§ 2.50 p.m.
§ Order of the Day for the Second Reading read.
§ LORD MANCROFT
My Lords, this Bill is another step in the implementation of Her Majesty's Government's undertaking to review, and where possible abolish, emergency powers. Its purpose is to get rid of some of the powers exercisable by the Crown under emergency legislation in relation to inventions and designs. In order to do so, however, without serious embarrassment to some Government Departments, it is necessary to make permanent a limited number of the powers they may now exercise under the emergency legislation. It is, I think, fair to say that the exercise of these emergency powers in the past has caused little trouble and even less injustice. None the less, the Government are anxious to retain only powers which are necessary for the efficient functioning of the Departments which have to use them.
The Bill does three things. First, it slightly increases the permanent powers of the Crown in relation to the use of inventions, designs and industrial information. Secondly, it preserves the powers of the two Government Departments mainly responsible for supplying the Armed Services, the Ministry of Supply and the Admiralty, to demand information for defence purposes. Thirdly, and most important, it brings to an end the much wider emergency powers now exercisable by the Crown to use inventions, designs and industrial information, and to demand information.
So far as patents are concerned, the Crown has always been able by law to use private patents as of right. I would emphasise this point, because I think it is something which a few people do not always remember. This power enables any Government Department to "make, use and exercise" inventions as of right "for the services of the Crown." In addition to this permanent power which the Crown possesses, Government Departments were given, during the recent war, considerably wider temporary powers to utilisepatented inventions. They are now exercisable under Section 49 of the Patents Act, 1949. That was the Act 769 which the noble Lord, Lord Lucas of Chilworth, steered so skilfully through your Lordships' House when noble Lords opposite were in power. That Act contains the expression "during any period of emergency," which must be declared by Order in Council.
These emergency powers are wider than the Crown's permanent powers in two ways. First, Section 49 widens the meaning of the expression "for the services of the Crown" by listing a number of widely framed purposes—for examplethe maintenance of supplies and services essential to the life of the communityandgenerally ensuring that the whole resources of the community are available for use, and are used in a manner best calculated to serve the interests of the community.Secondly, to the permanent power to make, use and exercise inventions, there is added by Section 49 the power to "vend" or, in plain English, sell them. Under these powers, during the war, vitamins were imported and manufactured to fortify foodstuffs for supply to the public. And, if by mentioning this fact I am not seriously endangering the prospects of the Bill, let me remind your Lordships that under these powers, similarly, dehydrated potatoes were manufactured and supplied to the long-suffering public. There were a variety of ways in which these powers were exercised. Concrete sleepers have been supplied for railways, coal cutters for collieries, and even refrigerators for council houses. Since 1949, the emergency period has been continued by yearly Orders in Council, as your Lordships know. On Thursday, in the calm and cool after the Division had been taken on the subject of television, your Lordships heard my noble and learned friend the Lord Chancellor ask the House to agree to certain extensions of these Orders in Council, and he added that this Bill, which I now have the honour to out before your Lordships this afternoon, would be shortly introduced. Thus, at the moment the Crown has power to use and sell patented inventions, as of right, for almost any purpose connected with the functions of government.
The Government feel, however, that it is quite unnecessary for the Crown to retain such wide powers during a period under which the country is returning to normal economy, and therefore they have 770 decided to terminate the period of emergency during which the Crown retains them. Why then, your Lordships may ask, is this not done by allowing the period of emergency to expire by the normal passage of time? The reason is that there are certain functions of government in respect of which it is necessary that the Crown should have these powers in normal periods, and it is doubtful whether the permanent powers which would still remain under Section 46 of the Patents Act provide for them. The powers retained are only those which are really required. First, there are the functions of the Minister of Health and the Secretary of State for Scotland in relation to hospital patients and pensioners—such things as the provision of deaf aids and artificial limbs. Secondly, there are the Civil Defence functions of the Departments responsible for the supply of Civil Defence equipment (mainly the Home Office and the Post Office)—for example, gas masks and equipment for operating air raid sirens. Finally, there are the functions of supplying communications equipment for the country's fire services—also required by the Home Office aid the Post Office. These three functions are listed in Clause 1 of the Bill.
Your Lordships may ask why it is necessary to list these functions at all in the Bill since the Crown already has power to use inventions "for the services of the Crown." But the meaning of this phrase is far from clear. The provision of warships, tanks and aircraft for the Armed Forces is clearly within it. But it is much less certain, when the Home Secretary wishes to supply a gas mask to a member of the public, or the Minister of Health a deaf-aid to a hospital patient, that the Ministers concerned have the powers to use inventions as of right in relation to the patents which cover the manufacture of these articles, even though they may be supplying them in pursuance of a statutory duty. The gas mask or deaf-aid might be said to be produced and supplied not "for the services of the Crown" but for the recipient's own use and purposes.
I have already pointed out that Section 46 of the Patents Act, the section which gives permanent powers of Crown user, does not give power to vend inventions. It does, however, give a limited power 771 of sale. It permits a Government Department to sell or authorise the sale of goods under treaty arrangements to the Government of a foreign country for the defence of that country. Under that power, Her Majesty's Government sold "Meteor" trainers to the Government of France; and Ministry of Supply contractors have sold "Vampires" to Norway, and "Meteor" night-fighters to Denmark. The existing permanent powers also permit the sale of articles made for the services of the Crown but no longer required. Much obsolete military equipment has been sold since it became surplus to requirements. But it may be the case that the Ministry of Supply may wish to sell or authorise the sale of defence goods to a foreign country in respect of which we have no treaty arrangement. For example, under the temporary powers, "Canberra" bombers have been sold by the English Electric Company to the Venezuelan Government; three S51 helicopters were sold by Westland Aircraft Ltd., to the Japanese Government for their national security forces, and five "Vampire" trainer aircraft were sold to the Chilean Government by de Havilland Aircraft Co. Ltd.
Or it may be that one country may wish to buy defence goods for supply to another country. Under N.A.T.O. arrangements, the United States Government makes what in that country are known as "off-shore" purchases—for example, purchases in this country of "Centurion" tanks, with spares, for delivery to the Governments of Belgium and Holland. Provision is therefore made by paragraph (a) of subsection (1) of Clause 1 for cases of this type.
Again, it may be that half-completed articles become surplus to requirements. Since they are unsaleable in that form, they would have to be scrapped unless there were power to complete them for sale. Paragraph (e) of the same subsection gives the necessary power.
There is one important point to be borne in mind regarding the Crown's power to use inventions as of right under Section 46. The section does not permit free Crown user. Compensation is payable after the use has taken place. But the importance of this power is that it saves delay. Thus, for example, my right 772 honourable friend, the Minister of Supply, when a patent is granted, or indeed sought, for an invention in respect of an aircraft engine, may immediately order his contractor to commence manufacture for supply to the R.A.F. Without this power, he would have first to negotiate terms with the patentee and might be interminably delayed by extortionate royalty demands.
I have so far been speaking only of the Crown's right to use patented inventions. But the same article may incorporate both a patented invention and a registered design. For instance, the hinges of my spectacles may be made in accordance with a patent, while the shape of the frame may be registered as a design. It may therefore be equally important for the Crown to be able to use a registered design without delay. The Crown has exactly equivalent powers in relation to registered designs as it has in respect of patents. The Registered Designs Act, 1949, which gives them, repeats in identical terms the provisions of the Patents Act which relate to Crown user of patents. For the reasons which I have given, therefore, the slightly extended permanent powers to Crown user of patented inventions, of which I have spoken, is applied to Crown user of registered designs.
As I have pointed out, Clause 1 of this Bill extends the permanent powers of Crown user under the Patents Act and the Registered Designs Act. But those Acts give rights only in respect of patented inventions and registered designs. The inventor of an un-patented invention does not possess the monopoly rights in his invention which are given to a patentee, but he can, by virtue of restrictive agreements, and to a lesser extent by the protection given by the Copyright Act, 1911, effectively prevent the use of his invention by outside parties. It is becoming increasingly the fashion in industry to keep industrial processes secret, and to rely on such agreements and the Copyright Act to protect new inventions and methods of production, rather than to take out patents in relation to them. Certain Government Departments—Secretaries of State, the Admiralty and the Ministry of Supply—at present have power under the Defence (Patents Trade Marks, Etc.) 773 Regulations, 1941, to authorise the use of anydrawing, model, plan or other document or information notwithstanding anything to the contrary contained in any licence or Agreement.Clause 2 of this Bill gives power to the Crown to authorise the use of unpatented inventions and unregistered designs, regardless of restrictive agreements. It is true that the Defence Regulation gives this power only to certain named Departments, but, since any Government Department has power to use patented inventions as of right, and the power given by this clause is complementary, it is thought right that the clause should give the power to "any Government Department." It should, however, be noted that the scope of this power is the same as that of the power to use patents—that is, it may be used only for the services of the Crown. And, unlike the Defence Regulation which it supersedes, it makes provision for the payment of compensation after the use has taken place.
It is clearly both illogical and inequitable that there should be compensation for Crown use if an invention is patented, and none if it is not. The Bill, therefore, goes on to repeal the Defence Regulation which this clause supersedes. The powers which are sufficient to enable Government Departments and their contractors to use patents and registered designs will thus hereafter be found in the Patents Act and the Registered Designs Act, as amended by Clause 1; their powers to use unpatented inventions and unregistered designs will be found in Clause 2.
It is, however, possible that the Department may not have the technical information necessary to use the invention, and the persons in possession of the information may not be willing to divulge it. The only power which can overcome this difficulty—and it is recognised by the Government to be an extreme power to be used sparingly—is one to require a person in possession of the information to divulge it. This power is at present given in a wide form by the Defence Regulations which I have mentioned. These enable a Secretary of State, the Admiralty, the Board of Trade, or the Minister of Supply, if it appears to them necessary, in the interests of the defence of the realm or otherwise in the public interest, to give directions to any person requiring him to furnish to any specified 774 person or authority such information relating to any invention, design or process as may be specified in the directions or demanded of him by that authority or person. At the specific request of my right honourable friends the First Lord of the Admiralty and the Minister of Supply, this power is now made permanent, but in a very modified form.
Although it is realised—and I emphasise this—that this is a wide power for a Government Department to possess, these two Departments feel that the existence of this power, and its use, or the possibility of its use, may be necessary for them in carrying out their function of supplying the Armed Services and they are positive that, without it, vital information might be withheld from them. Not only is it necessary where a person is unwilling, for his own purposes, to divulge information, but also where he is under a contractual obligation not to do so, and would, but for the existence of this power, feel himself bound not to break his contract by divulging it. It will be clear that the power is necessary during a war. But, since its main use must be in the development of a new piece of equipment, it must equally be necessary in peace time when it is our object, by providing the forces with the best equipment, to give them the strength to prevent war.
§ VISCOUNT SIMON
May I ask the noble Lord, who is giving such a clear description of the Bill, where I shall find in the Bill any provision that this power will be used only in extreme cases?
§ LORD WILMOT OF SELMESTON
Before the noble Lord answers that question, I should like to put another. Will he make it clear whether the wide powers which are being sought by this Bill will be enforced immediately the Bill has received the Royal Assent, or only when an emergency has been declared?
§ LORD MANCROFT
The answer to the noble and learned Viscount, Lord Simon, is that the information which he seeks is not in the Bill, as he will see But he must surely realise that such an expression cannot be placed in the Bill, and when two Ministers come and ask for such a power as this, I think the House can take it for granted that they will not use such an extreme power except in extreme circumstances. The answer to 775 the noble Lord, Lord Wilmot, is that I assume the power comes into force as soon as the Bill becomes an Act of Parliament. However, I should like to check up on that point.
§ LORD BALFOUR OF INCHRYE
The noble Lord is telling us now that these powers are necessary, but that, in fact, we can rely upon good, sensible Ministers not to abuse them.
§ LORD BALFOUR OF INCHRYE
Is not that the very argument that he condemned when the last Government were introducing certain nationalisation measures and taking wide powers? He then said: "I know that the present Ministers are good fellows, but there might be bad ones in the future."
§ LORD MANCROFT
If there are bad Ministers in the future, and if this Bill is not passed, then those bad Ministers can still do a great deal more under the existing regulations.
My Lords, surely the existing regulations are only extended from year to year and could be revoked in the case of a couple of bad Ministers appearing on the horizon.
§ LORD MANCROFT
In the opinion of some people, we have had a couple of bad Ministers appear on the horizon, but the powers have never been revoked. Therefore, if I may say so, the noble Lord's point is a hypothetical one.
As I was saying the power retained by this Bill to demand information is, however, considerably restricted compared with that under the Defence Regulation. Perhaps I can explain. The principal modifications in the Regulation, as I explained to the noble Lord, Lord Balfour of Inchrye, can be exercised by several Departments in the interests of the defence of the realm, and otherwise in the public interest. In the Bill, the power is limited to the two Departments I have just mentioned—that is, the Ministry of Supply and the Admiralty—which require it for defence purposes; and its use is confined to those purposes. It will not, therefore, be available to any other Government Department or for any other purpose than defence.
776 Again, there are no provisions in the Regulation for compensation. Compensation is, however, provided for by the Bill. Finally, barristers, solicitors, patent agents, Patent Office officials and other persons engaged in legal proceedings are, by the Bill, absolved from divulging information obtained by them when acting in that capacity. No such exemption was given by the Regulation. The Government feel that a Defence Regulation of this sort has no place in the law of a land at peace. This Bill, by retaining only what is necessary of the Regulation, makes its repeal possible. There has always been compensation for Crown use of patents and registered designs, but, as I have indicated, up to now there has been no right to compensation in respect of the use of unpatented inventions and unregistered designs. Nor did the person forced to disclose industrial information have any right to demand compensation. This Bill, however, remedies that fault. The settlement of disputes as to the amount of compensation statutorily payable is entrusted to the same tribunal as would settle disputes as to compensation for patents—that is to say, a court of law.
I have taken longer than I meant to take in explaining, or seeking to explain, this Bill to your Lordships. I offer no apology, because it is a Bill which has come to your Lordships' House first; it has not yet been through another place. I offer no apologies for going into some details of matters, which are concerned with the rights of the subject. I believe that your Lordships would think it wrong of me if I did not explain them as best I could. I am well aware of the fact—having read the newspapers in the last day or two—that some slight uneasiness concerning one or two of the smaller provisions of this Bill may prevail. Let me, if I can, straight away suggest that the Committee stage of this Bill will be taken as far off as is convenient to your Lordships, in order that any difficulties which may still exist or any points from outside sources which need examination, can be examined fully. I give your Lordships the undertaking that they will be examined fully and in as helpful a spirit as I can engender. To sum up, this Bill takes one more step towards the abolition of the Crown's emergency powers. By giving a statutory right to compensation it remedies any 777 injustice attaching to the use of the limited powers retained. And it retains only those powers which are really necessary, even in peace time. I therefore commend it cordially to your Lordships. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Mancroft.)
§ 3.13 p.m.
§ LORDWILMOT of SELMESTON
My Lords, your Lordships have come to expect from the noble Lord, Lord Mancroft, an elegant speech to which we listen with great interest. But to-day it seems to me that he has excelled himself in a masterly understatement. This is a revolutionary Bill. It takes some sweeping powers and embodies them in the permanent law of the land. Until now, these wide powers of exhortation, and extortion of industrial secrets and processes from their private owners for the use of the Crown, have been embodied only in Defence Regulations specifically made for a period of war and then extended, with the consent of Parliament, from year to year to cover what was deemed to be an extended emergency period. It is a different thing, I submit, to widen these powers—and they are greatly widened in all material respects—and then to embody them in an Act which will become permanent law of the land, because they are so wide as to strike at the very roots of private property in industrial patents and processes.
Not only does the Bill widen the powers of the Departments to require disclosure of pieces of information, but it widens the use which the Department may make of that information and extends the number of Departments which can make use of it. It also extends widely the purposes. Defence is now held to include maintenance in peace time of any services which the Government of the day decide are essential services. That can cover an unlimited field of activity, and I think it is true to say that if the powers of this Bill are fully used, any kind of industrial process or any kind of patent or secret can be extorted from the owners and used by the Department; disclosed to other people who may be competitors, and the product sold abroad without the consent of the persons who own the property in the patent or the process. That, surely, is going a long way, and I think your 778 Lordships are entitled to a little more time than we have had to consider this Bill before we can be asked to consent to it. This Bill was printed only a few days ago.
§ LORD WILMOT OF SELMESTON
Three weeks. There has been little time to examine and scrutinise it carefully, let alone to think out the necessary Amendments. Clause 3 gives the most astonishingly wide powers. One has only to read the first subsection. It says:… a competent authority may, if it appears to that authority to be necessary…give directions to any person requiring him…to disclose any information in his possession. This information can be used for a wide range of purposes.
Your Lordships' time is too valuable for me to take it up to-day in repeating sentences from the Bill. The primary purpose of the Bill is a necessary one, but if your Lordships consent to give this Bill a Second Reading to-day it should be only on the clearest understanding that the promise which the Minister made is interpreted in the widest sense: that a long period of time must elapse between now and the Committee stage, and the Government must show a willingness, which they are not always eager to do, to study any comments made by those in industry and by people interested in patents and processes. There has been no consultation with industry up to now. It seems to me remarkable to introduce a Bill of this kind and of this magnitude without any prior consultation with the interests and persons affected. The Government must show a ready disposition to listen to advice tendered to them, both from this side of the House and from outside, and must be prepared to embody in the Bill safeguards which will remove some of the grave apprehensions which we have about the Bill in its present form.
§ 3.19 p.m.
§ LORD BALFOUR OF INCHRYE
My Lords, this is a technical Bill and it is difficult for one who has not an expert legal training to understand it and speak to your Lordships upon it. Nevertheless, it is a most important Bill, and I should be grateful to my noble friend Lord Mancroft if, in my analysis of it and its possible effects, he will pick me up at any 779 time, in the course of the short time I shall detain your Lordships, if he considers I am wrong.
First, I think we all regret—and perhaps in his heart the noble Lord himself regrets—that this Bill has been introduced without the usual consultations with important industrial bodies. The Federation of British Industries knew nothing of this Bill until they saw a printed copy. I do not think it would be discourteous, or asking too much of the noble Lord, Lord Mancroft, to ask him whether, when he replies, he can give us some reason why the custom followed by successive Governments, that of consulting industry, was not carried out on this occasion. The noble Lord said that the Government's policy is to remove from regulations, so far as possible, the emergency powers needed in war time and to incorporate in permanent legislation such powers as they consider necessary for continuance in peace time. It is true that this Inventions and Designs Bill does this. But Lord Mancroft admitted it does more: it actually provides an extension of powers under the present Defence Regulations. War-time Defence Regulations conferred upon the Government powers used—and I quote:in the interests of the defence of the Realm or efficient prosecution of the war.In 1946 that limitation was amended to powers used—and again I quote:in the interests of the defence of the Realm or otherwise in the public interest.The first extension of the powers in this Bill was mentioned by Lord Mancroft. It eliminates the need for a treaty to exist between this country and another country before the Government can exercise their powers to authorise the supply to that other country of patented goods. That is true. But the second extension, which I do not think was touched upon by Lord Mancroft, is a widening of the definition of "defence purposes." The definition of "defence purposes" is given in Clause 6 and now includes not only defence of Her Majesty's Dominions or territories over which Her Majesty has jurisdiction but also—and I ask your Lordships to note these words:… the maintenance or restoration of peace and security in any part of the world, or of 780 any measures arising out of a breach or apprehended breach of peace in any part of the world.It may well be that Her Majesty's Government will defend this wide definition by saying that it is in line with Britain's international commitments under the United Nations Charter. It would be more acceptable, if that be their defence, if we had knowledge that other countries had either passed, or were ready to pledge themselves to endeavour to pass, similar and permanent reciprocal legislation. This, then, is my second question to the Minister: Can he tell us whether, if this definition is in line with our United Nations obligations, Her Majesty's Government are representing to other countries the need to introduce permanent and reciprocal legislation?
I now come to the wide permanent powers. I have tried to deal briefly with the extensions. Under Clause 1 (1) (a) of the Bill, the Government can pass to any other Government, possibly contrary to the wishes of the patent owner, goods made by a Government-authorised contractor if our Government consider that such goods are necessary for the defence of the foreign Government. It seems to me that under this Bill we are to become judges of what is or is not necessary for the defence of a foreign country. That seems to me to be a very wide power. The next wide power is mentioned in Clause 3 (1), wherein the Government take powers over not goods but information. "Information" is defined in Clause 6 (1). "Invention" and "design" are then defined in the last paragraph of Clause 6 (1). These two definitions, coupled together, seem to me to cover anything and everything produced by normal drawing and manufacturing processes at any factory, and certainly include what is known as the "know-how"—the knowledge and experience possessed by technical brains. I ask the noble Lord to say who can define, in an era of total war, what is or is not required for the defence of Britain or any other country. Civilians, their social and commercial lives, and their possessions, are in the front line of battle to-day, as much as the lives and equipment used by the Armed Forces. Therefore, on certification by the Government, virtually anything can be said to be required for defence, even though its normal use is civilian in peace time.
781 I turn from goods and information required for defence and I come to goods required for "services of the Crown." The previous definitions of "services of the Crown" are now widened under Clause 1 (1) (a), (b), (c), (d) and (e). As requirements for the National Health Act, 1946, are specifically mentioned, as I read it this proposal means that in future all drugs, medicines or appliances required—and presumably this would mean design and manufacturing processes—ranging from artificial limbs to penicillin, could be removed from the hands of inventors and producers and be taken over by the Government for handing over to any person nominated by the Government. This might mean a trade competitor within our own boundaries, or a foreign competitor overseas. This seems to me an extremely wide power. The only differences in these wide powers between goods required for defence purposes and goods required for services of the Crown are twofold. First, in the case of goods for defence there is a sanction of fine and imprisonment for refusal to supply information. This is stated in Clause 4 (1). In the case of defence, only the Admiralty or Ministry of Supply can now wield authority; whereas in regard to goods for the services of the Crown any Government Department can operate these particular powers.
This is very complicated, my Lords, and I trust you will forgive me for trying to go into some little detail in regard to this important Bill. The exercise of the powers under this Bill would violate the sanctity of customary commercial contracts. May I give your Lordships one or two examples? In doing so I am afraid I shall be obliged to use our old school day friends, "A" and "B." First, let me give the example of goods or processes for defence purposes. Manufacturer "A" produces a new article which he had hoped the Government of the United States would adopt. Our Government, under this Bill, can take "A's" work and hand it over to the United States Government, ignoring completely "B," who is "A's" authorised agent in the United States and who has a contract with "A" covering the use of inventions by "A" in that territory, such contracts to be interpreted according to United States law. Now when "B," the agent, sees "A's" invention in full use in the United States, through the United States 782 Government's distribution of that invention, "B" can sue "A" in the United States courts for breach of contract; and, as far as I can see, "A" will not have any redress at all.
The second example is this. Many firms have agreements with foreign co-operators, or even sometimes rivals, for the interchange of technical information. This is a practice which has been of great benefit in the past British industry. If firm "C" has been accustomed in the United States to pass information to "A," and "A" to pass information to "C," for strictly confidential use confined to the other party, that is probably in accord with a technical agreement for the interchange of information. Under the Bill, "C" would presumably continue to implement his part of the bargain, sending information to "A" in this country, but "A's" information would pass over the head of "C" direct to "C's" Government or to any individual rival in "C's" country whom our Government might select. I suppose "C" could sue "A" in the courts of "C's" country, the United States, and it seems to me that "A" would have no redress. If, as is most likely, "C" stopped supplying information to this country, it would probably be this country which would suffer severely.
Let me give one more example—goods for "services of the Crown." The same examples as I have given to your Lordships in regard to goods for defence, would, I believe, apply, except that, if our Government, in connection with defence or for services of the Crown, handed over processes for making some of the supplies from "A" in this country to "X" in this country, "A," who has designed and manufactured the processes, is prevented from suing "X" even though those inventions have been passed over to a rival, because of the provision in Clause 2 (1) which says that the Bill overrides any contract between "A" and "X," both of them being in this country. It seems to me that those are amazingly wide powers. My main criticisms are that the provisions of this Bill contain no machinery whereby those who have developed and manufactured goods, either for defence or for services of the Crown, can question the Government's right to take over their work. I understand the noble Earl the Postmaster 783 General wishes to make a statement. I would ask your Lordships' indulgence to detain you for a further five minutes, after that statement has been made.