PATENTS AND DESIGNS BILL. (Hansard, 23 August 1907)

§ THE MARQUESS OF SALISBURY,
in moving to omit Clause 7, said the proposal in this clause was a perfectly new one, which had never yet found its way into patent legislation. Under it the Comptroller, who, though an admirable official of the Board of Trade, was not a judicial officer in any sense of the word, had a right to stop absolutely an application for a patent if he thought it had been wholly anticipated. As a matter of fact, there was no more difficult issue to try as whether a patent had been wholly anticipated. The experience of the Courts showed in case after case and time after time that patents which had the appearance of having been wholly anticipated, so far from having been in fact anticipated, had been sustained by the highest Courts, and had been of the greatest use to the community and to the industries of the country. At a more congenial period he could have gone into that subject at great length; but he might mention one case in order to illustrate his meaning to their Lordships. A patent was applied for which had for its object the disin- 1352 fecting of clothes by means of superheated steam. When the specification was looked at that patent appeared to have been completely and absolutely anticipated by a former patent. The one which it was alleged. anticipated it was a complete and disastrous failure, for the reason that when the pressure of steam was put on the machine it burst, and therefore it did not succeed. As far as the description of the patent was concerned, the new patent was precisely the same as the old, only in this case when the pressure of steam was put on it did not burst, and the result was just the difference between complete failure and complete success. It would have been exceedingly difficult to have told that beforehand upon the terms of the specification; but when the case came to be tried by the superior Courts after the new patent had been in use for some time, the patent was sustained. He only mentioned that in order to illustrate that the issue of whether a patent had been anticipated or not was a most difficult one, and was not one which ought to be entrusted to the Comptroller of his own motion to interpret and decide upon. This clause had attracted a great deal of attention. It was not in the original Bill of His Majesty's Government, but it was put in in Grand Committee of the House of Commons. A letter had been written toThe Times protesting in the warmest way against is, and signed by a large number ofgentlemen, including Lord Kelvin, Sir Douglas Fox, Professor Silvanus Thompson, and many other eminent men who had great experience of inventions and patents. And, lastly, the London Chamber of Commerce had communicated with him through their representative, begging him to use his best endeavours to induce their Lordships to prevent the passing, of this clause. He need not remind their Lordships that the London Chamber of Commerce was a very important body, and that they had a special connection with patents, and upon the strength of their suggestion he had ventured to place this Amendment before their Lordships. No ultimate injustice would be done, even if the clause were struck out, because the granting of the patent afterwards could be opposed, if it was desired to oppose it, on behalf of any 1353 aggrieved party. That was not touched by this clause, nor was the right to have a patent revoked hereafter if the aggrieved party desired to have it revoked. The object of the Amendment was only to prevent the Comptroller taking the tremendous responsibility of stopping on his own motion the granting of a patent.
Amendment moved— To leave out Clause 7."—(The Marquess of Salisbury.)

§ THE LORD CHANCELLOR
I feel confident that if the noble Marquess had been in the habit of considering patents and specifications, he would not have lent his ear to those who oppose this clause. Patents are monopolies granted by the State in order to benefit those who are real inventors; but there is a class of patents taken out which are show patents, and to which I refrain from attaching a still more serious epithet. They are patents which have been partly anticipated; they are not new at all, but previous specifications have, in the words of this clause, "wholly and specifically" claimed them. But there are poor people who cannot afford to fight those who have got a patent; and the consequence is that by means of these bogus patents those people who obtain them frighten those who are poor and who cannot contest with them in courts of law, and thereby they require them to take out licences and make some sort of payment rather than have a litigation. That is the plain fact. One of the purposes of this Bill is to put an end to practices which I will not stigmatise further than I have already described them—and I think that is a most meritorious object. This is what the clause says— Provided that the comptroller, if satisfied that the invention claimed has been wholly claimed or described in any specification to which the investigation has extended may, in lieu of requiring references to be made in the applicant's specification as aforesaid, refuse to grant a patent. The noble Marquess is quite mistaken if he thinks there is much difficulty about that.

§ THE MARQUESS OF SALISBURY
I think there is.

§ THE LORD CHANCELLOR
I have had a great deal to do with specifications, and I do not think there is any difficulty in deciding whether there is ground for saying that an invention has been previously claimed. The whole thing is set out in print; you can see it at any time. But let me tell this to the noble Marquess: the Comptroller, himself a skilled official, has had the power of refusing patents since 1883 in cases where there has been opposition, and there is an appeal to the law officer. It is not the Comptroller alone, but there is an appeal to the law officer. I venture to think that nothing can be more desirable than to give an opportunity, in such obvious cases as these, of preventing what is really altogether an abuse of the system of patents for the sake of profit, and which has been a source of real complaint on the part of the trading classes.

§ THE MARQUESS OF SALISBURY
said that, having been a law officer, no doubt the noble and learned Lord knew as well as he did that in any case where a patent was alleged to have been anticipated, and the Comptroller thought so, the patentee had to put on his own specification, in black and white, the other patents which were said to anticipate his, so as to give such notice to the public as to enable them to resist an unfair patent. That was under the Act of 1892. The noble and learned Lord had also forgotten to remind their Lordships that, unless he was very much mistaken—he spoke under correction—in the Report of the Royal Commission on this subject, on which the Lord Chief Justice sat, as well as other persons of great eminence on these subjects—Lord Justice Fletcher Moulton amongst others—it was definitely recommended that this power should not be given; and there was a specific recommendation of that Committee upon which the Act of 1892 was founded. The House had not had a real opportunity of dealing with this Bill. He had cut down his observations to a minimum; but the Bill was presented to their Lordships' House on the 22nd August with these new principles introduced. It ought to have come to their Lordships earlier in the session, and to have been sent to a Select Committee. 1355 That would have been the proper proceeding, and he thought their Lordships were entitled to insist that a totally new clause should not be put into an Act of Parliament, to the prejudice of very great interests and in the teeth of a protest signed by such influential persons as he had mentioned, and by the Chamber of Commerce, without some better opportunity for consideration than had been afforded. If His Majesty's Government had treated their Lordships' House properly, and had sent the Bill in in proper time, it would then have been sent to a Select Committee; and not only would he not then have resisted it, but he would not even have dared to raise his voice, because then there would have been the Lord Chief Justice, Lord Avebury, Lord Collins, and others who knew very much more about the matter than he did, who at present were away on their holidays and therefore not able to take part in this discussion. He thought His Majesty's Government ought to give way.

§ THE LORD CHANCELLOR
I hope I have not said anything that can legitimately cause pain to the noble Marquess.

§ THE MARQUESS OF SALISBURY
Not at all.

§ THE LORD CHANCELLOR
The noble Marquess has said that this Bill ought to have come before your Lordships' House before. We all wish it had; and we all know the causes why it has not. I have had occasion to say before that until you alter the causes you will never be quite certain of being able to prevent these things happening. In regard to what the noble Marquess has said about the recommendation of the Committee, that is quite true. They thought the practice would be stopped by an additional sealing fee being put on. It has turned out, however, that the additional sealing fee has not had the effect of stopping these sham patents. In regard to the point about notice of previous patents, all that the noble Marquess says is perfectly true; but that has not prevented the abuses—because the point 1356 is that you have got a patent and, whatever the patent is, you prevent or terrorise poor people from using the old invention unless they are prepared to come to terms with you. The thing is wrong on the face of it; and no one has ever denied that the practice is carried on. I am quite satisfied that this is a fair thing to do, and I hope the noble Marquess will not press his Amendment.
On Question, Amendment negatived.
Clause 7 agreed to.
Clauses 8 and 9 agreed to.
Clause 10:—

§ THE EARL OF GRANARD
There are several Amendments standing in my name on this clause, but they are simply drafting Amendments rendered necessary in consequence of some inadvertence on the Report stage of the Bill.

§ THE MARQUESS OF SALISBURY
Why does the noble Earl strike out "wholly and specifically" in line 31?

§ THE EARL OF GRANARD
In answer to the noble Marquess, if "wholly and specifically" were allowed to remain in the clause, instead of widening its operation it would curtail it. I can give an example. If these words were allowed to remain it would not be possible for anybody to object to any part of an invention being taken.
Drafting Amendments agreed to.
Clause 10, as amended, agreed to.
Clauses 11 to 14 agreed to.
Clause 15:—

§ THE EARL OF GRANARD
As the clause stands at present, it will not come into operation until the expiration of a year from the commencement of this Act; that is to say, not until 1st January, 1909. The intention of this Amendment is that it should come into operation at the end of twelve months after the passing of the Bill. I may 1357 mention that the word "commencement" was accepted inadvertently in the House of Commons on the Report stage.
Amendment moved— In page 6, line 23, to leave out from the word 'patent' to the word 'of,' in line 26, and insert the words 'and not less than one year after the passing.'—(The Earl of Granard.)
THE MARQUESS OF SALISBURY said that there was a diff- erence of opinion between the noble Earl and himself as to the opening words of this Amendment as it stood, whether Clause 15 should apply to the question of patents granted before the commencement of this Act. He did not feel that their Lordships would care that he should raise that point at that hour of the night in a House not very numerously attended. It was a very important point, and, personally, he was very much astonished that His Majesty's Government had lent themselves to limiting the rights of the persons who had got their patents before the passage of this Act. It was a very strong measure; but he would not attempt to contest it at the present moment.
On Question, Amendment agreed to.
Drafting Amendments agreed to.
Clause 15, as amended, agreed to.
Clauses 16 to 22 agreed to.
Clause 23:—

§ THE EARL OF GRANARD
I beg to move to leave out the words "did not arise from any misconduct on the part of the patentee," and to insert the words "that no undue delay has occurred in making the application." We are of opinion that it is very improbable that omission would arise from any misconduct on the part of the patentee, and that what really should disqualify the application from obtaining restoration of the patent is undue delay in applying for such restoration.
Amendment moved— In page 10, lines 4 and 5, to leave out the words 'did not arise from any misconduct on the 1358 part of the patentee' and to insert the words 'that no undue delay has occurred in making the application.'—(The Earl of Granard.)

§ THE MARQUESS OF SALISBURY
Who judged? The Comptroller?

§ THE EARL OF GRANARD
The Comptroller, yes.
On Question, Amendment agreed to.
Clause 23, as amended, agreed to.
Clause 24:—
Drafting Amendment agreed to.

§ THE LORD CHANCELLOR
The next Amendment is one that I move and it arises in this way. There is a provision that certain conditions to the sale of patented articles shall not be valid. I will tell your Lordships exactly the sort of thing that happens. People who live abroad, and take out patents in this country, do not work them in this country, but manufacture the patented articles in, say, America or anywhere they please, and then they sell the right to use the patent here, and they affix conditions—for instance, conditions that all the machinery for the purpose of making the patented articles shall be bought from them in America, and all sorts of other conditions of an oppressive kind. Thereby they use the patent, not merely for the legitimate protection of themselves, but for the purpose of either preventing people in the United Kingdom from making the patented articles, or of attaching all kinds of irrelevant and oppressive conditions to the permission to make them. That is thought to be unfair; and the consequence is that certain conditions are proscribed here, as, for example, to require the purchaser or the licensee to acquire from the seller or the licensor any article or articles not protected by the patent. I have just given an illustration of that with regard to buying machinery. Still it is necessary to keep as much freedom as is consistent with preventing abuse of the patent; and accordingly we propose, in accordance with a sort of undertaking given in the House of Commons, that this subsection shall not apply if the seller, lessor, or 1359 licensor proves that at the time the contract was entered into the purchaser, lessee, or licensee had the option of purchasing the article or obtaining a lease or licence on reasonable terms without such conditions, and also that the contract entitles him to relieve himself of the liability to observe any such condition on giving notice and paying compensation. That seems to be the best and fairest way of enabling reasonable conditions to be made, or enabling practically any conditions to be made, provided there is a free opportunity for each party to contract. It is a technical and somewhat difficult matter—but the object is to prevent the imposition of these absolutely preposterous conditions by persons who sell from abroad—or indeed in this country also—patented articles.
Amendment moved— In line 30, after the word 'policy,' to insert the words 'Provided that this subsection shall not apply if (i.) the seller, lessor, or licensor proves that at the time the contract was entered into the purchaser, lessee, or licensee had the option of purchasing the article or obtaining a lease or licence on reasonable terms, without such conditions as aforesaid; and (ii.) the contract entitles the purchaser, lessee, or licensee to relieve himself of his liability to observe any such condition on giving the other party three months notice in writing and on payment in compensation for such relief in the case of a purchase, of such reasonable sum, or in the case of a lease or licence of such reasonable rent on royalty for the residue of the term of the contract, as may be fixed by an arbitrator appointed by the Board of Trade.'—(The Lord Chancellor.)

§ THE MARQUESS OF SALISBURY
said he certainly did not rise in any way to contest the principle of this clause, but he thought the clause as it stood in the Bill went much too far. However, the Amendment proposed by His Majesty's Government was certainly a considerable concession. He wanted to be as brief as possible, but there were two points to which he would like to call the noble and learned Lord's attention. In the first place, there was the compensation mentioned in the second subsection. That compensation was said to be "such reasonable sum or such reasonable rent or royalty"—so that the word "reasonable" was attached to "compensation." If the noble and learned Lord 1360 would look at the second subsection the corresponding compensation had no such word as "reasonable" sum attached to it. Then, in the case of contracts made before the passing of this Act where the terms of the contract could be broken in return for compensation, the word appeared alone without the word "reasonable." Here again he considerably felt at a loss in discussing the matter with the noble and learned Lord, but he suggested to him that anybody seeing the section when it passed into an Act of Parliament would have their attention at once drawn to the point that the "compensation" mentioned in the first subsection was differently worded from the "compensation" mentioned in the second and third subsections.

§ THE LORD CHANCELLOR
I do not mind leaving out the word "reasonable"; I think that will cover it.

§ THE MARQUESS OF SALISBURY
was obliged to the noble and learned Lord, but, were they to understand that the word "compensation" in this connection meant the full amount which the person who received the compensation had lost by the operation of the clause? It was not, he presumed, compensation such as might be thought sufficient by the official of the Board of Trade, whose business it was to make the Act work, but not to care so very much about justice to the parties. He did not mean to say that there were such persons at the Board of Trade, but it was a conceivable case. The compensation he wanted was full compensation corresponding to the loss to the individual whose contract was broken. Would he get the full value? He had a contract; the contract was broken; he lost by, it; would the compensation correspond, so far as human ingenuity could make it, to his loss?

§ THE LORD CHANCELLOR
I will omit the word "reasonable" in both places. I do not think it either adds to,or detracts from the value of the clause. With regard to the question which the noble Marquess put, he touched upon a very difficult subject, the measure of damages. What I think would be given would be what the arbitrator thinks, under the circumstances, it is fair to give, 1361 remembering what it is given for, namely, a man relieving himself of an obligation; he would have to compensate the other person whatever is fair.

§ THE MARQUESS OF SALISBURY
The same sort of damages as a jury would give?

§ THE LORD CHANCELLOR
Very much the same thing. In fixing damages, in nearly all cases you must consider what is reasonable, right and fair, and in this case you would have to compensate this person for the alteration in his position in consequence of notice having been given. That is the way it would be put to himself by the arbitrator; and I think it would be very difficult to go nearer to it. There is nothing that I know, either in the wording or the intention, to make any unfair limit.

§ THE MARQUESS OF SALISBURY
I think I must be satisfied with that. I should not have asked the noble and learned Lord the question but that there had been an observation by one of his colleagues in another place which led people to doubt what "full compensation" was intended to cover.

§ THE LORD CHANCELLOR
Those words were not before him.

§ THE MARQUESS OF SALISBURY
said he could absolutely rely on what the noble and learned Lord had told him. There was just one other question he wanted to put with reference to the word "and." This was a much more important question. Should not the word be "or"? He thought they were entitled to some consideration from His Majesty's Government. After all, this was the case of two men wishing to make a contract; the two persons were perfectly free agents. It was not like the oppression by a rich man of a poor man, but it was a case of dealings between two business men, each of whom was perfectly capable of making a bargain. It was said that notwithstanding that hard terms were inserted. They could see that hard terms might be inserted in such a contract, and they accepted the principle of the Government 1362 clause, but, if it could be shown that there was a reasonable alternative given to these hard terms, then this restrictive clause should not apply. What were reasonable terms? Surely, if the seller could prove that the man with whom he was dealing could, in the alternative of those terms, have bought in the open market freely, that ought to be quite sufficient; or, if he could, on the other hand, show that he had offered the purchaser an arrangement which did not involve these restrictive terms, that ought to be perfectly sufficient. But why couple them both together? Why make the double condition? Surely, it was quite sufficient in the case of business men, who were perfectly able to make a bargain between themselves, to go as far as he had described, and to allow either of the alternatives. He begged to move, as an Amendment to the Amendment, to leave out the word "and" and insert the word "or."
Amendment moved to the proposed Amendment— To leave out the word 'and' at the end of Subsection (i.), and to insert the word 'or.'—(The Marquess of Salisbury.)

§ THE LORD CHANCELLOR
I think if the noble Marquess will just look at the clause he will see that he cannot maintain that. He begins by admitting that there may be cases—in fact everybody knows there are numerous cases—in which these oppressive and unfair conditions are imposed upon persons who are not offered a fair alternative. If that is the case, would it be sufficient to say that that still may be imposed upon a person who is not offered a fair alternative if he is unable to get out of it by paying compensation? That is the effect of the noble Lord's Amendment; because either the first or the second limb of my proposed words would suffice to exclude the effect of the section. It is necessary, to my mind, in order to prevent the subsection applying, that there should be, in the first place, proof that the man could have got a licence on fair terms and, secondly, might have got out of it upon giving notice and paying compensation; and, if you say that he may still be oppressed if he got out of it by paying compensation, you put him to this alternative—that he is either to pay 1363 compensation in any event, or to pay compensation for getting out of what is unfair. That cannot be right.
On Question, original Amendment agreed to, with the omission of the word "reasonable" in lines 3 and 4.
Drafting Amendment agreed to.

LORD BALFOUR OF BURLEIGH,
who had an Amendment in page 11, line 23, after the word "from" to insert the words "buying or," said that he did not desire to move the Amendment, because an Amendment inserted by the noble Lord in charge of the Bill met his point.
Drafting Amendments agreed to.
Cause 24, as amended, agreed to.
Clauses 25 and 26 agreed to.
Clause 27, with drafting Amendment, agreed to.
Clause 28:—

§ THE MARQUESS OF SALISBURY,
in moving to insert a proviso giving leave to appeal under certain conditions, said that he had been in communication with the Lord Chancellor upon this point, but, unfortunately, owing to the demands upon his Lordship's time, they were not able to bring their conversation to a conclusion. He had therefore put the Amendment upon the Paper, but he would not press it if the noble Lord did not wish him to do so. He thought, considering the enormous importance of the issues involved, and the very large sums of money in question, there ought to be some possibility of bringing these cases to the Superior Courts if the Court of Appeal should think it right. He knew that in all cases of revocation there was an appeal granted now, but there were cases which did not involve revocation but yet were very important, as, for example, the case of a petition under Clause 16 with regard to a compulsory licence. That might be a decision of very great importance. He would say nothing more, except that if the noble and learned Lord was willing 1364 to accept his Amendment he would take it on any terms he liked. It was a matter much more for the noble and learned Lord than for himself.
Amendments moved— In page 12, line 35, after the word 'and' to insert the words 'save as hereinafter provided.' In line 39, after the word 'opposed' to insert the words 'unless the Court of Appeal shall give leave to appeal upon such condition as to costs or otherwise as they shall think just; provided that in considering any application for leave to appeal the Court of Apeal shall have regard to the interests involved in the proceedings and the financial position of the parties thereto.'—(The Marquess of Salisbury.)

§ THE LORD CHANCELLOR
This is one of the sort of points on which I wish, so to speak, both ways. In appeals, you have always got to consider, in the first place, that it is very hard if the decision of one Judge produces unfairness or injustice. On the other hand, you have to remember that the rich man can kill the poor man by constant appeal. It is extremely difficult to draw the line between the two. I am quite certain that the noble Marquess and I have exactly the same purpose in view. Will he just look and see what things are unappealable—I mean unappealable to the Court? In the first place, decisions of the Comptroller under Clause 15—that is, for the revocation of patents outside the United Kingdom—when a man takes out a patent outside England and never works it in England, but merely uses it to prevent industry in England. There is no appeal if it is proved that the patent ought to be revoked for not being worked outside the United Kingdom; and I think that is a fair issue enough to leave to the one Judge.

§ THE MARQUESS OF SALISBURY
thought there was an appeal under that, because it involved revocation.

§ THE LORD CHANCELLOR
The only appeals in which decisions would be final would be, in the first place, decisions under the Comptroller. They would not be appealable. The next are decisions under Clause 16, where the Judge gives a compulsory licence on the ground that the patentee takes out his patent in this country and works it wholly abroad, and 1365 will not allow anybody to work it in England at all—which is a usual rule. We give the Judge power to say: "You shall allow it to be worked in this country; it is an English patent, and we will not allow you to use it for the purpose of preventing British industry." There is no appeal against that, and I do not see that there is anything very hard in such a case. The next is the decision of the Judge under Clause 17. Clause 17 is a clause for merely extending the term of a patent from fourteen years to something further. There is no appeal against that, and there is no appeal against the decision of the Comptroller (and this is the last, I am glad to say) under Clause 23, that is in regard to lapsed patents being restored, After all, they are not really fighting points as to whether there has been infringement of the patent. It is only those four points which are unappealable. I will not say we are absolutely right, but it seems to me not unreasonable to sayfinis litem at an early stage.

§ THE MARQUESS OF SALISBURY
thought that the noble and learned Lord—if he might say so with respect—put the point not quite fairly. It was quite true that it was in the eyes of a true born Britisher an outrage that a patent could not be worked in England, but that was not the appeal which would go to the Appeal Court. Somebody would have to decide what was the interpretation of being "Wholly or mainly manufactured in the United Kingdom." That must be a matter of the most immense intricacy—indeed, he could not attach any meaning at all to the word "mainly," but then he was not a lawyer. He could not conceive how it would be interpreted. It might be said that "mainly" meant that of all the articles in question the majority were made outside the United Kingdom. If that was the meaning of "mainly" then the clause would work a great hardship, but if it meant that of the supply in England the larger number had been made abroad that would not be so bad. But it seemed 1366 to him a word of the vaguest possible kind, and likely to lead to any amount of litigation. Taking Clause 16 he found that somebody would have to interpret what the words "manufactured to an adequate extent" meant. Was not that a wonderful word for an Act of Parliament? Who in the world knew what an "adequate extent" could be? And, again, there was the expression "supply on reasonable terms." He did not want to insist, but he did not think the noble and learned Lord ought to import any prejudice from the kind of subject which these clauses dealt with. No doubt they were designed to prevent injustice to British subjects, but that was no reason why they should put in an Act of Parliament very vague terms and then not allow any appeal to a proper tribunal to say what they meant.

§ THE LORD CHANCELLOR
I do not deny that there may be cases of hardship arising upon this or upon any other clause in any other Act of Parliament. It is a choice of evils—whether you will protract litigation or whether you will risk error now and then. I think we must draw the line somewhere.

§ THE MARQUESS OF SALISBURY
I do not press it.
Amendment, by leave, withdrawn.

§ THE LORD CHANCELLOR
I move to insert a new clause, which is only for the purpose of applying to Scotland the expression "rules of the Supreme Court." It appears that my countrymen in Scotland have not been as diligent as they are reputed to be, and your Lordspips may be able to make them work, I hope, by putting in that this refers to Scotland.
Amendment moved— To insert the following new clause:—'The expression "rules of the Supreme Court" shall in this Act (except in Section 28) as applying to Scotland mean Act of Sederunt; and notwithstanding anything contained in the Patents, Designs, and Trade Marks Acts, 1883 to 1902, or in this Act, the expression "Court" in Section 16 and 17 of this Act shall, in reference to proceedings in Scotland thereunder, mean any Lord Ordinary of the Court of Session.'—(The Lord Chancellor.)

LORD BALFOUR OF BURLEIGH
said the Amendment sounded quite reasonable, but they would look at it when it was in print.

§ THE LORD CHANCELLOR
Before I put this clause the noble Lord has handed in an Amendment to Clause 48 relating to the Isle of Man. I will put that first.
On Question, Amendment agreed to
On Question, new clause after Clause 49 agreed to.
Clause 50, with drafting Amendment agreed to.
In the Schedule:—
Drafting Amendment agreed to.
Standing Committee negatived. The Report of Amendments to he received on Monday next, and Bill to be printed as amended. [No. 211].