1 per cent. The dates are not always helpful to local education authorities since at least one quarter will largely cover the school summer holiday. The Convention of Scottish Local Authorities would like a compromise on that. Five per cent. would be preferable, but if there are considerations in the Berne convention which limit it to 4 per cent., it might be easier and more helpful to local education authorities and schools if that could be done in two half-yearly batches of 2 per cent. That would overcome the problem where at least one of the quarters would largely fall during a holiday.
547 I have received representations from constituents on the Bill as it affects broadcasting, following some discussions in the newspapers on the extent to which interviewees have a copyright. People in broadcasting to whom I spoke earlier today feel that the position has not yet been satisfactorily clarified. Obvious areas of concern are where a reporter goes into the street with a microphone and takes off-the-cuff remarks from people and programmes such as those of Roger Cook involving consumer investigations where interviews are often of a hostile nature with someone trying to protect practices in which they have been engaged and which may not always meet with public approval.
There is still some doubt whether such interviews can be repeated after an initial live broadcast or whether the person who gave the interview has a copyright of the recording which, if he exercised that right, would prevent any further broadcast of the interview.
We would all regret seeing any unnecessary restraint on journalism, and the view in the industry is that the present position is not satisfactory. It has been suggested that there can be an implied consent by the interviewee. That will not be clear in a case when someone has said something which he would rather not have said and if an albeit honest statement might put that person in a bad light. Implied consent or implied licence is always revocable.
The other argument was that an interview was not a work qualifying for protection under the Bill. There is a great deal of judicial authority which suggests that one does not have to do very much for one's words and utterances to become a work and subject to protection. If further clarification on that point can be given, so much the better.
Every hon. Member who has spoken in the debate has referred to the absence of any provision for a levy on blank tapes. That is a serious omission. The right hon. Member for Chertsey and Walton has alredy referred, in his quotations from the White Paper, to the Government's complete about—turn from their position two years ago. Although I was not an avid reader of the Conservative campaign guide at the last general election, I believe that it contained a commitment to a levy on blank tapes.
Earl Ferrers made a very persuasive contribution in another place when he moved an amendment in respect of a levy on blank tapes. Indeed, I suspect that he was so persuasive that he was brought into the Government team to prevent him from having another opportunity to persuade their Lordships about the merits of his argument.
I listened to the Minister's arguments about why the levy should not be introduced. We would all accept that the argument is finely balanced and we can all readily see the pros and cons. The Minister said that Parliament has given rights to singers, musicians and composers and they should not have to come to us for help if their rights are not readily enforced. We cannot accept that argument just like that. If the rights that Parliament has granted to people cannot be enforced and are not effective, it behoves us to reconsider the matter to discover whether there is anything else that we can do to ensure that their rights are protected.
The Minister said that this is a pretty rough and ready measure. We should also consider the public lending right. Considering the number of libraries in the country, very 548 few are chosen as the sample on which to base the remuneration payments to authors. That system is pretty rough and ready. However, it has been accepted that people whose skills and talents lie in creative and artistic works, be that the written word, spoken word or song, should be entitled to some return for their creativity.
It was suggested in another place that the public lending right system would raise about £7 million. Although that may be a small amount of money when we consider the vast amounts raised in taxation each year, if that money were distributed among musicians, singers and composers it would be very beneficial. Many of those people do not have large incomes. If they are to be allowed time to express ther creative talents, that extra money—albeit relatively small in terms of the total taxation take—might allow them to further their careers and talents in a way which would not otherwise be possible.
I am sure that amendments providing for a levy will be introduced in Committee and we will certainly support them. We accept that there will be problems for blind and deaf people. It is not beyond the wit of the House to find appropriate arrangments to allow for the imposition of a levy and its collection without too much bureaucracy and, at the same time, take account of those people with a special case for exemption.
I hope that a constructive approach will be taken to the Bill. I am certain that Opposition Members will table constructive amendments. I hope that the Government will listen and be prepared to concede where they believe that a reasoned and well-argued case has been made. As has already been said, intellectual property and its protection are important for stimulating creativity and enterprise. The provisions in the Bill assist that. The Bill is also of considerable economic importance for us, not least as we approach 1992 and the single European market. Subject to reservations that will no doubt be debated, we welcome the Bill.
§ Mr. Iain Mills (Meriden)
I want to describe the background to my interest in this subject. I spent 18 years in manufacturing industry, originally as a tyre designer. I am the co-holder of a number of patents. I was also a marketing manager interested in trade marks, branding and naming. I am a non-executive director of Interbrand Group plc. I give advice to Grant, Spencer Caisley and Porteus and to the Industrial Anti-Counterfeiting Group. I am vice-president of the Institute of Trading Standards Administration and chairman of the Community Trade Marks Office committee. I apologise for recounting that list, but it shows that I take a strong interest in intellectual property.
I want to thank everyone who has supported me over the past few years in our campaign to increase the interest in intellectual property. I welcome the Bill and congratulate my right hon. and noble Friend in another place, my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and Minister of Trade and Industry and his colleagues on including in the Bill many of the things for which we have been campaigning with regard to intellectual property matters for almost a decade. I congratulate everyone on bringing that about. No doubt such action was taken with 1992 in mind and induced by the Government's clear recognition of the importance of intellectual property.
549 My right hon. and noble Friend the Secretary of State for Trade and Industry said in another place:Intellectual property is of substantial economic significance. It forms the foundations of major industries …A recent study concluded that 2.6 per cent. of GDP is generated by copyright based industries."—that is just copyright.If one were to take into account industries which rely heavily on patents and designs"—and I would add trade marks—the figure would obviously be higher still."—[Official Report, House of Lords, 12 November 1987; Vol. 489, c. 1476.]As was stated earlier, intellectual property is clearly an area of enormous significance. However, until recently, it was not recognised by the nation, or the House, as having that degree of significance.
It will he difficult to achieve in the Bill all the balances to encourage this great creator of wealth for our industries. We should remind ourselves of the enormous importance of our brand names, trade marks and inventions. They are seen by people throughout Europe and further afield—and particularly in the newly developing countries—as highly attractive and extremely valuable. If there are any short cuts available to those countries to overcome the high cost and staffing difficulties of industrial research and creating brand names, images and market penetrations, the protection of intellectual property—the protection of our copyrights, design rights, patents and trade marks—will prove in the competitive years to 1992 and beyond to be an absolutely vital part of our industrial economic strategy.
We must get the balance of protection right in the Bill to protect United Kingdom interests, to allow us access to our partners in Europe into the single market in 1992. Innovation, the protection of our clever, new designs and existing designs, will be all-important.
As well as my interest in intellectual property, I have a constituency interest in the midlands and I share a constituency border with my hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry and Consumer Affairs. I accept that there is a difficult but important balance to achieve with regard to unregistered design rights between the original equipment manufacturer who has to put huge sums of money into developing products—even those that are functional—and the spare parts manufacturers. Many of us have both original equipment manufacturers and spare parts manufacturers in our constituencies.
The matter is not simple and it cannot be left on the shelf. The judgment in the other place in the case of British Leyland v. Armstrong shows that some decisions must be made. I asked those who advised me to give me some idea of how design is looked on elsewhere and I understand that copyright protection of purely functional designs is much rarer in other countries. It may be obtained for 25 years in Japan and for 16 years in New Zealand. Many of the old Commonwealth countries which have previously granted life plus 50-year protection for purely functional objects are changing their copyright laws as we have had to do so, in the light of the key decision in British Leyland v. Armstrong. In France, a registrable design can be protected by copyright.
Quite how we achieve the right decisions on this balance, I am not sure. We have to look not only at our own situation but at the fact that the European Economic Community is seen as the leader in intellectual property matters. Therefore, whatever we do in the Bill will no doubt result in repercussions, and perhaps people 550 following our example. The European Commission must be looking carefully at what we are doing. In achieving a balance we have not only our own legislation to bear in mind but our commitment to 1992 and our example to countries in Europe, and throughout the Commonwealth. Therefore, it will be a most difficult matter.
I have corresponded with my hon. Friend the Minister on this matter of whether "must match" and "must fit" will be fair to both sides of the equation, and I wish to press him further on it. I understand that the decision was made in the light of increasing competition. I have received figures from Ford showing that body panels and wings of cars are largely imported. The figure is about 80 or 90 per cent. If we reduce the amount of protection, do we not increase the amount of import penetration and, in the name of competition, encourage those people from abroad?
This may all be part of 1992 and the single market, but we need to look carefully at it, and I would be grateful for my hon. Friend's comments on how we can see the "must match," and "must fit" proposals creating more incentives for UK manufacturers to compete with European manufacturers, so that body panels are produced here. I have some sympathy with the motor industry's argument that its members would like to see this idea dropped, but I also have sympathy with the desire for further competition. While there is a case to be made for this, although that is not accepted by the car industry—the original equipment manufacturers—it may be seen as a blunt instrument in the way in which it applies, for example, to computer hardware. It worries me that, if the normal three parts of any word processor can fit, presumably there would be no unregistered design right for a part of a word processor or whatever part of the three bits that usually go together, for people such as IBM and other computer manufacturers. If I have misunderstood this, I would be grateful to he reassured, but if those parts fit or match, unless they are a registered design, there will be no protection. If the argument is that the manufacturer of such products should register all his designs, I can understand that, but to register every part of a motor car would be an enormously lengthy and time-consuming process, and while it might be possible for large manufacturers, what about small manufacturers?
I am not rejecting "must match" and "must fit," but I am exploring—perhaps it would be better done in Committee, in view of the need for brevity—whether there are any other ways out of this problem. For example, there is the change of the licence of rights to a compulsory licence. I understand that the European Commission is looking carefully at the possibility of compulsory licences, which would need the establishment of a tribunal system. This involves another part of the Bill and an extension of its powers to compulsory licences. If a manufacturer who wished to enter the market could not get a licence under this compulsory licence procedure, he could, if the manufacturer of the original products complained, go to the tribunal for judgment.
I understand and appreciate the importance of avoiding monopolies, but there is a likelihood, if we do not tackle the European dimension, that this matter will be referred to the European Court, and I would appreciate my hon. Friend's comments.
I am also concerned about the functional designs and the enjoyment of copyright for the designer's life plus 50 years. As time is now fleeing. I will press my hon. Friend 551 the Minister on this matter in Committee. There is some concern about the judgment of aesthetic designs and how eye appeal, not artistic merit, would effectively be the criterion, and the 15-year provision. I have been pressed about the design right of five years complete and a further five years under licence, leading to 10 years' protection for registered designs, and the suggestion that this should be extended to 10, 15 or 20 years, again with the possibility of a compulsory licence. These are important matters.
I understand the difficulties of my hon. Friend the Minister as, among the many briefs I am clutching, I note that the Confederation of British Industry is strong in its resolution to the matter, that the British Automotive Parts Promotion Council takes rather a different view and that the Society of Motor Manufacturers and Traders does not seem to have found common ground among its members, and is unable to advise them. I fully appreciate the difficulties of Ministers and Back Benchers in coming to hard conclusions as to the best solution. A balance, which has been mentioned today, is obviously important.
There are a number of other aspects. I am concerned—I know that this matter was taken up in the other place—about Crown powers. The Crown has been given new and extensive rights, and the defence industry is most concerned about this matter. I wonder whether these new sweeping powers are necessary and I hope that the Government will be sympathetic to an amendment on this. The five-year licence provision sufficiently protects the Crown and I am not sure about the urgent need provision suggested by Lord Beaverbrook. I would be grateful for my hon. Friend's comments on this matter, but perhaps it would be better to take this up in more detail in Committee.
I was interested in my hon. Friend's comments about the number of proposals in the Bill which affect trade mark agents, and I welcome the inclusion of privilege in the matter of trade mark agents dealing with clients. This is an important matter for them. They will also be subject, as I understand from the Bill, to becoming registered on a registry of trade mark agents. This is obviously a great advance, which I welcome. Although it may not be possible for him to comment tonight, I press my hon. Friend on how this registry would be formed. I understand from correspondence that this may not be possible now, and that it could be introduced subsequently. I have talked to a wide range of eminent trade mark agents and they are concerned that their profession achieves the highest quality of education, performance and standards. I am concerned that the way in which the registry operates allows this to happen.
I congratulate the Institute of Trade Mark Agents on its new proposals for education and qualifications, but wonder whether it would not be appropriate to have an intermediate body which may set down the basic criteria for the way in which the registry operates, such as the senatorial version of its standing advisory committee. I know that it is planning to broaden that, but I wonder whether some intermediate body might be suitable. While I am in favour of self-regulation, there are occasions when the rules should, perhaps, be set by another body. By and large, I wholeheartedly welcome the establishment of a 552 registry for trade mark agents and all agents also welcome that, provided we can achieve the best and highest degree of qualification.
I should now like to turn to some technical points. I understand that the appropriate section extends privilege to a registered patent agent in respect ofany matter relating to patents, trade marks, service marks, registered designs or design right, or with respect to any question of copyright connected with any such matters;It does not appears to cover the question of passing off confidentiality. It may well be that the matter was covered in another place, but I should appreciate the Minister's comments, though not necessarily tonight. The corresponding provision for registered trade mark agents in the appropriate section appears to coverany matter relating to trade marks or service marks".It makes no mention of copyright design passing off in the same way. Part VII, which deals with the fraudulent application or use of a registered trade mark, makes no reference to service marks. If I am incorrect about that or if it has been corrected in another place, perhaps the Minister will tell the House now or at a later stage.
The appointment of county courts or patent county courts in the appropriate section which refers to related patents and designs or other intellectually related matters presumably includes trade marks and service marks. The other section provides for the inclusion of registered patent agents who may address a patent county court. Will registered trade mark agents have those same powers? I would appreciate the Minister's advice on that matter.
I have been in correspondence with the Minister about character merchandising and, as always, I appreciated his forthright and frank comments. The Standing Advisory Committee is taking a long-range view of trade mark matters. I would welcome the Minister's advice because character merchandising may well be taken up later in another Bill. I am especially concerned about the problems of trafficking, but perhaps the Bill is not the appropriate measure to deal with that. We must get this matter right, and many suggestions have been made about it. Unless we can deal adequately with trafficking there may be even more problems.
I was interested recently to be briefed by the Institution of Electrical Engineers when I found that this extraordinary and exciting Bill presents problems for it, too. I originally trained as a chemical engineer and have some sympathy for electrical engineers. The institution showed me its database and abstracts from it. I understand that under the original terms of the Bill that will be illegal. The institution was helpful in its briefing and the Government may well be sympathetic to an amendment that will help the institution to give to the scientific community quite remarkable access to abstracts from learned articles. I cannot remember how many learned articles are covered, but they are of enormous value and are used by the European Parliament, by hon. Members and by the scientific community.
The institute is anxious about the matter, and I have assured it that there will be many amendments coming from the other place and that the Minister's officials are working extremely hard. Any advice on timing would be helpful, and perhaps the Minister would be prepared to see members of the institution. I do not act on its behalf, but as an engineer I find its concern quite important.
I am a vice-president of the Institute of Trading Standards Administration and I am concerned about 553 enforcement by trading standards officers. They are quite justified in bringing to me the problem that they are finding in using the Trade Descriptions Act 1968 against persons dealing in illicit audio recordings or foreign video recordings. This is often because of the clever marketing techniques used by people who deal in those things.
Trading standards officers have found that their efforts to use the Act are frequently thwarted because the illicit packer, in copying the packaging of the legitimate article, omits all mention of the genuine producer and sometimes even substitutes the name and logo of an entirely fictitious company. Similar problems exist with Asian language video recordings and computer software. I should be grateful for the Minister's advice about what to do to strengthen the enforcement powers of trading standards officers.
I have long campaigned against industrial counterfeiting and I enormously appreciate the inclusion in the Bill of the clause that makes counterfeiting a criminal offence. I congratulate my hon. Friend and his colleagues because it is right that this pernicious practice should be made a criminal offence. The clause will be widely welcomed, not just by hon. Members, but by British industry because it is likely to provide a significant and obvious deterrent to this kind of crime. Arguments that the Trade Marks Act 1938 provides criminal penalties have been belied by the fact that on average the courts have imposed penalties of about £200 per crime. To a counterfeiter making many hundreds of thousands of pounds from counterfeiting our famous British brand names and products, that is derisory and not a deterrent.
I congratulate the Government and give notice that while fully supporting the Bill I feel that on some points we can improve even further their excellent efforts. If I am lucky enough to be on the Standing Committee and to catch the Chairman's eye, I shall suggest amendments that will confer on the police power to apply to a magistrate for a search warrant, and shall seek to amend the provision about the forfeiture of counterfeit goods or material so that it no longer depends on a person being convicted. I shall suggest amendments to change the offence of possession in order to make it unnecessary to prove that the possessor himself intended to commit a further offence. I shall try to insert a power that will enable enforcement authorities to share information, first with each other and secondly with industry. That is most important. I shall also try to strengthen Customs procedures about the importation of counterfeit goods.
I seem to be congratulating the Government quite often and I do so again on the European measure about which they are taking a lead on the control of counterfeit goods coming into Britain. I look forward to discussing in more detail with the Minister in Committee the reasons behind my proposed amendments to the excellent clause about counterfeiting.
§ Mr. Norman Tebbit (Chingford)
I have not had an opportunity to study the Bill as carefully as my hon. Friend. Does the counterfeiting power extend to intellectual property as well as to physical property?
§ Mr. Mills
I can tell my right hon. Friend the Member for Chingford (Mr. Tebbit) that, as I understand it, it would. If it is a deliberate counterfeit and not a design right it would come under that clause.
554 I could be tempted to continue for hours about the Community Trade Marks Office but I know that I should not be called again. I had the honour to chair the Committee which dealt with this and I can tell the House that the matter is still very much in the air. I congratulate my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) on his redoubtable and splendid support when he was Minister of State for the campaign to site the proposed Community Trade Marks Office in London. I congratulate my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my hon. Friend the Member for Coventry, South-West (Mr. Butcher) on their efforts. We have all campaigned, but we are up against tough opposition from The Hague, Munich and now Madrid. It is only right that Britain, which does not have a visible and tangible demonstration of its commitment to the European Community, should have this important institution. We have Culham, which is not an institution but a research project. Despite being the second biggest contributor to the European Community, we do not have evidence of our strong commitment to Europe, not just in the past but in 1992.
The time has come for Europe to recognise the justice of our case and to give us that important institution, which will directly lead to at least 200 jobs, and may indirectly lead to 10 or 20 times that number. With the help of the developers, Taylor Woodrow, Her Majesty's Government are building that office. It is in St. Katharine's dock, near the Tower of London. My colleagues should look at it. That is how tangible the commitment is. The Government have offered substantial support. I press them to declare how substantial it is and to increase the substance, if that is needed. The Government must understand that they may have to play this as the European bargaining takes place. I ask my hon. Friend to ensure that the Government's intellectual backing and commitment are followed up by funds and arguments to ensure that justice is done and Britain has that European institution.
§ Mr. Ted Garrett (Wallsend)
Had the debate been televised, it would have been a switch-off. However, the debate is more interesting for the long-term prospects of the country than are some of the packed, highly controversial debates on what I sometimes think are non-issues. Therefore, it is pleasant and refreshing to stand here this evening, in the peace and quiet of the Chamber—it was peaceful until the right hon. Member for Chingford (Mr. Tebbit) arrived—and debate some matters of interest to the nation and do less politicking.
I warn hon. Members who have the misfortune to sit on the Committee that examines the Bill. I was a member of the Committee that examined the last patents Bill, the Patents, Designs and Marks Bill, that came from the House of Lords. Hon. Members will find it a dreadful, complex experience. Often, after sitting from 10.30 in the morning to 1 o'clock in the afternoon, they will come out of the Committee Room with sore heads. The last patent Bill was recognised as a stop-gap measure. I well remember having a conversation with a noble Lord who has gained fame in the legal profession for his knowledge of the Patent Acts. He said, "You may be an engineer, Mr. Member for Wallsend, but you know nothing about complexity and technology until you get into patent legislation."
555 We are now in a more difficult situation. We have extended way beyond patents into other aspects of design, technology and science. Nevertheless, I welcome the Bill. Surprisingly, for a debate of this calibre, there are some hon. Members with a good knowledge of science, technology, and chemical engineering who can add something in Committee. Hon. Members on the Committee will also learn something about their fellow hon. Members. I have never seen such unity between spokesmen on both sides of the House.
I was impressed by my hon. Friend the Member for Dagenham (Mr. Gould), whose intellect I admire; it is far superior to mine. But I like classical music and he likes pop music. He mentioned that one in four pop music compositions is exported from this country. I thought of all the misery that had been inflicted upon so many people and of the long-term damage to their ears. That is well worth remembering.
I have always held the view that the design ability, inventiveness and ingenuity of the people of this country have never been fully rewarded. The man who invented "cats' eyes"—some hon. Members are too young to remember; it was in the 1930s—received adequate reward. I have often considered that Frank Whittle, who designed the jet engine, never received his full reward. Many of us may cite examples of men and women who, applying their minds and logic, have come up with some brilliant thoughts. For example, I refer to marine engineering. Some of our designers in the north-east helped to design the bulbous nose on many ships in use today. That design was stolen from us by the Japanese, and we never received our full reward.
People have improved the quality of many of our textiles. Hon. Members will have seen textiles that have been churned out in the far east, inscribed, "Finest English worsted. Made in Huddersfield." Again, our designs and colours have been stolen. We have British watches of standing and substance. They are much more expensive than I can afford. Cheap imitations are flooding in from many areas. Fake designs audaciously bear quality trade marks.
We must get around to protecting not merely designs and names but the rewards for the people who have singlemindedly put so much of their lives into such designs. Without them, British industry, technology and inventiveness will not progress. These days, we hear a lot about the decline in British industry. British industry is beginning to surge forward. New people are going into British industry. We must encourage them, but we must also encourage those who put in the effort to get the just reward. It is a sad reflection on our society that so many people who have put in the effort have not been rewarded. The reason is that they have not had sufficient money to take a case through the courts.
A long time ago, before I became an hon. Member, I was lucky enough to work for enlightened employers. Some of my contemporaries were design-conscious and inventive. They got assistance from their employers to register patents. That is an expensive procedure. It becomes more expensive when some principles of a patent are deliberately stolen. It is at that stage that the legal profession comes into the matter.
556 The Minister said that he would like the Patent Office to be kept in London. I for one would not. I should like the Patent Office to be where our design and industrial bases are. I would plump for the north-east, but I suspect that the Patent Office will remain in London. That is where patent lawyers live and congregate. That is where, with high moral standards, they argue with each other in the courts. Often they argue that costs are astronomical. Those hon. Members who will be on the Committee should also look at that aspect of the legislation.
The Government produced a Green Paper and a White Paper, but such documents are produced for discussion. All Governments have the right to decide what their analysis is, what should be rejected from a Green Paper and what should be added to the Bill, and the Government have done that.
I support them on the question of blank tape because of the sheer bureaucracy that would be involved in getting the ultimate levy. It will be bad enough collecting the poll tax without trying to get money on blank tape.
Those are my random thoughts. I hope that in Committee we shall have some really serious debates. We will have to sharpen our minds to get this legislation through with every loophole closed. I am old enough to know that we shall not close all the loopholes, but when the Bill comes out of Committee we shall certainly have improved the lot of the people who will ultimately benefit from it.
§ Mr. Gerrard Neale (Cornwall, North)
I wish to echo the comment made by the hon. Member for Wallsend (Mr. Garrett) that it is certainly a pleasure to take part in a debate that is less ritualistic than most and deals with the issues before us in the Bill. He referred in his speech to lawyers, and this Bill has been described as a lawyers' paradise. It is with some hesitation that I declare my interest as a partner in a law firm that has quite a number of clients who are involved in publishing authors' creative work and dealing with intellectual property. I hope that the hon. Member for Norwood (Mr. Fraser) will have some sympathy with the suspicion that one has an intense sense of anticipation that this Bill may reach the statute book in as complicated and convoluted form as possible, and the even worse suspicion that the sole purpose of my speech is to complicate it still further.
Those interested in this area of the law have been greatly reassured by the very name of the Bill and the way in which it has been introduced, although there are, of course, concerns, and I will touch on those in a moment. The hon. Member for Dagenham (Mr. Gould) implicitly indicated the degree of courage that is required to bring forward a Bill of this kind, bearing in mind the tremendously conflicting interests. It is a great credit to the Government that they have introduced it.
The Bill started its life in another place as a relatively straightforward and clearly drafted piece of legislation, but has already, as indicated by my right hon. and learned Friend the Minister, become something of a monster. In my view, it still has some way to go towards achieving its objectives of improving the lot of those responsible for creating the works of the mind on which our society depends while ensuring that there is access to those works 557 on fair terms. I hope that during the Bill's passage through the House we may be able to do something to restore the balance which in some areas seems to have been lost.
I shall direct my remarks predominantly to the copyright elements of the Bill. We have had excellent speeches by my hon. Friend the Member for Meriden (Mr. Mills) and my right hon. Friend the Member for Chertsey and Walton (Sir. G. Pattie) on the design aspects.
The Government have told us, and history shows, that there is a major new copyright Bill only once in a generation, so the Bill is important if only for that reason. But it has a much greater importance. Copyright is the trading system for works of the mind, for the information and creative products which play so vital a part in our society and our economy today. In terms of demand, four years ago a Cabinet Office paper estimated the value of those industries at some £15 billion a year. The hon. Member for Dagenham quoted a figure of £20 billion, which is something over one twentieth of our total economy. Those industries include, in addition to the traditional writing, publishing and printing industries, broadcasting in all its new forms, the film, video and audio industries, computer services and those involved in the distribution of information products.
These industries are large, significant and influential for the shape and growth of our society. They represent an area of trade in which the United Kingdom, with the benefits of the English language, has a particular role to play. They enjoy exceptional growth possibilities, and various speakers have referred to that. As a country, our writing, research, publishing, television, films and software are of unrivalled quality. We stand on the threshold of an information explosion generated by the information technology revolution. This offers this country unusal opportunities, which the industries are now seizing. What is more, as has been said by various hon. Members, the copyright model that we set in this Bill is very likely to be followed by countless other countries which have taken their lead from us already in such matters as well as in other areas of legislation.
The Bill, on its publication in the other place, appeared to recognise that an effective trading system for information products and services is clearly essential. In the United Kingdom we secured this long ago by establishing a property right, a right to sell or license. The existence of this right works in the interests of the public by encouraging authors and other creators to put their works on the market by giving them the prospect of fair earnings. But, because the property is incorporeal, unlike land or chattels, it is particularly difficult to enforce. That problem was touched on by my right hon. and learned Friend in his opening speech. At any time it has been easy to make pirate copies of books, films, records and software. As a consequence, the Copyright Acts have imposed both civil remedies and criminal penalties to discourage such behaviour. My right hon. Friend the Member for Chertsey and Walton pointed out how new information technology has greatly increased that risk, not just from commercial fly-by-nighters but by all sorts of respectable people: by the ordinary citizen with a cassette recorder, by industrial companies—which, one has to say, at the same time will go to the ends of the earth to protect their own intellectual property—by libraries, by professional people by Governments and by local government.
These new technologies, of course, help provide access to information. They enable users of information to make 558 a copy—perhaps many copies—cheaply and easily of just the piece of information they need. This confers major benefits on consumers, the benefits of cheapness and selection. Since, normally, they own the master copy, they are, they think, doing only what is within their rights. But for the copyright owner these acts are legion. The copy seems to amount to little, but the sum of the copies is enormous and for many types of work this prevents the owner from getting the fair return to which he or she is entitled. It discourages investment of his or her time and skill in the creation of further work and it discourages investment in those works by publishers. In volume, it destroys the viability of industries dependent upon the copyright.
It was this phenomenon that the Whitford departmental inquiry was set up to investigate and advise on. ft produced a widely accepted report to the effect that copyright owners would have to accept new and perhaps less satisfactory systems for controlling and producing returns from these new uses. It also advocated that users should accept that, while such systems should as far as possible be voluntary, they should be backed by statutory enforcement.
Those recommendations were accepted by the Government in a series of Green Papers and White Papers, and appeared for the most part in the original text of this Bill. But in the course of proceedings in another place many of them and many of the positive supports for the copyright owners have been dropped. I will not repeat the elements touched on by my right hon. Friend the Member for Chertsey and Walton in that regard. He referred to the need to secure reward for composers and manufacturers of music records so frequently copied in the home, and to his stance on the levy on blank tape. I could not contemplate going that far, but I must say to my hon. Friend the Parliamentary Under-Secretary that I still feel some pricks of conscience that we have yet to cover this point and should be happy to contribute to any attempt that he might make to cover it.
§ Mr. James Couchman (Gillingham)
Does my hon. Friend recognise the great danger that, if we set up such a bureaucracy to distribute money from a comparatively modest levy on blank tapes, much would go on administration and little to those who composed or performed the works? Would that not have a similarity to the performing rights system, where a high proportion of the money paid to the Performing Right Society does not go to the composer or artist, but is spent on administration?
§ Mr. Neale
There is undoubtedly a danger in any system of this type. I agree with the hon. Member for Dagenham that if one is to criticise the Government on their stance it is only right and proper to come forward with a clear alternative, which I am unable to do. I am left with a feeling of conscience, which I think my hon. Friend the Minister, as a composer, would share and I wish him well in that interest. I am sure he will accept that it is clearly unfair on people who spend considerable time arid effort producing creative works to see them copied freely, without any attempt to contain that.
There is a fundamental need to secure a reward for writers and publishers for the books and periodicals which are so freely copied by libraries and, similarly, those copied by commercial companies and research institutions 559 through the block licensing systems. Yet that has been truncated in the Bill, so that if it were enacted it would amount to an unfair freedom for important sections of the market to make copies to meet their needs. For valuable and scientific publications the result would be devastating, given the expense of production and the small circulation. Under clause 29 academic institutions, libraries and commercial research organisations will be able to obtain copies of articles, journals and even parts of books. They are all worthy institutions but, as Whitford said, there is no reason for permitting the confiscation of originators' property, especially since relatively simple licensing systems are available to provide the required access.
My right hon. and learned Friend reiterated his belief that people should be rewarded when they create a work and my hon. Friend the Member for Meriden referred to the comments of Lord Beaverbrook and the Secretary of State in another place. It was the CBI and library bodies that objected to the administration involved. If comparatively little is going on, the amount of administration should be small. If the administration costs are heavy, it shows, as does research, that there is an enormous amount of infringement of originators' rights. We need to consider that carefully.
The legal presumptions are designed to ease and reduce the cost of the copyright plaintiff's burden of proof in enforcement actions. It is worrying that the Government dropped those without adequate replacement, and I hope that that will be considered. As a result this Bill carries the danger of becoming an infringers' charter. New technologies present, not so much an opportunity for the copyright owner, but a major threat, destroying the viability of an original publishing operation, particularly of the valuable specialised works which are most likely to be accessed by these means. Book publishers, for example, greatly hit by these changes in policy, have given the Government a shortlist of priorities which include better protection of computer software. The Bill improves on that, but there are certain disturbing drafting loopholes. They include support for the block licensing of photocopying by institutions and companies—that is truncated in the Bill as it stands; support in the fight against international piracy of books and other copyright products; and the special circumstances of British publishing in the European market, which is by no means a common publishing market because of the different marketing considerations that inevitably apply.
In that connection, in 1981 the book publishing industry asked the Government for help with serious problems which the single market presented for British publishing. The threat came from opening the doors to competing American products, without any compensating entry into the United States. I hope that it is appreciated that, far from helping, clause 29 advertises the opportunity.
I ask my right hon. and hon. Friends in the Department to continue to listen carefully to the amendments that are being advocated. I am sure that the spirit of the debate will be carried over into the Committee. There seems to be a genuine desire to create a better environment in this respect. These points need to be remedied so that Parliament helps, and does not penalise, our creative 560 industries which are so vital, not just to our culture, but to our economy. They are important to the extent that many hundreds of millions of pounds a year are involved.
In conclusion, I wish to take up a point made by my right hon. Friend the Member for Chertsey and Walton. Given the history of infrequent introductions of Copyright Bills and the rapid change in technology, we need both a more permanent form of machinery to keep this under review, and help in ensuring that our law keeps abreast of technical changes. I know that so far the Government have resisted the idea of a standing national council to assist in this process. I am sure that my hon. Friend the Minister realises that that idea is supported by the Confederation of Information Communication Industries. He has resisted it to date, but I hope that he will reconsider it because there is considerable anxiety regarding the pace of change and the ability to get round elements of the Bill.
I welcome the general thrust of the Bill and I applaud my right hon. and hon. Friends in the Department of Trade and Industry for introducing it. One accepts that there are desperately conflicting pressures. There is not a great deal of party political division over the subject, but there is commercial division and it would have been extremely tempting for the Government to leave it for yet another year. I wish the Bill well and I hope that my hon. Friend the Minister notes the points raised in the debate.
§ 7.7 pm
§ Mr. John Fraser (Norwood)
This is not a controversial Bill; nobody will vote against it, and that would he the case whenever it was presented. Therefore, it is a disgraceful reflection on the British legislative system that we have had to wait 11 years since the publication of the Whitford report for legislation. It is the fault of Administrations of both parties. For a short time I was a Minister after the Whitford report was published. We must find a better way of legislating more quickly on matters on which there is no great disagreement on principle. If it takes 11 years to put into effect relatively uncontroversial but important legislation such as this, there seems little hope of reaching a common single European market by 1992.
The purpose of the legislation must be to ensure that the creator of intellectual property is properly rewarded for his effort, which ranges from a symphony to the composition of a computer software system. Those who spend time on the creation of a computer software system may spend more time on it than Mozart did on a symphony, and that effort must be properly rewarded. It is wrong that the results of a great deal of effort should be stolen so easily.
I hope that in future we shall be able to legislate more quickly on these matters, perhaps concentrating on matters of principle and rights. Enforcement and administrative matters might well be developed later. Of course, I welcome the Bill.
I shall deal briefly with three matters. First, I have had letters from several universities about the copyright in statutes and the statutory instruments passed by Parliament, and in law reports. Several people have written to me saying that it is wrong for them to be denied the opportunity to present for a court or tribunal legislation that has been passed by the House or, indeed, law reports that require the interpretation of legislation. I hope that the Minister will look at that problem. I am sure that other people have written to him about it. It is an important matter of principle that the law should be 561 accessible to all and that poor litigants, especially those who litigate themselves and who need to copy and take extracts from law reports, should be readily afforded the opportunity to do so without breaching copyright laws.
Secondly, moral right exists in many European countries. The Bill extends it to creative matters such as films. Sometimes when I go to the films I think that there is so much moral rights recorded in the film that the credit titles will be longer than the film. Sometimes the film has been going for 10 minutes before the moral rights are put up on the screen and the story resumes.
I think that the concept of moral right is correct, but we ought to be consistent about it. It will apply to writers of advertisement copy and producers of film, but it is not to extend to journalism. Indeed, when one considers some journalism in The Sun or the Evening Standard, perhaps moral right ought to be compulsory. When someone writes headlines such as "Big-boobed bimbo bonked", not only should the author of such a story have the moral right, if that is the right word in that context, to have his name recorded, but it ought to be compulsory so that we know who writes the disreputable smear stories that appear in some of our newspapers. So, if we are to have moral right, let us have it across the board.
There is equally a strong case for someone who produces, say, excellent photographs or sketches for newspapers, or a piece of writing or broadcasting, to have moral right. It should exist consistently across the board.
Thirdly. with regard to a blank tape levy, musicians, composers and performers especially have had their work plagiarised and stolen from time immemorial. Composers such as Donizetti and Rossini used sometimes not to tell the artists or the orchestra the contents of their great arias until the day of a performance. That led them into trouble. I believe that on one occasion a composer, working at the end of the 18th century, presented an aria at the last moment because he was fearful that his work would be reproduced on the streets of Venice without benefit to him. Other prima donnas who had learnt about it at the last moment insisted on another aria being written. I believe that on one occasion either Rossini or Donizetti was forced to sit down at about midday and write another aria to match the ones that had been disclosed at the last possible moment. Therefore, this has always been a problem.
The Government have recognised that. In 1986 they decided that the blank tape levy was a way of dealing with the matter. I am not suggesting that the levy is the only or the perfect way of dealing with the problem of giving artists their correct reward. But if anything has happened since 1986, it must be a reinforcement of the argument that composers and performers ought to be given protection against copying, even if it is only in the home. Since 1986 there has been on the market a flood of double-tape machines. Very few people nowadays buy a hi-fi system unless it has a back-to-back taping system. Such systems are widely advertised, and their sale has greatly increased in the past two or three years. That reinforces the argument for protecting artists whose work can be copied so easily.
The growth in the market of compact disc players means that one can buy a very high quality recording which will not deteriorate over time and can copy it over and over again. The copy does not have the hiss and 562 scratch that one gets from an ordinary gramophone recording. That again reinforces the argument for protecting the performer.
Indeed, everything that has happened in that time will reinforce the need to protect the artist and to present him with some reward. Of course, in the past, some people have achieved extraordinary rewards. I think that it was Puccini who earned more from Al Jolson than he did from many of his scores. Al Jolson's publisher took a piece from Tosca and turned it into a song called "I found my love in Avalon". Puccini sued Al Jolson's publisher and was awarded the entire royalties. I think that it produced a rather larger income for him than many of his famous operatic scores. I want to see artists and performers, whether of classical or pop music, getting their just rewards, as Puccini did from Al Jolson's productions. Something like a blank tape levy is the only way to do it.
I know that there are problems about administration. As a solution, I suggest that the Government ought to put into the Bill a framework based on a levy on tapes. It would not be as difficult to administer as the Government suggest. After all, there are few manufacturers of tapes and it would not be too difficult to catch and control those who import tapes. So one can define the market fairly easily. There are turnover records and the manufacturers can be identified separately in VAT returns. There is no great difficulty in identifying the market. The Government ought to tack on to the Bill a framework for doing this, but say that they will allow for an interval of time during which the industry could try to work out a voluntary arrangement.
Such systems operate elsewhere, for example, for the advertising industry. The control of advertisements works extremely well with the Advertising Standards Authority. The authority works voluntarily without any public expenditure involved. It does its job excellently. A system of self-regulation will be imported when we implement the European directive on advertising.
In exactly the same way, there could be a voluntary arrangement in this case. It all came about because the advertising industry was told that if it did not regulate itself there would be statutory intervention. If the Government put a framework into the Bill that they could implement in future, after perhaps three or even 10 years, so that they could transfer some of those rewards from the copiers of music, in particular, to its producers it would be possible for the tape producers to set about organising a voluntary scheme. It would involve no public expenditure or great bureaucracy and would transfer rewards from those who enjoy music and other productions to those who produce them.
I do not think it is an argument against this approach that performers such as Madonna or The Beatles earn a lot of money. They will earn a lot of money from their record productions in any case. But it tends to be artists who do not have large incomes who will suffer as a result of copying. I hope that the Government will adopt that compromise.
The Bill is uncontroversial. I am not asking for a U-turn, but I do ask the Government for what I believe the pop industry describes as a re-mix.
§ Mr. Andrew Hunter (Basingstoke)
Some hon. Members—I count myself among them,—may be 563 experiencing a political version of déjà vu, having covered in previous debates at least part of the material that we are covering today.
Three years ago, my hon. Friend the Member for Corby (Mr. Powell) successfully introduced what was to become the Copyright (Computer Software) Amendment Act 1985. I welcomed the opportunity to take part in that debate, just as I welcome this opportunity.
The town of Basingstoke, which dominates my constituency, has become over the years one of the major centres in the United Kingdom for the hi-tech industry. Constituency interests in intellectual property, and the Bill, are appreciable.
I echo the sentiments already expressed that it is good to take part in a debate where clearly there is no party political divide, especially after the uproar earlier this afternoon. I listened with great care and interest to the hon. Member for Dagenham (Mr. Gould) and I substantially agree with what he said.
I do not for one moment challenge the need for the introduction of major legislation of this sort. On the contrary, I add my voice to those who demand such legislation. I fully accept the proposition that copyright law must be made more logical and consistent and that it must be brought up to date to take into account modern developments in communication technology.
As a former schoolmaster, I particularly welcome the suggestion that schools and other education establishments should he allowed to record broadcast material for teaching purposes. As has been said in the debate, it is essential to introduce new and effective measures for dealing with copyright theft, counterfeiting and so on.
I particularly welcome the Government's acknowledgement of the importance of getting the balance right between the interests of the innovator or designer and the interests of fair competition, with the benefits that that will bring to the consumer. The essential and fundamental question is whether that balance is right and whether the Bill has found the balance. I propose to restrict my comments exclusively to the design side of the Bill. Initially, I must confess that I have my doubts about whether the balance is right.
My attention was particularly caught by a choice of words by my right hon. and learned Friend the Minister who spoke of the need to legislate to provide limited protection for the designer and innovator. I felt that the context in which he used those words demanded not the term "limited" but "adequate". At several key points in the Bill the interests of the innovator and designer may not be sufficiently safeguarded—lost, as it were, to the interests of the consumer and fair competition.
The Bill carries with it the abolition of design copyright. It replaces it with two forms of protection, each of which is accompanied by major exemptions, which have the objective of allowing spare part copying, to which much reference has been made. Under part IV, the option of registered design is limited only to aesthetic design. Arguably, that is a weakness, although I acknowledge that the period of protection is sufficiently extended.
Similarly, under part III, an automatic design right is created for functional, non-aesthetic designs and non-registered aesthetic designs, but the period of 564 protection is only five years. In the following five years the innovator or designer is obliged to allow rivals to compete and thereafter no protection is given.
The spare parts debate dominated much of the proceedings in another place. During those deliberations, most attention was given to the motor vehicle industry. I do not for one moment doubt the importance of that industry or the specific problems generated in it, but, arguably, their Lordships' debate was the poorer for its great concentration on the industry. Arguably, the proposals in the Bill are couched in terms which, to an excessive extent, reflect the interests of the motor vehicle industry. As a result, arguably, protection has been completely removed from a wide range of design products in other industries. The impact on the rest of industry could be dramatic and highly undesirable.
Without for one moment denying the need for the legislation, and while warmly welcoming it, I believe that there is no doubt that there is a growing and articulate body of thought that is concerned about the proposals on designs. The essential argument is that the Bill will, in practice, substantially weaken the incentives for British companies to innovate. My hon. Friend the Member for Meriden (Mr. Mills) made much of that and I entirely endorse his comments.
More specifically, it can be argued that British companies will be at a disadvantage compared with overseas competitors since so many of the latter enjoy far greater protection. I understand that functional design is protected for 50 years in France and for 25 years in Japan and that there is limitless protection in Portugal. Without protection, the incentive to innovate is seriously undermined. The Standing Committee will have to address that problem seriously.
An area for concern is the suggestion that the introduction of registered design will impose major new burdens on business. The Government's overall objective is to decrease the burdens on industry. It is a fact that tens or even hundreds of development designs are produced for every product that is eventually marketed. Very probably during that process the designer will wish to protect those development designs as well as his final product. If that is so, the Bill will impose on the designer a process of registration that will be costly and time-consuming and might prove to be bureaucratically burdensome. The impact may be felt most by small businesses, that very sector of our national and economic life which the Government so rightly wish to nurture.
A second area for concern, which must be considered carefully, is the argument that functional design deserves greater recognition than is currently given in the Bill. To start with, and almost in parentheses, I confess that I am confused and somewhat cynical about the rigid distinction between aesthetic and functional design. I wonder whether, in practice, that rigid distinction can be made. However, accepting for a moment that such a distinction can be drawn, I must ask why the Bill gives such a low priority to protecting functional design.
The Bill would have us believe that artistic endeavour and aesthetic design are more worthy of protection than functional design. Why should industrial innovation and functional excellence be regarded as less worthy of protection? Surely functional excellence, ease of assembly and economic use of material are as much of good design as aesthetic qualities, yet in the Bill functional excellence 565 receives the protection only of design right rather than of registered design. The Bill almost presents functional design as a second-class citizen.
The protection of five years given by the Bill is insufficient to encourage innovation to the extent that we should like. It is insufficient to allow British industry to compete on an equal footing with overseas competitors.
A third area for concern in the Bill is the "must fit, must match" principle. Surely it contains loopholes and inconsistencies. The Bill excludes from all protection many products that cannot be regarded just as spare parts. Intentionally or unintentionally, it will be possible for a host of composite unit products—hi-fi, kitchen units, food processors and so on—to be copied freely. Surely that cannot be right. Nor can it be the intention of the Bill. For such items, there will be no protection, which is unacceptable—hence so much of the concern that is being expressed about the design part of the Bill.
Similarly, the "must match" principle, intentionally or unintentionally, encompasses a wide range of items, including product casing formed from two or more pieces. In other words, the design casing of a huge range of products will lose protection. The important point is that many firms have developed products that are novel primarily in appearance or in the interconnections. Protection will be removed from those.
Let me expand on the point that I tried to draw from the hon. Member for Dagenham in an intervention. As we know, the Bill removes design copyright. It can be argued that it has not replaced it with adequate protection for innovators. Despite the hours of consideration given to the Bill in another place and the conclusions reached there, it may still be argued that design copyright should not be eliminated. However, if it is to be eliminated, functional design must be protected for a greater length of time.
I accept—indeed I warmly welcome—the Bill and I welcome the opportunity for this debate. The key to the problem is to get the balance of conflicting interests right, and I have my doubts that that balance has been achieved for the design aspects.
§ Mr. Brian Wilson (Cunninghame, North)
This interesting debate has so far covered everything from the defence industry to Madonna and doubtless a few variations are yet to come. I mean no disrespect to the hon. Member for Basingstoke (Mr. Hunter), who made interesting points about design, if I restrict myself to one or two specific aspects of the Bill. The only interests that I have to declare are as a member of the National Union of Journalists and as someone who occasionally tapes music. Let me say immediately that I would have no objection to paying a little to those who have created that music.
Let me deal with the aspects of the Bill affecting journalism. It is important that what is, by common consent, a necessary and valuable Bill should not have a marginal impact upon groups of people whom there is no intention to hurt. While the major industrial concerns are being discussed, some such effects could slip through almost unnoticed. I am especially concerned about clause 11, which replaces clause 4 of the 1956 Act. Under that Act a journalist who wrote a piece of work had to accept—perhaps sometimes reluctantly—that the proprietor of the publication was entitled to the copyright in that work so 566 far as it related to its appearance in any newspaper, magazine or other periodical. In all other respects, the copyright was retained by the author. Thus a newspaper or magazine could syndicate staff journalists' work in other newspapers or magazines, but if the work was broadcast, included in a book or fed into a database, the author held the copyright and was entitled to recompense for its use. When the Bill entered the Lords, that was roughly the position.
However, quite a dramatic change was made in the Lords. I had hoped that, in amending the Bill, the Lords would have moved towards protecting the rights of journalists, perhaps allowing journalists' employers to use their work in their other publications but limiting it to that. In fact, the other place moved in the opposite direction. The effect of clause 11 as drafted would be that once the journalist has produced a piece of work for his own publication—presumably in return for the salary that that publication pays him—that work belongs to the proprietor, who can do whatever he likes with it. The effect of that is absurd. A relatively low-paid journalist—and they exist—is paid for a piece of work that acquires a value, because of the journalist's reputation or the subject matter or quality of the work, and it is then open season for the proprietor to maximise his revenue by selling that work all over the world and to all branches of the media. That is going too far towards helping the proprietor's interests and diminishing the legitimate rights of journalists. I know that hon. Members on both sides of the House have been known to contribute to the written and broadcast media from time to time and I suspect that they understand the problem. A journalist works for the money that he is paid, but it seems very unfair if that work is then flogged all over the world for large amounts of money, not a penny of which he is entitled to.
If the Bill is unfair to journalists who write, its effects on photographers are far more pernicious. Perhaps I may explain. Article 10(1) of the Berne convention, which governs such matters, states:It shall be permissible in all the countries of the Union to make short quotations from newspaper articles and periodicals, as well as to include them in press summaries".Most people would say that that was fair enough. In line with article 10(1), the fair dealing provisions of the 1956 Act allowed journalists to make quotations from other sources to clarify a news report, so long as prior permission was obtained. Clause 30 of the Bill, however, removes the distinction between fair dealings with literary work and fair dealing with photographic work.
Clause 30 (1)(b) proposes that the use of material free of charge for the purposes of news reporting should be extended to photographic material. The implication for photographers—particularly freelance photographers—is devastating. One cannot use a bit of a picture in the same way as one can use a quotation from a story or other piece of literature to illustrate a piece or work. One can only use the picture itself. If every Tom, Dick and Harry the world over had the right to use other people's pictures to illustrate his work without paying for them, many photographers would simply lose their livelihood. Everyone knows that freelance photographers are not paid for their work as they do it. The pictures that they take lie in libraries and are used over a period of months and perhaps years. That is what provides the freelance photographer with his income.
567 The journalists' third anxiety about the Bill comes under the heading of moral rights. Essentially, we are discussing whether it should be the right of the publisher or editor to do exactly what he likes with the work that a journalist provides. The original clause 69, which is now clause 73, grants the right to be identified as the author of an article but then makes the right meaningless by stating that the right is not infringed unless it has been asserted in accordance with clause 74. That latter clause requires that the assertion must be in writing. Such a requirement negates the whole purpose of establishing moral rights and the NUJ seeks an amendment to make it easier for copyright holders to assert their moral rights. I am sure that all hon. Members will agree that one has the moral right not to have what one writes manipulated and altered—still appearing under one's name but being used for a purpose quite alien to what was originally intended. We can surely agree that such a right should be incorporated in the Bill.
The National Union of Journalists expresses valid concerns. The union has no political axe to grind but, in the spirit of what has been said about inventors, intellectual property and the right to possession of the intangible, the Bill should defend journalists' rights because they fall into that category. As it stands, the Bill moves too far towards the interests of proprietors and publishers.
As to taping, like other hon. Members, I have had letters from constituents who are confused about it. Some of them, who are musicians, composers and members of the Performing Right Society, cannot understand why the Government have done a remarkable U-turn on home taping. As we have heard already, the 1986 White Paper recognised the extent of the problem and proposed as a solution to legitimise home taping, except for computer programs and videos, and to introduce a 10 per cent. levy on blank audio cassettes, which was to be distributed to copyright owners. That was a commonsense and modest solution. There is statistical evidence that it would have the full support of the vast majority who tape music for their own benefit.
People who take the trouble to tape music, and who have an interest in music almost by definition, respect the musicians, composers, and others who have created the work. People who do home taping are getting something on the cheap but they would not want it to be thought of as stealing the work of others. The modest levy which was proposed would have enabled everyone to have a clear conscience. The product would be cheaper, even with the levy. People would not have to buy the packaging and those who produced the work would get some recompense.
The arguments adduced against the levy have concentrated on other categories of users. The needs of those people could be accommodated in the legislation. I suggest that the arguments we have heard are a subterfuge. It is estimated that 85 per cent. to 90 per cent. of the blank tape for 100 million cassettes imported and sold in the United Kingdom is used to make illegal copies. The Minister should not use an argument which affects only 10 per cent. to destroy the case for a levy on 90 per cent. of blank tapes. A principle is involved. The same principle is recognised in public lending rights and I hope that the Government will accept it in regard to taping.
568 A great array of people support the taping levy. Sir Michael Tippett and other composers point out that, while £7 million as the total figure which a taping royalty would produce is not much in terms of a Cabinet Minister's salary, it would make all the difference to a composer who is earning less than half the national wage.
Similarly, Sir David Lumsden of the Royal Academy of Music and the heads of other music colleges have expressed concern that there are few enough places for students of music and people involved in the music profession to get their income from and that to deprive them of this money is unreasonable, particularly when it seemed that they would get it.
In a letter a constituent from Kilbirnie says:It was understood that this principle of a levy was to be included in the Copyright Bill now going through Parliament as the only effective means by which these royalties could be protected; however, the Government has performed a U-turn on this issue, having dropped the royalty proposal and now we are left with nothing. This legislation would have been a unique opportunity and still could be, to right this grave injustice.The appropriate words are "still could be". The Government could change their minds again. There will be fine tuning to the legislation and I hope that it will include changes in the Bill as it affects journalists and the music profession and industry.
§ Mr. Churchill (Davyhulme)
There has been considerable agreement between the two Front Benches. When that occurs, it behoves Parliament to look at the measure with scepticism. It is with pleasure that I agree that almost everything which the hon. Member for Cunninghame, North (Mr. Wilson) has said, with one qualification. I would not favour a levy on blank tapes, above all because it would hit the blind who rely a great deal on the use of tapes for newsletters and newspapers which sighted people record for them.
I intervene briefly as an author and journalist. I also declare an interest as a trade unionist and as the parliamentary convenor of the Institute of Journalists—wholly unpaid, I hasten to say.
The Bill represents only the second major attempt in the past 75 years to amend the legislation on copyright. No doubt it is intended that, like its predecessors, it should stand the test of time. I very much hope that, suitably amended, it will.
There is much in the Bill which I welcome, but I regret that it is fatally flawed in regard to the interests of journalists, first, in respect of the ownership by journalists of the secondary copyright in the material which they produce, which has traditionally been theirs, and, secondly, in respect of the moral rights being introduced for the first time into British copyright legislation in accordance with the provisions of the Berne copyright convention.
When the Bill was introduced in another place it was acceptable on both counts in regard to protection afforded to journalists, both staff and freelance. Regrettably, Ministers in another place surrendered on these points to the powerful lobby of publishers which is to be found in their Lordships' House. Indeed, there are no more powerful lobbyists than those cloaked in ermine and bedecked with coronets. One must wonder if the time has come for the establishment of a register of Lordships' interests, just as there is a Register of Members' Interests.
569 In consequence of the amendments that the Government accepted in another place, the Bill has been drastically amended as it affects the rights of journalists and, as the hon. Member for Cunninghame, North rightly mentioned, photographers, in favour of employers and at the expense of staff and freelance journalists and photographers. Journalists will lose the right which has been theirs since the Copyright Act 1911, confirmed by the Copyright Act 1956, to retain secondary rights in their creative work. This is an important point which the Government must address. They must reinstate the provision in Committee. As it stands, the Bill discriminates against the interests of the creators of original work in journalism and photography. In this respect it has become nothing less than a gaffer's Bill.
The second objection that I voice is on moral rights. One has not been able to find much morality in the gutters of Fleet Street of late. None the less, the concept of moral rights has been imported into the legislation in consequence of the Berne convention which goes back to 1886 and of which we, 102 years later, are finally taking note.
The 1986 White Paper on intellectual property and innovation, command 9712, explains:amendment of the law will be necessary to comply with the Paris text of the Berne Convention, which requires member states to protect some at least of the moral rights at least until the expiry of copyright.Nevertheless, though included in the Bill as the required additional safeguards for the creators of copyright works, the provision on moral rights was so extensively modified during the Bill's passage through their Lordships' House, under pressure from the publishers' lobby, that, far from affording the protection which the Berne convention sought to give, it may now remove from many individuals even the right to protest at the infringement of such modest rights as they already possess. That cannot be the Government's intent. As defined in clauses 73, 76 and 78, there are three kinds of moral rights: the right to be identified as the author, the right to object to derogatory treatment of one's work, and the right not to have one's work falsely attributed.
As foreshadowed in the Whitford report and in the 1981 Green Paper, the White Paper contained a proposal to legislate on moral rights:
As originally introduced the Bill met in large measure the points contained in the White Paper. That is why I am at a loss to understand the way in which Ministers in another place conceded the point before the publishers, who are to be found there in large numbers. There are certainly more publishers there than there are journalists. As a result of financial and other pressures, which could be exerted against an author or a journalist to cause him or her to waive moral rights for all time, the provision now in the Bill for the waiver of those rights is completely against 570 the spirit of the Berne convention. The rights are supposed to be "non-assignable" and "separated from commercial values".
- "(a) authors will be given the right to claim authorship and to object to distortion, but not to modification of a work to which they could not reasonably refuse consent;
- (b) these moral rights will be independent of the economic rights, and will be exercisable only by the author. After his death they may be exercised by the person who inherits the copyright or, if the author no longer owns the copyright at his death, by the person to whom he has bequeathed them. An author will be able to waive his moral rights, and such waiver will override any inheritance or bequest; and
- (c) moral rights will apply for the duration of the copyright."
Instead, under the Bill, the waivermay relate to … works generally … existing or future … and … unconditional".It is regrettable that the amendments were accepted in another place, and I ask my right hon. and hon. Friends who are dealing with the Bill—particularly as it passes through its Committee stage—to look at those clauses and undertake to table amendments to remove the exceptions that drastically affect the existing rights of journalists, as well as the other rights being brought in under the terms of moral rights. I ask them specifically to look at the rights contained in clauses 11, 75 and 77 and that they further amend clause 83—which permits waivers—to require that the waivers must be specific in relation to time and circumstances.
Further, in the spirit of the Berne convention and the White Paper, it should be made an offence under the Bill to offer a financial inducement or commercial advantage for the waiving or non-assertion of any moral right or to penalise an author who asserts or refuses to waive any such right. I trust that in replying to the debate my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs will express his willingness on behalf of the Government to grant justice to journalists in this respect so that they will not be disadvantaged by the Bill, which I am sure was not the Government's intention.
§ Mr. Ian McCartney (Makerfield)
Last week my hon. Friend the Member for Sedgefield (Mr. Blair) asked me to participate in this evening's debate on the basis that it would be one of non-political controversy. Having read in Hansard the debates in another place, and heard the interesting and knowledgable contributions in this debate, I agree that, although the presentation of the Bill is an area of non-political controversy, the matter has caused a great deal of controversy, both in terms of the Government's proposals and the amendments which have been tabled, and from my point of view as a Back Bencher. It is interesting, when coming here as a Back Bencher with no axe to grind, to note how, when lobbying hon. Members for this evening's debate, 'the various interested parties offer contrary advice on, in some instances, the same clauses. Therefore, I wish the Minister and my hon. Friends on the Opposition Front Bench well in trying to square the circle in Committee in regard to these complex and confusing issues.
The issues are critical to much of British industry and the arts, and through them to the nation's creative genius. I understand that the Minister has for some time been trying to break into the area of creative genius in the arts. Because of the unanimity in the House, I wonder whether in his reply he will abandon the political context and sing us his version of "I Did it My Way". [Laughter.] Well, hon. Members were rather slow there.
Previous Second Reading debates in which I have taken part have been controversial. The Opposition and the Government were at each other and much of the nitty gritty of the debate was not highlighted. Therefore, from my point of view, this evening's debate has been useful in setting out the agenda for the Committee stage. We must get this legislation right, and the fine tuning which will take place in Committee is necessary to help achieve that aim. 571 I accept that there are such conflicting interests among some of the lobbyists involved that it will be virtually impossible, despite the fine tuning and agreements that take place, for the Bill to be supported unanimously by all sections of British industry and the arts when it comes out of Committee.
I hope to outline some of the briefings that I, and I am sure other hon. Members, have received from a number of sources on some of the important aspects of the legislation. Six major bodies with an interest in the Bill have written to me. They are the Committee on Photographic Copyright, the British Automotive Parts Promotion Council, the Music Copyright Reform Group, the information technology industries, Phonographic Performance Ltd. and the Confederation of British Industry. As I have said, sometimes those various groups oppose each other vehemently and cause confusion.
In my previous life as a local government councillor, I was also a director of the Wigan development company and the Wigan Information Technology company. I was also one of those instrumental in introducing a business centre into Wigan, purchased and run through public resources with private capital. All three of those business interests made a major contribution not just to introducing new industry into our area, but in trying to encourage innovation, in both the public and the private sectors. They used resources to encourage new inventors and people with new ideas not only to set up their operations in Wigan but to assist them in developing their ideas for production capacity and for sales both at home and abroad. Time will tell whether those initiatives will be successful. Paramount to the success of those innovations in British industry is protection for those with new ideas about production capacity in industry and new information technology. It is critical for such developments that protection is provided in this legislation. Members of Parliament must respect the necessity to ensure that British industry is protected.
If this were a defence debate about espionage I suspect that 300 or 400 hon. Members would attend and participate, including the hon. Member for Davyhulme (Mr. Churchill). Here we are dealing with industrial espionage. I was interested in the remarks of my hon. Friend the Member for Wallsend (Mr. Garrett) who spoke about the history of British industry and of how often the ideas of our inventors and our industrial innovations have been stolen and used by foreign competitors to produce materials that were then imported back to the United Kingdom. So it is important that these ideas should be protected from industrial espionage by people, at home or abroad, who seek to secure and use them to their benefit and the detriment of our nation and of those who have used their own mental capacities and financial resources to design new information technology systems and other things that are essential to the British economy and
I welcome the commitment given by both Front Benches to ensuring that British artistic, industrial and technological creativity should be protected. However, I am worried—I seek the Minister's reassurance on this—that unless we get this right, British artists and industry will be put at a grave disadvantage as compared with our overseas competitors. I hope that the Minister will take up these matters positively in Committee.
572 On 25 April the CBI issued a statement to coincide with this debate. Before I am accused of using a counterfeit I hasten to add that I shall quote from the CBI's brief. It says thatBritain's designers and inventors need a just reward for their efforts.The Government's aim in the Bill is to strike a balance between encouraging creativity and the need to ensure competition.The CBI believes the Bill has got the balance wrong.The Bill (Part III) introduces a new 'design right', covering designs applied in industry. The new `design right' will:
- —Effectively have a protected term of only 5 years as opposed to copyright (life of author plus 50 years) and registered design (25 years).
- —So as to solve difficulties over car 'spares', it will not allow any protection where two new rules apply—'must fit' (Clause 198(3)) and 'must match' (Clauses 198(3) and 248(1)).The Bill will thus remove protection from the vast majority of design-intensive industries in the UK and leave them less competitive than their rivals abroad.The CBI went further in its detailed criticism of the Government's attempt merely to strike a balance between competition and the need to encourage investment in new ideas. It says:Competition Law should look after anti-competitive procedures. Weakening proper industrial design protection does not do this. It simply weakens the market. It is protection which encourages a strong and vibrant home market. The consumer must have a choice. But this implies not just on costs but by having a range of competitive alternative products. There would not be, the present diversity of consumer products without intellectual property right protection.Education provides an example. Because it has been almost impossible to police intellectual property rights in educational software products, almost no good educational software is now being produced. No protectiom can mean no new products.As the law stands, functional design enjoys copyright for the designer's life, plus 50 years. Aesthetic design is judged on eye appeal, not artistic merit, for 15 years from its first launch date. The Government now propose three different kinds of protection: design right, registered designs and copyright. I believe that in practice these proposals are weak. Design right gives protection against copying for functional as well as aesthetic works applied industrially for 10 years, but the last five years are subject to a licence of right, giving an effective protection of only five years.
Registration gives a monopoly for 25 years on industrial-supplied designs having aesthetic merit. Registration must be applied for and it is not cheap. Copyright mainly covers surface decoration and industrially applied designs against copying genuine copyright. However, when design has been exploited in one article, protection against it being copied in another is limited to 25 years. It applies to graphic works, photographs, sculptures or collages, irrespective of artistic quality, and to works of artistic merit. The Bill increases the general protection for registered designs from 13 to 25 years.
The CBI also recently carried out comparisons with overseas competitors and produced a study that shows that, if the Bill becomes law, protection in the United Kingdom will be much less than what is available to competitors abroad in the domestic markets. The CBI argues that the best form of intellectual property right to protect design is copyright. It does not give an absolute monopoly, and so new generations of original design are 573 not hindered. It comes into existence automatically and does not involve costly procedures, which is particularly important to small and medium-sized companies.
During my experience with the Wigan development company, these were precisely the sort of companies with which we were involved, and we tried to attract private and public capital to encourage such companies to invest in new ideas and in long-term new job opportunities. It would be a sad development for British industry if those companies were affected—albeit unwittingly—by the Government, if amendments to the Bill are not accepted.
The impact on competition is less than in cases in which an absolute monopoly is given. The CBI wrote to the Minister and set out five proposals, which would form the basis for amendments that the Government should consider in Committee. They are: the restoration of dual protection by design copyright, as well as the new design right; increasing the design right term to 25 years; the removal of the unwarranted extended exceptions "must fit" and "must match", and their inclusion in the Bill as defences against infringement, rather than as exceptions to the right of protection; the control of possible abuse of monopoly by the provision of a power to grant licences in appropriate cases where abuse is shown; and the provision for the Secretary of State to have the power, in certain sections of industry or in particular cases, to reduce the term from 25 years, as appropriate, or to provide for the grant of licences within that term, as appropriate to different industrial needs.
I can understand the motor manufacturers' interest in this matter. I represent a constituency in the north-west and I know that a great number of people are directly or indirectly employed by the motor manufacturing industry. My borough has suffered from the massive shake-up of British Leyland, John Brown Tractors and the automotive products industry. So the pressure that was applied to the other place was understandable, and their Lordships came to their conclusions accordingly. However, as Conservative Members have said, the balance has shifted too far in the direction of that sector of interest to the possible detriment of the development of industry as a whole. We need seriously to consider redressing the balance to ensure both that the motor manufacturers' interests are preserved and that the legitimate interests of other sectors of the British economy are not undermined.
Like other hon. Members, I have an interest in other important areas of controversy in the Bill—piracy, photography, music, information technology products, and the design of same.
In the time left to me, I should like to give my support to those hon. Members who have spoken on behalf of the photographic industry and the National Union of Journalists. I am also particularly concerned about the submissions made on behalf of the photographic industry in respect of some of the amendments. As politicians, we should all take kindly to the photographic industry as we are sometimes the beneficiaries of the artistic activities and work of those involved in the industry, although some of us are portrayed in a more flattering light than others. I am concerned that the livelihood of news photographers will be threatened. That has been amply outlined by my hon. Friend the Member for Cunninghame, North (Mr. Wilson). I do not wish to go into detail on that, but I hope that the Minister will give a commitment seriously to consider in Committee amendments that take account of those anxieties.
574 I look forward to the Committee stage and hope that the Government will approach the amendments in a constructive manner and that we can bring forward a Bill which, if not acceptable to British industry and the arts as a whole, will nevertheless be acceptable to the vast majority. I hope that it will ensure, in the long run, that we protect the innovative skills of industry and the arts in this country. By protecting those skills, we protect both the internal and external markets which are so important to our economy and to the European economy as a whole.
By doing so, we shall also develop the economy of the north-west and rebuild and reshape it after the rundown of the traditional industries of shipbuilding, textiles and heavy engineering. That will provide an opportunity for those innovative skills to flourish. It will provide new jobs and industrial opportunities and a fair reward for those who, through their skills, develop new ideas and products to the benefit of their regions and of our industrial economy as a whole.
§ Mr. Richard Page (Hertfordshire, South-West)
It has already been said that the Bill does not feature very highly in the Richter scale of political sexiness compared with other Bills before us this week. It could be described by people of a kind and charitable disposition as a technical, complex and heavy Bill. For that reason, I admire the hon. Member for Makerfield (Mr. McCartney) when he says that he is looking forward to the Committee stage. I put that down to youthful enthusiasm and I hope that, if I serve on the Committee, some of his enthusiasm will rub off on me.
§ Mr. Page
I do not think that the Bill will help the hon. Gentleman in that direction.
I hope that the Bill will help British industry. and commerce. It is vital that we get the matter right. In the past, the United Kingdom has been a world leader in this area, but time and events have moved on. Everyone agrees that the Copyright Act 1956 must be updated, but there are obviously some differences of opinion about the way to proceed.
There is a rumour that the long-awaited Green Paper from the European Commission is due shortly, but we cannot wait for it. We need to modernise our copyright law and, if we wait for the Green Paper, it will take a considerable time for any harmonisation to take place.
One of the traditional problems of copyright has been to explain to the layman what it is. That has been made even more complex through the scientific advances, giving, day by day, easier public access to intellectual property rights. The Bill has to achieve a fair balance between the creator and the producer on one side and the consumer and user on the other. One group wants strong protection and control whereas the other wants immediate access, preferably at no cost, but, if the consumer has to pay anything, it must be the cheapest price. We must strike a balance in the middle. We must protect civil liberties, but we must not discourage creativity, research and innovation. If I remember the matter correctly from my school days, an equation must balance. We must put something into that equation to recognise the constantly changing scientific scene.
575 One of the most common examples is records. Some hon. Members will remember the old bakelite discs, although they were before my time. We then moved on to plastic discs, analogue tapes and compact discs and digital audio tapes are now appearing on the horizon. With that rapidly moving scientific scene, we must get the matter right.
The figures quoted as representing the contribution of copyright to our gross domestic product have varied from 2.6 per cent. to 7.5 per cent., depending on which base one takes. However, whichever base one takes, those figures represent a sizeable contribution to our economy. That sheer size demands our attention. We must have justice for both sides. I am tempted to quote the Emperor Justinian who said:Justice is the constant and perpetual wish to render to everyone his due.Perhaps that is not a good example because the Roman empire collapsed a few years later and the Barbarians won with their motto that might is right.
I welcome the provisions that bring about stronger legal support in respect of infringement of copyright. A few holes must still be plugged, but we have taken a substantial step along the right path. The updating of our copyright law is vital because, whatever our faults as a nation, and we have quite a few, we have two strengths—our ingenuity and our inventiveness. It is right for the Government to protect that ingenuity and strength. I do not know how we have come by that, but, as an island race, we have always had an open door for refugees and exiles, in addition to experiencing the odd invasion. There is an old saying that those who get up and go, get up and go. Perhaps some of them have come here and contributed to the cultural strength of our nation.
The House should be grateful to the other place. It has given the Bill the first canter round the course and has highlighted the areas of agreement and disagreement. Those debates have given the interested parties a chance to contribute. The march of technology has created much of the reason for the Bill. I was impressed to see that the Secretary of State for Trade and Industry has put into the Bill a clause to deal with computer-generated products and artificial intelligence and, in Committee, we shall see a closer definition of that work.
I hope that, in Committee, we shall touch again on the issues introduced tonight. We have heard much about the "must-fit" and "must-match" problems. My hon. Friend the Member for Meriden (Mr. Mills) provided a powerful trailer to the arguments to be advanced. My right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) outlined the case for the blank tape levy exceedingly well. I have no doubt that those arguments will be put forward again in Committee.
I also hope that the Committee will consider more closely the terms employed in the Bill and try to cover the computer software advances that are taking place. I support my right hon. Friend the Member for Chertsey and Walton in that. I hope too that we shall consider some of the mundane matters, for example, some of the definitions of what is a film. The 1956 Act defines a film as a recording of visual images on any medium from which a moving picture may be, by any means, produced. Most 576 films today have a soundtrack with them and I hope that we can deal with that point. We should also have a stab at defining a public performance.
My hon. Friend the Member for Meriden has outlined the need to clear up the position of location systems using abstracts of scientific and technical publications and I hope that that can be brought within the copyright law.
The main point on which I want to concentrate my argument and the minds of hon. Members was voiced by the Earl of Winchilsea and Nottingham in the other place when he spoke about the impact of rental shops and digital audio tapes in downtown Tokyo. He mentioned the impact that that was having on Japan's recording industry. In fact, it almost ruined it and Japan has now introduced copyrights to protect its industries, although it has not helped too much on the international scene.
As Britain has a leading position in international records—I am told that it has some 25 per cent. of the market—that area must be considered and protected. I am aware that my noble Friend the Secretary of State for Trade and Industry introduced a rental right at the end of the Bill's passage in the other place to give some protection, but I hope that our Standing Committee will consider whether that is sufficient. I took some encouragement from my right hon. and learned Friend the Chancellor of the Duchy of Lancaster when he said that he would like to look at that to make sure that he was satisfied that we have got it right.
Again, time moves against us and I know that many of my hon. Friends want to speak. Therefore, I shall confine my remarks to one last point in reply to the reference to spoilers and anti-spoilers. I hope that not too much faith is placed on such devices. Time has shown that for every lock there is a key and we should look to the law to be the belt to any braces of any electrical or mechanical spoiling device.
I welcome the Bill. I hope that in Committee it proceeds with the same spirit of friendship and constructiveness that exists in the House today, and I look forward to it reaching the statute book in the shortest possible time.
§ Miss Emma Nicholson (Torridge and Devon, West)
This is a complex and multifaceted piece of legislation, which covers different areas of interest for many hon. Members. I wonder whether I could ask even those right hon. and hon. Members who are waiting to speak to turn aside from studying the massive injustices that the Bill, I now learn, will inflict on journalists, who are usually a hardy breed and very good at turning injustices on to other people—I am sorry about their future suffering—and away also from the most fascinating subject that was raised earlier, the regime for replicating motor exhausts, to something that genuinely excites me—the computer industry and the protection of its intellectual heritage.
I must declare an interest. It is not a financial interest any longer now that I am here; it is a professional interest. I was trained by ICL as a computer programmer. I went on to be an assistant analyst and computer consultant with 10 years hands-on experience in the industry. I am now enjoying an industry and Parliament fellowship with IBM, and I maintain links with my old colleagues who are now senior members of the British Computer Society.
I welcome the Bill, which aims to set the matter of copyright protection on a more logical and consistent 577 basis, as my right hon. and learned Friend the Chancellor of the Duchy of Lancaster says. It seeks to strike the balance between rewarding the creator of an artistic endeavour without stifling invention—a difficult balance to achieve.
I am not absolutely comfortable that the Bill is yet full enough to protect computer software. I use the words "full enough" on purpose. That may he because it does not recognise the uniqueness of computer software. I wonder whether the definition of computer software as a subset of literary works is accurate or adequate enough to perform the task of copyright protection.
My right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) reminded us that in 1956 computers were the size of a house. He must have been referring to Leo I in London university, which was housed opposite the British museum in three separate houses. I cannot say that it created pseudo-Shakespeare, because no binary-coded decimal machine code is a naturally aurally appealing tongue. But I recall creating fugues on early computers. On the other hand, I cannot imagine that my hon. Friend the Member for Twickenham (Mr. Jessel) would, in consequence, indentify software as a byproduct of J. S. Bach.
Computer software is the product of new methods of identifying and transmitting human thought. My right hon. Friend the Member for Chertsey and Walton referred to artificial intelligence when he said how difficult it was to define computer software. That is so very old. Software is not artificial; it is real. It is definable and it can be properly protected.
We must not wait until 1992. The suggestion put forward earlier that this is such a complicated industry that we could not do it now is absolutely wrong. Once the Government have created the redefinition of computer software which is right and appropriate, this will be no U-turn but a set of nano-second decisions by the Secretary of State which will bring the Government to the right conclusions. Indeed, if we are stuck we can find a suitably equipped personal computer, with doubtless superbly registered parts, compatible and user-friendly to help. I am tempted to say that we might bring in to the House a new language that would certainly be more Member-friendly than that which we heard earlier. Hon. Members will know that one of the easiest computer languages is called BASIC. It is certainly basic, but not as primitive as that used by the hon. Member for Warley, East (Mr. Faulds).
Let me return to the difficulty, suggested by my right hon. Friend the Member for Chertsey and Walton, of protecting the product, computer software, which is the creation of a rapidly changing industry. He gave the impression that that is well-nigh impossible. Of course, it is not, because change is the essence of the computer industry. If the computer industry were not changing, it would be dying.
I cannot use the term "manifestly" impossible. That has a Latin root. We must remember when we are thinking about computer software that our language is literary and how difficult it is to think in any other terminology. We have to think laterally to find a definition that fits this unique product.
Hon. Members have said that a person who is out of programming for three years will have to be wholly retrained. Of course, such a person will need to be updated, but the industry moves forward in a way that enables a person to return to play a useful part. The state 578 of the art means that we have to think differently for the products of software designers—those few highly creative people—and the ordinary programmer. Although they create different levels of excellent product, both are still creating protectable work.
Let me deal briefly with a few amendments that I know that the Government will wish to consider and doubtless will consider in Committee. My right hon. Friend the Member for Chertsey and Walton does not need to go back to 1956 because we have the excellent Copyright (Computer Software) Amendment Act 1985. One of the provisions in that Act was important. It made it clear that storing a work in a computer is a form of reproduction which requires the copyright owner's consent. The Bill does not make that clear. I feel confident that the Government intend to uphold the promise that was made on that in the other place and that we shall see an amendment to clause 17(2) to that effect.
Let me deal now with a more complicated problem. The White Paper in its introduction states thatwe must accommodate new technical developments—satellite broadcasting, computer programs and electronic data storageand so on.
The creation of expert systems that not only answer the questions put to them, not on paper of course, but through keyboards, for example, such as a medical diagnostic system or others, at the moment fall under the clauses relating to cable programmes. That is to say, data bases which are changed interactively through user-connected terminals—as we have all done so often in the computer field—over a telecommunications network are defined as expert systems.
As the Bill stands, clause 7(2)(a) may seem to exclude such valuable systems from protection. I feel confident that the Government will introduce an amendment to rectify that situation as was offered on Second Reading in the other place.
In the Bill, as a subset of literary works, computer programs come within the fair dealing provisions of clause 29. Therefore, it may appear that home copying of computer software can now be exempted from copyright infringement on the grounds that it is for private study and that research organisations may justify the copying of programs on the basis that it is for research purposes. I am sure that that comes about because clause 29 refers so much to literary and other such works. I suggest that that would be an unintended consequence of the provisions which would be unwelcome to the industry and the Government. All that is needed is an amendment to exclude electronic reproduction from the fair dealing clause 29. I am confident that that will be considered.
My right hon. and learned Friend the Minister referred to a welcome amendment to deal with spoilers. I was not absolutely clear whether he would incorporate in that amendment programs that already exist to prevent the illicit copying of programs. There are programs in production already designed to defeat the software protection mechanism.
Clause 24 makes it an offence to possess an article that can be used to make infringing copies. I doubt whether a program, within the meaning of the Bill, is classified as an article and would therefore come within that provision. If that is so, the clause would have to be changed to make it 579 clear that possessing one of the copy-making programs that already exist would be an offence similar to possessing an infringing printing plate.
I have left possibly the most difficult point to last. Copyright works of all descriptions—literary, artistic, musical, photographic, software, film or sound recordings—can now be recorded and reproduced from a single optical disc. That point throws up many weaknesses in the Bill. It butts on eight separate clauses. If left untouched, it could lead to unmanageable results. Would it not be better to have a copyright law which treated all works of intellectual endeavour in the same way? Otherwise, we might inadvertently end up with a very difficult patch job on the old law rather than creating the new, necessary safety net. That is a complex problem. I could describe it at length, but other hon. Members want to speak on that. Indeed I could stress the eight different clauses which will be in conflict with each other and which will make that point unmanageable for optical discs.
The Minister referred to rental right. I am delighted to learn that that subject will be examined, perhaps through the introduction of a clause already discussed in another place, to permit the provisions of clause 63 to be overridden by contract. I also strongly welcome the Government dropping the tape levy. Such a levy would have encouraged home copying of computer software. That would be unmanageable. From the social angle, dropping the levy is of great value to the blind. As a musician I welcome the Government's decision and am comfortable with it.
We can be market leaders in software protection. We are much further ahead than any other European country in that area. Justifiably, I look to the Government to secure for us that enviable position. Britain is a world leader in some forms of computer software. Let us support that work.
§ Mr. Toby Jessel (Twickenham)
I was greatly impressed by the speech of my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) and by her special knowledge of computers and other matters—until she made her point about the blank tape levy.
Although I personally have no financial interest at all in the Bill, no fewer than four of my close relations have interests in recording or copyright matters. My wife is an actress and singer who records. My brother-in-law is the composer Panufnik, whose symphonies and other works are recorded. I have a sister who has written 18 books, and my brother has an interest, recently much reduced, in a record company. Although perhaps not obliged to do so, I prefer to declare those family interests.
My right hon. and learned Friend the Chancellor of the Duchy of Lancaster referred to the need to "protect creative talent". To be creative seems to me to be fundamental. The creativity of artists, performers, composers and writers is basic to the enrichment of people's lives. In the House of Commons, perhaps because we are properly at the receiving end of so many time-consuming welfare cases of constituents, we do not always devote enough time or give enough weight to the 580 creative side of human life, which is just as important to human well-being and which Parliament ought to encourage. We should positively lean in that direction.
Of course the successful management and growth of the British economy brought about by the Government can benefit the livelihood of artists and musicians as everyone else. Beyond that, the Bill does much to promote and sustain what is creative. On the whole, I support the Bill. However, there is one glaring omission to which many right hon. and hon. Members have referred. There are no royalties or levies on blank tapes. I hope that we can put that right and I want to explain why.
At live performances, musicians or actors in essence sell their work through the agency of a theatre or concert hall to an audience who pay for their seats. That is a free bargain between the artist and audience. With modern technology, the performance can be recorded on discs, films or tapes which can be sold to individuals or the media. That, again, is a free bargain between the artist and the audience. However, that professional recording can be poached and put on to a cheap blank tape which can be purchased for £1. That is not a fair or free bargain. That is stealing someone's professional work. It is close to theft. It is an injustice which the House should not countenance. Nor should we gloss over it; because only the Government and Parliament can take effective action to remedy that injustice.
That point was made in the White Paper in 1986, to which my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) referred extensively. I will not read the whole of that passage from White Paper again, but part of it states:After giving full and careful consideration to all the opinions expressed in response to the 1985 Green Paper, the Government has concluded that:That was the Government policy announced by my right hon. Friend the Member for Southend, West (Mr. Channon), as Secretary of State for Trade and Industry, at a press conference in 1986 and that view was constantly and frequently repeated.
- (a) copyright owners and performers should be remunerated for the use of their material and performances by those who tape them at home to the prejudice of the legitimate interests of the copyright owners;
- (b) there is no realistic alternative to a compulsory levy on blank recording tape as a means of providing such remuneration.
I received a letter in November 1986 from my right hon. Friend the Member for Shropshire, North (Mr. Biffen), the then Leader of the House, on behalf of the Government in which he stated:The Government remain committed to the proposals for legislation on intellectual property as set out in the White Paper on Intellectual Property and Innovation. I can assure you that we have not dropped the proposals for a blank tape levy and the necessary legislation will be introduced when the Parliamentary timetable permits.Our policy was consistent with the European trends. My right hon. Friend the Member for Chertsey and Walton listed those countries in Europe with similar views. All Common Market countries have brought in a scheme for such a levy or are bringing one in except Britain, Ireland and Greece. It is possible that we shall have to introduce such a scheme anyway before long, so we may as well get on with it now.
In West Germany the levy money is distributed 42 per cent. to composers, 42 per cent. to performers and producers and 16 per cent. to literary authors or the 581 equivalent. Another form of distribution exists in France. The levy money can be distributed fairly and equitably and in accordance with the type of scheme run by the Performing Right Society. The administrative costs of such a scheme should obviously be financed from the scheme. The beneficiaries of the scheme would have a strong incentive to ensure that its administration was economical. That is the answer to those who complain about the likely administrative costs.
All the blank tapes used in this country are manufactured abroad—60 per cent. come from Japan, and 40 per cent. from West Germany. The manufacturers of blank tapes in Germany can hardly be surprised if we put a levy on them, because the West Germans already have a levy on their blank tapes.
The proposed levy is 10 per cent. which is 10p on a £1 blank tape. Thanks to our growing prosperity, a 10p charge is no hardship for anyone, not even the young. It is a third of the price of a cup of coffee in a third class café. By no stretch of the imagination could it be called, as my right hon. and learned Friend described it, an unfair burden.
§ Mr. Mark Fisher (Stoke-on-Trent, Central)
Will the hon. Gentleman confirm that the cost of administration in West Germany is approximately 7 per cent.? That figure might be of interest to those hon. Members who are concerned about what they perceive as high administrative costs. That 7 per cent. seems admirable.
§ Mr. Jessel
I am grateful to the hon. Gentleman. I did not know that figure, but I expect that he is right, and I have no reason to doubt it.
The 10p might even be absorbed by the producers, as has happened with petrol tax increases, but if not, the levy would not be burdensome, even to blind people. Everyone wants to help blind people. One person in 300 is registered as blind or partially sighted. I am told that the average person buys eight blank tapes a year, and even if blind people buy twice that many—16 a year—at a 10p levy, that would be £1.60 a year, or 3p a week. Therefore, I do not believe it is right to use the position of blind people to stir up emotion against the proposal. I do not believe that the blind, of all people, would wish to stand in the way of actors, composers and musicians receiving a fair reward for what they have produced, merely to save that 3p per head per week each. In any case, there is every reason to think that the music industry would help. The reference to the blind is something of a red herring and the argument has been abused.
My right hon. and learned Friend referred to rough justice. I am told that 85 to 90 per cent. of blank tapes are used to copy copyright material, almost entirely music. After all, not many people want to buy blank tapes to record the speeches of hon. Members. Yes, the levy is rough justice, but so are local authority rates and so will community charges be if we have them. Those local charges are or will be imposed regardless of the unequal use that people make or will make of education, local road repairs or the other services of local authorities. Everybody understands that point; nobody minds it. The same would apply to the rough justice of the levy on blank tapes. My right hon. and learned Friend said that the benefit should go mainly to the performers—I could not agree more—and that could be done along the lines of the West German example.
582 My noble Friend the Secretary of State for Trade and Industry has to deal with many major matters of crucial importance to the future of our national prosperity. He said in the other place that the arguments on the tape levy were finely balanced. It is no disrespect to him to say that it is not self-evident that his proposals are more authentic than those of his immediate predecessor, my right hon. Friend the Member for Southend, West, who had previous experience for some years as Minister for the Arts, and was thereby steeped in the needs of the musical world. I profoundly believe that the 1986 White Paper is right, and I hope that the Government will listen, heed the arguments and think again.
§ Mr. William Powell (Corby)
Those right hon. and hon. Members who have waded through the hundreds of clauses and the various schedules of the Bill and reached the last page will notice among the repeal list that the Copyright (Computer Software) Amendment Act 1985 is to be repealed in full. For most hon. Members, and most members of the public, consigning this statute to the footnotes of history will be of very little moment. For me, it is a matter of considerable importance, because I was the promoter of that Act. A number of right hon. and hon. Members, including my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), have referred to the effect of that statute, which was intended to be a stopgap measure. It has been wholly beneficial to the industry. This Bill will take over from where we left off, and I shall come on to endorse a point made by my hon. Friend in relation to clause 17(2).
My hon. Friend the Member for Basingstoke (Mr. Hunter), in his important contribution, said that there was an atmosphere of déja vu about this debate. Those of us who, on those various Fridays in 1985, went through the debates on my Act will have that sense of déja vu. I am sure that the knowledge that I spoke for over an hour on the Second Reading debate has had an important deterrent effect on today's debate. I have no doubt that the fear that I might do likewise tonight has concentrated minds marvellously.
I am able to make a very different speech now at quarter to nine in the evening than I would have done if I had had the opportunity of occupying the Floor for an hour or more. I hope that that will come as a relief to hon. Members. I merely want to reflect on the important themes that I stressed then and that are of importance now, not just for the Bill but for the computer software industry. The first relates to enforcement and the second to a much wider interest in computer software and education.
Let me deal firstly with enforcement. The powers in the Bill are not sufficient to ensure the proper enforcement of the proposed law, certainly as far as it affects the computer software industry. In 1985 I told the House how we would try to ensure that my Bill, if it became an Act of Parliament, would be enforced. I am delighted to say that FAST—the Federation Against Software Theft—established a law enforcement agency under a former senior police officer in the Metropolitan police, Mr. Bob Hay, and it has had considerable success, both in practical and deterrent terms, in reducing the level of piracy in the computer software industry.
The current estimates are that FAST, through Mr. Hay's office, is reducing the level of software piracy by at 583 least £50 million a year and that is a fairly substantial achievement for what was intended to be a modest, stopgap measure. However, for the reasons that my hon. Friend the Member for Torridge and Devon, West has given, I am afraid that the Bill, as it is currently drafted in clause 17(2), does not produce any important amendment to section 2 of my Act. I shall be doing all that I can to ensure that the matter that my hon. Friend raised—I do not need to go into it in full at this stage—is fully reproduced in this statute and that a program stored within a computer is as fully protected as anything that has been produced from a computer.
The presumptions need to be fully thought out. When the Bill was originally produced in the other place, there was a presumption of subsistence and ownership of copyright. During the course of the exhaustive Committee stage that the Bill underwent in the other place, that part of the Bill was taken out. However, it must be put back again. If it is to be necessary for the victim of new software piracy to establish the presumption that exists at the moment, it will cost vast sums in solicitors' fees, and so on, to bring the necessary proof to court. One of the things that we were able to do in 1985 was to prevent that. If we can save the authors of copyrights from these wholly unnecessary legal costs, we must do so. If we cannot restore what was removed in the other place, it will cost tens of thousands of pounds.
It is important to establish that trading standards officers have a role in the enforcement of this law. My hon. Friend the Member for Meriden (Mr. Mills) spoke about that earlier. In some ways, trading standards officers have a more important role than that of the police. Importation of pirated software is a major issue, and, although the Government take the view that Customs officers are not yet equipped to deal with this, the statute must extend the powers of the Customs, if necessary by delegated legislation.
My right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) said that the introduction of private Member's legislation is not a satisfactory way of dealing with problems as they arise. Hon. Members have stressed that many problems will arise in the next 10, 15 or 20 years during the currency of this statute, and none of us has any idea of what they will be. In 1985 the computer software industry faced the most enormous difficulties because of the pirating of its products and there was a gaping hole in law enforcement. Hundreds of millions of pounds worth of goods were at risk and many authors lost the opportunity to profit from their work and from everything that went with it. The software industry had to rely on the lottery of the private Member's ballot and had to hope that somebody would be prepared to take up the cause. That is a most unsatisfactory way to deal with such matters.
The film industry was particularly at risk in 1983 when the measure introduced by Lord Eden of Winton, as he now is, was almost lost in the hasty deals that had to be made because Parliament was being dissolved for the coming general election. That is no way to treat our important industries and I hope that my right hon. and learned Friend the Minister will seriously consider the point that was made with considerable force by my right hon. Friend the Member for Chertsey and Walton.
584 I do not have time to develop the important points that I would like to make about education and the computer software industry. Perhaps we shall have an opportunity to deal with those matters in the Standing Committee. I welcome the Bill. It is a question of striking balances on a wide range of complicated issues about which the arguments are never all in one direction. As a result of considerable consultation and the tremendous efforts of my right hon. and learned Friend and his predecessors the Government have got the Bill very nearly right. However, we shall have to look at some matters and I shall reserve my detailed contributions for later debates.
§ Mr. Tim Janman (Thurrock)
Before speaking about the Bill I should like to comment on the speech of the hon. Member for Dagenham (Mr. Gould). I think that he not too seriously chided my right hon. and learned Friend the Minister for a Bill that he said went against the Government's free market and capitalist principles and was in some ways interventionist. Unfortunately, the hon. Gentleman is not in the Chamber, but I am sure that he would agree that not only is the invisible hand of the market one of the cornerstones of capitalism or classical liberalism—call it what we will—but that another buttress of classical liberalism and a capitalist society is property and the right to own it and defend it. That does not mean only physical property, such as buildings, but obviously means intellectual property. I am sure that if Adam Smith were alive today he would not have intellectual conflict between the sort of society and economic system that he would support and this Bill.
It is refreshing to see the Government bring forward a Bill that updates and prepares for the 1990s the area of intellectual property rights. I welcome the Government's refusal to support the tape lobby's proposals to legitimise home copying. The United Kingdom is the home of a growing and profitable software industry. Any legislation that fosters the expectation that the purchase of some recording medium, such as a magnetic tape or disc, can automatically confer the right to copy a third party's information without the owner's permission must weaken the opportunities for our software industry to develop and market its products. To United Kingdom software houses, a tape levy would encourage theft of property—in this case intellectual property.
My first concern about the Bill was mentioned by my hon. Friend the Member for Basingstoke (Mr. Hunter) who spoke about the effect of registered design on small businesses. On any product there are many new features with many new designs related to them. My understanding is that under the Bill all these new designs would have to be registered. That would be very costly and bureaucratic for small businesses. The current copyright law would give those designs automatic protection. This would particularly hit small businesses in, for example, textiles, clothes, jewellery, carpeting and crockery. Young fashion designers would be exposed to not being able to bear the costs of registering their designs and would be defenceless against copiers.
My main concern about the Bill relates to the "must match, must fit" clauses because they will weaken the incentives for British companies to innovate. They will set the United Kingdom apart from all the major industrialised nations in the Economic Community at a 585 time when we are moving towards 1992 and harmonisation. The Bill excludes from all protection many products which are not spare parts and which could be freely copied. My hon. Friend the Member for Basingstoke listed many of those products, such as hi-fi, vacuum cleaners, television sets and castings for personal computers. The "must fit" clause could have some unfortunate ramifications for toy companies such as Lego and Meccano, which depend on interlocking designs—as do prefabricated housing systems. In both instances—and there are others—protection will be lost.
My hon. Friend the Member for Basingstoke rightly mentioned that the "must match" clause encompasses every type of product casing formed from two or more pieces. Presumably, vacuum cleaners, typewriters, hi-fi components, tea pots and personal computer casings will come under the clause.
I now refer to some of the assumptions that the Government have made in putting forward the clause. They have assumed that the "must match" exception clause will benefit consumers through lower prices. In fact, copiers widely copy only those parts that are most required. They do not copy less commonly required spare parts. In the motor industry that would include body panels for aged car models, which would normally be owned by people on lower incomes. Prices would have to be put up, because the original equipment manufacturer would compensate for loss of margins on the more commonly copied body panels by upping his prices for those that only he would still make available to the market place.
There is an assumption that the "must match" exception clause will increase competition and consumer choice. When a consumer buys a vehicle, when he chooses which manufacturer to go to, one criterion is the availability, quality and cost of spare parts that the original equipment manufacturer produces. Although I am a keen advocate of competition, I fear that the "must match" exception clause takes the theory of competition to rather esoteric lengths.
The next assumption inherent in the "must match" exception clause is that current manufacturers are ripping off the consumer. That is not a fair assumption. For example, in 1986 the Ford Motor Company's return on all sheet metal parts was only 3.6 per cent. That is hardly a huge margin. The clause will put us out of step with the rest of the Common Market. It will prevent us from creating a common market in that respect. For example, in every industrialised country in the European Community there is a 15-year protection for spare parts such as car body panels. Because of that, the clause will do nothing to aid employment in the motor industry.
Currently, most copying is done by body panel manufacturers in Taiwan, Spain and Italy. Because of the protection that will continue to exist in the European Community, it will not be possible for British copiers, who, at the moment, are mainly merely importers, to have any market for which to compete. Therefore, as was suggested by the hon. Member for Orkney and Shetland (Mr. Wallace), the clause will do nothing to aid the motor industry or jobs within it.
The other flaw in the "must match" exception clause is the assumption that there will be a direct link between its effects and the consumer. Any differential in price between a body panel from an original equipment manufacturer in the motor industry and that from a copier is absorbed by 586 the repairer in the body shop that is doing the repair work. The consumer rarely knows what the price differential is. He or she rarely knows whether the body panel being fitted to their vehicle was manufactured by the original manufacturer or by a counterfeiter. Therefore, the assumptions in the Bill do not apply.
I am aware that time is pressing on, so I shall curtail my remarks. The "must match" clause will seriously undermine industry's ability to fund innovative design and engineering, which are vital to this country's competitive position. But one should not criticise the "must match" exception clause without putting forward an alternative constructive solution. My solution would be to allow the copyright tribunal to hear and resolve cases of monopoly abuse of articles covered by design copyright—for instance, motor car spare parts. If original equipment manufacturers abuse what could be seen to be their monopoly position in the market place, the copyright tribunal could award compulsory licences to other manufacturers who are willing to make the same body panels and make them available in the market place. That would be similar to the precedent of the powers of the patent comptroller under the Patents, Designs and Marks Act 1986.
I have concentrated on a certain aspect of the Bill, the "must match" exception clause and the "must fit" exception clause. It may appear that I have been critical. I have doubts and concerns about those aspects of the Bill. Because of its complexity and breadth, many hon. Members have voiced concerns about some aspects and clauses of the Bill. However I believe that there is strong support on both sides of the House for the majority of the objectives that the Government seek to achieve. I look forward to serving on the Standing Committee arid continuing to support the Government in bringing forward the Bill.
§ 9.5 pm
§ Mr. Simon Coombs (Swindon)
There are times when it seems that a Back Bencher's speech must be like a pair of bellows. It expands to take account of the green acres opposite graced only by the Three Musketeers—the hon. Members for Dagenham (Mr. Gould), for Sedgefield (Mr. Blair) and for Makerfield (Mr. McCartney). Then. as one looks at one's own Benches and sees the eager faces all around, it contracts again to what one might describe as a Whip's allowance.
This is a big and very complicated Bill and we shall deal with it in Committee. I want to highlight three aspects in which I have a constituency interest. Many of my constituents are employed by a trio of industries which are affected by the legislation that we are taking on its first stage through the House tonight.
First, I want to refer to the pharmaceutical industry. It is absolutely right that we should establish throughout the Bill the value of the right to copy. If the Government seek to encourage competition, an open market, the transfer of the property right must reflect its value. A pharmaceutical company, which needs a return on a product to fund future research and development, must obtain appropriate value before the surrender of that right. The pharmaceutical industry in 1988 is truly international. That means that it could and would migrate if a 20-year patent life were not 587 granted to it. I welcome the fact that the Government propose to return to the status quo of 1978 to restore that balance to the industry.
There is also a spare parts industry in Swindon. It is in a different situation. The industry covers not just motor car spare parts, as many would think, but domestic appliances, industrial, agricultural and garden machinery, office equipment and electrical equipment. In fact, 400,000 jobs or more in this industry are affected by the Bill.
The proposed unregistered design right includes spare parts and draws them into an author monopoly of 15 years' duration. The Government have drastically altered the balance between spare parts manufacturers and orignators of the product, and either spare parts should be exempt or the value of the right should be established clearly and it should be sold.
The third area that I want to discuss tonight has been referred to often in the debate today. It is the question of what we do about the music industry. The concept of value is most significant when copying is undetectable, unpreventable and effectively unpunishable. If the owner of the copyright cannot enforce it, he has, in my view, the right to redress, to compensation.
For the music industry this problem is a serious one. Home taping is widespread. Many hon. Members have referred to this situation. More than 80 million tapes were used last year to copy music illegally. Now, coming over the horizon we have compact disc and digital audio tape. These will soon replace the records and cassettes of today. The technology will move on and every home taper will become a potential commercial pirate. The quality of the new materials is such that piracy in the home becomes a possibility, not just piracy in terms of imports from abroad. The existing £700 million a year haemorrhage from the record industry will not only continue but worsen. One should take note of a British industry that can export £400 million worth of goods every year and reflect that maybe it might be in the interests of Government and Parliament to look after it. I did not say protect it; I said look after it. Its export earnings makes the record industry one of the best in this country, and its problems will be multiplied several times over if we do not find a way in this legislation of guarding against the worsening problem of home taping.
Will the Government continue to wash their hands and say, "Copyright is all very well but if you cannot enforce it there is nothing else we are prepared to do"? The Government have agreed to royalties, licences of right and several other ways of recognising that an author and originator of intellectual property has a right to a return on what he has created. It cannot be right that one industry should be singled out for separate treatment that says, "Yes, you have that right, but no, we are not prepared to help you to enforce it."
I do not accept the argument of Ministers that it is too difficult to collect a royalty from those who infringe with home taping. It is a simple matter to collect from source, from the manufacturers, and to distribute through one of the existing collecting societies. The idea expressed by the Secretary of State in another place that a half or a quarter of the income from the collection of a levy would be lost 588 in administration is simply wrong. The figure of 7 per cent. in West Germany gives us a guide to what the true level of administration costs could be.
The question of rough justice has been advanced as a reason for not proceeding with a royalty or levy. I follow other hon. Members in saying that we have many examples in our society of rough justice. Anyone who pays rates but is not a parent loses out because two thirds will go on the cost of local education. Anyone who pays his gas and electricity bills on time will lose out because the bills will be higher than they need have been if all fellow citizens had taken the trouble to pay their bills on time. The whole of our society is littered with examples of rough justice and it is not good enough to say that this industry should be left at the mercy of copyright infringers because an element of rough justice is involved in collecting the levy.
A levy is not a tax; it is an exchange of value from the user to the originator of copyright. The Government merely create the circumstances in which fair play can take place. Just as they set up the legal system to ensure that theft can be punished, so they are capable of creating a position where this type of theft, and it is theft, can be dealt with in a way that is fair to the person who is aggrieved.
The Committee must return to the question how Parliament should defend a great British industry which is under severe attack. In that respect I welcome the announcement of my right hon. and learned Friend that moves to restrict the rental rights are to be introduced in Committee. Obviously, that is the right way to proceed and it will receive warm support from all who have spoken tonight. But that is only part of the problem. In Committee, we must look for a new initiative from the Government. Those who hope to serve on the Committee will want to support the Government in that, because they recognise that the situation cannot be left intact.
I welcome the Bill which is much needed. After 32 years it is time for a good overhaul, just as two years ago we argued that the Shops Act 1950 was due for an overhaul, and still is. I hope that we can move forward without controversy to put the whole question of copyright, patents and designs on a modern and forward-looking footing—forward-looking because the technology will move on quickly from now. We must also look outwards to the EEC. As my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) pointed out so effectively, the EEC will bring to bear upon us precisely the format which we must achieve if we are to reflect harmonisation in 1992. We cannot afford to be insular in the way in which we tackle the problems that must be addressed in this Bill.
On the basis that the Government are forward-looking, I have the happy task of saying that the House should support the Bill.
§ Mr. Julian Brazier (Canterbury)
I am grateful to my hon. Friends for compressing their speeches and to the Opposition Front Bench for allowing the last of the contributors to speak.
The provision introduced in another place to extend for ever the copyright on Peter Pan has certainly captured the public imagination. I trust that is not because the public regard Parliament as a pantomime!
The importance of the Bill has been stressed by every speaker. Many hon. Members said, and I agree, that the 589 Government have fought hard to achieve a successful balance between protection of the intellectual property of an originator, which is so important to our society, and a fair degree of competition. In this they have succeeded.
I particularly welcome a measure that will affect my constituency, the lifting of "licence of right" relating to the last four years of the copyright for the pharmaceutical industry. Effectively, the change will mean that pharmaceutical companies will have the benefit of the last eight years of the 20 years during which they have a guaranteed monopoly, whereas previously they had only four years out of 16. The first 12 years is typically taken up by development. I know that the change will make a big difference to them.
With regard to the blank tape levy issue, which has come up time and again, I cannot help thinking that the figures are disproportionate. We are told that this is one of the biggest industries in the country. Some people have produced incredible figures. One speaker talked of £ 15,000 million and another mentioned £20,000 million, whereas for the recovery from blank tapes we are talking of perhaps £9 million. There must be a simpler method to deal with the problem, if we decide eventually that it is getting out of hand, than a levy on every tape with the hassles involved, such as rebates to special groups such as the blind.
In the main, I welcome the Bill; it is very important. I wanted to speak in the debate—I volunteered for the Standing Committee, and I hope that the Committee of Selection will consider me as there is nothing wrong with volunteering occasionally—because clause 224, which deals with Crown user right, and clause 151, which deals with first ownership of new design rights, run against the balance in the rest of the Bill. They do so because they represent a serious threat to some sectors of research and development in this country.
I believe strongly that the Government have got the economy on its feet in a permanent and sustainable way, but I am worried about the amount of research and development in the private sector, which is still far too low.
Private sector research and development in the United Kingdom is only 1.1 per cent. of GDP, as against 1.4 per cent. in the United States, 1.6 per cent. in West Germany and 1.9 per cent. in Japan. I shall explain why the two clauses might prevent our figure from improving. Clause 224 gives to the Government Crown user rights that amount to confiscation. As it stands, the clause does not distinguish clearly between background and foreground information. It affects a Crown supplier such as a defence supplier—there are other types of Crown supplier, but defence is by far the biggest category—that has been commissioned to do a particular job and paid to develop a certain piece of equipment, however much background information may have been brought to the table.
Perhaps the company has included components developed at its own cost. It will almost certainly mean that there will be considerable know-how invested in the process. With many defence contracts, it is probable that even if the development was commissioned by the Government. a large proportion of its cost, as well as the cost of the parts brought to the table, has been paid for by the company. In many cases it is as much as half.
If the clause is not amended, the Ministry of Defence or one of the other Departments will be able to say, "We commissioned that, so, now that it has been developed, it is our property and we shall be able to hand it out to open 590 competitive tender for the first production batch." The effect will be simple. In the short term, it will save the taxpayer a great deal of money. In the long term, it will ensure that in a generation's time we are importing most of our defence equipment. The people who will tender the lowest price for production contracts, if they are not let in the first phase to designers—subject to reasonable terms—will be companies that do not have the embarrassment of research and development overheads.
Clause 151 is parallel to that. It deals with first ownership of new design rights on a wider basis, outside Government suppliers. It is liable particularly to affect small companies.
I echo the warning of my hon. Friend the Member for Meriden (Mr. Mills). Like him, I shall seek to discuss those two clauses in Committee——
§ Mr. Brazier
That is right.
I should like to illustrate the depth of the problem with a story, which was alluded to by the hon. Member for Wallsend (Mr. Garrett). In 1937, Frank Whittle tried to get a contract from the Air Ministry to develop what appeared to be a sound scheme. In fact, it was the first ever jet engine. Only one organisation, the Royal Air Force, saw any merit in it. Finally, the RAF managed to persuade the Air Ministry to agree to it. The Treasury managed to sabotage the project through continually cutting off funds. Nevertheless, largely through private money, Frank Whittle drove through the scheme to the point at which, in 1943, he had more or less developed the jet engine. As a war was on, his design rights were confiscated and handed over to some American companies and two other British companies and his company was nearly shot from under him. Obviously, what one does in war is different from what one does in peacetime, but that is an illustration, in an extreme case, of what could happen if those two clauses are not examined carefully and amended in Committee.
This is a good Bill, which looks into a large number of different areas of this important subject. In all the areas except the one that I identified, it is a positive Bill. I am glad to have had the opportunity to contribute to the debate.
§ Mr. Tony Blair (Sedgefield)
This has been an interesting and full debate. It was opened by the Chancellor of the Duchy of Lancaster and my hon. Friend the Member for Dagenham (Mr. Gould), who spoke with all the enthusiasm and vim of those who know that their involvement with the Bill will be concluded with its Second Reading.
The Bill is a parliamentarian's nightmare. It is horribly complex and undeniably important and does not even have the spice of acute party controversy. That complexity is compounded by what my hon. Friend the Member for Makerfield (Mr. McCartney) referred to as the tremendous conflicts of interest that arise throughout the Bill. Not merely are we faced with competing claims, but many of them occur within a legitimate area of disagreement, so that we have problems of judgment added to those of complexity.
We shall judge the Bill according to those criteria. The Bill should take account of advances in technology. It 591 should correct outstanding anomalies and clarify previously disparate and complex legislation it should bring us into line as far as possible with our international treaty obligations, particularly the Berne convention. It should attempt to hold sway fairly between the competing claims of the artist, the entrepreneur and the consuming public, and between rewarding investment and protecting consumers.
My hon. Friend the Member for Norwood (Mr. Fraser) told us about the Bill's long gestation. There are probably two reasons for that. First, many of the problems seem virtually intractable. That is why we had not only the Whitford report of more than a decade ago, but three Green Papers and a recent White Paper. Each reached different conclusions from its predecessor and I suspect that the Bill will be amended substantially before it is passed. Secondly, although we are dealing mainly with copyright, other aspects of intellectual property such as patents, registered designs and trade marks impinge on that and overlap each other so that it is sometimes difficult to separate what is properly copyright from patent or design legislation.
There is further difficulty with copyright. New technology has brought so many changes and advances that we now have a whole range of problems that were virtually unimaginable 20 years ago and in some cases only five years ago. What H. G. Wells would have thought of as science fiction we think of as part of our ordinary home furniture.
Further pressures arise from the completion of the internal market in 1992 and the pressing need to ensure that, so far as possible, we come into line with Europe so we can compete on equal terms.
Copyright law faces a further critical problem. Copyright was developed first to protect artistic works and the creativity of artists. Almost immediately, however, those who were commercialising the creative work of artists also required protection for the investment that they undertook. The question then arose what to do about industrial functional design, which is not within the rubric of registered designs, because it is wholly functional, but in which investment is obviously required and which therefore requires some protection in law. The difficulty is that one can ask why copyright protection for investment in functional articles is any different from copyright protection for articles of artistic work. In other words, why should copyright law be any different for the record and for the car exhaust?
Here I agree with the Government in identifying the problem. With a functional item that should have its design protected because of the investment required but which the consumer is necessarily obliged to use because of its nature there is the danger of a misuse of the monopoly position of those who have designed the article. In principle, the functional article should be no different from the artistic work, but in practice it plainly is because of the possibility of abuse of monopoly.
The Bill is necessary to clear up issues of technological advance, to bring us into line with our treaty obligations and to meet the particularly difficult problems raised by the issue of industrial design. Therefore, we ask not 592 whether the principle of the Bill is wrong but whether the Government have got the practical details right in relation to the difficulties to which I referred.
I shall deal with several key issues—first, the blank tape levy. Although the blank tape levy is important to the music industry in one sense, it is not of huge financial importance; it would bring the industry £6 million or £7 million a year. The music industry is justified in saying that an important principle is involved. At present, blank tapes are used extensively for home taping of copyright material. We know and accept that. It is in theory unlawful to do it; therefore, in theory, at least, the law is being broken on a fairly wide scale. A rational choice, and the choice faced up to by the White Paper, was either to make home taping lawful and to provide compensation for the copying. or to make it lawful and to provide no compensation.
What was not envisaged was that Parliament should consider the matter, aware that home taping is happening and that it is unlawful, and leave the law unaltered and abused. The Bill cannot go through as it is. Because it does not make home taping lawful, it accepts the justice of the claim that there should be copyright protection given to home taping, but it does not give any practical means of enforcement or any means of compensating for the unlawful action. That is an unjustifiable way of approaching the matter. We cannot say that the claim is justified, accept that there is no proper means of enforcing the law and then leave the law in its present unsatisfactory state.
Some of the objections to the blank tape royalty are specious. It has been said that the administrative cost of collecting and distributing the levy would be enormous. An analogy has been drawn with public lending rights and performing rights. The major difference is that the blank tape levy would operate within a narrow compass. Only a certain number of firms bring blank tape into the country. In West Germany, where there is such a system, the administrative costs amount to only about 7 per cent. of the money raised. Therefore, that is not a valid objection.
I agree with my hon. Friend the Member for Cunninghame, North (Mr. Wilson) that most consumers who have respect for the creators of work accept that there should be compensation for the use of copyright material. When we examine again the proposal for a blank tape royalty within the context of the unsatisfactory nature of the law, we will be driven logically to adopt the view that there should be compensation for the abuse of copyright.
The White Paper originally made no provision for rental rights. Although that White Paper was published only two years ago, the Government said that they were not sure that rental rights required protection. The almost universal view that has emerged from today's debate is that rental rights should have protection. In other words, the position adopted by the White Paper that there should be no copyright protection of rentals has, by consensus, almost been rejected. Therefore, the question is whether in providing a rental right we are providing an effective right.
It all depends on the nature of the industry. The video film industry, for example, may be happy with one year. That is a fairly easy period for it to live with. However, if we consider those who produce, for example, the compact discs, which will last for a considerable time, or more especially those who produce computer software, it is extremely difficult to argue that the one-year rental period is a satisfactory method of protecting the investment.
§ Mr. William Powell
The hon. Gentleman makes a pertinent point, but he understates it. The truth of the matter is that the situation would be impossible for the computer software industry if the provision stood, because if protection was limited to only one year there would be no point in computer software developers even setting about their work.
§ Mr. Blair
I do not disagree with that point, but that is the limit of the protection given at present. I am saying that we have accepted that a rental right must exist. However, we have failed so far to face up to what that means in terms of giving adequate rental protection.
I spoke earlier about striking the right balance between the interests of industry and the consumer. Most people looking particularly at the computer industry, but also at the record industry and the potential for hiring out compact discs, would not think that that balance has been struck correctly in relation to rental rights. That also may need changing.
Further, there are the fair dealing provisions, where, if there is fair dealing in copying for the purposes of research or study, there is exemption from copyright infringement. Two problems arise on that. First, the Government have decided—so far at least—that there should be no payment by industry for copies of publications done for commercial research. I understand that the publishers have come back to the Government with a scheme, which is at least worth looking at, for some form of compensation to the authors of publications that are copied. We have not taken a position on that at this stage, but we shall have to look at it during the passage of the Bill.
I point out too that, as far as I am aware, the United States has the Coypright Clearance Centre which is its attempt to deal with the problem, and apparently it is working.
There is also the point made by my hon. Friends the Members for Houghton and Washington (Mr. Boyes) and for Cunninghame, North about photographers. I have not yet heard the explanation for the proposal that photographers should lose any copyright protection when their work is used for the reporting of current events. One thing that photographers are concerned to do, which is essential to their commercial livelihood, is to have their photograpahs used either for news reels or newpapers for the reporting of current events. At the very least, we deserve an explanation of why they should lose any protection, on the basis of fair dealing, when such photographs are taken.
There are also problems associated with the conflict of copyright between the creator of the work and those commercialising it or particularly between journalists and newspaper proprietors. That point was raised passionately by the hon. Member for Davyhulme (Mr. Churchill). It was a good trade union speech which shed an entirely new light on the hon. Gentleman. The point that he was making was about the inequality of bargaining power between the creator and the commercialiser of the work. That is the aspect which one must decide when considering which part of the copyright should take precedence.
The essential question is what one is attempting to compensate for when the rights of journalists and newspaper proprietors, or of artists and the record industry, conflict. It is important to realise that the economic bargaining power will, on the whole, rest with the commercialisers rather than with the creators. 594 Contracts can alter any of these provisions—parties can agree to do something quite different from what the law lays down. They can, by contract, abstain from any of the rights that they have. In those circumstances, it seems all the more important that the correct balance is struck, both on copyright and on moral right. I am not certain that that balance has been correctly achieved. There are also the difficulties of establishing the copyright tribunal. They, too, will have to be examined.
I want to deal with the thorny issue of design rights. I agree that not all design of functional articles can be given protection, because of the danger of monopoly. In drawing the line we must take account of the investment being rewarded and the choice of the consumer—those are the competing claims. The Government propose that when the consumer must purchase an article that fits or matches the rest of a larger design there should be no protection. The problem is that it is irrational to discount investment only on that basis. In other words, to draw the line between protecting investment and the consumer by reference to a definition of design does not seem correct, because there may be a design that must fit and match but which has involved a huge amount of investment and should therefore be protected. That has been obscured, as the hon. Member for Basingstoke (Mr. Hunter) pointed out, by the obsession with car spare parts, but the problem is much broader than that. We should deal with the root of the problem—the fear of a lack of competition if monopoly power is abused—and that can be dealt with in a different way from that which the Government propose.
§ Mr. Blair
I am just about to sit down.
The Bill has many good parts and is a worthy effort. However, I still think that when it meets difficult problems it shakes them by the hand and walks away from them. We cannot afford to do that in Committee. We must ensure that this is a Bill for the future which stimulates our artists and enriches our consumers, while safeguarding our industry. That is our task in Committee. While we agree with the principle of the Bill on Second Reading, we reserve our position on its practical application.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher)
The hon. Member for Sedgefield (Mr. Blair) rightly surmised that the Government are not walking away from the issues in the Bill. There are those who are alarmed by the prospect of the Government walking remorselessly towards about 25 issues of a complex and sometimes highly contentious nature. Some would say it would be better to wait for the Common Market to bring forward its view, or to allow certain ambiguities to continue which industry and industrial property rights owners could not have tolerated.
The hon. Member for Dagenham (Mr. Gould) made a powerful observation: that at the most conservative estimate about 2.6 per cent. of GDP is in the business of intellectual property; and its exploitation is an equally significant economic activity. He raised a number of interesting points about the need for interventionism, or otherwise, in markets. An example from the business of information shows how liberalism has undoubtedly delivered immense benefits to consumers and protected the 595 rights of intellectual property owners. In London there are now about 2,500 companies operating what are called value-added data or network services—they sell information internationally. Until this Government liberalised that market four or five years ago, there were none. So, from a standing start, liberalisation of a market, while protecting the rights of the providers of information, has provided an immense amount of employment and income for the United Kingdom. It is my earnest hope that what we have done will make London into a centre that will match those of New York and Tokyo in the exchange of information, just as those three centres are now world centres of the exchange of financial services and stocks and shares. We believe that intervention in markets is justified only to the extent that it makes them work better.
I hope that hon. Members will have noticed that there is surety and clarity in the majority of issues tackled in the Bill and most of those markets work better where there is such surety and clarity. We are helping the market by providing that long overdue recodification or updating of the law.
The hon. Member for Dagenham mentioned the example of the music industry. Is that industry suffering from an impure or defective market? Is the industry not dynamic? The hon. Gentlemen said that the sales figures of record companies are healthy. We are talking about £400 million worth of overseas earnings. If we introduce a levy, will it help the market to work better or provide compensation to the owners of rights in the original work to the extent that they would be stimulated even further to improve the quality and volume of the products coming on to the market? That is a central question. Certainly the Government would argue that the introduction of a levy would not necessarily introduce a better choice for consumers and would, at best, perhaps be neutral in terms of the amount of work produced by creative people.
I am sure that all Conservative Members will join me in acknowledging the care and professionalism over many years of my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) in respect of the issues that we are discussing today. He is, to some extent, the architect of some of the new provisions and I recognise his logic when he argues that we should be careful about the use of terminology. He is correct in saying that, by using literary analogies all the time, we can sometimes cloud the issue, particularly in the high technology, computer and electronics areas. I wish to reassure my right hon. Friend that we shall be vigilant in Committee in the terminology that we use. We shall be particularly vigilant in applying the correct terminology to computer media input and output and we shall not hide behind the blanket phrase, as he fears, or use non-specific language.
I thank the hon. Member for Orkney and Shetland (Mr. Wallace) for his support on the "must fit" and "must match" question and I hope that he will follow closely the arguments in Committee. As the hon. Gentleman and the hon. Member for Sedgefield (Mr. Blair) may have surmised from the observations of my right hon. and learned Friend the Chancellor of the Duchy of Lancaster, that issue is subject to further discussion and I shall be meeting people in the next fortnight to further those discussions.
596 I wish to acknowledge the efforts of my hon. Friend the Member for Meriden (Mr. Mills) to get the Community Trade Marks Office moved to London. He and I are at one in that regard. London is ideally suited to provide the services required of the CTMO and my hon. Friend's long-standing interest and expertise in those matters will be a valuable aid in achieving what we hope will be a favourable result.
En passant, the design right is automatic and does not have to be registered. The designs that must be registered are the non-functional and aesthetic designs.
On the question of the word processor, under "must fit" and "must match", the male and female parts of the plugs which a keyboard would require to connect into a word processor must fit and must match. I believe that I have correctly interpreted the comments of my hon. Friend the Member for Meriden. Anyone who simply copied a keyboard would be caught by the usual terms on copying. However, that is a good illustration and one that we should explore in Committee.
I know that the computer industry and one or two other industries feel that they have been left out of the "must fit" and "must match" argument; that it has all been dominated by the motor industry. That is not the case. We have thought the matter through and as we examine the provisions in greater detail we may be able to reassure those hon. Members who are anxious about the white goods industry or indeed the computer industry or lifestyle products that this methodology translate across.
The hon. Member for Wallsend (Mr. Garrett) made a charming speech. He has probably had to head north to look after his constituents. I agree with him when he says that this is an overdue restatement and codification of intellectual property. Its timing is about right.
The hon. Member for Makerfield (Mr. McCartney) talked about the balance of interest between the designer and the user. He said that he was looking forward to the Committee stage, from which I assume that he will be serving on the Committee. I look forward to his contributions. Some hon. Members who are unfamiliar with the rich challenges that lie in the Bill see its Committee stage as a parliamentary equivalent of the Gulag. I can assure my hon. Friends that that will not be so. With our hon. Friend the Member for Cambridge (Mr. Rhodes James) in the chair, this will be a stimulating, lively and rewarding Committee on which to serve.
I recognise the expertise of my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) on computer software, with which I shall try to deal in outline form tonight. My hon. Friend the Member for Twickenham (Mr. Jessel) made an impassioned plea for the levy. My hon. Friend the Member for Corby (Mr. Powell) has a lot to be thankful for in computer software and his Bill has given us many insights into how to go about protecting it. I shall examine his comments on the powers of enforcement in the Bill, which I understand to be one of the central points of his speech.
I thank my hon. Friend the Member for Thurrock (Mr. Janman) who is also anxious about the "must fit" and "must match" provisions. My hon. Friend the Member for Swindon (Mr. Coombs), in whose constituency I opened a compact disc factory a few months ago, is understandably anxious about the levy. I can tell the hon. Member for Sedgefield (Mr. Blair) that we are looking at the rental right. I shall be discussing that with the Copyright Licensing Agency and I agree with him entirely on the 597 "must fit" and "must match" question. It is difficult and the route that we have taken so far is a design right route. Despite all the people that we have consulted, we cannot find an alternative way to square the two pressures that he so lucidly described. If he were to shout "Eureka" in Committee on discovering some source of wisdom that we have yet to come across, he will do the Committee a great service.
The blank tape levy has dominated a number of contributions. The Government's position is clear. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster pointed out that there is an element of rough justice. It was interesting to see that not one of the contributions in favour of the levy addressed the question of rough justice. The argument in the main was that there is rough justice in other methods, or any alternative method, but it is correct for my right hon. and learned Friend and I to point out that there would be a number of "innocent" sufferers from the blanket imposition of a levy—a levy which, incidentally, could be marked up in the retail chain with the result that the burden on the consumer would be considerably more, with those in the retail chain standing to gain almost as much as those for whom the levy was intended. It is for that reason, and others, that we are still determined to press the case against the levy being introduced.
§ Mr. Jessel
My hon. Friend the Minister referred to suffering and burdens. As the levy would be 10p which, as I said, is one third of the price of a cup of coffee in a third class café, it is difficult to imagine that causing any hardship. The average purchaser of blank tapes buys eight a year. He would pay 80p a year. or 1.5p, a week on average.
§ Mr. Butcher
I remember considering a number of ways to deal with the blind and talking newspapers for the blind. I remember being horrified by the kind of procedures that we would have to adopt to allow blind people to have their levy rebated. Indeed, I was horrified at the paper work that would be involved.
There are different kinds of suffering. We must consider the pure nuisance that would be caused. For the generality of consumers, we must consider the National Consumer Council and the Consumers Association which are absolutely steadfast in their opposition to the levy. Those organisations and the House must judge the interests of the consumer. I must wear a consumer affairs hat. On the balance of the arguments put forward by my right hon. and learned Friend the Minister, the case for the levy is not proven.
§ Mr. Butcher
I want to press on. This has been an incredibly complex debate and I want to respond to five other issues.
I want briefly to consider the question of design right. Hon. Members have asked whether the new design right proposed in part III of the Bill is the right way to protect designs. We believe that it is. Copyright is quite inappropriate, not least because, it depends on the existence of an original artistic work, such as a design drawing. That is a highly artificial way of protecting industrial products against copying. Some designs would get no protection at all, because for example, they started 598 life as a model rather than a drawing. Similarly, registered designs are not the way to protect the vast number of functional designs produced every year.
The registration system works well for aesthetic designs, but they form a limited class of designs intended mainly for consumer goods. The burden that would be placed on industry and on Government resources if every functional design needing protection had to be registered would be very great.
New laws on unfair competition or unfair copying are another possibility referred to by Opposition Members. They would inevitably give rise to an unacceptable level of uncertainty and we will have to investigate that further. On the other hand, design right has many advantages. It is an automatic right which, like copyright, does not depend on registration. It has none of the disadvantages that copyright protection would inevitably produce if it were applied to industrial products. It provides the necessary degree of certainty which is of great importance to industry. We believe that design right is ideally suited for the task of protecting industrial designs.
With regard to spare parts, it has been said that the "must match" exception goes too far or that it would damage original equipment manufacturers. I do not agree that the provision goes too far just because it will allow copying of entire parts. The point is that in certain important areas of the spare parts market the only way to ensure that consumers enjoy the benefit of competition is to allow that type of copying.
We have ensured that the exception operates only when the part is an integral component of a larger design style, body panels being an obvious example. In that area, the consumer frequently needs to replace the part in question and has no choice but to do so with a part of exactly the same shape and appearance. To give a total monopoly over the supply of these spares to the original equipment designer would not, in the Government's view, be desirable.
I have no doubt that there will be many debates in Committee on the practicalities of the Bill. As my right hon. and learned Friend the Minister said at the beginning of the debate, the Bill has had a long gestation. That long period of consultation and deliberation has been time well spent. The opportunity to revise copyright and design legislation does not occur that often. There have been only two such Acts this century, the Copyright Acts of 1911 and 1956. I detect that the House sees this as a Bill to work on in a non-contentious manner. It is my hope that, in the end, we shall have an excellent Act.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).