HL Deb 29 April 1948 vol 155 cc568-90

4.46 p.m.

Order of the Day for the Second Reading read.

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)

My Lords, I beg to move that this Bill be read a second time. Its purpose is to ensure that full and proper use is made of British inventions, and to secure for this country the benefit of inventions resulting from public research, and of any other inventions which are either not taken beyond the laboratory stage or are insufficiently developed or exploited. The Bill will, in fact, fill a serious gap in the technical and industrial equipment of the country, a gap caused by the failure either to put our scientific discoveries and inventive ideas to practical use in industry or to secure the protection which national and commercial law could provide for the product of the brains of our countrymen.

To maintain our competitive power in world markets, and to provide a reasonable standard of living at home, we must keep up a continuous flow into industry of new ideas which will result in new products, new processes of improving old products, and increased efficiency generally. Much of the scientific work of the country is at present being carried on in the research stations of our Defence Departments and is, of course, directed primarily to the needs of defence. But many of the ideas and discoveries produced in this way would be of great value to industry, either in the form in which they are produced or after further experiment and development work. But it is not the job of the Defence Departments to spend money and time in finding and developing civilian uses for their inventions. Nor are they equipped to handle the highly technical and difficult job of exploiting these inventions in the civilian field by the negotiation of licences, here and abroad.

Inventions produced in the industrial research associations flow naturally to the industries concerned, but the discoveries in the research stations controlled by the Department of Scientific and Industrial Research have no such natural outlet. The stations are concerned mainly with fundamental researches, as are those of other civilian departments, and we should not expect them to direct their energies from their proper function by taking on the entirely different task of carrying their discoveries through their development stages or of undertaking their commercial exploitation. By far the greatest number of inventions produced by the private inventor, or within an industrial firm, probably receive the treatment which they merit. There will be cases, however, where an employee produces an idea which is not quite in the firm's own line of business, or where a private inventor is unable to afford the cost of development to the point at which he can sell or license his invention to industry.

Our past record has shown that we are second to none in producing ideas, but it also shows that we have, on occasion, been slow to put some of our ideas to use, or have even neglected them altogether, with results which have been much to our disadvantage. There was, for example, the case of Richard Babbage, to whom the British Government made a grant in connection with his work on a differential calculating machine. The grant was later withdrawn, Babbage became disheartened, and the lead in the development of calculating machines passed to Europe and America, where it has been maintained until this day. Indeed, a major development in this field in 1930 was based essentially on the principles of the Babbage machine of a century ago. Another example is that of Perkin, who in the middle of the last century founded a flourishing industry based on the discovery of aniline dyes. His successors, however, failed to continue his researches, and the initiative passed to the German dye industry which built up and retained practically a world monopoly for seventy years. We must not be so short-sighted to-day, and there is a danger that, without legislation such as that provided in this Bill, we might lose the benefit of some of our inventions, or allow our competitors to get ahead in developing them, simply because we lack the organisation to put them to proper use.

Medical research presents some difficulty, since the ethics of the profession prohibit its members from seeking any profit from a proprietary interest in medical products for the alleviation of disease. As a result, medical discoveries have been published for the free use of the world. But in many cases—for instance, when a drug has been discovered—the development of production methods has been done abroad, so that the application of our own discovery to the relief of suffering has cost us foreign royalties. Penicillin is a case in point, although here I must point out that our failure to develop the discovery in this country was due to war-time lack of facilities and labour, difficulties which did not apply overseas. Another reason for taking out our own patents is that, in some cases, licences granted under a patent would afford a valuable method of controlling the quality of vital medical products and of ensuring that these are made available: to the public as freely and cheaply as possible. The present Bill offers a solution to these difficulties, and in this particular connection it has the support of the Medical Research Council, who have been anxious to see established a body of suitable trustees prepared to accept patents dedicated to them and to administer them in the best interests of the public as a whole. This is the part which it is proposed that the Corporation should play. University workers have their own pride in the disinterestedness of the research work which they do, and prefer to publish their discoveries. These sometimes contain valuable and patentable ideas.

For one reason and another, then, there are numerous occasions within the technological and scientific life of the country when the inventive process fails in getting an invention carried to the point where it becomes of practical use to industry, or when the valuable rights in the products of British brains are unnecessarily lost to this country. In the particular case of a steady stream of inventions, discoveries and new ideas flowing from Government or Government-financed research establishments, the Scientific Advisory Council suggested that an organisation, independent of Government Departments, should be created to take over inventions arising from Government research. The problem was also considered independently by Mr. Kenneth Swan's Committee on Patent Law who made a recommendation on similar lines. Since the war, the Departments concerned have given the matter detailed consideration and the present Bill is based on their recommendations. I should mention here that its proposals do not affect in any way the law of patents but legislation to amend the Patents and Designs Act is under consideration.

Clause 1 of the Bill creates the National Research Development Corporation, whose functions are defined as being, broadly, to secure the development and exploitation of inventions in the public interest and to deal in rights in inventions. The Corporation are given the power to act like any other commercial body in the execution of their business, but have no powers beyond those inherent in any other legal person or association under the laws of the country. In so far as they obtain their inventions from private persons, the Corporation have to do this by freely negotiated contract. Clause 2 deals with the constitution of the Corporation. The directors are to be appointed by the President of the Board of Trade and will then, subject to his direction on general matters of policy and to certain other reserved powers, be left to exercise their independent judgment in carrying out their duties. In so doing, they will have to take into account the public interest, any general directions which they may be given, and the financial requirements in Clause 3 that the Corporation must, by and large, pay their way.

Clause 4 deals with the power of the Board of Trade to give directions to the Corporation, and provides that the Corporation shall seek the approval of the Board of Trade if they wish to engage in the actual manufacture, or the practical application in any other way, of an invention or to create a company for this purpose, or, indeed, to take an interest in any other commercial concern. The clause also requires the Corporation to make annually to the Board of Trade a report which the Board will lay before Parliament. Clause 5 provides for the case in which, for reasons of public policy, a Department wishes the Corporation to embark upon a project which the Corporation cannot easily reconcile with their general programme or, perhaps, within their obligations under Clause 3. In these circumstances, the Department concerned is authorised to reimburse the Corporation for any loss which may be sustained and to provide this money from its Vote.

Clauses 6, 7, 8 and 9 deal with the financial provisions of the Bill, and they are so clear that I am sure your Lordships do not require me to deal with them now. Clause 10 requires the Corporation to keep proper accounts and records, and requires an annual statement of account to be submitted after audit to the Board of Trade. A copy of this statement and audit report is to be laid before Parliament by the Board of Trade. I would like to say here that the proviso at the end of this clause regarding the withholding in the public interest of any part of this report, has been reconsidered by His Majesty's Government, and a Government Amendment proposing the deletion of this proviso will be tabled on the Committee stage. Clause 11 provides the mechanism for the transfer of money from the Consolidated Fund, and Clause 12 provides for the payment of receipts into the Exchequer. The Schedule to the Bill makes various provisions for the proper constitution and operation of the Corporation.

The Corporation thus created will be empowered to accept inventions resulting from public research. Inventions resulting from research in Government Departments and, therefore, belonging entirely to the Government will be assigned to it. Research associations and other grant-aided bodies, under the terms of their grants, have various rights in their inventions, ranging up to complete possession. Nothing in this Bill destroys these rights but, if the people concerned are willing to assign them or part of them, the Corporation will be prepared to negotiate suitable terms with them. The Corporation may patent any of these inventions at home or abroad if they are not patented already; they may develop them by further experiment or pilot scale operation and, at an appropriate stage, will license them to industry on terms calculated to secure the maximum benefit to the economy and a reasonable return to the Crown; or they may license abroad on terms to bring in a good return to this country.

VISCOUNT MAUGHAM

May I ask the noble Viscount which clause he is speaking about?

VISCOUNT HALL

If the noble Viscount will wait, my noble friend Lord Chorley will deal with any point he wishes to raise.

VISCOUNT MAUGHAM

I only wanted to follow what you were saying.

VISCOUNT HALL

I am dealing with the Schedule. In the case of a private invention likely to be of national value, the Corporation may negotiate the purchase of the whole interest or a share in the invention or of certain rights, say to the overseas patents arising from it. The terms of acquisition will be freely negotiated with the inventor. These inventions will then be treated in the same way. They will take over such inventions as may be offered to them by medical and university researchers, and we hope that, now that the Corporation offer an opportunity of patenting discoveries for other than private profit, the people working in those fields of research will be willing to consider taking out patents rather more freely than they have done in the past. The Corporation, therefore, will usually exploit inventions through established industry, but, in the very exceptional case in which industry cannot see its way to take up an invention which the Corporation believe is good and valuable, the Corporation may arrange for manufacture, and distribution if necessary, on their own account. Before taking such a course, however, they will have to obtain the consent of the Board of Trade. The Corporation will, of course, concern themselves in this way only with their own inventions. They will not engage in the general manufacture or trading.

In all their doings the Corporation will necessarily act in the closest co-operation and agreement with the Departments concerned, with the universities and with every industry. The Federation of British Industries have been consulted and have expressed certain views on the Bill which I can assure them will receive full consideration. The Institute of Patent Agents support the principles of the Bill, the Trades Union Congress have also promised their support, and, as I have already said, the Bill has been welcomed by the Medical Research Council. I think it will be agreed that the Bill is a valuable one and I recommend it with confidence to your Lordships' House. I beg to move.

Moved, That the Bill be now read 2a.—(Viscount Hall.)

5.5 p.m.

VISCOUNT SWINTON

My Lords, the interesting and moderate introduction which the First Lord has given to this Bill has certainly led me to believe that his intentions are strictly honourable. I am bound to say that I listened to him with a good deal of relief because, on reading the Bill, I thought that the powers which are sought in it went a good way beyond the moderate and reasonable desires which the First Lord has expressed. We all want to encourage inventors, and we all want the development of inventions. I was delighted to hear the First Lord so definitely concur in this. I am sure that the development of inventions can best, and generally, indeed only, take place in industry. Nothing would be worse than to set up a divorce between the Government and industry or between scientists and industry. We want them to be blood brothers. I am certain that progressive industry will always be alert for new processes and new inventions. Indeed, the noble Viscount said that we could not compete with foreign countries unless we had that. He might also have added (but it would have been a little indiscreet of him) that that ability to compete is best fostered by a system of competitive industry.

I must join issue with him on one of his historical memories. I had a good deal to do with the re-establishment of the dyestuffs industry in this country. The noble Viscount spoke of it as though what had happened was that an ingenious inventor had invented the aniline dye and a lazy country had failed to take advantage of it. As a matter of fact, what happened was that the industry was developed here. The dyestuff makers and the chemists of this country were the first to take advantage of it and were keen to do so; but, because no system of protection was allowed at that time to this industry, it was killed by competition. The noble Lord, Lord Chorley, does not know. He learnt about this in the London School of Economics. I learnt about it in the hard school of experience, when I had to re-establish it. The industry was killed, and in the First World War how badly we needed it! And then how much more wise were we! It was one of those cases where the users thought the one thing that mattered was to buy their dyes in the cheapest market. The dyestuff industry had to be re-established, and we did re-establish it under a system of protection, with the wiser understanding that we were members one of another, in full partnership and collaboration with the colour users. Given that opportunity the industry went right ahead. We again became the best makers of dyestuffs in the world, and we were able to make them at competitive prices. As the noble Viscount the First Lord said, it is only an exceptional case where an invention is not fully developed. I am glad to note to-day that all those foolish ideas about universal one-sided free trade have gone by the board. The noble Viscount and I take a much more practical and national view of the way in which to conduct the national effort.

The noble Viscount referred to the Swan Committee, who made a number of extremely practical recommendations. One of the things they did was to set at rest a number of rumours which were not at all well supported. One rumour which one often heard was that it was the habit of industry to acquire patents and to sit upon them and not develop them, and to deprive poor inventors of opportunity. The Swan Committee went into this matter very carefully. They went out into the by-ways and hedges and invited any inventors who had been so obstructed to come in, but they could not get any to do so. That was the odd thing.

In paragraph 24 of their First Report they said: Rumours of this practice are frequent, and they went on to say: but, in spite of our endeavours to obtain it, no satisfactory evidence of particular examples has been forthcoming. Several persons who have made public statements about the suppression of inventions were invited to give evidence before us but did not accept the invitation. That sort of thing, of course, often happens when an inquiry is conducted into general allegations. The Report proceeded: We have formed the opinion that this type of restriction has been much exaggerated… The Committee said later in their Report that they thought that probably the rumours were generally due to the unfulfilled expectations of over-sanguine inventors. They further said that they thought some amendment of Section 27 of the Patents Act was desirable, not because they thought it allowed inventions to be suppressed in this way, but because they thought there was some doubt as to whether the wording of the section did, in fact, cover all the mischief with which it was intended to deal. I am glad to hear that this has been considered, and I hope that it will get further than mere consideration. We had a very good Act in the Companies' Act, and an amendment of the Patents Law would be a better contribution to industrial efficiency and development in this country than some other controversial measures which I can think of, which may also be in contemplation but which, perhaps, have not yet reached a more advanced stage than that.

I was interested to learn that this Bill is not intended to trench upon the provisions of the Patents Law. I take it that what the noble Viscount means is that if there is some invention which has not been exploited and advantage ought to be taken of Section 27 of the Patents Act, then, under the Bill, the Corporation will be entitled, just as any individual is entitled to-day, to make application to the Comptroller for permission to exploit the derelict or unused patent. Incidentally, it is interesting to observe that in the United States the tendency to seek protection by patents is, I think, rather falling into desuetude. The tendency over there, when a new process is discovered, is now not to take out a patent to protect it but rather to rely on being first in the field and having the know-how. I have been given in America some very interesting examples—I will not trouble the House with them now—of cases in which, when entirely new processes have been discovered, companies put them into practice right away, without bothering to patent them at all. They do not rely on protection by patent but on the fact of being first in the field; and they have confidence that, having obtained a start, they will be able to keep their lead in the exploitation and development of the processes.

Now I wish to turn for a moment to the language of the Bill, because, after all, it is the language that matters. What we pass are not the very reasonable intentions which have been expressed by the noble Viscount—most of which I share—but the: provisions expressed in this Bill. I speak as a layman or, at any rate, as one who has not been a lawyer for a long time, and therefore I am subject to correction. But, as I understand, the Corporation have to act under Clause 1 (1) (a) whenever they think it desirable in "the public interest." But "public interest" is not defined. I agree that probably it is an almost impossible thing to define, although we think we know it when we see it. Of course,"public interest" will be whatever the Corporation think. Every Government and all Ministers say they are acting in the public interest. In fact public interest is, if undefined, what each of us thinks it desirable to do. Therefore, we want to make no mistake—public interest will be what the Corporation think ought to be done.

To be frank, I am not greatly relieved of any anxiety in that respect when the noble Viscount says (I think this comes under Clause 4) that the Board of Trade may give the Corporation any directions. I do not know that I should regard that as necessarily being inspired writ. But the very wide powers which the Corporation are to have will be exercised without appeal. If the noble Viscount is right (and I feel sure he is right in saying that this is the intention) about the Bill giving no compulsory power of any kind to the Corporation, but that anything which: he Corporation do by way of acquiring a patent or a process has to be done by free voluntary agreement between the Corporation and the owner of the patent or process, then, of course, I agree that there is no case for going to arbitration. Obviously, in such circumstances, nothing will be taken over unless there is a freely negotiated agreement between the Corporation and the owner. I hope that is true, but I am bound to say that I find it a little difficult to understand why such a lot is said in paragraphs (a) and (b) of subsection (1) of Clause 1. One might have supposed that it would be sufficient to say that the Corporation shall have power to enter into an agreement with any owner of a patent or process or invention to acquire that patent, process or invention and, if the Corporation acquire it, to exploit it.

The words are rather curious. Paragraph (a) says that it is a function of the Corporation to secure: …where the public interest so requires, the development or exploitation of inventions resulting from public research, and of any other invention as to which it appears to the Corporation that it is not being developed or exploited or sufficiently developed or exploited; I am bound to say that that looks as though the Corporation are to have some power to develop an invention if they think that it is not being developed or exploited, or sufficiently developed and exploited. Paragraph (b) sets out that the Corporation shall also have the function: of acquiring, holding, disposing of and granting rights (whether gratuitously, or for consideration) in connection with inventions resulting from public research "— those would belong to it anyhow— and, where the public interest so requires, in connection with inventions resulting from other sources. I should like to be reassured that there is to be no compulsory acquisition of any sort or kind. If I am told that that is the intention, I shall be quite content that the lawyers shall look at this and see that no compulsory powers of any kind are implied in the Bill.

Then I turn to another power, the power to carry on any activity which the Corporation regard as convenient. This is provided for in Clause 1 (3). This states that they shall be able to carry on any activity: …convenient for or in connection with the exercise of their said functions, and in particular may carry on, or promote or facilitate the carrying on by other persons, of any business. On the face of it that means that when they have acquired a patent right they may set up a factory, using Government credit and the taxpayers' money in the establishing of the industry. If I understood him aright, the noble Viscount said, very fairly, that though there would be that power under the Bill, when it was a case of exploiting an invention commercially, it was the intention of the Corporation to do it through an existing industry.

I agree with the noble Viscount that that is the right way. I leave aside the pure defence invention, which may be best dealt with in a Government establishment—though it may well be that even that is best dealt with in industry. For instance, in the case of an aircraft invention, probably the only practical way of developing it would be to pick the best firm in the industry or make it common to all firms and see that the invention is used. It is quite easy for the State to recoup its expenditure—I did it very often—by arranging with the firm that the development charges shall be added to the purchase price of the finished article. I would say, do not hesitate to pick the best, and make sure you are using the best. I do not want to go into Committee points in any detail now, but if what I have indicated is the intention, it ought to be further explained. If I may suggest so, it would be wise to put down something on these lines to express the intention of the noble Viscount and myself—namely, that where an invention is to be exploited commercially, the Corporation will seek to do it on proper terms through existing industry. And if they cannot get it done that way and think it ought to be done, then I agree they should have the power to do it themselves.

I want to turn for a moment to the expression "public research." A distinction is made, but if there is to be no compulsory power, I do not know why the distinction is made. In Clause 1 (2) it says that the expression 'public research' means research carried out by a Government department…. It seems to me to be quite obvious that, if the whole of the research is conducted by a Government Department, the product of that research is the property of the Government. No question can arise there. The subsection goes on to say that "public research" also means research carried out by any "other public body." I am advised that "public body" would include any research association instituted and conducted by an industry, even if it received no Government money. I do not think the words "financial assistance…provided out of public funds" are intended to cover that case; those words relate to "any other research." I would like to know whether that is so. In any case, suppose we have a research institution established by an individual firm or by the whole of an industry (as I am glad to say is so often the case) which receives some modest grant, say 5 per cent., from Government funds, is it not true that that grant would bring it within these words "public body"? If that is so, is there a special power exercised under this Bill? The subsection finally says that "public research" also means: any other research in respect of which financial assistance is provided out of public funds. I am sure it cannot be intended that the Corporation are to have arbitrary powers over inventions coming from all those sources.

I think it is common ground that it is greatly in the interests of the Government and of industry that there should be the closest co-operation between industries and the Department of Scientific and Industrial Research and other Government research organisations. If this Bill is left so drafted that it leaves doubt as to what are the powers of this Corporation, then it may well be that the existing co-operation between industry and the different research organisations of the Government will be jeopardised, and industry, not unreasonably anxious and suspicious, might be chary of giving that full co-operation which we want to see. I am sure that is not the intention and the desire of the Government, and we should see that the Bill is in a form which will make that clear.

I am glad that the proviso to Clause 10 is to be struck out. I could not see any point in it. If this institution is to go on and do its job, obviously there ought to be a report about it. If there were anything which concerned security, I should not ask for it. But obviously it should be subject to the light of day. I think I have said enough to show that, subject to any further assurances we may receive, and indeed apart from them, we wish to make sure that the terms of the Bill are what we want them to be, and we shall have to consider them carefully in Committee stage. We wish to make sure that the Bill does state and limit what is our common intention. It certainly would be wrong to give delegated powers to this Corporation wider than I hope and believe it is our common intention to give.

5.27 p.m.

LORD STRABOLGI

My Lords, I congratulate the noble Viscount, Lord Hall, not only on the manner in which he introduced this Bill, but on the Bill itself. It is of immense importance. I do not think its importance could be exaggerated. With respect to the noble Viscount who has just resumed his seat, I do not think he quite appreciated how important the Bill is from a certain point of view, which he may not altogether hold. Nevertheless, from his speech, I thought some warning was given that there will be an attempt to emasculate the Bill in this House. I hope the noble Viscount, Lord Hall, is prepared to stand firmly against any interference with the fundamental principles in this highly important measure.

It is a significant Bill, certainly as important from our point of view on this side of the House as any of the schemes of nationalisation brought in by the present Government. And I will explain in a moment why. In the past and up to the present time, a great many inventions have been discovered through Government research, but though of great value, they have not been of sufficient profit or interest to commercial interests and they have been neglected and allowed to languish. Valuable inventions were neglected to our great loss. I will leave the question of aniline dyes to my noble friend, Lord Chorley, who knows the subject much better than I do. In any case, the reason why we lost the industry of making aniline dyes is very different from that put forward by the noble Viscount, who said we lost it because we had not got protection, because we were a Free Trade country. The reason is entirely different. It was a flagrant case of national neglect.

The majority of research is now carried on by the Government itself in the defence Ministries and elsewhere, and we badly need this Corporation. It will have powers to examine and offer to industry such inventions made during Government research if desirable; but, above all, to see that worth-while inventions, made under Government auspices by the Government-controlled and employed scientists, are properly developed for the good of the nation, even if commercial interests are not prepared to exploit such inventions.

In this connection may I for a moment follow the lines of the noble Lord, Lord Cherwell, on the last Bill which we discussed this afternoon? A lot will depend on the personnel of this Corporation. The only question I am going to ask the noble Lord, Lord Chorley—who I understand is to reply—is whether the appointment of the chairman of the Corporation, who will be the most important person, will be a whole-time appointment. He will be far more important than the managing director, and I submit that it is necessary for that appointment to be a whole-time one. I would prefer to see a small Corporation. The numbers mentioned are between four and ten, but I would rather see a smaller Corporation of whole-time directors. The most successful companies in private industries are those which have boards of only whole-time directors, and I should have thought that that was desirable in this case. The reason why the chairman is so important is that it is he who, if necessary, can make or recommend a change in the post of managing director. He is the man who will know, or ought to know, whether the managing director can be improved upon.

At one stage of my career I had a good deal to do with inventors. When I was in the Planning Division of the Admiralty war staff during the First World War one of my jobs (this may possibly interest the First Lord) was to "vet." new inventions. In many cases I had to see the inventors as well. Some of them were most difficult people, and a good deal of patience was required to deal with them. Indeed, it has been said that all inventors are more or less mad, or they would not be inventors. A person of special qualifications is required to be the managing director of this Corporation, and I suggest that the chairman should be a whole-time official, at any rate in the first years, in order to see that we really have the right man there. The noble Viscount, Lord Swinton, talked of industry and inventors as being blood-brothers.

VISCOUNT SWINTON

I said that I hoped to see a complete brotherhood and partnership in this matter between the Government and industry.

LORD STRABOLGI

I hope so, too. I took it down as "between the inventors and industry." The inventors and industry have not always behaved to each other as blood-brothers. I am afraid there have been far too many cases where valuable inventions have been put into cold storage because they cut across the vested interests of powerful corporations. I will take the liberty of quoting to your Lordships one or two very startling cases. The zip fastener was patented first of all in 1879. Its development was blocked, very naturally, no doubt, by the button-making interests. They took out blocking patents, and that kind of thing. That is a practice which is well known, not only in this country but also in the United States of America. It was only in the First World War, when the zips were needed for ammunition carriers or containers, that they came into general use. War always stimulates invention, and does away with the prejudices and blockages against interesting inventions. It was only after 1918, as a result of experience in the First World War, and the utilisation of the zip fastener, that it came into commercial use. Up till then, between 1879, when it was first patented, and the time when it was first put on the market on a large scale after the First World War, the modern woman was no better off than Queen Cleopatra, who had all the wealth of the gorgeous East to draw upon, but had not the zip fastener. Neither had the modern woman the zip fastener until the war-time necessity for a quick fastening device brought it on the market, against the opposition of the button-making interests.

VISCOUNT SWINTON

Had the patent lasted for forty years?

LORD STRABOLGI

No, of course it had not. No patent can last for more than fifteen years. But subsidiary patents can be taken out. The noble Viscount probably knows a good deal more about patents than I do but I know some of the devices used. I am told that even to-day what is called the everlasting match—the match that can be used a great number of times; I am told up to one hundred times—has been prevented from being put on the market by blocking patents, at the instance of the match-manufacturing interests, even at a time when we are woefully short of timber.

The noble Viscount referred to the United States of America. The Federal Communications Commission in 1937 found that the Bell Telephone Company had suppressed no fewer than 3,400 patents, simply to forestall competition. The noble Viscount said that it has become more usual not to take out patents in the United States. That is because it is notorious in the United States that the only thing that matters in the protection of patent rights is 10,000,000 dollars.

In passing, I was glad to hear my noble friend say that it was proposed to introduce a Bill to improve the existing patent laws in this country. I do not think I shall be contradicted when I say that in the engineering and commercial world in the past, the British patent practice has not been held in such high regard as that of Germany or America. When an important patent is under consideration, I believe that the first question asked in the engineering world is: "What is the American and German patent position?" In referring to the German patent position, of course, I am speaking about the years between the wars, and before the First World War. I am informed also (this is another example of the "very rare cases" referred to by the noble Viscount where there has been any stoppage on the use of inventions for commercial interests) that the Wellsbach Mantle was blocked for years by the gas interests because it used less gas. Those are just one or two examples, and I have reason to believe there are many others.

My noble friend Lord Hall referred to the intentions with regard to the discoveries that will be made or have been made by public servants. Again, there is a great need for a better system and practice, and I am glad to see that this Bill contains the necessary clause to deal with that side of the subject. In the First World War the famous Mr. Contanesco, who invented the synchronised firing gear for the machine-gun (many of your Lordships will remember that invention, and the great difference that it made to our Air Force) also invented a pump for diesel engines. The diesel engine was at that time beginning to come into large-scale use. He gave the discovery gratis to the Government, on condition that particulars were not published. Great use was made of Mr. Contanesco's invention, but by some mistake it was published. The German Bosche Company immediately possessed themselves of it; they quickly took out the necessary patents, and exploited the use of this diesel engine pump, in the comparatively modern type of diesel engine coming into general use, all over the world. On a smaller scale, that is another example of the sad story of the aniline dyes.

This Bill is also important for the poor man who produces a useful invention, perhaps one of great value, and finds it impossible, for one reason or another, to secure financial backing, or if—and I suppose it will be possible to deal with cases of this kind—he has come to an arrangement with a powerful corporation and the invention, because it cuts across existing processes or other vested interests, or would render obsolete existing methods, is put into cold storage, blocking patents are taken out, or it is otherwise neglected. Then, if the unfortunate inventor tries to go to law, he finds himself handicapped by having to fight a wealthy corporation who are prepared to take the case all through the courts, to employ the best patent experts and lawyers to look after their vested interests, and to spend unlimited money. The handicap against an inventor in the face of great and sometimes unscrupulous companies has always been a menace in the past. Not only has the individual suffered, but the whole nation has suffered. I have quoted one or two cases and others have been quoted by my noble friend, the First Lord. If we can really free the genius of the British people, which is unsurpassed in this field, and allow free development of inventions which are made over the next decade, it will be of tremendous importance to this country. In saying that our genius is unsurpassed, I am not exaggerating. In the last century and a half this country has led the world in invention, but we have not always been alert or, I am sorry to say, in some cases over scrupulous in the way in which those inventions have been utilised and developed.

I said just now that war always stimulated invention, and that is true. It is one of the few good things that can be said about the practice of warfare. It not only stimulates invention, but it leads to the rapid development of new discoveries. It sweeps away all the artificial commercial obstructions in the way of its use. But to have a war in order to stimulate invention is rather like burning down the house to have roast pig. This Bill, if it is properly administered and properly supported and is not cut about too much by the spokesmen of the F.B.I, and others in this House, will be able to do what war in the past has done: to give a tremendous stimulus and speed up to the development and use of inventions In this world, as things are now, our economic situation requires the greatest use to be made of one of our most valuable assets, the inventive brains of the British people.

5.43 p.m.

VISCOUNT MAUGHAM

My Lords, I should like to add something on this topic, because I had a good deal to do with patents at one time in my life, and because, as a result of what the noble Lord, Lord Strabolgi, has said, I think there is a certain misconception in his mind and quite likely in the minds of many others as to the real object of this Bill. I agree with him that it is a Bill of the greatest importance, though I do not think I have come to that conclusion upon the same grounds as the noble Lord. I also agree that there are many abuses in connection with the patent law of this country and, I may add, of all other countries with which I am acquainted. It is almost impossible to deal with all of those abuses. Patents may be taken out in all countries for some object other than the development of the invention which is the subject of the patent. If my memory serves me correctly, some of those abuses were pointed out in the Report of my friend, Mr. Kenneth Swan, and I hope and believe that some of them will be dealt with in the Patents Bill which is to be brought before this House at, I hope, an early date. I have not seen a draft of that Bill and I do not know what it contains, but I hope that it will deal with some of the abuses which exist in this country and are capable of being dealt with by law. Many of them cannot be, but one has to do one's best. I hope that rich corporations will not in future take out patents by the hundred for some reason other than the exploitation of a particular invention.

Why I differ from the noble Lord, Lord Strabolgi, in his view of the Bill is this. Speaking as a lawyer, I do not think that Clause I of the Bill is so framed as to give any power of compulsory purchase, nor do I believe it was intended to give any such power. There is nothing of the sort in the Bill. Paragraphs (a) and (b) of subsection (1) of Clause 1 are in the nature of a memorandum of association in the case of a company, and are intended to convey the objects for which the Corporation is to be established. You must look in other clauses—if you can find them—to find how those powers, which are not compulsory powers of exploitation or anything of the sort, are to be exercised. If I have not yet said it, I will say this at once: I think the objects of the Bill are completely admirable, and will fulfil a long-felt need in this country for assistance in connection with the exploitation of inventions. I think we all agree that the inventions of this country are equal to those of any other country, and have in many respects revolutionised industry all over the world. We have heard about dyes, and I am not going to travel into that topic, but it was the celebrated Mr. Perkins, who was a brewer's assistant, who started the great dyestuff industry by his invention.

What I would suggest to the noble Viscount the First Lord is that the Bill does not fully explain its objects, and may I say (for I suppose the tenth time in this House), it is a bad principle to have excellent intentions in a Bill and not to limit, define or explain what those intentions are. In this Bill there is practically nothing that the Corporation will not be able to do except exercise compulsory powers. They will not possess compulsory powers, but the ordinary rights they will have—with the consent, of course, of the Board of Trade—are to go into industry and carry on practically any industry in the world. I am quite sure that that is not intended. I would humbly submit to the Government that it will do the Bill no harm, but will do it a great deal of good if, by some Amendments, they define a little more in detail the nature of the functions which the Corporation are intended to carry out under Clause 1.

I hope the Government will understand that I do not think—and I know my noble friend Lord Swinton does not think—that this is a Party matter at all. We are simply interested in getting this Bill—which we both think is an admirable Bill—so framed that the ordinary inventor in a little workshop in the country who has discovered something of value or who has done something in connection with his employment by the Government on some project or other, without the necessity of going to a lawyer, may find out what the Bill empowers the Corporation to do. Inventors should be able to understand the Bill in general terms, and should know that they can go to a certain address in London or elsewhere and ask for assistance. I am not going through all the points that the noble Viscount, Lord Swinton has put before your Lordships, but I have a burning desire to help. I have known a number of cases, and if it were not so late an hour I could give your Lordships an account of some of them, in which a private inventor has actually made an invention of first-rate value. He has patented it on paying the fees for obtaining a patent in the first case, but has got nothing out of it; then somebody else, some other corporation or the like, has made millions—I am not exaggerating—by the development of the invention, simply because the unfortunate man has not been able to find anyone to help him to pay the renewal fees.

One of the most valuable patents ever made was made by such an inventor, who received nothing for it; but, because he was one of the very best inventors, he patented some other inventions which gave him some advantage. The patent I am thinking of, the triode valve, would, if he had been able to keep it as a patent and had been able to get it accepted and exploited, have been worth millions of pounds. I have known other people, in a much smaller way, who have suffered from the same disadvantage. Everybody of that kind who has made an invention wants to get it patented at once, and he can obtain, very cheaply, provisional protection. I am not sure whether your Lordships are aware that if such a man makes, say, £5 worth of goods by the use of his invention, and those goods are sold by a chemist or by an engineering shop anywhere in the country, that is a publication in law of his patent, and after that date he cannot obtain for it a valid patent. The result is that it is absolutely essential for anyone in this country who invents something to secure protection for it.

All these people who are covered by the phrase: …and of any other invention as to which it appears to the Corporation that it is not being developed or exploited…. will, with very few exceptions, if they have any sense at all, obtain either a provisional or a complete protection for their patent. If they go to Whitehall or elsewhere, and tell many people about this invention, there is always a chance of its being published in some form or other, or of the matter leaking out in such a way that the patent will become useless. The great value of this Bill is that people who are with or without any protection can apply for assistance from the Corporation; otherwise, they may be totally unable to have their patent exploited. Those are the people who have to be helped. Their whole future, in many cases, may depend on the assistance of the Corporation in the exploitation of the invention.

The result of this Bill, when it becomes an Act, will be a tremendous infusion of courage into people who are engaged in any form of industry, if they have an inventive mind. At present they are told: "It is no good making your invention, because it will cost you perhaps £10,000 or £100,000 to get it on the market." Under the terms of this Bill, if the invention is really good, the inventor will be able to complete it in a form in which it is capable of being understood by third parties and will take it round to the Corporation. I am a wholehearted supporter of this measure, and your Lord-ships need not think that anything I say is intended as in any way "crabbing" the importance of the Bill. I do feel, however, that it is quite wrong in a Bill of this sort, which is chiefly dealing with patents, to omit the word "patent" from the Bill. I believe that laymen who read this Bill for the first time will think that it has nothing to do with patents, whereas the whole Bill is really devoted to the matter of patents. It does not say so; it calls them "inventions." But inventions are the subject matter of patents, and cannot be safeguarded with out patents.

It is for that reason that I earnestly urge the noble Viscount in charge of the Bill to see whether there cannot be some elucidation of what he said in the latter part of his speech in introducing the measure. I cannot find in the Bill the matter to which the noble Viscount referred in the latter part of his speech, when he was explaining the provisions of subsection (1). Perhaps he could put the matter right by some Amendment. If so I shall be satisfied. At present, I am inclined to think that, perhaps because of a desire to economise in paper, the real object of the Bill is to be found in the speech of the noble Viscount rather than in the Bill itself. I am unwilling to put down any Amendment to this Bill, but I hope the noble Viscount will take advice and make the Bill a little more intelligible to the ordinary layman.

House adjourned during pleasure.

House resumed.