Design right

HC Deb 25 July 1988 vol 138 cc37-73

Mr. Blair

I beg to move, amendment No. 224, in page 93, leave out lines 12 to 19.

Mr. Speaker

With this it will be convenient to consider the following amendments: No. 274, in page 93, leave out lines 17 to 19.

No. 225, in clause 228, page 101, line 17, leave out 'in the last five years of the design right term'.

No. 226, in page 101, line 19, at end insert—

1. '(a) In respect of an article which is manufactured as a replacement part.
2. (b) In any other case in the last five years of the design right term.'.

No. 328, in page 101, line 19, at end insert— '(1A) Where a design right subsists in:—

1. (i) features of shape or configuration which enable an article to be connected to, or placed in, around or against, another article so that either article may perform its function.
2. (ii) features of shape or configuration dependent upon the appearance of that of which the article is intended to form part,

any person is entitled as of right to a licence to do during the design right term any act which would otherwise infringe the design right.'.right.'.

No. 227, in page 101, line 33, at end add— '(5) In this section an article is manufactured as a replacement part if it is primarily made for use as a replacement for a thing which forms part of, or functions in connection with, another article.'.

Mr. Blair

I think it is fair to say that at times the Bill evoked an interest inside the House that was almost in inverse proportion to the interest outside the House. We have been subjected to the most intense lobbying and hardly a sector of British industry that will be affected by the Bill has not clearly made known its views to us.

The difficult balance that we have to strike in the Bill is between ensuring that industry has a proper incentive to invest and recognising that the consumer must be protected against the lack of competition that will inevitably come from copyright protection. If we protect industry too much the consumer will suffer through the abuse of monopoly, and if we give too little protection to industry it will lose the incentive to invest. Our task is not to choose between the interests of industry and the consumer but adequately to balance those interests. A competitive industry will require a powerful consumer and the wise consumer knows that the value of industry must be built on investment.

The clause that we are debating is perhaps the most contentious for industry in the entire Bill. It is about the new concept introduced by the Government of unregistered design right. Although protection is already given to aesthetic designs, there has been considerable debate about the protection that should be given to functional designs—the designs of everyday articles used in industry and in the home. We agree with the Government that reform is necessary because the law has been left in an entire mess. Functional designs enjoy protection equivalent to artistic works under copyright—life plus 50 years—whereas aesthetic designs enjoy a much shorter period of protection. In addition to that inherently unlikely and wrong position, an important court case in 1986, British Leyland and Armstrong, dealt with the whole question of functional design and car spare parts. In effect, the court said that the law needed to be reformed because it was uncertain.

The important matter to stress when talking about spare parts is that we are not talking merely about spare parts in the car industry. One of the things made clear to us in Committee and in the representations addressed to us is that if the debate proceeds simply on the basis of car spare parts we shall be in grave danger of legislating for the particular and forgetting entirely about the general. To illustrate that point more graphically I shall read from a letter sent to me by the Society of British Aerospace companies. It says: Unless modified, the Bill will act as an impediment to the progressive development of UK industry, particularly the aerospace industry, in its need for continued and vigorous innovation to meet world-wide competition on a fair and realistic basis. The electrical appliance industry is also significantly affected by unregistered design right. In the briefing prepared by the Association of Manufacturers of Domestic Electrical Appliances, the association says: Although we believe that many parts of the Bill are an improvement on existing laws, we would take this opportunity to focus attention on one specific area of the Bill which we feel would be particularly detrimental to the interests of our member companies. Our concern relates to the manufacture and provision of spare parts. Representations have also been addressed to us by the Variety Group which operates in industrial constructions and farm machinery. It makes the same points. A brief was also prepared by, I think, the Design Council. There have been so many briefs on this issue that it is difficult to know exactly where letters or briefings come from. The Design Council says: The zero protection proposed for a great deal of human ingenuity seems at odds with the 25 years protection proposed for the decorative panel"— Those are designs with aesthetic qualities. The brief says: A cuddly toy will get 25 years' protection but a new educational construction kit will be open for all to copy from day one. Of course the car spare parts industry is important and will be greatly affected. However, it is not the only industry that will be affected. In addition to the problem of deciding how functional designs should be protected in relation to spare parts there is also a problem about the definition of spare parts. That is because the Government have not defined spare parts in the Bill. They have gone for what is now called the "must fit"/"must match" exemption. They are saying that when a part must fit or must match another part it loses its copyright protection. In Committee we saw the anomalies to which that could lead. In a Hoover two end parts must fit and must match the main body of the machine. In the middle there is a joining part that picks up fluff.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

That is called the agitator.

Mr. Blair

I thought that that was a political term, but apparently it is used in relation to Hoover spare parts. The Bill has been a continuing education for us all.

The agitator part does not get the benefit of the "must fit"/"must match" exception and is protected. However, the two end bits that join it to the machine fall within the "must fit"/"must match" exception and will not be protected. That is an inherently foolish way in which to leave the law. The solution proposed by the Government, at which I shall shortly look in detail, does not merely arouse the anxiety of many companies across the spectrum of industry. Even the definition of spare parts has been subjected to criticism.

At the beginning of my speech I spoke about a balance and such a balance applies strongly to this part of the Bill. We must pay attention to the need to reward investment while not allowing the abuse of monopoly because of anti-protection practices. Under the Government scheme, functional designs are to be given 10 years' protection. During the last five years of that 10-year term, spare parts manufacturers or copiers can manufacture that functional design under a licence of right from the original manufacturer. That scheme of 10-year protection for unregistered design right with licences of right in the last five years sits alongside the "must fit"/"must match" exception. That means that spare parts that must fit or must match lose protection altogether. The three components of the scheme are the 10-year period, the five years with the licence of right and no protection at all for spare parts that fall within the "must fit"/"must match" exception.

4.30 pm

The difficulty with the Government's proposal is that it does not address the problem of the requirement to balance the need to reward investment and the need to protect the consumer. The Government's scheme decides what spare parts will be given protection simply by reference to an accident of design; if the piece must fit and must match another, it loses protection, irrespective of the investment made and the development costs. If it does not fall foul of the "must fit"/"must match" exception, it attains full unregistered design right protection as any other functional design would, even though few research or development costs may have been involved.

The Government say that they have thought about the proposal carefully. They say that they have been through all the various arguments and reached a considered view. It is worth reminding Ministers, however, that one thing of which the Government cannot be accused in this matter is consistency. They have constantly changed their mind, and I do not entirely criticise them for that because, as I said, it is a difficult issue. None the less, the Government have swerved this way and that throughout a debate that has lasted for a period of years.

When the 1986 White Paper was published, the Government's position was as clear as it could possibly be. In the White Paper the Government clearly said that, having considered all the arguments, they believed that spare parts should be given functional design protection. That was the position that they adopted in 1986, and it was only changed the following year. The Government say that they have considered the matter over a long period, and I accept that, but they have also constantly changed their mind over a long period. At the end of the Committee stage the question arose whether they should not change their mind again and realise the strength of the arguments put to them.

I have described the Government's proposal, and I shall now deal with our alternative proposal. There are two major problems about what the Government have done. First, they have not defined spare parts but have simply introduced the concept of "must fit"/"must match". Any workable scheme to deal with functional design as it relates to spare parts must define spare parts. That is why we have provided a definition of spare parts as replacement parts for another article in amendment No. 227. To take my earlier example of the Hoover machine, the agitator would be included in the definition of spare parts along with the two end parts. That seems sensible, as we should thus avoid the absurd anomaly that one part of what is essentially the same spare part has design right protection and another does not.

I freely confess that the second part of our proposal is a compromise, but it is a compromise that has some merit, and it is certainly superior to the Government's proposal. At the moment, spare parts lose all protection if they fall within the "must fit"/"must match" definition. That is clearly wrong, for all the reasons that I have given. On the other hand, it is correct that we need to guard against the abuse of the monopoly position that copyright protection confers—a monopoly position that has been abused.

We propose, therefore, that spare parts should be given full design right protection, but that they should none the less be able to be copied under licence from the original manufacturer. If the terms of that licence cannot be agreed between the parties, there should be a right of appeal to the Comptroller-General of Patents, who will then decide what the terms of the licence should be.

That would allow copiers to carry on copying original parts, but it would ensure that they could do so only under licence from the original manufacturer. That would mean that the original manufacturer would be able to secure some reward, within the terms of the licence, for his investment—his research and development costs. I accept that that means that copying could continue, but it would be infinitely preferable for it to continue only under licence, whereas under the Bill as drafted it could continue without any restriction.

When we pressed this point, the Government said that those arrangements would be too complicated and that it would lead to too much bureaucracy if the Comptroller-General of Patents was given the right of appeal on the licences of right. We were told that it would be too problematic to administer. The conclusive answer to that argument is that clause 228 already provides for licences of right during the five years of an unregistered design right term. In other words, there is the ability to copy any functional design, subject to licence, during the last five years of the 10-year term. That is already in the Bill.

The Opposition say that spare parts should also be able to be copied only under licence and that to give adequate protection to the consumer that licence should be available from day one, if terms can be agreed. The copier could then copy but only with the consent of, and on terms agreed with, the manufacturer. If the parties could not agree terms, the matter would go to the Comptroller-General of Patents who would adjudicate upon it. That is precisely what would happen in the last five years of the unregistered design right term in any event. Whereas our proposal does not give complete design right protection, as we suggested in Committee, it is a workable compromise between the interests of consumers and the interests of industry.

Mr. Terry Davis (Birmingham, Hodge Hill)

My hon. Friend has clearly made a detailed study of this difficult matter. Specifically on the question of car spare parts and replacement parts, will my hon. Friend make it clear whether the proposal would mean that there would be a licence of right during the first five years as well as during the second five years, or does the proposal replace the existing provisions altogether?

Mr. Blair

Under the Bill as drafted, car spare parts could be manufactured without any hindrance at all. In Committee, it was strongly suggested that spare parts should be given proper design right protection, but the amendment embodying that suggestion was not accepted by the Government. Our compromise proposal would allow copying, but only under licence from the original manufacturer. That would mean that the original manufacturer could secure—in the form of royalties, for example—compensation for his development costs and other investment.

I fully accept that the car industry would like full unregistered design right protection for the entire five-year term, as with other functional designs. However, in view of the Government's opposition to that, we have produced a workable compromise. Whereas under the Bill as drafted copying could go on without any let or hindrance, under our proposal it could happen only under licence from the original manufacturer. That would allow the manufacturer to negotiate the terms on which the copying of spare parts could take place. As I said, that is a much better way of dealing with the matter than the Government's proposal.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher)

Perhaps I may clarify the position. The hon. Member for Sedgefield (Mr. Blair) said that under the Bill as drafted, copying could go on unhindered. That is not the case. Copying would be unhindered only for those parts of the spare part for which the alternative designer had no choice under the "must match" exception. In the case of a functional part for which an alternative design solution could be found—away from the parts of the part that must fit—there is design freedom. I would not want the hon. Gentleman to have the impression that copying of all kinds of any spare part is unlimited and free. That is not the case.

Mr. Blair

That brings us back to the great bone of contention in Committee, what "must fit"/"must match" encapsulates and what it concerns. The Minister's intervention simply underlines the point. The truth is that industry has been through this Bill carefully and it does not have the faintest idea how it will be applied. Those involved in the car industry fear that their spare parts will be copied without any hindrance or obstacle. They are concerned that that will mean that their research and development costs and the investment that they made to manufacture the original part will be lost because the copier will be able to copy the spare part without difficulty. If we are being told that "must fit''/"must match" does not do that, we are being told something different from what we understood to be the truth in Committee.

The advantage of our scheme is that it would ensure that the manufacturer had a bargaining point not merely in terms of a reward for the investment made, but, as one Conservative member of the committee said, in terms of quality. We are already aware that the quality of some of the spare parts manufactured by copiers is not the same as the originals. That is something that could be taken into account by the parties coming to an agreement or, in default of the agreement, by the comptroller. The Government argue that such a step is too bureaucratic and too complex, but the conclusive rebuttal of that argument is that licences of right will be available in any event for designs in the last five years of their term.

In Committee the Minister advanced two other arguments in defence of the Government proposals. We have done some research on them and found them lacking in substance. The first argument that the Minister advanced was that the spare parts used in the aerospace industry will not get the benefit of unregistered design right, but that, none the less, many of those things could be patented and therefore the patent law could supplement whatever deficiencies may arise regarding unregistered design right. We have studied that argument carefully and the aerospace industry has told us that that is not the case. Concorde, for example, which is a fairly advanced piece of engineering on anyone's terms, only has 12 parts that are patented. The likelihood of being able to resolve the difficulties of unregistered design right through patent law is remote.

The second argument advanced by the Minister with which I must take issue is that we are in step with other countries by not giving protection to functional design spare parts. He quoted West Germany as an example. I have studied the West German system and most of what we describe as functional design spare parts are protected by West German law. That protection is afforded in a slightly different way from our system, but none the less that protection is available.

West Germany has two particular ways in which to protect functional designs. The first is under what the Germans entitle a "gebrauchsmuster", which is a utility model term of protection. Italy uses a similar device. As a result, new functional designs that include some type of technical advance are given protection. Under the German design Act new and original designs which are not purely technical are also protected. Therefore its visual appearance has some bearing. That protection is so broad that it encompasses many of the things that would fit within our ordinary unregistered design right spare parts system. Although registered designs in the United Kingdom amount to 6,500 per year, in Germany registered designs run at 65,000 a year—10 times as many. In effect West Germany offers protection in many different circumstances to spare parts.

The Minister will be aware that industry is extremely concerned about the Government proposals. There has been intensive lobbying from practically every part of British industry. Industry has said that many of the spare parts that are currently manufactured as original parts and which have protection will not be protected after the passage of the Bill. Is that correct? I asked the Minister that in Committee and I would like an answer today. Has there been a study of the exact impact of the Bill on British industry? Even allowing for the normal hype generated by lobbyists, they have made a powerful case to us about the effects of the Bill.

4.45 pm

In this Bill I do not believe that we should create some false dichotomy between industry and the consumer and that one must choose either to be pro-industry or pro-consumer. If copyright protection was abolished tomorrow it would inevitably mean that certain items would be copied and the price would come down. That might mean short-term benefits for the consumer, but in the long term there would be no benefits because industry would cease to invest. We must not make a choice between those interests, but strike a balance between them. We believe that we have struck a better balance than the Government and, for that reason, I commend our amendments to the House.

Mr. Richard Page (Hertfordshire, South-West)

I should like to discuss amendment No. 274, which is tabled in my name and in the name of my hon. Friend the Member for Thurrock (Mr. Janman). Our amendment removes the "must match" exception in the Bill.

I shall not rerun the complete Committee stage. I accept the Government's argument that the existing position on functional designs needs reassessing and must be brought into better order. The recent case to which the hon. Member for Sedgefield (Mr. Blair) referred shows that the existing system has been allowed to run for too long and that the consumer has suffered.

In Committee it was clear, as the debate went on, that there was gathering disquiet about the Government's proposals. If the amendment that I put down in Committee had been put to a vote I believe that it would have been carried. That would have meant that the "must match"/"must fit" exception would have been removed. In that debate it became clear that industry was just waking up to the effects of those exceptions. More and more industries have been contacting me day by day to outline the effects of the "must match"/"must fit" exceptions on their businesses. As time has gone by and as industry has become more aware, it is clear that the "must match" exception has given most concern.

In Committee we had a marvellous time as many hon. Members produced all sorts of exhibits to illustrate their case. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) produced something which I thought at first was vaguely obscene, but which I then discovered was the seal from the front of a Hoover washing machine. One can see how a vital part such as that could be abused by a copyist.

The forms of protection that have been proposed by the Government appear to be out of kilter. It is rather peculiar that a registered design can be given for 25 years for some fairly innocent item—I gave the Committee the example of a belt buckle—but under design right an item is given only five years' complete protection and for the other five years it can be copied under licence. It now appears that design right protection has been removed with the exceptions introduced in the "must fit"/"must match" areas. Surely, as night follows day, it is inevitable that when one talks about "must match" a discussion of car panels will follow. I shall be the first person to talk about car panels, since nobody else has.

The issue that we are discussing is rather confusing. I agree with the hon. Member for Sedgefield, who said that the legislation will cause confusion. It could be a lawyer's paradise. I hope for greater clarification of the borderlines of where the exceptions will apply—and where they will not. The hon. Member for Sedgefield illustrated the point by mentioning Hoover parts, and a legal gentleman could have considerable fun and game in court ascertaining just where the line should be drawn.

Let us return to car panels. I shall not take the House through the process of making a motor car again. I bored the Committee enough with that in June.

Mr. Nicholas Baker (Dorset, North)

Hear, hear.

Mr. Page

I thank my hon. Friend for his endorsement of the quality of my speeches in Committee.

A considerable investment is made. The sum of £800 million has been quoted as the price of producing a new body shell that goes on the market. As the Bill stands, that £800 million-worth of body shell can be copied in bits and pieces from day one. It is not fair that a copier can start copying the bits that he wants with no recompense for or acknowledgment of the huge investment put in by the manufacturer.

The Government say that the cry of competition is the reason. Fair enough: let us have competition, but let us make it fair. This is not fair, because a manufacturer makes a huge investment, which is entailed in his obligation to the consumer to make every spare part or panel that goes to make up a car. He cannot make only the parts that he thinks will sell in large numbers and ignore the ones that will be the subject of only limited demand.

What is the copyist's obligation? None. He will cream off the panels that get damaged and for which there is high volume demand—and to blazes with the rest. He will not produce roof panels in competition with the manufacturer or produce bulkheads to ensure that the manufacturer is given appropriate competition. Copyists will put only high-moving parts into their factories. They will assure themselves of volume sales and manufacturers will be left to pick up their obligation to the customers.

The hon. Member for Sedgefield concentrated on the exception of "must fit". I have a growing impression from the companies that have contacted me that they can live with that exception. They do not like it or think it fair but when the crunch comes they think that they can just about accept it. But they cannot accept the "must match" exception and have vigorously campaigned to try to remove it.

It is only right that we should cast an eye over what is happening in the rest of the EEC. In Germany and Italy, design registration protection is given to new and original designs, with an emphasis on aesthetic appearance. The German design law, passed in 1976, means that a typical design would require registration which would confer protection for a limited period. In France, protection is for designs that are industrially produced and of novel appearance, including designs whose shape is dictated by function. The Benelux and Scandinavian countries have a unified industrial law for designs in relation to appearance. Looking across at the EEC and some Scandinavian countries, we can see that the protection is in place there. As has already been said, there seem to be far more registrations there, too.

In the EEC countries there are laws about unfair competition in Germany, France, Italy, Benelux, Denmark and Spain. The protection that those laws provide against unfair competition has supplemented some of the missing intellectual property rights. In the Benelux countries, the law is broad enough to cover a variety of activities which, in the United Kingdom, would have to be dealt with by copyright, if they could be dealt with at all. So an unfair competition approach permits a sensible distinction to be drawn between parts that can be copied, if there is not to be a monopoly, and those which can at least be differentiated.

In the United Kingdom, now that we are a part of a larger economic unit, there is a feeling that some protection is needed for the enormous outlay of time and money involved in developing and testing new products of mass production which fall short of the test of inventiveness that qualifies a product for a patent. The hon. Member for Sedgefield mentioned a number of items that could possibly be patented that went into the construction of Concorde. I urge my hon. Friend to re-examie the provisions of the clause a little more closely. I hope he will find it in his heart to be charitable at this last-ditch stage and withdraw the "must match" exception.

Mr. Rowlands

The value of Report stage of the Bill is that it gives us the opportunity to disgest some of the arguments and issues and to scrutinise what Ministers have said. Sometimes we find they have fobbed us off, or have bent the argument; sometimes they have addressed it and produced cogent cases against our amendments. Some of us have thus scrutinised the Minister's words since Committee stage. Now we have the chance to scrutinise the Minister's case against the pitch and argument of my hon. Friend the Member for Sedgefield (Mr. Blair) and the hon. Member for Hertfordshire, South-West (Mr. Page).

One of the Minister's arguments was that a licence of right from day one would create a horrendous bureaucracy. There is a problem with that: he is not certain which way to argue. In his earlier intervention in the speech of my hon. Friend the Member for Sedgefield, the Minister seemed to imply that many designs would attract that right. At the same time he argues that horrendous bureaucracy would follow if we included a large number of parts in any form of copyright. We need to know exactly how many parts will be excluded from any design right by the "must fit"/"must match" arrangements. If a large number is involved, the Minister's argument that giving design rights and licensing rights from day one would entail bureaucracy might have some validity, but I shall argue that that grossly exaggerates the case.

The Minister must make up his mind: will a large number of "must fit"/"must match" exclusions be free of any form of design right? If so, imposing the licence to right will create bureaucracy, in the Minister's view. On the other hand, the Minister seemed to give the impression earlier that we were exaggerating the number of parts that will not attract design right. He seemed to say that many more parts would attract design right than the industries that have made representations to him or those who have presented this case think.

I shall not trespass on the subject of the important next group of amendments, which are concerned with what is original and what commonplace. That is another fundamental issue in the problem of defining how far design right reaches—or does not reach.

I wish to tackle the Minister's case against what I thought was an extremely important initiative taken by a large part of industry. I am glad that the CBI has endorsed the suggestion that one way forward in the argument over spare or replacement parts would be to grant licences of right from day one. When we discussed this in Committee, the CBI had not yet supported that principle, and we had heard from only some sections of the industrial community. Since then, there has been general acceptance of that generous compromise by those who represent industry. The granting of a licence of right from day one would also enable the designer and manufacturer to specify the quality and safety of copies. I am deeply disappointed that the Minister will not seize on that compromise and carry it forward.

5 pm

The Minister argued that the compromise would create bureaucracy. From talking to firms in my area and others, and from representations that I have received, I know that the greatest administrative burden would be placed on those who grant the licences—the very people who support the amendment. A large part of the administrative burden will fall on those who advocate granting a licence of right from day one. They are willing to carry the burden of the many applications from companies that wish to make the parts that they originally designed.

The Minister has grossly exaggerated the character of the licensing arrangements. Industry already spends a great deal of time licensing and has developed standard documentation and routines for dealing with applications. We should not be bamboozled or cajoled into conceding the Minister's argument that it would cause undue bureaucracy.

The Minister also argued that much bureaucracy will fall on the Comptroller and that, if we waited for five years, we would have some case law to follow. He exaggerates the number of cases that would go to the Comptroller under our arrangement. We should not forget that parts are usually supplied under warranty. They will not need to be copied from day one, but those who want the right to copy them will then be able to apply for a licence. The copyists are not being placed at a great disadvantage. By the time that the negotiations have taken place and a market in those spare parts has been created—after the warranty has expired—they will have the licences to copy those parts.

In Committee, we pointed out to the Minister that we would have this problem in five years' time. Why will it be less bureaucratic after five years? The Minister said that, by that time, a considerable amount of case history will have been built up and there will be less bureaucracy, but how will case history be built up if there is a five-year delay? We shall have to deal with arguments about case history irrespective of whether licences of right are granted on day one or in the fifth year.

On 14 June, the Minister said: But it has been made clear to us that the European Commission would object if we increased the term or reduced or eliminated either of the exceptions."—[Official Report, Standing Committee E; 14 June 1988, c. 555.] Where is the evidence for that? We had many exchanges in Committee about the EC Green Paper on copyright law. Neither the Minister nor members of the Committee had seen it, although it had been seen by those concerned with the home taping levy and had been passed on to the Japanese. I thought that that would contain the evidence for the Minister's statement, but it contains little if any reference to those issues. If the EC objected to our suggestion, there would have been a specific reference to it in the Green Paper. The Minister said that we cannot amend our Bill because the EC would object, but its Green Paper makes no reference to the issue. We should not allow his argument to stand. Even if he produces such evidence, the House has the right—in the absence of EC law—to amend the Bill as we suggest.

The Minister may try to argue about bureaucracy, but the most important thing about the key amendment in this group is that no one suggests that the original manufacturers or designers of parts should have a monopoly right. We are going much further than many others are willing to go. We are destroying the concept of monopoly and would grant people from day one the right to copy parts. That is an important compromise and, given the lack of consensus on the issue, it would be foolish for the Minister to turn his back on our important suggestions.

Sir Hal Miller (Bromsgrove)

I am a stranger to the debate so far, not having had the privilege of being a member of the Standing Committee, but I feel that something needs to be said in support of the Government on the issue, with specific reference to car panels. I was not provoked on this subject by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), but I was reminded of certain facts that need to be drawn to the attention of the House in support of the Government's position.

I had intended to make the burden of my remarks on the series of amendments coupled with new clause 5, which deal with licences. I think that that is where my hon. Friend and I would find common ground, in that there should be a system of licensing that should provide for some reward for the original designer, although we might have some disagreements about how soon that licence should be obtainable and the royalty that should be paid.

My point is about the need to match. With regard to car panels, it is important to bear it in mind that the whole business came into being for two very good reasons. The first was the introduction of the MOT test, which is a measure that I hope we all welcome, but it necessitated the replacement of rust-damaged part panels. Our original equipment manufacturers were not in the habit of supplying part panels and had no wish to do so at that stage. They made a great deal more profit from supplying whole panels. We shall come to the point about the prices at which they supply whole panels, but the original concept was the rust-corroded part panel, which gave rise to the suppliers.

Mr. Page

I agree with my hon. Friend about how this all came about. In the Bill we have the design right protection for five years and more, beyond which the panel makers will be able to produce automatically those types of panels. It is most unusual for a car panel to rust away after the five years. In the second five years, one can have a licence of right. So I agree with my hon. Friend, and look forward to what he says.

Sir Hal Miller

I was coming to a further development, that the products of the independent panel makers were originally part panels, but later whole panels, for crash-damaged cars, for which there was a large demand. The whole panel's price was kept up by the original equipment manufacturers, particularly through their franchise system. Now we are reaching the subject of competition in the retailing of motor vehicles and supply of parts. The figures show that most customers remain with the franchise dealer while their vehicle is under warranty, super-cover and so on, but when that period expires there is a sharp decline in the numbers of those who travel, perhaps some distance, to the franchise dealer, and a great rise in the numbers of those who go round the corner to the man at the local garage, as I have been in the habit of doing, and ask for a repair. Many of us are familiar with the question that is asked: "Is this for insurance or are you standing the rap?" Often that produces a different answer from the customer, as to the type and extent of the repair that he wishes to be undertaken.

What is beyond doubt is the decline in the number of people attending franchise dealers for spare parts after the period of warranty has expired and the tremendous growth that we are now experiencing in alternatives to franchise dealers. I am not supposed to be advertising, but a large number of firms are growing up, which supply various parts. We are seeing that trend partly because of the rigidities, expense and restrictions of the franchise system. That area needs to be further examined.

I am not carrying out a vendetta against our car manufacturers, but when they complain about the independent panel manufacturers, we must say that they themselves have had recourse to those independent manufacturers. For example, if one peels the label of one of our well-known makers from the panel, one finds the independent panel maker's name underneath. That might strike some of us as a curious protection of therights—

Mr. Tim Janman (Thurrock)

In that example, would the original equipment manufacturer have given all the necessary details of the original design to the third-party copier so that he can manufacture the panel to the correct quality and standards?

5.15 pm

Sir Hal Miller

I am happy to respond to that question. I was not trying to lure my hon. Friend onwards, but I have to tell him that the independent company that supplied the panel from Germany is being prosecuted in this country by the same original equipment manufacturer for supplying identical panels in this country, although the manufacturer was buying the panels from the same company in another country. It was a ham-fisted attempt but that is what one is led to when trying to protect the franchise system.

In another case, one of our original manufacturers, whom I shall protect by not naming him, set up his own subsidiary in Taiwan with the express purpose of manufacturing those selfsame panels. So the idea that we are getting the panel hot off the press in this country or in Germany, from one of our original car manufacturers, is far removed from the truth. We should not mislead ourselves into thinking that that is so.

Mr. Matthew Carrington (Fulham)

Does my hon. Friend agree that having multiple sources is often a great advantage for the manufacturers of body panels, in case one of the sources of the body panels has a strike, goes out of business, and so on? Frequently one finds that many manufacturers are encouraged to produce components of all sorts for the motor industry, just to ensure that there is continuity of supply.

Sir Hal Miller

I am one of those who constantly pay tribute in the House to the efforts of our major manufacturers to overcome their industrial relations problems. Those considerations are not so relevant now as they were 10 years ago. In the motor industry as a whole, it is commonplace that manufacturers seek single-source suppliers for longer-term deals and put out the design of the part, as long as the specification and quality reach the right standard. That is the trend. What my hon. Friend was talking about may have been true 10 years ago, but it is not so much the case for motor manufacturers now.

We must support the Government on the "must match" exception because the panels have to comply with the original contours of the car if they are to be an effective replacement. One of the reasons given for maintaining the hoped-for monopoly and the franchise deal in respect of the panels is that there is a commitment to keep supplies for earlier models for 10 or 12 years. I wish that that was shown to be true and that the prices, where such panels were eventually discovered in the warehouse, bore some relation to the prices for panels that could be readily obtained from the independent manufacturers. The argument is not quite so much one way as some of my hon. Friends believe.

Mr. Rowlands

I have listened carefully to the hon. Gentleman's case, but not one of his arguments has been deployed against the right to license from day one. He referred to a warranty period, which means that the right to license from day one would enable any copier to get his part into the market place in good time. The hon. Gentleman also referred to the quality of the specification. A right to license from day one could specify that. He also spoke about the relationship between the independents and the main manufacturer. A right to license from day one would take care of that. I remind the hon. Gentleman that the clause does not relate only to the body panels of cars. It deals with washing machines and other complicated machinery.

Sir Hal Miller

I said at the beginning of my speech that I intended to devote most of it to licensing, particularly registered design rights. We shall deal with that question when we consider the amendments grouped with new clause 5. I said that I thought that my hon. Friend the Member for Hertfordshire, South-West and I would reach common ground on that point. However, the Government need some support over the "must match" exception because the argument seems to be all in one direction. There are very good reasons for supporting the Government.

Mr. Terry Davis

My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has just reminded the House that although the clause applies to replacement parts for motor vehicles, it also applies to the aerospace industry and a number of other industries, such as the electrical appliances industry. I accept what my hon. Friend has said, but I shall concentrate my remarks on the effect of this legislation on the car industry. I worked for many years on the marketing and the supply of spare parts for the industry. That was some years ago, but I continue to take an interest in it.

My hon. Friend the Member for Sedgefield (Mr. Blair) said that a balance must be struck in the car industry. I agree with him. He referred to the need for the industry to be neither pro-industry nor pro-consumer. I agree with him about that, too. However, he spoke as though the industry consisted solely of motor manufacturers. It is a much more complex industry than that. It includes the manufacturers of spare parts. They are an extremely important part of the industry. Manufacturers of spare parts include a wide range of businesses, from Lucas and GKN at one end to very small firms, sometimes described as back-street firms, producing items such as body panel parts, at the other.

We must also consider the dealers. There is a divergence of interest between the franchised dealer—franchised by the motor manufacturers—who receives a percentage of the price of a spare part and the unfranchised garage that does a large part of the servicing of motor vehicles. The latter is an extremely important part of the motor industry, consisting mainly of very small firms—of people starting up on their own.

Similarly, the importers of vehicles have not been mentioned in this debate, but they must also be taken into account. If the Bill protects vehicle importers, we shall bar our own industry from supplying spare parts. French, German, Japanese and Italian cars account for a considerable number of the cars that are sold in this country. I should be loth to do anything that cut our spare parts manufacturers out of that very profitable business.

Furthermore, the interests of consumers are not always identical. The original buyer of a motor car will have a different interest in spare parts from that of the person who buys a second-hand motor car. The second-hand car owner will have the greatest interest in the price of spare parts. He will require more of them, particularly the more expensive spare parts that the original owner of the car will not have to buy, unless there is an accident.

Mr. Janman

The hon. Gentleman compares the interests of a person buying a new car with those of a person buying an older car. Does he accept that as a car gets older it is inevitable that the number of parts that make up the total market place for that model will reduce and become more and more slow moving? If we allowed the "must match" exception to remain, the copiers would not be interested in the slow-moving parts. Only the manufacturer of the original equipment would be interested, and the price of the slow moving parts that go into older vehicles would increase.

Mr. Davis

No, it is not like that at all. There is a business cycle for spare parts. To begin with, it is very slow moving. Then it builds up to a peak. That is when a motor vehicle is several years old. Depending on how long that model is kept in production and the number of vehicles sold, there is a rise to a peak in sales of spare parts. Then it tails off. It is not the case that the older the vehicle and the older the parts, the more slow-moving they will be. One could be selling more parts for older vehicles. I am referring to parts that wear out. There is a different pattern for parts that are replaced because of crash damage. I shall not bore the House by describing the various life cycles and business cycles of spare parts, but the hon. Gentleman has over-simplified the case.

The owners of second-hand cars have a different interest in spare parts from those of fleet buyers or the owners of new cars. They will buy different sorts of parts. The person who buys a second-hand car will have to buy more expensive replacement parts, particularly body panel parts and engine parts. However, there is some community of interest between the motor manufacturer and the small manufacturer of body panel parts. When a car goes out of production, a motor manufacturer may run out of spare parts because it was impossible to envisage how many buyers of a spare part there would be when production ended.

The motor manufacturer will want to obtain small runs of pressed parts from the so-called back-street manufacturers. If they did not exist, the motor manufacturers would be in great difficulties. Motor manufacturers rely on spare parts manufacturers in places like Coventry, particularly to provide spare parts for the kind of cars that are bought by enthusiasts and that people drive not for years but for decades. It is very difficult to obtain such body parts unless it is possible to arrange for a small run of pressed parts every few months or, more likely, every few years.

It follows that there is not a complete divergence of interest between the various sections of the motor industry, even when we speak about motor manufacturers and body panel manufacturers.

My hon. Friend the Member for Sedgefield referred to the need to reward the investment by motor manufacturers.

Mr. Rowlands

My hon. Friend referred to the life cycle of parts. Will not the design right also have been worked out for spare parts? Would not licences for spare parts exist for up to five years? During that life cycle, copying would certainly be allowed. Has not my hon. Friend argued against the amendment?

Mr. Davis

My hon. Friend is absolutely right. I am simply explaining that it is a more complicated industry than has been suggested. I shall turn to my hon. Friend's point in a moment.

It is necessary to reward the motor manufacturer: but how is he to get his reward? It has been suggested in this debate that the motor manufacturer will be rewarded for his investment by selling spare parts. To do that, he will ask a lower price for the vehicle when it is sold and then ask a higher price for replacement parts. It is rather similar to a razor blade manufacturer who is prepared to give away razors, provided that he is allowed to sell the blades that fit the razor. But the interests of consumers vary. If we are not careful, we shall penalise consumers who buy second-hand cars. Generally speaking, they are in the lower income groups.

To turn directly to the point made by my hon. Friend the Member for Merthy Tydfil and Rhymney, it is not a question of body parts only. One of the largest segments of the spare parts business is exhaust systems. They do not last five years on a new car. The owners of cars often have to replace the exhaust system before the cars are five years old, so the replacement of exhaust systems becomes important within five years. Therefore, within that five-year period, some of those reasonably expensive parts and systems will be sold.

It has been suggested that there should be a right to a licence from day one. That is a constructive suggestion. The difficulty is how much the licence will cost—that is, how much the motor manufacturer will charge the spare parts manufacturer for a licence from day one. That is where the conflict will occur. Of course, it will be in the interest of the motor manufacturer to extract the highest possible price for a licence from the replacement parts manufacturer. I am concerned as to how that will be sorted out.

5.30 pm

My hon. Friend the Member for Sedgefield suggested that there should be an appeal to some registrar. I understand that. But we are talking about many parts. It is not a case of a licence to make a single part. A very large number of parts will be involved, presumably with a different licence fee for each part.

I am not surprised that at least some motor manufacturers agree with the idea of a right to licence from day one, provided that they can set the price of the licence. That is a key point. While they are negotiating, does the spare part manufacturer have the right to make the body panel or other part? That is an extremely important issue which my hon. Friend did not mention.

My hon. Friend the Member for Merthyr Tydfil and Rhymney raised the very important questions of safety and quality. There are other ways of ensuring the safety of spare parts, and it is wrong to try to do it through this Bill, which does not deal with safety. There are laws on product liability and regulations on British standards. It is quite right that we control the safety of spare parts. As for quality, again it may be against the interests of the consumer for motor manufacturers to impose a quality standard upon the manufacturers of spare parts. Some famous names entered the replacement parts business making parts of a lower standard and quality than the original equipment provided by the motor manufacturers, but of a quality and standard acceptable to the consumer.

A classic name is the pioneer of exhaust systems known as Quinton Hazell, who founded his business on that principle. The consumers did not want the equivalent of gold-plated exhaust systems; they wanted serviceable exhaust systems, and he built a whole business on that concept by setting a standard of quality acceptable to the consumer, but of a lower standard than the original equipment from the manufacturers. That is part of the right of the consumer to choose. If a consumer pays a far lower price, he will not expect a standard of quality which he would receive from the original equipment manufacturer at a higher price.

Mr. Page

Although an exhaust pipe is obviously not a safety part of a motor car, some manufacturers would be extremely concerned about the quality of any product made under licence, particularly a body panel, for example, that had taken part in crash tests to conform to the various regulations, and would not wish a cheapjack copier to make it out of much thinner material that would not deform in the same way, and give controlled deceleration and therefore, if it were fitted, would put the occupants of the car through the windscreen.

Mr. Davis

The hon. Gentleman and I have no difference in our concern about road safety. We differ as to how those standards, which are important for road safety, should be imposed and monitored. I suggest that there are other ways to control the safety and quality of products. There are other laws which do that—not by giving the motor manufacturer a monopoly over the supply of replacement parts. That is the difference between us, although we have the same objectives.

I am not surprised that the motor manufacturers do not like the "must fit"/"must match" concept. I am not surprised that the CBI does not like it because the CBI tends to reflect the views of the motor manufacturers, and I am not convinced that the CBI reflects the view of those who make the replacement parts. Certainly it would be to the disadvantage of those manufacturers, which are small firms, and if we are not very careful about the way in which we engage in this legislation, it may lead to higher prices to the consumers. The motor manufacturers are, by any definition, big business. Some of the manufacturers and suppliers of replacement parts are small firms, and their consumers tend to be people in the lower income groups.

I have reservations about some of the views expressed by my hon. Friends, and I shall listen carefully to the Minister's reply.

Mr. Janman

It is worth looking back at the Standing Committee, and worth remembering that when we had a long and intensive debate on the "must match" exception clause, every Conservative Member who spoke on the clause either counselled the Minister to proceed with at least caution, or expressed total opposition to it.

Although I do not wish to repeat all that I said on Second Reading or in Standing Committee, I wish once again to make some comments against the "must match" exception and with that in mind I wish to speak in support of amendment No. 274, tabled by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and me. It is also worth noting that when we debated the clause in Standing Committee, I hope that I am right in saying that we did not go to a vote because the Opposition had been left in a state of limbo as industry, through various different bodies—the CBI being the most notable—had not really got its act together in presenting a coherent alternative strategy to the one which the Government were proposing at the time.

My hon. Friend the Member for Hertfordshire, South-West said earlier that if there had been a vote in Committee on the "must match" exception clause, knowing how some Conservative Members would have voted or abstained in that Division, that clause would have been taken out of the Bill in Committee. I can verify that.

Today, we are discussing how to improve the market place for the consumer. My hon. Friend the Minister will acknowledge that I am a strong supporter of increasing choice for the consumer and freeing up and deregulating markets and liberalising them so that the consumer has more choice. On the other hand, we wish to maintain fair competition and an adequate reward for the considerable investment in design and innovation by original equipment manufacturers.

I agree with the hon. Member for Sedgefield (Mr. Blair) that this is not a case for deciding whether one is pro-consumer or pro-industry. I do not believe that the "must match" exception clause is pro-consumer, although I agree with earlier comments that the exception will hit a large number of manufacturers across the face of British industry and in many different industrial sectors—white goods, electronics, the motor industry and others. Because of my experience of working in the motor industry, I wish to focus my comments on how it will not help the consumer in that spare parts sector because the consumer does not have an interface with the people who are supplying the body panel. The middle man has that interface.

My hon. Friend the Member for Bromsgrove (Sir H. Miller) was quite right when he said that if one goes to a back-street garage or a franchised dealer, one does not normally go there for a body panel. One goes there to have one's car serviced or, if body panels are involved, one is more likely to be going there to have a car repaired. One goes there to buy a repair service, not one particular body panel. Therefore, the consumer has no direct connection with the decisions as to which body panel and which supplier is used, whether it is a Taiwanese import, an import from the original equipment manufacturer or a body panel made in this country by the original equipment manufacturer. The consumer does not have the chance to exercise choice and value judgment as to the difference in quality, albeit accepting that a bottom-line safety net of quality and safety exists.

The consumer is not in a position to make that choice because he does not come into contact with the supplier. The person carrying out the repair will decide whether he puts on a copied body panel or one from the original equipment manufacturer. He will decide what price is passed on to the consumer. If there is some fiddling going on—as there often is in this area—the consumer will be none the wiser as to what type of body panel is being fitted and whether the price paid correlates with that asked by the original supplier of the body panel.

My hon. Friend the Member for Bromsgrove pointed out that in about 80 per cent. of cases, the consumer is not paying for the work done. Therefore, the consumer's interest in the intricacies of where the repairer is obtaining supplies is somewhat diminished. It would be different if the consumer was paying for it with readies from his own pocket. Whether it is a company car or a car owned by the consumer himself, in 80 per cent. of cases the repair is paid for by the insurance company. It is fair to say that insurance company inspectors do not take much notice of whether the panel being fitted to the car says "Made in Dagenham" or whether it is made in Milan or wherever.

Mr. Page

From my experience, when the inspector comes to estimate a job, he does not see any panels, because at that stage they would not have been ordered.

Mr. Janman

I am grateful to my hon. Friend for pointing that out. It is a useful clarification of my point.

To some extent I bow to the superior knowledge of the hon. Member for Birmingham, Hodge Hill (Mr. Davis), given his experience in this sector of the motor industry. However, surely he would accept that the total amount of business available to spare part manufacturers, whether it be the original equipment manufacturer or a copier, for gearboxes, front wing body panels or whatever for a 10-year-old mark I or mark II Escort is different from the business available for a one, two or three-year-old Sierra. He will acknowledge that the number of parts being sold for two or three-year-old Sierras is far greater than for 10-year-old Escorts. Therefore, the market for body panels for two or three-year-old Sierras is far more lucrative than that for 10-year-old Escorts.

The copiers do not have to invest in copying the panels, because they do not have the original specification. They simply set up shop cheaply many thousands of miles away and copy the fast-moving panels. Therefore, understand-ably they are able to vastly undercut the original equipment manufacturer. The original equipment manufacturer will be left to supply the slower-moving parts and its margins will be squeezed because of the inevitable reduction in market share of fast-moving parts. Therefore, they will put up their margins on slow-moving parts. People on lower incomes who generally own older cars will have to pay the price if the "must match" exception clause remains in the Bill.

I understand that the United Kingdom consumer organisations have expressed support for this liberalising measure. However, it is interesting that the BEUC, the European consumer body, understands what the ramifications will be for the overall standard of quality and safety and realises that the "must match" exception clause will lead to a diminution of quality. Therefore, it is not surprising that the BEUC did not intervene in the Veng v. Ford body panel case, brought by the European Commission. It takes the view that it will be against consumer interests for the Government to press ahead with the principle of the "must match" exception clause.

We have to decide whether there are benefits to the consumer; I do not believe that there will be. We also have to decide whether there will be benefits to the nation as a whole; again, I do not believe that there will be. The legislation would put us out of step with design right protection for spare parts manufacturers in virtually every major European Community nation. The loss of revenue and the reduction of jobs in, for example, Ford, British Leyland and Vauxhall will not be balanced by any increase in opportunity for the small number of British-based copiers.

Also, there will be no opportunities for new British-based copiers to spring up because they will not have European markets available to them in the same way as foreign copiers do, because of the difference in law in terms of the strength of protection given to spare parts manufacturers in this country and the rest of Europe. Therefore, the jobs lost in the original equipment manufacturing sector of the industry will not be compensated for by any gains in the spare parts sector.

5.45 pm

The answer to the problem is not to move ahead with the "must match" exception clause but to give the right of compulsory licensing if there is proven monopoly abuse. I do not think that there is monopoly abuse at present. Because the original equipment manufacturer has to invest in the original technology and design of all parts, his costs for producing a particular body panel are much greater than those of a copier in Taiwan who has not had to invest in the early stages. It is worth noting that, in 1986, Ford's return on investment in body panels was only 3.6 per cent. That is hardly ripping off the consumer. Given an environment of fair competition and the costs that large manufacturers face when they first design a car, we do not want consumers to be ripped off. We should force manufacturers who are abusing their position to give licences to other people to compete.

Unless circumstances of monopoly abuse prevail, the "must match" exception clause is not to the benefit of the consumer in the motor industry. It will have a detrimental effect on our manufacturing base in the motor industry and in the other industries affected. Therefore, I repeat the request by my hon. Friend the Member for Hertfordshire, South-West and ask my hon. Friend the Minister, at this late stage, to think again on this misguided course.

Mr. Butcher

I thank hon. Members for continuing what has become a firm tradition of the Bill, which is to focus entirely on the merits of the argument. Yet again we have seen a diversity of opinion on both sides of the House. Without immediately displaying which side of the argument I wish to favour, all I will say is that my hon. Friend the Member for Bromsgrove (Sir H. Miller) and the hon. Member for Birmingham, Hodge Hill (Mr. Davis) did not grace our Committee. However, they have a reputation in the House as Members who are assiduous in the representation of all sectors of the motor industry and the interests of midlands manufacturing generally. There was much in what they said, and in the past I have found it to be compelling. I hope that the hon. Member for Hodge Hill will not be embarrassed, given the traditions of debates on this subject, if I say that his was a fine speech. There were many fine speeches in Committee and I hope that there will be many more on Report.

The advantages of the Report stage and remaining stages are many. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) reminded us that we have a chance to look at the recorded comments and to re-analyse and retune our own arguments. It is also an opportunity to continue the discussions on several items within the Bill that remain controversial. It was during that period that hon. Members have spoken to several people outside who consider that vital interests are at stake. They have done so at all times with a sense of perspective and fair play.

I hope that Opposition Members who have keyed some of their arguments against the position of the CBI as reported and of the British aerospace companies will not mind if I point out that I do not believe that the amendments have the unanimous support of the CBI. A couple of weeks ago, I received a letter from the chairman of the CBI working group, which had been looking into design rights. He considered that he had to write to let me know that he could not support the CBI's views on the matter. The chairman's view was: The Government had got its design proposals just about right. We have received further letters from other industrial sources who are also of the view that, at present, the design right proposals offer the right balance between the needs of designers and competitors. We had further discussions with the CBI.

British aerospace companies are concerned because some matters of interpretation and principle are at issue. One of the outcomes of my discussion with them is that they better understood some of the terminology that we were using, but, perhaps most important of all, I was able to point out that the term of protection will not begin until articles made to a design are actually manufactured and are made available for sale or hire. I recently met representatives of the Society of British Aerospace Companies. They seemed to be content, particularly with the formulation of that part of the Bill. They suggested that the trigger for the term of protection might be the granting of an airworthiness certificate—that aircraft must be granted a certificate of airworthiness before they can be sold. So, usually, the 10-year term will begin only after such a certificate is granted.

I agree with the hon. Member for Hodge Hill and my hon. Friend the Member for Bromsgrove. We discussed the interests of the motor industry in a variety of ways, but, on most occasions, it was said that, for every job in vehicle assembly plants, there are three or four jobs outside for those who supply components and parts to vehicle assemblers. We must bear in mind the interests of that part of the industry if the preoccupation of Opposition Members—I am sure that it is the case with Conservative Members—is with jobs, competitiveness and opportunities for such companies.

Opposition Members have told us many times that we should be concerned about the ratio of imports into the United Kingdom. It is a matter of some sadness to those hon. Members who have loyalties to the midlands in particular to note the fall in the share of the British car market that is occupied by domestic manufacturers. It has happened. No doubt, on another day, we shall debate why it happened, but if 50 per cent.-plus of the car park, which is the term that manufacturers use, now rattling around this country is of foreign manufacture, should we not give an opportunity to British components and panel suppliers—those in the "must match" exception—to compete to supply Renaults, Volkswagens, Datsuns, and "fow-vays"? All such people could be legitimate targets for companies that hitherto have not found a friendly environment in which to ply their art, certainly in regard to industrial copyright.

The hon. Member for Hodge Hill asked several questions. He asked whether it is true that industry will lose protection for spare parts when the Bill becomes law. The answer is that, in most cases, spare parts will gain the protection that they now lack. He referred to the judgment in the BL v. Armstrong case. Therefore, he should know that their Lordships held that copyright does not protect spare parts. However, design right will protect spare parts, subject to the "must fit"/"must match" exceptions. In summary, the protection of spare parts will, in general, be increased rather than decreased by the Bill. The amendments bring us to those main features—"must fit"/"must match".

I shall refer to the amendments tabled by my hon. Friend the Member for Bromsgrove in a few moments, but first I shall summarise my understanding of the main thrust of the amendment moved by the hon. Member for Sedgefield (Mr. Blair) to make sure that we are all on the same wavelength. The hon. Member wants to delete the "must fit"/"must match" exceptions and, instead, provide that licences of right will apply to all spare parts from day one. He believes that that will allow competition in what would otherwise be captive after-markets, while giving original designers more of a say in what goes on.

The hon. Member for Merthyr Tydfil and Rhymney has a slightly different solution. He wants to subject "must fit"/"must match" features to licences of right, again from day one. In some ways, the proposals are perfectly respectable—I can say that in respect of what is essentially a non-political Bill—but they suffer from one fundamental and, I am bound to say, fatal flaw. They would both mean that, every time someone wanted to compete by making an article that had to be fitted or matched to another article, he would need a licence.

I appreciate that licences would enable the rights owner to exercise some control over what a competitor produces—for example, in respect of matters such as safety and quality. But any intellectual property right comes to an end at some point. In the case of design right, it is after 10 years in the market. All the factors such as safety that are of concern to the hon. Gentleman, are just as important after the intellectual property right has run out. At that point, the intellectual property law is of no help. That is why we have left a whole raft of separate, free-standing legislation and regulations on safety, and that is how it should be. In my view, the existing provisions on safety provide all that is necessary, and additional licensing provisions in design right are not necessary.

That is particularly so because the licensing arrangements that have been proposed would have a number of highly undesirable consequences. First, the need for a licence would arise not only when a competitor wanted a copy the whole of an article in its entirety, but when a competitor wanted to use his own design and his own technology.

We must bear it in mind that hon. Members have tried to champion the cause of the creative designer. In such circumstances, he would still need to copy the connecting features to make his product fit. The need either to seek a licence or to negotiate the terms and conditions of a licence of right could, at best, act only as a disincentive to design innovation. With the hon. Gentleman's amendments, if the article is not a replacement part, the design right owner could refuse a licence in the first five years. That would result in a monopoly that would shut everyone else out, and that would be the ultimate disincentive.

Mr. Blair

If the "must fit"/"must match" exceptions do not apply, whoever wants to manufacture or copy a certain design must apply for the permission of the original designer in any event.

Mr. Butcher

At this stage of a Bill's consideration, amendments are tabled as alternatives in a last try to come to a consolidated and considered view. The effect of the hon. Gentleman's amendment is as I have described it. He tests me on the practicalities of my own position. I am bound to say that there is a surety to give suppliers of component parts a clear idea of what is required of them. In general, it is in common with median protection in other parts of western Europe. In taking this route, we have listened carefully to those who argued, as the hon. Gentleman has just argued, that we should seek a much better period of protection for original designers or we should erode it almost in its entirety. The hon. Gentleman's amendments seem to face in both directions. That is not a criticism of Opposition Members. They have had to wrestle with the same dilemma. To return to the comment of the ex-chairman of the CBI committee, I believe that we have the balance about right.

6 pm

I should do the hon. Member for Sedgefield the service of replying to the other implications of his amendments. The second, related problem is that they would involve a great deal of unnecessary red tape, although I do not intend to labour that point. The hon. Member for Merthyr Tydfil and Rhymney teased me about this in Committee and has done so again today. Nevertheless, it is true that, whenever a competitor wished to produce something that fitted or matched something else, a licence would be required. In some circumstances he would be entitled to a licence of right, but he would still have to negotiate the terms and conditions.

We are working—I hope—to create a larger, more open, more competitive market. The thought of industry having to negotiate licences on every occasion as a precondition of competition does not merely irritate me or lead me to question the bureaucracy involved—it makes my blood run cold. It is simply not true that there are large areas of industry in which there will be no argument about licences. I have been involved with design protection for some years and one thing is crystal clear—there is controversy and argument wherever one looks.

Under the Bill as drafted, the licence of right provisions will come into play only when a competitor wishes to copy an entire article or that part of an article for which there is design freedom and for which an alternative design is possible. They will not apply whenever somebody wishes to compete, as would be the case under the proposals of the hon. Member for Sedgefield. The difference in the number of times that licences would be needed under the two sets of proposals would be many orders of magnitude. To me, that difficulty is of itself fatal to both the hon. Gentleman's proposals.

There are other detailed but no less important problems with the hon. Gentleman's amendments. For example, when is a replacement part not a replacement part? The hon. Gentleman made a valiant stab at a definition, but it is important to bear in mind that that question will have to be answered as each article is made. A single article cannot be "primarily made" as a replacement part. Amendment No. 227 states: an article is manufactured as a replacement part if it is primarily made for use as a replacement". But it either is or is not made as a replacement part. I shall not go into that at length; I am sure that the hon. Member for Sedgefield does not wish me to reinterpret his amendment for him at this stage.

My hon. Friend the Member for Bromsgrove again spoke eloquently in defence of the "must match" condition that he seeks for the original manufacturer. Reference has been made to the possibility of the consumer being duped—for instance, a supplier taking a margin on what may be sold as an accredited spare panel from the original manufacturer. As the hon. Member for Hodge Hill reminded us, that is perhaps more within the remit of other legislation. Misleading the consumer can be dealt with in that way.

With regard to safety, there are the general safety requirement and the British standards. I accept those arguments, and the insurance industry is highly interested in them, although there are times when it finds replacement parts fitted by non-original manufacturers perfectly acceptable for insurance purposes. I am familiar with the example given by the hon. Member for Hodge Hill—that of Quinton Hazell and his exhaust pipes. We discussed exhaust pipes at great length in Committee and at the current rate of progress we shall probably still be discussing them at 4 am tomorrow. Many companies begin their lives offering the customer cheaper alternatives and then move up market to become considerable and respected members of the industrial community.

I have tried not to recast the arguments used in Committee in exactly the same way or on the same basis. The Opposition will, however, expect a reply from me on two important questions, and this is the last opportunity for me to give the information that they have demanded.

I was asked what evidence we had that the European Commission would object to our increasing the term of design protection or removing the exceptions. I accept that there is no published evidence in recent Commission documents or elsewhere, but we discussed the matter with the Commission in the run-up to the Bill. The Commission had already objected to the excessive protection for functional designs given by United Kingdom copyright and was equally concerned that any new design law should not move out of line with protection elsewhere in the Community.

The Commission was satisfied with our proposals on this basis but made it clear that additional protection might well lead to a formal complaint under the European Community treaty. That does not amount to being dictated to by the European Commission, because 10 years' protection, with appropriate exceptions and licensing arrangements, represents what we regarded as necessary in any event. It shows, however, that there is no truth in the allegation that we are giving less protection than the rest of the Community.

Several references were made to design protection in Germany and the basic facts were largely correct. There is protection for basic designs under a utility model or petty patent system. There are also large numbers of design registrations; the Opposition were absolutely right about that. The essential point, however, is that neither of those forms of protection is equivalent to the design right protection provided by the Bill. Petty patents are granted only for inventive designs and registrations are possible only where the appearance of the design matters. A large number of designs, especially for spare parts, do not fall into either category, but they would be protected in the United Kingdom when the Bill becomes law although they are not protected in Germany.

I hope that I have met the points raised by my hon. Friend the Member for Bromsgrove and by the Opposition and that hon. Members will not seek to divide the House on an amendment which is not just illogical but impracticable.

Mr. Blair

I entirely accept that these are difficult matters of judgment and I welcome the contributions of the hon. Member for Bromsgrove (Sir H. Miller) and my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis). I repeat, however, that the problem must not be seen merely as one concerning car spare parts. There is a great deal more to "must fit"/"must match" and design right than that. The Opposition have been accused of seeking a monopoly for the original manufacturer, but the basis of our proposal is that no such monopoly would exist. Rather, there would be a licence of right from the first day. That seems to take care of many of the objections, apart from the Minister's last point. The amendment would not affect the vast majority of original manufacturers or, indeed, of component manufacturers, so the car industry could operate very much as before, but under licence of right.

The Minister found great difficulty in defining a replacement part, but that is as nothing compared with the difficulties of "must fit"/"must match", which give rise to enormous problems as to how much of a replacement part would have protection and the absurdity of some parts of the part having protection while others did not. If that exception is not applied, there is total protection over the entire period of the design right term. The Minister accused the Opposition of facing both ways on this. In fact, we are merely seeking a compromise between the interests of industry in rewarding its investment and the interests of the consumer.

It is important to attain that compromise if we can. The only argument that has been advanced against it is that it would be too bureaucratic. I cannot believe that that is right. Licences of right and the concept of licensing apply throughout industry. Licences of right for the last five years of a design right are written into the Bill. Any function or design has a licence of right in its last five years, so provision is already made for licences of right in the Bill.

I cannot believe that sensible people could not come to agreement in the vast majority of cases. Where they cannot, a body of case law will grow up from appeals, and the position will become clearer. We cannot allow manufacturing industry and its forward pattern of investment to be distorted, because a view is taken based simply on the problems of the motor industry.

Our amendment is the best way forward as it provides for a workable compromise. We believe that it has the support of those in industry, who should know best how to look after their own affairs, and that the concept of licences of right for spare parts will protect the consumer.

Nothing that the Minister has said convinces us that those arguments are wrong, so I ask my hon. Friends to support the amendment in the Lobby

Question put, That the amendment be made:—

The House divided: Ayes 132, Noes 257.

Division No. 441]	[6.11 pm
AYES
Allen, Graham	Barnes, Harry (Derbyshire NE)
Anderson, Donald	Barron, Kevin
Archer, Rt Hon Peter	Beckett, Margaret
Armstrong, Hilary	Bennett, A. F. (D'nt'n & R'dish)
Ashton, Joe	Bidwell, Sydney
Banks, Tony (Newham NW)	Blair, Tony

Boyes, Roland	Lloyd, Tony (Stretford)
Bradley, Keith	McAllion, John
Bray, Dr Jeremy	McAvoy, Thomas
Brown, Nicholas (Newcastle E)	McKay, Allen (Barnsley West)
Buchan, Norman	McKelvey, William
Buckley, George J.	McLeish, Henry
Caborn, Richard	McTaggart, Bob
Campbell, Ron (Blyth Valley)	McWilliam, John
Campbell-Savours, D. N.	Madden, Max
Clark, Dr David (S Shields)	Mahon, Mrs Alice
Clarke, Tom (Monklands W)	Marek, Dr John
Clay, Bob	Martin, Michael J. (Springburn)
Clwyd, Mrs Ann	Martlew, Eric
Coleman, Donald	Meacher, Michael
Corbett, Robin	Michael, Alun
Corbyn, Jeremy	Michie, Bill (Sheffield Heeley)
Cousins, Jim	Millan, Rt Hon Bruce
Crowther, Stan	Mitchell, Austin (G't Grimsby)
Cryer, Bob	Morgan, Rhodri
Cummings, John	Morley, Elliott
Cunliffe, Lawrence	Morris, Rt Hon A. (W'shawe)
Darling, Alistair	Mowlam, Marjorie
Davies, Ron (Caerphilly)	Mullin, Chris
Dewar, Donald	Murphy, Paul
Dixon, Don	O'Brien, William
Dobson, Frank	Page, Richard
Doran, Frank	Patchett, Terry
Douglas, Dick	Pike, Peter L.
Dunwoody, Hon Mrs Gwyneth	Powell, Ray (Ogmore)
Eadie, Alexander	Prescott, John
Eastham, Ken	Quin, Ms Joyce
Ewing, Harry (Falkirk E)	Rees, Rt Hon Merlyn
Field, Frank (Birkenhead)	Roberts, Allan (Bootle)
Fields, Terry (L'pool B G'n)	Rogers, Allan
Fisher, Mark	Rooker, Jeff
Flannery, Martin	Ross, Ernie (Dundee W)
Flynn, Paul	Rowlands, Ted
Foot, Rt Hon Michael	Sheerman, Barry
Foster, Derek	Short, Clare
Foulkes, George	Skinner, Dennis
Fraser, John	Smith, Andrew (Oxford E)
Galloway, George	Smith, C. (Isl'ton & F'bury)
Garrett, Ted (Wallsend)	Smith, Rt Hon J. (Monk'ds E)
George, Bruce	Soley, Clive
Godman, Dr Norman A.	Spearing, Nigel
Griffiths, Win (Bridgend)	Taylor, Mrs Ann (Dewsbury)
Grocott, Bruce	Turner, Dennis
Heffer, Eric S.	Vaz, Keith
Hinchliffe, David	Wall, Pat
Hogg, N. (C'nauld & Kilsyth)	Wardell, Gareth (Gower)
Hoyle, Doug	Wareing, Robert N.
Hughes, Robert (Aberdeen N)	Welsh, Michael (Doncaster N)
Hughes, Roy (Newport E)	Williams, Rt Hon Alan
Hughes, Sean (Knowsley S)	Williams, Alan W. (Carm'then)
Illsley, Eric	Wilson, Brian
Ingram, Adam	Winnick, David
John, Brynmor	Wise, Mrs Audrey
Jones, Barry (Alyn & Deeside)	Worthington, Tony
Kinnock, Rt Hon Neil
Lamond, James	Tellers for the Ayes:
Leighton, Ron	Mrs. Llin Golding and Mr. Frank Haynes.
Litherland, Robert

NOES
Adley, Robert	Bellingham, Henry
Alexander, Richard	Bendall, Vivian
Alison, Rt Hon Michael	Bennett, Nicholas (Pembroke)
Amess, David	Benyon, W.
Arbuthnot, James	Biggs-Davison, Sir John
Arnold, Jacques (Gravesham)	Blackburn, Dr John G.
Arnold, Tom (Hazel Grove)	Bonsor, Sir Nicholas
Ashby, David	Boscawen, Hon Robert
Ashdown, Paddy	Boswell, Tim
Atkins, Robert	Bowden, A (Brighton K'pto'n)
Atkinson, David	Bowden, Gerald (Dulwich)
Baker, Nicholas (Dorset N)	Bowis, John
Baldry, Tony	Braine, Rt Hon Sir Bernard
Banks, Robert (Harrogate)	Brandon-Bravo, Martin
Batiste, Spencer	Brazier, Julian
Beaumont-Dark, Anthony	Bright, Graham

Brown, Michael (Brigg & Cl't's)	Hayward, Robert
Bruce, Ian (Dorset South)	Heathcoat-Amory, David
Bruce, Malcolm (Gordon)	Heddle, John
Buck, Sir Antony	Heseltine, Rt Hon Michael
Budgen, Nicholas	Hicks, Robert (Cornwall SE)
Burt, Alistair	Hind, Kenneth
Butcher, John	Hogg, Hon Douglas (Gr'th'm)
Butler, Chris	Holt, Richard
Butterfill, John	Hordern, Sir Peter
Carlisle, John, (Luton N)	Howard, Michael
Carlisle, Kenneth (Lincoln)	Howarth, G. (Cannock & B'wd)
Carrington, Matthew	Hughes, Robert G. (Harrow W)
Carttiss, Michael	Hughes, Simon (Southwark)
Channon, Rt Hon Paul	Hunt, David (Wirral W)
Chapman, Sydney	Hunt, John (Ravensbourne)
Chope, Christopher	Hunter, Andrew
Churchill, Mr	Irvine, Michael
Clark, Hon Alan (Plym'th S'n)	Irving, Charles
Clark, Dr Michael (Rochford)	Jack, Michael
Clark, Sir W. (Croydon S)	Janman, Tim
Clarke, Rt Hon K. (Rushcliffe)	Jessel, Toby
Colvin, Michael	Johnson Smith, Sir Geoffrey
Coombs, Anthony (Wyre F'rest)	Jones, Gwilym (Cardiff N)
Coombs, Simon (Swindon)	Jones, Robert B (Herts W)
Cope, Rt Hon John	Kellett-Bowman, Dame Elaine
Cormack, Patrick	Kennedy, Charles
Couchman, James	Key, Robert
Cran, James	King, Roger (B'ham N'thfield)
Currie, Mrs Edwina	Kirkwood, Archy
Curry, David	Knapman, Roger
Davies, Q. (Stamf'd & Spald'g)	Knight, Greg (Derby North)
Day, Stephen	Knight, Dame Jill (Edgbaston)
Devlin, Tim	Knowles, Michael
Dickens, Geoffrey	Knox, David
Douglas-Hamilton, Lord James	Latham, Michael
Dover, Den	Lawrence, Ivan
Durant, Tony	Lennox-Boyd, Hon Mark
Emery, Sir Peter	Lester, Jim (Broxtowe)
Evans, David (Welwyn Hatf'd)	Lilley, Peter
Ewing, Mrs Margaret (Moray)	Lloyd, Sir Ian (Havant)
Fallon, Michael	Lord, Michael
Favell, Tony	Luce, Rt Hon Richard
Fenner, Dame Peggy	McCrindle, Robert
Finsberg, Sir Geoffrey	Macfarlane, Sir Neil
Fishburn, Dudley	MacGregor, Rt Hon John
Fookes, Miss Janet	MacKay, Andrew (E Berkshire)
Forth, Eric	Maclean, David
Fowler, Rt Hon Norman	Maclennan, Robert
Fox, Sir Marcus	McLoughlin, Patrick
Franks, Cecil	McNair-Wilson, Sir Michael
Freeman, Roger	McNair-Wilson, P. (New Forest)
French, Douglas	Major, Rt Hon John
Fry, Peter	Malins, Humfrey
Gale, Roger	Mans, Keith
Gardiner, George	Maples, John
Garel-Jones, Tristan	Marlow, Tony
Gill, Christopher	Marshall, John (Hendon S)
Gilmour, Rt Hon Sir Ian	Marshall, Michael (Arundel)
Goodlad, Alastair	Martin, David (Portsmouth S)
Goodson-Wickes, Dr Charles	Maude, Hon Francis
Gorman, Mrs Teresa	Maxwell-Hyslop, Robin
Gorst, John	Meyer, Sir Anthony
Gow, Ian	Miller, Sir Hal
Gower, Sir Raymond	Mills, Iain
Greenway, Harry (Ealing N)	Mitchell, Andrew (Gedling)
Greenway, John (Ryedale)	Mitchell, David (Hants NW)
Gregory, Conal	Moate, Roger
Griffiths, Peter (Portsmouth N)	Monro, Sir Hector
Ground, Patrick	Montgomery, Sir Fergus
Gummer, Rt Hon John Selwyn	Morris, M (N'hampton S)
Hamilton, Neil (Tatton)	Morrison, Sir Charles
Hampson, Dr Keith	Morrison, Rt Hon P (Chester)
Hanley, Jeremy	Moss, Malcolm
Hannam, John	Moynihan, Hon Colin
Hargreaves, A. (B'ham H'll Gr')	Mudd, David
Hargreaves, Ken (Hyndburn)	Neale, Gerrard
Harris, David	Neubert, Michael
Haselhurst, Alan	Newton, Rt Hon Tony
Hawkins, Christopher	Nicholls, Patrick
Hayes, Jerry	Nicholson, David (Taunton)

Nicholson, Emma (Devon West)	Stern, Michael
Onslow, Rt Hon Cranley	Stevens, Lewis
Paice, James	Stewart, Allan (Eastwood)
Patnick, Irvine	Stewart, Andy (Sherwood)
Patten, Chris (Bath)	Sumberg, David
Peacock, Mrs Elizabeth	Summerson, Hugo
Porter, David (Waveney)	Taylor, John M (Solihull)
Portillo, Michael	Thompson, D. (Calder Valley)
Powell, William (Corby)	Thorne, Neil
Price, Sir David	Thurnham, Peter
Rathbone, Tim	Townend, John (Bridlington)
Redwood, John	Tracey, Richard
Riddick, Graham	Tredinnick, David
Ridley, Rt Hon Nicholas	Twinn, Dr Ian
Ridsdale, Sir Julian	Waddington, Rt Hon David
Rost, Peter	Wakeham, Rt Hon John
Ryder, Richard	Walden, George
Sackville, Hon Tom	Waller, Gary
Sayeed, Jonathan	Ward, John
Shaw, David (Dover)	Wardle, Charles (Bexhill)
Shaw, Sir Giles (Pudsey)	Watts, John
Shaw, Sir Michael (Scarb')	Wheeler, John
Shelton, William (Streatham)	Widdecombe, Ann
Shephard, Mrs G. (Norfolk SW)	Wiggin, Jerry
Shepherd, Colin (Hereford)	Wigley, Dafydd
Sims, Roger	Wilshire, David
Skeet, Sir Trevor	Winterton, Mrs Ann
Smyth, Rev Martin (Belfast S)	Winterton, Nicholas
Soames, Hon Nicholas	Wood, Timothy
Speller, Tony	Young, Sir George (Acton)
Spicer, Sir Jim (Dorset W)
Spicer, Michael (S Worcs)	Tellers for the Noes:
Squire, Robin	Mr. Alan Howarth Mr. David Lightbown.
Steel, Rt Hon David
Steen, Anthony

Amendment accordingly negatived.

Mr. Rowlands

I beg to move amendment No. 322, in page 93, line 22, at end insert— 'in determining whether a design is commonplace those features which are not visible to the naked eye shall be taken into account'.

Madam Deputy Speaker (Miss Betty Boothroyd)

With this it will be convenient to take amendment No. 323 in, page 93, line 22, at end insert— '(4A) A design is not commonplace for the purposes of this part if the creation of the design required a substantial input on the part of the designer of that design in terms of time and cost.'.

Mr. Rowlands

I remind the House that clause 205(4) says: A design is not 'original' for the purposes of this Part if it is commonplace in the design field in question at the time of its creation. Hon. Members who served on the Committee will know that we had considerable discussion, not about the semantics, but about the real meaning of the words "original" and "commonplace". I remind the Minister that, on 14 June, he said: I am not able to accept the hon. Gentleman's amendment. I do not think that it was designed to be accepted, but we wish to achieve its objective. If 'commonplace' will not suffice, we shall try to find another solution. A little later he said: I am not wedded to the word 'commonplace'. Amendment No. 407, tabled by the hon. Member for Merthyr Tydfil and Rhymney, is a good attempt to refine the expression. Therefore, he offered me some hope that he would study those words and their definitions.

The Minister further said: The meaning of 'commonplace' is a matter of ordinary English. I believe it is, but it is not an easily definable term when relating to design matters. The Minister continued: Whether a design is commonplace will be determined on the facts of the case. If we can find a better way of handling the matter, we shall do so."—[Official Report, Standing Committee E, 14 June 1988, c. 575–766.] We considered several illustrations in Committee, one of which was the armature which I am holding. It is for a Hoover washing machine. We asked whether it would be a commonplace part or whether it would attract a design right. For example, we asked whether the design of this door seal of a Hoover washing machine, which I am holding, is commonplace or whether it attracts originality and, therefore, a design right. Those are reasonable illustrations of the difficulty of matching practicality to legislation. The Minister assured us that he was not wedded to those words and therefore he felt that was a case for looking for another solution. That is what I am now trying to do.

I am rather disappointed about the events that have fallen between Committee and Report stage. The Minister and his Department—I am sorry to make this criticism—but especially his Department, seem to have taken a completely passive, if not negative, view of the efforts made by others to define or redefine the words "original" and "commonplace". The Department just stood back and said, "If you lot can come up with any ideas to redefine the words, we will look at them." It has made little or no effort to join in a partnership of consideration to redefine the terms in subsection (4) and to decide whether the design of the Hoover armature or of the door seal would be a commonplace or an original design.

Various industries and companies went to the Department and put up one or two suggestions which the Department, understandably, took apart. I have not, therefore, tabled amendments such as were discussed in Committee, but instead I have introduced two new ideas. Actually, they are not new and I shall describe their parentage.

Before doing so, I remind the House that this is not just a matter of semantics and fiddling around with words—it is an important and serious issue. There is a fundamental difference of interpretation of the Bill as it stands as to what will attract design right and what will not. The Minister believes that many more parts in industry will attract design right and will be considered original, as opposed to commonplace, than at present, especially in a company such as the one I am privileged to represent in Merthyr Tydfil—Hoover. It believes, however, that parts of its washing machines would be deemed in law to be commonplace, but the Minister and his officials may believe them to be original. It is not just a matter of semantics—it is one of considerable concern as there are differences of interpretation.

Having reminded the House of the two illustrations that I gave in Committee, I turn now to my two amendments, which seek to redefine first the word "commonplace" and secondly the word "original". Amendment 322 suggests that in determining whether a design is comonplace those features which are not visible to the naked eye shall be taken into account". 6.30 pm

Where did I get those words? They did not come from any outside lobby. They were not from industry or from an axe-grinding group. I took them almost word for word from the Department's own notes on the clause. especially those to the subsection. The valuable notes that were given to hon. Members serving on the Committee should be made available to any hon. Member. I draw attention to paragraph 3, which helped us to amplify and explain subsection (4) and the word "commonplace", and which stated: It is important to note that there is no requirement that the design be aesthetically pleasing for design right to subsist. Nor is there any requirement for the design to be visible to the naked eye. Thus, for example, a design of the aesthetic appearance of a table lamp, the functional form of the external and internal parts of a pump and the functional internal layout of an integrated circuit microchip could all give rise to design right. That is why I am travelling with the hope that the Minister will accept my amendment. The words not visible to the naked eye are taken from the Minister's Department's interpretation of the subsection, so they have impeccable parentage. If the Department regards something that one cannot see as being relevant in design terms, it is worth stating that in the clause.

Mr. Dafydd Wigley (Caernarfon)

As the hon. Gentleman knows, I have an interest in Hoover as I am a previous employee. Following our debate on this point in Committee, the British Automotive Parts Promotion Council has raised with me the point that stopping water coming out and dampening down harmonic vibrations would be a technical argument, as opposed to one relating to the shape of the configuration, and that as such it would not be a criterion for design right protection. How does the hon. Gentleman respond to that? I believe that we are both trying to go in the same direction.

Mr. Rowlands

The hon. Gentleman is absolutely right. If he recalls, the issue of the design of the Hoover door seal for a washing machine arose on the basis of the amendment that I was moving, which would state that technical factors would be taken into account in determining whether a part or the design of a part attracted design right. We used the door seal to illustrate that point. The very design of that part had an important effect on the whole performance of the machine. The Minister commented that he was not against the objective of my amendment when we discussed it in Committee.

Amendment No. 322 about not visible to the naked eye is a way of recognising that the technical features are factors which could attract design right. Therefore, although to some extent I am going back to earlier arguments, on this occasion I am resting my case on the Department's own words. In paragraph 3 on the note of the clause, the Department made the clear point that the functional character of the design and not just its look, and therefore, in my view, its technical efficiency, could be a deciding factor whether the design is "commonplace" or "original". The hon. Member for Caernarfon (Mr. Wigley) is making an important point. I believe that my amendment reaches towards that principle.

Amendment No. 323 tackles the issue slightly differently. It tries to establish that A design is not commonplace for the purposes of this part if the creation of the design required a substantial input on the part of the designer of that design in terms of time and cost. That would capture the designs of the two parts that I have used as illustrations, but it would also cover many other parts. I believe that it expresses in words what the Minister claims that the Bill states. I got those terms from a letter that the Minister sent to the Association of Manufacturers of Domestic Electrical Appliances. In an interesting and important paragraph, rejecting one suggestion from the industry, the Minister replied: As I explained in Committee, and as I understand my officials said during your recent meeting,"— that is a reference to the meeting between AMDEA and his officials— the term 'original' by itself does not require a design to be in any way different from what is widely known and used. Consequently the term 'commonplace' is needed simply to prevent mundane, routine, everyday, well-known designs from acquiring design right. I am sure that we all understand that because it is a reasonable statement. What interested me is that the letter continued: For example, if someone were to 'design' a piece of uniform hollow tubing, such a design would be unlikely to pass the 'commonplace' test, and I would hope you would agree that this is the right result. It is, of course, not a question of whether the article is commonplace, but rather whether the design is commonplace, The key words are: I think if a company had spent two years designing something the result would be hardly likely to be a commonplace design. Therefore, in responding to a series of suggestions by the industry about what the words "commonplace" and "original" mean, the Minister's letter gave an important interpretation of the difference. He introduced the concept that if the design of the part had taken two years, it would be highly unlikely that it would be a commonplace design. That prompted me immediately to table amendment No. 323, which turns into legislative form the interpretation placed on the difference between commonplace and original in the Minister's letter to the industry. Therefore, I travel hopefully on both these amendments because of their excellent parentage.

Mr. Thomas McAvoy (Glasgow, Rutherglen)

As my hon. Friend knows, I too am a former employee of the Hoover company, having worked at the Cambuslang plant. I am sure that my hon. Friend will agree that the substantial input into design and investment by the Hoover company in Cambuslang and in Merthyr has resulted in stable employment in those areas, and that the Government's proposals put that at risk.

Mr. Rowlands

I am grateful to my hon. Friend. I seem to be surrounded by former employees of Hoover. I never had the privilege of having a start at Hoover. I never qualified and I do not think that the company would have let me near its factories. However, I am sure that both my hon. Friend and the hon. Member for Caernarfon speak from experience.

I am simply saying that I do not see how the Government and the Minister could object to my two amendments because one comes from a note on the clause issued by the Minister's own Department and the second comes virtually straight from a letter that the Minister sent to the industry explaining and interpreting what "design", "commonplace" and "original" mean and the difference between them.

As we all know, the problem is that Hansard, letters from Ministers and notes on clauses are not the law and have no legislative force when it comes, as no doubt it will in the not-too-distant future, to a court case about what is commonplace and what is original. Therefore, I am seeking to make sure that what the Minister intends or what the Minister tells people that he is intending is translated into legislative form.

Mr. Bob Cryer (Bradford, South)

I am interested in these two amendments because they seem to provide the sort of protection to which a manufacturer should be reasonably entitled. I was not a member of the Committee and there is sometimes a sort of understanding that only hon. Members who served on the Bill Committee have a contribution to make. That is not the case.

I should like the Minister to elaborate on the case of a manufacturer of motor car pistons in my constituency. That manufacturer is Hepworth and Grandage Ltd. Are motor car pistons regarded as commonplace? If they are it would mean that any manufacturer could make or replace Hepworth and Grandage pistons. That firm has developed pistons that cause engines to use less oil than more conventional pistons. For example, the firm uses hardening in sections of the aluminium pistons. Such a difference is not often visible to the naked eye and would fall within the criteria of amendment No. 322.

Hepworth and Grandage use many and varied techniques that are also covered by amendment No. 323. The firm has spent a great deal on research and development. For example, it has fitted sets of pistons that it has designed into test engines made by manufacturers such as British Leyland and Jaguar and those engines have been run over many hours. The engines were then dismantled and the pistons carefully examined to see where wear has taken place and to see what disadvantages accrued from the design features being tested.

Such tests cost a great deal and it seems quite wrong that the design, testing and development of an object which to all intents and purposes, and certainly to the average onlooker, seems commonplace should be set to one side. Those processes might cost many hundreds of thousands of pounds and put a British manufacturer at a clear disadvantage. In any case, Hepworth and Grandage is at a clear disadvantage because it is the only major piston manufacturer left in the United Kingdom. Several have gone out of business in the past quarter of a century and we must make sure that we protect our diminishing manufacturing base.

I remind the Minister that about 2 million jobs in manufacturing have gone since 1979. There has been an onslaught on the manufacturing base that the Government inherited in 1979. We are entitled to say that manufacturers that do not simply copy other products but invest in research and development and produce products superior to others should have the right not to have their products treated as commonplace and therefore open to imitation and production by other manufacturers. Such other manufacturers may not have invested in research and development and may not employ research and development staff. Such staff are often expensive to employ because of their specialist skills.

Hepworth and Grandage is the largest private manufacturer in Bradford, with the largest number of workers. Its expertise and skill have enabled it to obtain a contract to provide pistons for the American company Buick. Because of its acknowledged position as one of the world's leading piston manufacturers it is building for Buick a piston manufacturing plant in America. That world position has been achieved only because of its investment in research and development and for that reason I seek the Minister's assurance that amendments Nos. 322 and 323 will be accepted. If the Minister does not accept them, will he assure us that it is because there is within the Bill adequate protection for manufacturers such as Hepworth and Grandage? Will the Bill protect such a company from pirate imitations by manufacturers working on rock bottom prices and therefore able to obtain a competitive advantage?

6.45 pm

The Minister may talk about the market place being the sole criterion, but to adopt such an attitude would be extremely unfair. That is because it is easy for a manufacturer to pick up an object that it claims is commonplace and manufacture it without any research and development costs, thereby gaining a competitive advantage. That may seem attractive to the Minister, but if further research and development is needed to keep up with international competitive developments, a manufacturer such as Hepworth and Grandage will be placed at a severe disadvantage. It seems fair and reasonable to give such a company some protection.

I look to the Minister to accept the amendments that were tabled and explained in Committee and based on the words of the Minister and a briefing provided to the Committee. If the Minister does not accept the amendments, will it be because he is satisfied beyond peradventure, as the lawyers say, that the Bill provides adequate protection? Almost certainly lawyers will become involved in this legislation and our job is to try to keep the lawyers out. When there is confrontation in court because of ambiguities in legislation it means that despite all the scrutiny in Committee upstairs and in the House this place has failed to provide clear legislation that will not lead to confrontation in court.

I hope that no obscurities will exist in the legislation because of the Minister's refusal to accept the amendments that clarify and perfect the legislation in the way that my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has suggested. On the face of it those amendments seem to put forward very strong arguments.

Mr. Butcher

I agree with the hon. Member for Bradford, South (Mr. Cryer) that our objective must be to design—if I may use that word—the Bill so that interpretation is minimal or at best simple. As a parliamentarian of some experience, he will know that trying to do that is never easy. Sometimes the efforts of parliamentary counsel who wish to clarify matters for the lawyers confuse things for the legislators, and we have even greater difficulty understanding some of the jargon.

I shall shortly deal with the hon. Gentleman's point about that excellent company Hepworth and Grandage. Before I do that I should tell the House that my motivation was to try to find a better word than "commonplace". After consultation with my officials who consulted all these infamous draftsmen, I wrote to the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and said—I hope he did not think I was being flippant—that we had difficulties in finding another word that gave the benefits he sought to achieve.

The hon. Gentleman criticised us for being passive, but that is a little unfair. Over many years my Department has been active in attempting to draw up clear and workable provisions for the Bill. The word "commonplace" was chosen not at random but after much consideration, including the deliberations of a working group which looked at the protection of semiconductor chip design at European Community level. We have looked a: the matter again to be sure, but try as we might we have not seen a better formulation.

The hon. Member for Merthyr Tydfil and Rhymney teased us about whether the notes on clauses and their relationship to my letter to him and subsequent observations meant that we were entirely convinced and not only agreed with his objectives but agreed that we should try to find another way. The passage that the hon. Gentleman quoted from the notes on clauses is. as he said, an explanation of the meaning of "design". Design does not need to be visible to receive design right. Amendment No. 322 is about the meaning of "commonplace", and that meaning is not assisted by adding other words out of context. The hon. Gentleman is still worried about the effect of the exclusion of commonplace designs. As I explained in Committee, the word "original" has the same meaning as that used in copyright in part I of the Bill—that is, independently created and not a copy.

By itself, the word "original" does not require the design to be in any way different from what is already widely known and used, and that is too generous a test for the acquisition of rights in designs. We therefore need a test to prevent well-known, everyday, standard designs from acquiring rights. That is all that the commonplace test is intended to do. I said in Committee that I was open to suggestions about how that might be expressed in the Bill and the hon. Member for Merthyr Tydfil and Rhymney is now seeking to refine the meaning of the word "commonplace". I believe that the word "commonplace" expresses our intention well. I have considered the hon. Gentleman's suggestions carefully, but I do not think that they would help—indeed, amendment No. 323 could be positively harmful.

Amendment No. 322 would require features that are not visible to the naked eye to be taken into account when assessing whether a design is commonplace. The problem is that that does not need saying. Design right is not restricted to visible features. There is nothing in the wording of the Bill that limits design right to features that are visible to the naked eye. Those features that are not visible to the naked eye, whether because they are internal, concealed features in the finished product or because they are too small to be seen, are covered by the Bill and, as a result, will automatically be taken into account at all levels. The only possible effect of stating the obvious—which is what the amendment seeks to do—is to cast doubt where none existed before.

Amendment No. 323 is slightly different. The Bill does not achieve what the hon. Member for Merthyr Tydfil and Rhymney wants, and I do not think that it should. If the amendment were accepted, a designer who had spent a lot of time and money to come up with a well-known, everyday, commonplace design would get rights in that design. That is not the sort of design that we want to encourage.

The test must be an objective one—is the design an everyday, commonplace design? If it is, there is no basis for an intellectual property right. It is for that reason, and not because we have not tried, that I have been resisting the amendment.

Mr. Rowlands

I should like to answer the Minister's comments on amendment No. 323. I tabled the amendment to establish that time and input should be a factor in determining whether a design was commonplace or original because in his letter, the Minister said specifically: I think if a company had spent two years designing something the result would be hardly likely to be a commonplace design. Yet he has now said to the House that that is not the sort of design that he wants to encourage. Did he mean the words when he wrote them, and is he now withdrawing them, or what? I do not understand his argument. I have used his own words and criteria in the amendment.

Mr. Butcher

We are now interpreting plain English and attempts to make the English plainer or clearer, It is perfectly legitimate for me, or any hon. Member, to consider designers who make a considerable effort. The pistons which were mentioned by the hon. Member for Bradford, South (Mr. Cryer), although an allegedly commonplace article, required considerable effort, whether in heat treatment or a characteristic which gave a particular performance.

If I identified as commonplace a paper clip or a piece of straight tubing that had been chopped into certain lengths, I believe that that would be a fairly accurate assessment. In saying that items that need far more intellectual effort and investment are not commonplace, I am not saying anything that the House under normal circumstances would find unacceptable.

The hon. Member for Bradford, South made a fine speech on behalf of the prime employer in his constituency and asked whether the motor pistons that it produced were commonplace. I am afraid that that is the wrong question. As I have explained on several occasions, the question should be whether the piston design is commonplace. Some pistons will receive design right protection and some will not. It will depend on whether the design features employed are or are not commonplace.

The hon. Member for Bradford, South mentioned a particular feature of a particular piston and said that it deserved protection; that is an argument that we have to meet. As I understand the example, the feature concerned was the material used, not the shape and configuration of the pistons.

Design right applies only shape and configuration and it cannot and should not protect materials and composition. Such features should be protected under the patent system if they have sufficient merit.

I agree with the contention of the hon. Member for Bradford, South. Massey-Ferguson in my own constituency is very concerned with the behaviour of mixtures of metals at very high temperatures; and it uses special heat treatment processes to produce special features in its components.

Mr. Wigley

The Minister said that design right applied to shape and configuration. Surely that is the whole point of the amendment, which seeks to apply design right to what is out of sight, which is excluded at present.

Mr. Butcher

We have wrestled with this matter for a long time. It is my duty, and it was the duty of the Committee, to try to make clear what would happen in the aftermath of our decision. Having gone through the matter with my officials and listened to advice from outside, I believe that the use of the word "commonplace" will satisfy the requirement to deal with this thorny duty that I thought the House had placed upon us. Unfortunately, this is our last chance to do that, so we must treat the matter very seriously, and I think that this is the very best shot that we can make.

Mr. Cryer

Does not the Minister agree that if there are to be differences from the commonplace in design, the relevant materials must be involved? For example, motor car pistons often work at high temperatures. The design shape is retained by virtue of the materials that are used, and they are part of the design. The piston is designed to maintain the compression of gases in the combustion chamber and to prevent the excess burning of oil from the crank case chamber. Designers therefore cannot ignore the material which, under pressure and heat, will change in one instance but remain true to the original design in the other, thus showing a superior design. The materials are not entirely separate from the shape and design. Amendment No. 322 deals with features that are not apparent to the naked eye, and materials must be among those.

Mr. Butcher

I think that we are arguing at cross purposes. There is not much between us on the question of the interplay between materials and processes of manufacturing, but there is a distinction between those features and the shape and configuration of the article. Consider the most modern techniques of precision casting or heat treatment; certain shapes may become possible only if such technologies and techniques are introduced.

Let me return to the practicalities. Someone may come along and try to rip off the shape of a piston into which a lot of work has gone. A competitor can do that only if the performance of the rip-off part is the same under certain engineering conditions. It is therefore legitimate to argue that we are discussing related issues. It is certainly true that some design options become possible because of the performance of certain materials, but the protection that the hon. Gentleman seeks is already there. A Taiwanese operation might want to supply rip-off, straight-copy pistons to given specifications but it would, I think, have great difficulty in convincing General Motors, for example, that the performance of those pistons—the aspects in which General Motors would be interested—would be adequate.

The hon. Member for Merthyr Tydfil and Rhymney tested me further and said that the letter I had sent to him showed that I was inconsistent. I said that it was unlikely that anyone who spent two years and a lot of money on a design would come up with something commonplace, but that it was just possible that he might. As I have said, in that case he should not get protection. There is nothing inconsistent between the letter that I wrote to industry and what I said today.

7 pm

Mr. Rowlands

I am extremely puzzled and rather disappointed by the Minister's reply. I would have thought that the Minister would have reached out to us more in an attempt to assure us, if nothing else, about the cases that we have quoted.

My hon. Friend the Member for Bradford, South (Mr. Cryer) has spoken about the close interrelationship between a design and the materials used to create it. The Hoover washing machine door seal took a considerable time to design, but its success also depends upon the materials used to create it. Without such a combination there would be many problems regarding the performance of that machine.

We have sought to emphasise the aspects of a design that are not naked to the eye and it is a strong case to make—it was mentioned in the Department's report. The time and effort that is put into a design should also be taken into account when determining whether something is commonplace or original.

Mr. Cryer

The Minister has said that a rip-off imitation could be easily detected, but does my hon. Friend agree that that is not necessarily true? An original manufacturer of pistons may produce one that lasts for 90,000 miles and provides good service. The rip-off piston may only provide good service for between 20,000 and 30,000 miles, but by that time it is possible that the source of the rip-off will have been forgotten.

Mr. Rowlands

It is true that a copy may work perfectly well for a given period of time, but when it breaks down the consumer will not complain to the copyist, but to the manufacturers, for example Hoover. The same is true if a piston or other car part breaks down.

I shall not push this amendment. The Minister says one thing, but industry says another. We give the Minister notice that if we find that we were right and he was wrong after the Bill has been passed, we shall demand amending legislation as quickly as possible. We shall have to wait and see. I hope that we are wrong and that the Minister is right, but if not we shall have to come back to it.

In the light of the arguments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.