§ Order of the Day for the Second Reading read.
§ LORD TEMPLEMORE
My Lords, I beg to move that this Bill be now read a second time. The Bill is intended to give effect to certain amendments in the law relating to trade marks. The last amending measure concerned with trade marks was passed in the year 1919, and that dealt only with a few minor matters. Many important principles in the law of trade marks date back to 1905 and even to the original Act of 1875 and to judicial decisions given before that date. It was in 1932 that my right honourable friend, who had become President of the Board of Trade the year before, gave his consideration to this matter, and came to the conclusion that it was very evident that the present state of the trade mark law was ill adapted to modern business. Not only were some parts of the trade mark law incomprehensible to the traders of the country, but in certain 13 aspects, especially in that of the assignment of trade marks, it actually handicapped business.
Therefore in January, 1933, a very strong Committee was set up by my right honourable friend the President of the Board of Trade under the chairmanship of my noble friend Lord Goschen, whom I am glad to see in his place. The terms of reference were as follows:To consider and report whether any, and if so what, changes in the existing law and practice relating to trade marks are desirable.The Committee entered on a task of very great difficulty, and they performed it with very great thoroughness. They held altogether forty-two sittings, they examined innumerable witnesses, and the result of their efforts is contained in a very weighty Blue-book which I think is on the Table and which was published as Command Paper No. 4568 in April, 1934, when the Committee made their Report fifteen months after they had been appointed. The Report was unanimous and this Bill, which I am now presenting to your Lordships, is intended to give effect to those recommendations of the Report which require legislative action. Your Lordships will see, if you examine the Bill, that the paragraphs of the Report which affect the clauses of the Bill are referred to in square brackets underneath the small print in the margin.
With your Lordships' permission I will now say a few words about some of the clauses of this Bill, taking them in the order of their relative importance as it seems to His Majesty's Government. The most important clause we consider is Clause 7, which deals with the assignment and transmission of trade Marks. Under the existing law a registered trade mark can be assigned and transmitted only in connection with the goodwill of the business concerned in the goods for which it is registered. This rule corresponds with the Common Law rule which was laid down before the date of the first Registration Act—that is the Act of 1875—at a time when businesses were much smaller and trading conditions much simpler than they are today. The rule is based upon the view that, if a trade mark is assigned without the goodwill of the business in which it is used, purchasers of the goods who were acquainted with the mark before its assignment could be deceived by its 14 use by a new proprietor. Under modern conditions, however, purchasers of goods often know little or nothing as to the proprietor of the trade mark under which they purchase goods; and, if trade marks were made more freely assignable, transfer could often take place to the great advantage of business without injury to the purchasing public.
The Bill, therefore, under Clause 7, proposes to allow a trade mark to be assigned and transmitted either with or without the goodwill of the business concerned and either for all or for some only of the goods in respect of which it is registered. But to prevent such a freedom of assignment from resulting in deception of the public, the Bill provides that transfer of a trade mark shall not be permissible if it would result in rights being given to more than one person for the use of the same or of a similar trade mark upon the same goods or similar goods so as to be likely to deceive or cause confusion. In order, however, that a trader who proposes to assign his trade mark might ascertain whether the assignment would be allowable under these provisions, the Bill empowers the Registrar of Trade Marks, on the application of the proprietor of a registered trade mark, to issue a certificate as to whether the proposed assignment would comply with this requirement and such a certificate, subject to appeal to the High Court and provided certain conditions are complied with, is to be conclusive.
The Bill preserves the position that an assignment may be limited to the rights in the trade mark in respect of goods to be exported to any particular country. It deals specially with the case of transfers for part only of the United Kingdom—which might result in confusion and deception to purchasers—and provides that no such transfer shall be valid if it would have the result that different persons would have rights to use the same mark or a similar mark for the same goods or similar goods for different places in the United Kingdom, unless the proprietor of the mark is able to satisfy the Registrar of Trade Marks that in all the circumstances of the case the results of such an assignment would not be contrary to the public interest. I must say at this stage that there has been a good deal of misapprehension on the part of traders as to the existing law 15 on this subject, and a number of assignments have been made which would appear to be invalid. To meet this situation the Bill proposes that the freedom which it gives for the transfer of a trade mark without the goodwill of a business, and in respect of some only of the goods for which it is registered, shall be deemed always to have existed but that these retrospective provisions are to be without prejudice to any determination of a competent tribunal made before the commencement of the new Act or to the determination of any appeal from a determination so made, or to any title acquired by a purchaser for money or money's worth before that date.
I come now to the next important clause in our opinion, and that is Clause 8, relating to registered users. As the law stands a proprietor of a trade mark who licenses another trader to use the mark upon that other trader's own goods, even if the goods are similar in all respects to the goods upon which the proprietor himself uses the mark, probably destroys his own mark. In some cases, however—for example, those of companies with mutual working arrangements, or where different companies, although separate legal entities, are parts of the same organisation—a trade mark could be allowed by its owner to be used by another firm with advantage to business and without any detriment to purchasers of the goods. It is not considered advisable that proprietor's of trade marks should be permitted unrestricted powers of licensing the use of their trade marks by others, as such a system might in some cases lead to deception and confusion. What the Bill proposes in this clause is that the proprietor of a trade mark shall be at liberty to apply to the Registrar of Trade Marks to register another firm as a "registered user" of his trade mark, and if, after considering all the facts of the case, the Registrar is satisfied that the proposed use would not be contrary to the public interest, he may register the proposed user of the trade mark as such.
I will deal next with Clause 4. There is a rule of trade mark law which, with its existing scope, is found to restrict business and hamper enterprise. It is that which lays downs that a word which has become the name of an article or substance shall no longer be a valid trade 16 mark in respect of that article or substance. It sometimes happens, however, that a word trade mark is used by itself by members of the public as the name of the goods upon which it is employed without any power on the part of the owner of the mark to prevent such a descriptive use of it, and in this way a trade mark may become invalid through no fault of its owner. Words form a very useful kind of trade mark, but the existence of the rule to which I have just referred restricts their use and prevents the owners of such marks from using them to the best advantage. The Bill accordingly, in Clause 4, provides that the mere use of a word trade mark as the name or description of an article or substance shall not invalidate the mark unless it is proved that there has been a r d continues to be a well-known and established use of the word as the name of the goods by some trader in the goods other than the proprietor or a registered user of the trade mark. The Bill deals specially with the case in which the article or substance in question has been covered by a patent that has since expired, and also with the case of chemical substances.
Another provision of the Bill deals with a matter which I will briefly explain. Under the existing law, one trader can make use of the trade mark of another to describe his own goods provided he makes it clear that the goods are not the goods of the owner of the trade mark. In this way an unscrupulous trader may be able to secure for himself some of the ad vantages of the goodwill which has been built around another's trade mark, perhaps at great cost, and at the same time may injure that goodwill and the reputation of the mark. To remedy this position the Bill, in Clauses 15 and 16 (which deal with the effects of registration) lays down that the right given by the registration of a trade mark shall be deemed to be infringed by the use of a trade mark by a third party in relation to the relevant goods, not only when it is used by that third party strictly as a trade mark, but when it is used in any other manner in which it might be taken to refer to the true owner of the trade mark or to his goods.
I pass now to Clause 13, relating to defensive trade marks. Some trade marks used in connection with particular goods have become so well known that their 17 use in relation to other goods could not fail to lead to the belief that the owner of the trade mark was in some way connected with those goods, although in fact he had no trade in them. At present, however, the owner of such a well-known trade mark is unable to protect it by registration against use by others in relation to other goods because the additional registrations would be liable to be removed from the Register for non-use of the mark in those cases. This clause enables the necessary protection to be secured by the registration of the mark as what is known as a "defensive" trade mark.
Then there are certain provisions in the Bill which are of special importance to our export trade. Take, in this connection, Clause 31. In the first place, it is not at present altogether clear in what cases a trade mark can be validly registered in this country for use only upon goods to be exported, and it is often desirable, particularly I believe in the Manchester trade, that a trader who may not be in a position to use a trade mark upon goods to be sold in the retail trade in this country should be able to protect it for trade to a country or countries overseas. In fact, there are many trade marks in the cotton trade which are used in this restricted way and which are registered with a corresponding limitation. Clause 31 defines "limitations," which under various provisions of the Ads can be imposed upon registrations, as including, among other things, limitations to use in relation to goods for export from the United Kingdom to any overseas market or markets. Clause 14 is an important clause. It deals with the question of what constitutes use for export, and Clause 32 (2) provides, amongst other things, that any trade mark which has already been registered which such a limitation shall not for that reason alone be removable from the Register.
Another amendment which is important in connection with the export trade is concerned with the requirements for registration in Part B of the Register. I should, perhaps, explain that Part B of the Register was set up by the Act of 1919 for the reception of trade marks which are not sufficiently distinctive to qualify for inclusion in Part A of the 18 Register. To compensate for this inferior distinctiveness, registration in Part B gives less complete protection than registration in Part A. The main reason for instituting Part B of the Register was to make it easier for some of our export marks to be registered because, as I am informed, in some foreign countries a trade mark can be registered only if it has been first registered in its country of origin, and in such countries our traders have found themselves at a disadvantage as compared with traders from other countries where trade marks can be registered without a strict examination or even without any examination at all. It is, however, at present, a requirement for registration in Part B that the trade mark shall have been used for two years, and experience has shown that this requirement enables foreign competitors of our exporters to forestall them upon foreign trade mark registers. The Bill accordingly deals with this by omitting Section 2 (1) of the Act of 1919. Your Lordships will see that this is done in the Fourth Schedule on page 48 of the Bill, line 14.
There are a considerable number of other provisions in the Bill, but I think I need refer now to only one of them. If your Lordships will turn to Clause 17 you will see that that deals with contractual restrictions on the use of trade marks. Manufacturers sometimes find that their reputation is injured by goods bearing their trade mark being sold in an altered condition, such as after repacking, or by the trade mark being partly obliterated or some other trade mark or other matter being used with it. This clause will enable a trade mark owner to prevent that being done by empowering him when contracting to impose conditions so as to bind any trader dealing with the goods who has notice of the conditions, unless he has purchased from another person who acquired the goods without such notice.
I am afraid I have spoken at some length, but I hope at not too great length, because this is a very important subject. At any rate I think I have said sufficient to show your Lordships what the Bill proposes to do. The measures which this Bill proposes are, as I have already explained, based upon careful consideration of the Report of Lord Goschen's Committee, and, as far as can be ascer- 19 tained, they have received the practically unanimous approval of trading circles in this country. I hope I have said enough to show your Lordships that, while this Bill contains a number of proposals designed to bring trade mark law more into agreement with accepted usages of trade, and that it is likely if enacted to result in considerable benefits to traders, the interests of the purchasing public have always been kept in mind, and provisions for their protection have been introduced wherever that has been thought to be necessary. The Bill is a somewhat long and a very technical and complicated Bill, and I wish that someone more capable than myself could have explained it to your Lordships. I know that great care has been taken to consult the trading interests and the business community of the country, and I may say that His Majesty's Government put forward this Bill with the certain knowledge that if it is passed into law it will be of undoubted benefit to the trade of this country, which it is the business of His Majesty's Government and of all of us to try to improve at the present time. It is a Bill which the whole trading community earnestly desire should be carried into law at an early date, and I commend it with confidence to your Lordships. I beg to move
§ Moved, That the Bill be now read 2a.—[Lord Templemore.]
My Lords, as Chairman of the Committee upon whose Report this Bill is largely based, perhaps I may be allowed to give your Lordships some idea of the manner in which the Committee arrived at their conclusions and the strength of support which those conclusions have received in the country. It was a very representative Committee. There were on it representatives of both branches of the legal profession, representatives of His Majesty's Government, representatives of the patent agents' profession, and representatives of industry from London, Liverpool and Manchester. We received a great deal of evidence, both oral and written, from representatives of industry all over the country. In fact, I do not think it would be going too far to say that, directly or indirectly, we were able to obtain the views of all the most important sections of trade in the country.
20 One thing that impressed itself upon me in regard to this evidence was the fact that representatives of all those industries, and especially of the export industries, told the Committee that the trade mark law, although it had served well in the past, was based upon a simpler and older organisation of industrial activities, and was not adequate to serve the present needs of modern business. It was pointed out to us that, in these days of joint stock companies, of specialisation and of what I think is sometimes called the rationalisation of industry, some of the provisions of the law were really hindering rather than assisting development upon modern lines. I think it is also worthy of note that while the appointment of the Committee and the fact that e were taking evidence was well-known and advertised, yet there was no one who came before us and said that he was satisfied with the present state of the law. Everyone demanded some substantial remodelling of that law. If any difference of opinion emerged from the evidence it was merely a difference of opinion as to how suggested reforms could be carried out.
My noble friend, in introducing the Bill, referred to some of its provisions which were inserted in order to protect the interests of the public. That is an aspect which I should like to emphasise, because we gave very great consideration to it, and all our proposals were discussed from the point of view not only of the trader but also of the purchaser. I should like, if I may, to give two examples, and to refer to two matters which were mentioned by my noble friend. The first is the assignment of trade marks, which is dealt with in Clause 7. This caused us considerable anxiety, and I agree with the noble Lord in thinking that the provisions dealing with it are some of the most important in the Bill. We found that the existing law, by which a trade mark can only be assigned or transmitted in connection with the goodwill of the business, was a hindrance to that specialisation and rationalisation of industry which I have mentioned. While, however, it was clear that something must be done to remedy this state of things, the Committee were fully alive to the necessity of taking precautions to see that any measure which benefited the trader did not operate in a way which would be harmful 21 to the public. The results of the Committee's study of this question are embodied in subsections (3) and (5) of Clause 7.
I was also much impressed with the case which was made out against the continuance of the law under which a trader, if he allowed his trade mark to be used by another trader, ran the risk of invalidating it. It was quite clear that in numerous cases it would be very useful if associated concerns, such as those which I believe are called mother and daughter companies, could use the same trade mark, and the Committee endeavoured to devise a scheme by which this could be permitted without deception of the purchaser. Their suggestion on this head is embodied in subsection (5) of Clause 8, which provides that the more liberal régime which this clause sets up shall only come into operation in individual cases where it is shown to the satisfaction of the Registrar of Trade Marks that the arrangement in question would not be contrary to the public interest. My noble friend has dealt so fully with the provisions of the Bill that it is not necessary for me to say more on them. I would only add that the unanimity that the Committee reached on this subject was no superficial unanimity; it was really a concurrence of views after the most careful sifting and consideration of the matter. Like my noble friend below me, I believe that this Bill will be of great benefit to traders, that it will be fair to the public and the consumers, and that it is in the general interest of the trade of this country.
§ LORD MARKS
My Lords, the Committee over which the noble Viscount presided has had very difficult work to do, and the traders of the country in general have appreciated that the members were dealing with every industry and were also having regard to the protection of the public as well as of those concerned with trade marks. A trade mark is not by any means, as some people imagine it to be, a modern device. Cups and articles of pottery have been discovered which are four thousand years old and show on their bases the marks of the maker and the potter. Men used these marks to distinguish their goods from other goods, and this has been clone all through the centuries. A man was unable to put his signature to a commercial article which he produced, and so he applied a mark 22 which he had conceived, and made his goods known by that mark. Registration of trade marks in this country runs back officially only to 1875, but the fact that there are now some 10,000 applications for fresh trade marks every year is an indication that industry in general needs these other marks to be granted to traders in order to distinguish their articles from articles bearing other marks on the Register, and that it should be the duty of the Registrar of Trade Marks to protect them. What is needed is not so much a mark for the identification of goods as one for securing honest trading, so that no person shall copy an article which appears to be a useful one and put on his copy the same mark as that put on the article of the originator. He may copy the article, but he must copy it in such a way that if he applied the mark to it he would bring the mark into contempt by his bad copy.
It has been unfortunate in the past that when a man obtained a trade mark he was considered to have obtained something which was tied strictly to the goodwill of his business; consequently, if he attempted to dispose of the trade mark in order that he might set up one section of his business to manufacture the article with which the trade mark was concerned, and did not at the same time sell the entire business with which it was associated, the transfer of the mark was null and void and it came within the public domain. This hindered the transference of businesses which were large and unwieldy into sectional businesses which could be carried on by independent manufacturers as branches of the business with which the parent company was associated. This Bill provides that a man who has proprietary rights over a mark associated with his business can transfer that mark to another person without of necessity being obliged to transfer the goodwill of the business with which it is associated. This provision will lead to the development of industries, inasmuch as it will allow smaller industries to be separated from large industries, and will allow large industries to detach some of their unwieldy and uncomfortable parts to other businesses without vitiating all the goodwill associated with the main business.
Another difficulty connected with trade marks in the past has been felt when a foreign concern has been interested in a trade mark. Moreover, dishonest per- 23 sons have often made attempts to take advantage of a mark that has been made public and well advertised, and to apply it to a totally different class of goods in order to get the benefit of the publicity which the original possessor has obtained for his own goods. This leads to a deception of the public. Seeing a similar mark on another article people would conclude that that mark was associated with the original manufacture of a totally different product, and therefore the proposal in the Bill is to prevent a mark being made use of by unwarranted persons for the purpose of getting the advantage of the publicity in another industry. Probably there will not be very many of such marks, but there is a great temptation, when a mark has been well-advertised, and when it has been associated with one particular article or one particular class of goods, to conclude that it is a good mark and may with advantage be adopted for something else. When that has been done the public are deceived. This Bill therefore protects the public against such deception, and protects the manufacturer, or the original owners, from that which is robbery.
The Bill deals with many points which for years have led to difficulties in connection with the interpretation of trade mark law. The noble Viscount's Committee, in their Report, have given traders generally not only a Report based upon the evidence which they had but the reasons for the conclusions and findings based upon the evidence which they heard. I am perfectly certain that this Bill, which has been awaited for some years with great anxiety, will be welcomed by all industries as opening a new charter for honest trading and also a new charter for the better development of the whole of our British industries.
§ LORD MOTTISTONE
My Lords, I hope before the Bill receives a Second Reading that I may be permitted to say, speaking with only a little knowledge, but some knowledge, of the subject, that we ought to express our gratitude to Lord Goschen and his colleagues for the real public service which they have rendered in giving us the Report upon which this Bill is based. I know that not only the trading community here, but abroad, will welcome this Bill. It is in the interests not only of the consumer but of the manufacturer, and of trade in general. This 24 is one of those rare moments when everybody, so far as I can ascertain, is pleased and correspondingly grateful to Lord Goschen and his Committee. I only wish to add, on behalf of those who sit in this part of the House, that we congratulate the noble Lord who introduced the Bill on the lucid manner in which he did so.
§ LORD MELCHETT
My Lords, I do not want to detain the House for more than two minutes, but I would wish to associate myself with what was said by the noble Lord opposite as to our gratitude to the noble Viscount, Lord Goschen, and his colleagues for their work on the Committee, and also to the Government for bringing in this Bill. It really will be of great advantage in the rationalisation of and the development of the larger aspects of industry. The two points which have been referred to are of very great importance. The present position, with regard to Clause 8, is that there is no power for a subsidiary company to a low other subsidiaries of the same parent company to manufacture under the same trade mark. That is a great disadvantage, particularly to those in the export trade, who may have three or four factories all making an identical product. If the trade mark is as popular in the upper reaches of the Yangtze Kiang as it is upon the banks of the Ganges, they may wish to send either to China or to I India, or alternately. It will make for great convenience and economy in manufacture. The point is also true about the question of separating goodwill from trade marks. Under the existing law no one could possibly do what is proposed—it would be quite impossible—but under this Bill it will be possible to specialise in a higher degree within the law than has been permitted under existing legislation. I beg to support the Bill.
§ LORD TEMPLEMORE
My Lords, I have a very unusual and very pleasing experience, to-day, as a member of the Government proposing a Bill in this House, because everybody who has spoken has given the Bill his blessing, and fortunately for myself, who can make no claim to be an expert in the matter, I have really no questions to answer. I am very much obliged to noble Lords who have spoken and particularly to Lord Goschen, ho has given us some very interesting information as to the doings of his Committee. All this bears 25 out what I said in my opening speech, that the trading community, who were not at all satisfied with things as they are, will welcome this Bill. The speech of Lord Marks was exceedingly interesting to me because I had no idea until he made his speech that trade marks were so old as he indicated. I think it is a very interesting fact. Although I am no expert in the matter, and knew nothing about trade marks until I took this Bill in hand, I must say, and I am glad to say, that the assistance given to me by Dr. Lindley, Comptroller-General of Patents, Designs and Trade Marks at the Board of Trade, has made the subject, I do not say amusing, but interesting. No doubt I shall often discourse upon trade marks in the future. I am very much obliged to Lord Mottistone for his appreciation of my humble efforts and I have nothing to add except as to the future stages of the Bill. As your Lordships are aware, it received a formal First Reading on December 3 last. 26 It is a very important Bill, and my right honourable friend is exceedingly anxious to get it passed and sent down to another place, so that it may become law as soon as possible. At the same time, on a subject which is so important and complicated I do not wish to hurry the House unduly. Therefore, with your Lordships' permission, I will put down the Committee stage for Tuesday, February 9, in the hope that that will give any of your Lordships who may wish to put down Amendments, if there be any, time to consider the measure.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.