§ 3.0 p.m.
§ Report of Amendments received (according to Order).
§ Clause 1:
§ Rights in inventions made by employees.
§ (2) This section shall apply notwithstanding any rule of law or implied agreement whereby the said benefit would belong exclusively either to the employer or the employee, but shall not prevent effect being given to the express terms of any agreement.
LORD RHODES, moved, in subsection (2), to leave out all words after "not" and to insert:
affect the operation of any agreement between them expressly providing for the allocation of that benefit.
(3) In the determination of any dispute as to the allocation of benefit under this section regard shall be had—
(4) Without prejudice to the power of the comptroller to determine disputes under section 56(1) of the Patents Act 1949".
§ The noble Lord said: My Lords, we had a very interesting and helpful debate on the Committee stage of this Bill, and as a result, I should like to move the first Amendment, which deals with three distinct matters which are best explained separately. The first matter is the amendment of Clause 1(2) of the Bill.1030
Clause 1(2), as drafted, provides that the Bill
shall not prevent effect being given to the express terms of any agreement".
For these words the Amendment substitutes the words
shall not affect the operation of any agreement between them expressly providing for the allocation of the benefit.
§ There is no intention that the Bill should override contracts entered into between employer and employee which allocate the benefit of inventions, either to one or other exclusively or to both of them in shares. On the other hand, we wish to make sure that we reverse the Common Law rule that, in the absence of specific agreement regarding its ownership, the whole benefit of an invention made by an employee in the course of his employment belongs to his employer. In Committee the final words of Clause 1(2) were criticised by the noble Lord, Lord Wilberforce, as being likely, in certain circumstances, to have an undesired effect and, on further consideration, we feel that they may allow the Common Law rule to creep in by the backdoor. I believe that the noble Lord, Lord Drumalbyn, will remember that this was also brought out by him.
§ For instance, where an employer/ employee agreement contains an express term that the employee will devote all his time and skill to the service of the employer, it can be argued that, to give effect to the agreement, the whole benefit of the invention must be given to the employer. This is not the intention. It is only if employer and employee come to some agreement which actually deals with the allocation of benefit of inventions made by the employee, that the agreement is to be unaffected by the Bill. The amended form of wording now makes this quite clear.
§ There was quite a lot of discussion in Committee about the question of including in the Bill some guidance on the matters that should be taken into account in determining what is "just". We spent some time on that. The noble Lords, Lord Cawley, Lord Drumalbyn and Lord Wilberforce, and others, had a go at trying to put down words to match what was needed. The danger of inserting a list of considerations, even a non-exhaustive list, is, as is quite evident to anybody, that those criteria might be 1031 over-emphasised and a circumstance highly relevant to the particular case might not be given full weight. Nevertheless, it is accepted that the insertion of some considerations may help the parties to settle their differences without resorting to litigation. I think that, during the Committee stage debate, the concern of noble Lords that unnecessary litigation might be avoided if some form of words could be introduced to help them before they got to that stage, was brought out. Therefore, a new subsection (3) is proposed containing those considerations which must be taken into account in addition to any other relevant circumstances.
§ The first one, paragraph (a), involves the court or Comptroller in considering, for example, whether the employee was engaged to make inventions, and how much he was to be paid for this purpose. It seems obvious that the just share of an employee who is paid a large salary to invent ought to be less than that awarded to someone who is employed for a different purpose and paid at a correspondingly lower rate. This sort of consideration is in line with the thought behind the Amendments put down in Committee by the noble Lords, Lord Wilberforce, Lord Cawley and Lord Drumalbyn, which were Nos. 2 and 4, paragraph (c), and most people will agree that such considerations are highly relevant.
§ The second consideration, paragraph (b), also echoes some of the Amendments proposed during the Committee stage (Nos. 2 and 4, paragraph (f)), and it is concerned generally with the help given to the employee-inventor by or on behalf of the employer. For instance, it is pertinent to inquire whether the invention resulted from specific instructions given by the employer to follow a certain line of research or development, what facilities to this end were provided by the employer, and what contribution to the invention was made by other persons in the employer's service.
§ Consideration (c)is based on the thought that the proportion of the benefit which the employee should be awarded is dependent, at least to some extent, upon whether or not the invention has resulted from something more than he was actually required to do. It seems right to inquire whether the employee 1032 has spent some of his leisure time, some of his own money, or used some of his own equipment in the making of the invention.
§ These are matters which most people will agree the court or Comptroller should look into: but in many cases they will not be the only considerations applicable, and so it is proposed to make the list non-exhaustive. It will have been noted that we have not included in the Amendment all of the considerations which were proposed in Committee. For instance, we do not think it would be wise to insist that the "value of the invention" (Committee stage Amendment No. 2) should be considered. This does not appear to be relevant to the question of what share of the benefit is "just". In any case, it is impossible to judge the value of an invention at the beginning of its life. I think we went into that quite adequately during the Committee stage, and I do not propose to go into it again.
§ Then, we do not refer to the "customs of the industry", which was in Amendment No. 4, paragraph (e), since the aim is to obtain a measure of uniformity and because the customs of any given industry may be difficult to prove. I think it was also made clear during the Committee stage that this should be a matter between organised labour and organised employers, and that consideration should be given to it.
Again, we doubt the appropriateness of inserting references to the
rights and obligations of the party owning the legal title to the invention or patent as regards the prosecution or defence of any application or proceeding in relation thereto",
which I think has to do with the Amendment to be moved later by the noble Lord, Lord Drumalbyn, and which we shall probably be discussing then. The legal owner of an invention is likely in his own interests to take all necessary steps to ensure that rights are not lost. This means that if he knows that, as a result of a dispute as to benefit, the invention is likely to become public knowledge, he would almost certainly seek a patent. He would be a very pigheaded individual if he did not do so. The trust relationship created by the Bill should be sufficient to ensure that the legal owner deals prudently with the invention.
§ Finally, it does not appear right to refer to the "preference of the parties" (Committee stage Amendment No. 4 paragraph (h)); there is no more reason for this Bill to say that the courts must take account of the wishes of the parties than there is for any other Act of Parliament to do so.
§ I turn now to the last part of the Amendment; and in so doing I wish to apologise to the House for making rather heavy weather of it, owing to my having such a heavy cold. The last part of the Amendment deals with the new opening words included in Clause 1(4). Some doubt has been expressed in debate about the jurisdiction of the Comptroller of Patents. Under Section 56(1) the Comptroller of Patents is empowered to decide disputes as to the "rights" in an invention made by an employee. These "rights" may concern the legal title to the invention or the statutory right created by this Bill to a just share in its fruits. In order to make it quite clear that the Comptroller is to have jurisdiction in both cases, we propose inserting the final words of the Amendment. If the initiative is taken by one of the parties concerned, then they can please themselves whether it goes through the courts or through the Comptroller of Patents.
§ In Committee, the noble and learned Lord, Lord Wilberforce, proposed an Amendment which would have had the effect of making the Bill cover inventions made by an employee together with co-employees or third persons who are not co-employees; and I promised to consider the point. I am advised that the Bill as drafted already covers cases involving co-employees. It is not our intention to go any wider than this. Cases involving an employee and someone who is not in the service of the same employer seem to involve great difficulty. In the first place, the Common Law rule which vests the ownership of an invention made by the employee during the course of his employment in the employer has no application vis-à-vis the person who is not an employee. I want to make that quite clear. Second, if we provide for an apportionment of the interest of the person who is not an employee, there is no logical reason why we should not provide for the apportionment of the benefit of any invention made by joint 1034 inventors; and this goes far beyond the intention of the Bill. We think that cases of this type are likely to be rare and are best left to be dealt with by the law as it exists apart from the Bill. These are our best efforts to meet the wishes of your Lordships House. We are indebted to noble Lords who went to the trouble to make suggestions. I think we have got as near as we can to a satisfactory form of words. I beg to move.
Page 1, line 13, leave out from beginning to ("Rights") in line 14 and insert the said new words.—(Lord Rhodes.)
§ 3.15 p.m.
LORD CAWLEYmoved, as an Amendment to the Amendment, after paragraph (c), to insert:
(d)to any expenditure in connection with registration, maintenance or enforcement of any patent for the invention and corresponding patents in other countries,
The noble Lord said: My Lords, before I move the Amendment standing in my name and that of my noble friend Lord Drumalbyn, I desire to answer two statements which were made by the noble and learned Lord the Lord Chancellor in a speech on Committee stage which affected me personally, and about which I was taken completely by surprise.
The first occasion was when the Lord Chancellor said:
It did not occur to the noble Lord, Lord Cawley, who gave evidence before the Committee"—
the Swan Committee—
or to anybody else who gave evidence before the Committee that the words in such manner as it may deem just ', might cause difficulty."—[OFFICIAL REPORT, Vol. 266 (No. 72), col. 50, May 11, 1965.]
It is my submission that the noble and learned Lord suggested that, until I saw this Bill in print, I had not really considered that these words might cause any difficulty. It is perfectly true, as can be seen in the Swan Report, Appendix II, that with two of my colleagues I gave evidence to the Swan Committee and that the evidence I gave concerned the extension of patents. We were asked certain questions on methods of manufacture. They were nothing to do with employees' inventions, and we knew nothing whatever of this suggestion on the part of the Swan Committee until we saw the Final Report of the Committee, which was published in September, 1947.
We had prepared an interleaved book of the proceedings of the Committee in order to write down our suggestions. In that book, I find (opposite paragraph 28) these words, as a note:
What are the principles on which the Comptroller should decide?
Therefore, it was certainly in my mind in the autumn of 1947 that there was something wrong with the proposal. It may be asked why I did not bring this up during the course of discussions on the 1949 Bill. The answer is simple: I was not in your Lordships' House at that time. But I had this in my mind for a long time.
The second thing is this. The noble and learned Lord the Lord Chancellor also addressed me when he said:
As the noble Lord no doubt knows, in many modern countries—certainly in Austria, Sweden, Norway, Denmark, Switzerland, Germany and Italy—the law provides as a matter of public interest that the inventor must get something, whatever the contract between the parties"—[OFFICIAL REPORT, Vol. 266 (No. 72), col. 49, May 11, 1965.]
I am not an authority on International Law, but I showed this to an authority on international law, who referred me to Section 343 of the Civil Code of Switzerland, which he informs me is now in force. I will read a translation of it taken from the International Labour Review, Volume 83, No. 1. It is as follows:
Inventions made by an employee in the course of his work belong to the employer if inventive activity is comprised in the service duties of the employee or, where this is not the case, if the employer has retained a right to them. In the latter case the employee is entitled to reasonable special compensation if the invention is of considerable economic value. When assessing this compensation regard must be had to the assistance given by the employer and to the use made of his property.
My suggestion was that in Switzerland, at any rate, workers have no more rights to inventions made in their employer's time than they now have in this country. I have no doubt that that was a slip in the noble and learned Lord's brief.
§ I turn now to the Amendment which I propose to Lord Rhodes's Amendment. I must say that I am grateful to the noble Lord for the Amendment he has proposed. I think it meets largely what my noble friend and I had in our minds. But this point, which I think is important, is, of course, the same point as was in 1036 our former Amendment. It is this—I take a simple case. An employee goes away from his factory and patents an invention which he made during his time in the factory. He may spend quite a lot of money on it. If the employer says, "I want a share of it. I will take you to the Comptroller or the court", and he takes the employee to the Comptroller, or to the court, on appeal, it may be that the tribunal will say to the employee, "What you did was quite unjustified. We are not going to take any account of the money you spent on taking out the patent". I must admit that this works the other way, in favour of the employer.
§ My noble friend and I think that this is a point which might be overlooked. Though, in the eyes of certain tribunals the interests of justice may suggest that this should not to be taken into account, I think that it ought to be taken into account. I therefore beg to move this Amendment.
§ Amendment to Amendment moved—
Line 13, at end insert—
("(d)to any expenditure in connection with registration, maintenance or enforcement of any patent for the invention and corresponding patents in other countries."—(Lord Cawley.)
§ 3.22 p.m.
§ THE LORD CHANCELLOR (LORD GARDINER)
My Lords, my noble friend Lord Rhodes will be replying to the Amendment to the Amendment. May I just say a word on the remarks which the noble Lord, Lord Cawley, has made about some observations of mine on the Committee stage? There were two points. I will accept what the noble Lord, Lord Cawley, says about what he said before the Committee and on the reason why he did not take up a particular point. It appears from Appendix II of the Swan Committee's Report—this was a very experienced Committee—that they heard representatives of the Admiralty, the Post Office, the Ministry of Supply, the British Federation of Master Printers, the Chartered Institute of Patent Agents, the Council of Industrial Design, the Federation of British Industries, the Institute of Patentees, the Joint Chemical Committee on Patents, the Law Society, the National Federation of Professional Workers, the Patent Office and other bodies concerned with patents, including two learned Judges of the High Court, and members 1037 of the Bar, one of whom was the noble Lord, Lord Cawley.
As the noble Lord will appreciate, the only point I was seeking to make was that it does not appear from the Report that any of those very experienced witnesses had raised any difficulties. No difficulty is suggested in the Report on enacting that the patent or invention, or the interest or benefit accruing there-from, should be apportioned between the parties as in the circumstances of the case may seem just. That was the point I was making. It did not appear from the Report that they had thought any difficulty would be contained in that.
The other point had arisen simply because, as your Lordships will remember, when the Bill was in Committee I was pointing out and stressing the very limited character of the Bill and in particular that it was not intended to reform the law on patents. I pointed out that if Parliament was considering the reforming of the law on patents, one would have paid attention to the fact that in most modern countries the law does provide for a court to be able to give something to an inventor of a profitable invention, nowithstanding any contract to the contrary between the parties. Among the countries whom I said had enacted such laws were Austria, Sweden, Norway, Denmark, Switzerland, Germany and Italy. I might, I think, have added Japan.
The noble Lord, Lord Cawley, is of the opinion that this is not so in Switzerland. I am sure that your Lordships' House will not want a long discussion between the noble Lord and me as to the position in Switzerland, but my translation of the Swiss code comes from a valuable study of the law on patents in all European countries. It is the Study of the Subcommittee on Patents, Trademarks and Copyrights of the well-known Committee of the Judiciary of the United States Senate. In dealing with the law of Switzerland it states that in Section 343 (there are really two subsections) first:Inventions which an employee makes in the course of his service activity, belong to the employer, if the inventive activity is within the duty of the employee, or, in any event, if the employee has reserved such a claim in the service contract.That deals with legal ownership. Then it goes on: 1038In the latter event the employee has a right to special compensation, in case the invention is of considerable economic importance.It then goes on, on page 125, to say that the words"considerable economic importance"have been judicially construed as meaning merely that it is substantial. The substantial economic importance of the invention is interpreted assomething which brings the employer a substantial advantage. This effect can be reached by 'positive'effects—such as making manufacture or sale possible, increasing markets or lowering costs",and so on. And then, as to whether each part of the section applies whether there is a contract to the contrary or not it says:Section 343, subsection 1, is considered to be a voluntary ('dispositiv') regulation which can be modified or superseded in advance by contract between the parties. The right of an employee to claim compensation pursuant to section 343, subsection 2 (for inventions of substantial economic importance) on the other hand, is considered to be compulsory law, not subject to abrogation by contract.The Swiss authorities relied on the argument at the foot of the page. It was in consequence of that authority that I included Switzerland as being among those modern industrial countries which do not share Lord Cawley's view, expressed on Second Reading, that it would be unusual if in English law an inventor of something which could be very profitable to his employer could be given something by the court, nothwithstanding whatever the contract between the parties may be.
§ LORD CAWLEY
My Lords, though I do not entirely accept the Lord Chancellor's interpretation of the law of Switzerland, I do not think that this is the forum in which we need to discuss it.
§ LORD DOUGLAS OF BARLOCH
My Lords, I should like to support the Amendment to the Amendment which has been moved by the noble Lord. Lord Cawley. As the Amendment stands, at the present moment it appears free of the emphasis upon the circumstances surrounding the making of the invention. Paragraph (a) refers:to the nature of the employment, and the remuneration and duties of the employeeParagraph (d)refers to advice, equipment and other assistance provided. Paragraph (e)refers to contribution in time 1039 or resources. All these things appear to be related to the making of the invention and not to the actual patenting of it.
It is, of course. quite expensive to take out a series of patents in order to obtain the protection of an invention in the principal industrial countries, and it may involve a very considerable expenditure if there happen to be disputes or litigation with regard to the matter. I therefore hope that my noble friend Lord Rhodes will find himself able to accept this Amendment, because unless, in fact, somebody, whether it be the employer or the employee, goes to the expenditure of patenting the production, there will be no benefit whatever.
§ LORD RHODES
My Lords, I readily followed the noble Lord, Lord Cawley, in his approval of what we have tried to do. I am afraid that I could not follow him as readily on his exceptions to the Swiss code. I do not think that I was alone in that. I could follow him in the Amendment to the Amendment. This Amendment seeks to add an additional paragraph to the Government Amendment setting out the criteria to be considered in determining what are "just" shares in the benefit of an invention. It proposes that specific regard should be had to expenditure in connection with the registration, maintenance or enforcement of any patent for the invention, whether a United Kingdom or foreign patent.
We have considered the matter very carefully, but we feel that this Amendment is unnecessary, and, indeed, might create difficulties. The Government Amendment already provides that regard is to be had to "any other relevant circumstances", in addition to those particularly mentioned. On the other hand, an express reference to expenditure might cause difficulties for a number of reasons.
First, it seems very difficult to correlate expenditure to the value of the "benefit": it would need a Solomon to do that. For example, an employer in proceedings before the Comptroller may show that he has spent£1,000 on patent matters connected with the invention. Unless one can guess what percentage of the benefit this sum represents, it seems very difficult to take it into account in 1040 determining the employer's share of the benefit. I think that that is logical. Secondly, if the Amendment is intended to cover future expenditure it seems quite impossible to ascertain how much this expenditure is likely to be. To take an example—and I could go on ad libidumwith instances of what could happen—a third party may start an action in connection with the patent some years later. Until the action is over, and costs have been awarded, no one can possibly tell how much this will cost the employer who holds the patent. Again, if we insert this consideration, the tribunal will find it impossible to know in whose favour it tells. If an employer spends large sums on protecting his invention this is evidence that he at least values it highly.
Finally, and most important, the rights created by the Bill are in the nature of rights under a trust. The normal rules about expenditure incurred in protecting the trust property will, therefore, apply. The general principle is that a trustee is entitled to recover expenditure in connection with the trust property as a first charge on the proceeds of the trust. The application of these rules will deal adequately with the point raised by the noble Lord, and in fact make for a fairer result than the insertion of this Amendment would. In the circumstances, I would ask the noble Lord whether he will be kind enough to withdraw his Amendment.
§ 3.33 p.m.
§ VISCOUNT DILHORNE
My Lords, I have listened with the greatest attention to the speech made by the noble Lord. He made some observations about not following what my noble friend said about the Swiss law and about the difficulty he had in understanding it. I am afraid that I am much in the same difficulty in following the noble Lord's answer. Though no doubt it satisfies the noble Lord, it certainly does not satisfy my noble friends on this side of the House. He seemed to think, in his concluding observation, that this Amendment seeks to add something to the matters which the court will have to take into consideration in determining what is just in making a division.
The noble Lord began his reply by drawing attention to the words in his Amendment "as well as to any other rele- 1041 vant circumstances". I thought then that he was going to say that the circumstances referred to in the Amendment to the Amendment would be covered by that. I think the noble Lord should be clear and specific on this and say whether or not, in his view the matters dealt with in the Amendment to the Amendment will come within the term "any other relevant circumstances". If they do, there is something to be said for spelling them out and not just leaving them vague. If they do not, it seems to me to be an important principle, and I can see no reason why the noble Lord should have thought fit to refer to the words "any other relevant circumstances". The arguments which he advanced seemed to me to be wholly irrelevant to the matter. What we are considering here is what guidance should be given to the tribunal in considering what is just, not the correlating of expenditure and benefit or any future claim of compensation against the patent holder.
Surely one of the matters to be taken into account will be the contribution the employer has made. It may be large or small, but it will be for the court to determine what weight should be attached to it. But surely it is a relevant circumstance that the tribunal should have regard to the part the employer has had in relation to the invention, or to the fact that he may have played no part in these respects at all. I venture to think that it is very desirable that this Amendment to the Amendment should be added to clarify and help the court in the discharge of its functions. With the greatest respect, I think that the noble Lord's reply was most unsatisfactory. I hope that he will give further consideration to this matter and, if he cannot accept the Amendment to the Amendment, perhaps give us a more cogent reason for not doing so.
§ LORD DOUGLAS OF BARLOCH
My Lords, I have no right to speak again but, if I may have the leave of the House, I should like to ask my noble friend one question. He has said that under this provision the benefit apportioned between the employer and employee will be treated as a trust and, therefore, any expenses in connection with it will be borne by the parties respectively. But is it not the case that that takes effect only after the patent has 1042 been granted, and would not apply to the expenses which have been incurred in obtaining the patent?
§ LORD CONESFORD
My Lords, I do not wish to intervene on the question whether this paragraph should or should not be added, because I have not studied it deeply enough. But as one who took part in the discussion on Committee stage, and urged that an addition should be made to the Bill, I should like to join other noble Lords in welcoming all the paragraphs of the Government's Amendment, which improves the Bill very much in the way that I ventured to advocate on the last occasion.
§ LORD RHODES
My Lords, I will do with pleasure what I am requested by the noble and learned Viscount to do. The noble and learned Viscount has lately done his homework on this matter.
§ LORD RHODES
My Lords, I take that. The House knows that the noble and learned Viscount's knowledge of the law is far greater than mine. I realise that in talking on this Bill at all, I am disputing in large measure with my betters.
§ LORD RHODES
My Lords, I thank the noble and learned Viscount for his assurance. I must say to him, as I said to another noble Lord, that I was not at all abashed by the remarks that had been made, because I find that when you get to the fine edge and finality of the legal point, there is nothing in it: it is just a matter of words, words, words. When I say that I am unable to go on for a long time in explanation of a moot point, I never did go in for explanations of moot points; I never in my life had any time to do that. There is one here, and I am not starting now.
What I am saying to the noble Lord is this. When I said, as I did, that the Government Amendment already provides that regard is to be had to any other relevant circumstances in addition to those particularly mentioned, we are specific in saying that any other relevant circumstances give the answer to his doubts.
§ VISCOUNT DILHORNE
My Lords, I will put the question specifically to the noble Lord, because I must say that I find difficulty in seeing what he means by what he has said. Does he mean that the matters referred to in the Amendment to the Amendment are relevant circumstances to be taken into account?
§ LORD RHODES
No; I did not mean that at all. I said that the circumstances referred to in the Amendment to the Amendment, and any consideration which might be attached to them, are already provided for by the words "any other relevant circumstances". Is the noble and learned Viscount satisfied now?
§ VISCOUNT DILHORNE
My Lords, as I have been asked that question, I must say that I am not in the least satisfied. The noble Lord is adding confusion to confusion. He says that words do not matter. But words do matter when you are putting them into a Statute. I would ask the noble Lord, quite seriously, to give further consideration to this. Otherwise, the line he is taking in regard to it may cause us to take a course which we do not want to take in order to keep the matter open. It is not satisfactory to be so vague about this. If these matters in connection with registration of a patent, maintenance or reinforcement of any patent of the invention, and corresponding patents in other countries, are relevant matters to be taken into consideration, there is no harm in saying so.
It is because the noble Lord has placed such stress each time he has spoken on the words in the Amendments "any other relevant circumstances" that I think the House is entitled to have from him clarity in the answer to whether or not he and the Government regard the circumstances mentioned in the Amendment to the Amendment as relevant to the determination of the Tribunal. I should have thought, quite frankly, that they were. What weight should be given to them would be a matter for the Tribunal. The fact that the employer had done nothing would be a relevant circumstance. The fact that the employer had done a great deal might also be a relevant circumstance. While I do not in any way profess to be a patents lawyer, I do gain confidence from the fact that in this matter one has the valuable support of 1044 the noble Lord, Lord Douglas of Bar-loch.
§ LORD MORTON OF HENRYTON
My Lords, if it is not out of order for me to speak now, I should like to say a few words. I was the Patent Appeal Tribunal for some years, and I think I am the only Member of this House who has ever held that office. I must say that I think it would assist the Tribunal if the words which are suggested by the Amendment to the Amendment were inserted. Otherwise, one might be left in doubt as to what are considered to be relevant circumstances. If that is intended to be a relevant circumstance, then I should have thought it would be helpful to the Tribunal, and it would be better to have it in the Bill.
§ LORD CAWLEY
My Lords, I think the point here is that some tribunals might not think that this was a relevant circumstance. I do not think it is obvious that expenditure on these legal matters, let us say, by the employee, would necessarily be a relevant circumstance. We put down this Amendment to make certain that this point, at any rate, is stressed. But, subject to what my noble friend Lord Drumalbyn has said—and I hope the noble Lord will bear the matter in mind before this Bill goes to another place—I should be prepared to withdraw the Amendment to the Amendment.
§ LORD DRUMALBYN
My Lords, the noble Lord, Lord Rhodes, has been pressed on all sides in this matter. The noble Lord, Lord Douglas of Barloch, has put the argument that this is a circumstance which is different in character from all the other circumstances that have already been mentioned. I should have thought that, for this reason alone, it was desirable that the difference should be emphasised by giving it special mention. I did not detect in what the noble Lord had to say any case against putting this down. I did not detect any reason why it would be in any way embarrassing or misleading, whether in emphasis or in any other way, to have it down. Now that this has had the very distinguished support it has from the noble and learned Lord, Lord Morton of Henryton, I think the noble Lord, Lord Rhodes, ought to consider this again.
1045 As my noble and learned friend Lord Dilhorne has said, we do not want to press this, but unless the noble Lord can be rather more forthcoming in his attitude, and give more satisfaction, I feel that we have no option but to press it to a Division in order to keep the matter open. As I have said, we do not want to do this. All we are asking the noble Lord to do is to give this matter further consideration between now and the next stage of the Bill. I think this is the least he can do, and I hope he will agree to do it.
§ Amendment to the Amendment, by leave, withdrawn.
§ On Question, Amendment agreed to.
§ 3.48 p.m.
LORD CAWLEYmoved to add to the clause:
() Effect may be given to the foregoing subsections of this section by directing that the benefit of the invention and of any patent therefor shall belong to the employer and the employee in specified shares, or by apportioning the interest in or benefit derivable from the said invention and of any patent therefor in any other way that the court or comptroller may deem appropriate in the circumstances of the case, and in determining the apportionment effect shall be given to any preference agreed between the parties.
§ The noble Lord said: My Lords, this Amendment is really in two parts. I think the noble Lord, Lord Rhodes, has dealt with the final sentence, which is not really essential to the Amendment, and I will deal with the first part. To give an example of what this Amendment is aimed at, there was a case in 1949 called Barnet Instruments Limited v. Overton. Overton was a worker in Barnet Instruments, and he had taken out a patent jointly with the company. A dispute arose between the two and it was taken to court. Overton was a foreman, and he had invented a chuck or a buffing machine. 'The buffing machine was for polishing the outside of pressure gauges. It had nothing to do with the trade which his employers carried on, except that they used the machine to polish pressure 1046 gauges. They were not manufacturers of buffing machines.
§ It appears from this case that if it could have been done with justice the position would have been satisfactory if the employers had received a free licence to use the invention in their factory, and Overton could have had all the other rights, including if possible, selling the rights to a manufacturer of buffing machines. This is what in America they call "shop rights". I think it is important that these rights should be included in the Bill. For this reason, I think there appears little doubt that Barnet Instruments were a dog-in-the-manger concern. They were determined to get that invention, and they had no intention of exploiting it outside their own factory. I think this occurs. You may think that employers are not like that, but such employers do exist, and this Amendment is designed to deal with that situation. It may be just, not to divide the benefits of the patent, but to divide the patent into fields: to give the employee a right over one field, and the employer a right over another field. That is the point of the first part of this Amendment.
The second point has been dealt with, and I have no doubt that my noble friend Lord Drumalbyn would be willing to withdraw the latter part of the Amendment, the words:
… and in determining the apportionment effect shall be given to any preference agreed between the parties".
I beg to move.
Page 1, line 21, at end insert the said subsection—(Lord Cawley.)
§ LORD RHODES
My Lords, this Amendment has certain features in common with that moved by the noble and learned Lord, Lord Wilberforce, on May 11. The Amendment of the noble and learned Lord sought to provide that effect could be given to the Bill not only by apportioning the benefit of an invention, but by awarding lump-sum payments or royalties or exclusive licences. The noble and learned Lord the Lord Chancellor, in reply, pointed out that this went beyond the intention of the Bill and might cause difficulties. The present Amendment deals only with apportionment. May I draw attention to the fact that the noble and learned Lord, in the debate 1047 on the Amendment, said that, in so far as it provided that the benefit of an invention should belong to the employer and the employee in specified shares, the Amendment was unnecessary. I can only repeat this remark in so far as the first seven lines of the Amendment are concerned. We do not think they add anything to the Bill. They merely state what is inherent in it, and, if I may say so, fairly obviously inherent in it.
As to the final words of the Amendment, we feel that any civil court normally gives effect to any agreed preference to the parties to a dispute. It seems to me that there is little point in making particular references to this in the present Bill, and I hope that, in the light of what I have had to say, the noble Lord will withdraw his Amendment.
§ LORD DRUMALBYN
My Lords, if I might venture to add to what my noble friend has said, this Amendment is undoubtedly based upon the Amendment of the noble and learned Lord, Lord Wilberforce. As the noble Lord has said, paragraphs (b) and (c) of that Amendment specified some of the other ways in which the noble and learned Lord thought the benefit in the invention or the patent might be divided. In this Amendment what has been done is, first of all, to reproduce paragraph (a) (which, as the Lord Chancellor said, simply provides for the division into shares of the benefit) and to add to that a further section which says, in effect, that if the court feels that it would be just to apportion the benefit and the interest in the invention of the patent in any other way, then it should be empowered to do so.
Supposing that the owner of the patent does not choose to exploit the patent himself, but is willing to allow the other party to do so, on terms agreed between the parties, would the court overrule such an agreement? In view of the Amendment just accepted, presumably not, as it would be an agreement expressly providing for the allocation of the benefit. If that is so, why should the court not have power itself to allocate the benefit in similar terms? If this is an appropriate way for benefit to be apportioned by agreement, why should it not be an appropriate way for the court to apportion benefit? Why 1048 should the court be confined only to allocating shares of the proceeds of exploiting the patent?
Again, if the court is not to override an express agreement, made before the proceedings, under which the patent is to belong exclusively to one party, subject to the payment of a royalty or a lump sum, or of periodic amounts to the other, as the Amendment of the noble and learned Lord, Lord Wilberforce, provided, why should the court not have power to give its consent to such an agreement arrived at after proceedings have been begun, or in the course of them? Or why should it not have power, even if no such preference of the parties were expressed, to allocate the benefit in that way if it considered that in all the circumstances that was just?
The noble and learned Lord the Lord Chancellor said in column 49 of Hansard, May 11, 1965, that in many modern countries the law provides that as a matter of common interest the inventor must get something. Was that not what the Swan Committee had in mind when they recommended that the court should have power toapportion the interest in or benefit derivable from the invention or patent between the parties in such manner as it may deem just"?I do not know whether there is any significance in the fact that the present Bill drops the words "in such manner" Why should the Bill, if it is really to give effect to the purpose of Section 56(2) of the 1949 Act, confine the court to only one manner in which it may apportion the interest in or benefit from the patent, no matter what may best suit the parties themselves? Admittedly, the words "in such manner" would not fit in to subsection (1) as it has been redrafted. But in the redrafting, has not an essential element in Section 56(2) been omitted—an omission which this Amendment seeks to repair? No doubt the subsection has been redrafted to get rid of the concept of apportionment, the meaning of which was called in question in the Patchettcase. But it would be a pity if, having got rid of that word, the ghost of the word were still to stalk through the Bill in its more restrictive sense, in spite of subsection (4) as it is now drafted.
1049 It seems to me that it would be worth while for the noble Lord to consider again this point as to whether there is any other way, as the Amendment says, in which the benefit may be divided, other than in shares. This is not exactly and precisely laid down in the Bill. It does not seem to be a concept which can be derived from what the Swan Committee said. It seems to me that there may well be occasions on which there are other ways in which it would be just to divide the benefit. I fail to see why the noble Lord does not take this point. What the Amendment does is to leave it open to the court, if it thinks there are other ways in which it would be possible to divide the benefit, so to do.
§ LORD RHODES
My Lords, may I say again that in so far as it is provided that the benefit of an invention should belong to the employer and the employee in specified shares, the Amendment is unnecessary, so I am advised, and I can only repeat this remark so far as the first seven lines of the Amendment are concerned. We do not think they add anything to the Bill; they merely state what is inherent in it. I am afraid I cannot accept the Amendment.
§ VISCOUNT DILHORNE
My Lords, I agree that this is a technical point, but, none the less, it may be important. The noble Lord, Lord Wilberforce, is a considerable authority upon these matters, and while it may be true that the first 3½ lines of the Amendment are already provided for, I must say I am a little surprised to hear it said that the next three or four lines are also already provided for. As I understand it, if I have followed the argument correctly and in particular the speech made by the noble and learned Lord, the Lord Chancellor, it is clear that under the Bill the court can direct the benefit of the invention and any patent therefor to be apportioned in specified shares, but I cannot see what objection there is to widening this slightly by including the next wordsor by apportioning the interest in or benefit derivable from the said invention and of any patent therefor in any other way that the court or comptroller may deem appropriate in the circumstances of the case.It may be there is no other way which is appropriate, and then these words will not have any effect; but if there is another 1050 way, then the omission of these words from the Bill would be important.
I know we are pressing the noble Lord rather hard this afternoon, but I would ask him to look at this matter again. I cannot see how the inclusion of these words to the middle of the Amendment can do any harm at all. Indeed, I think they might do considerable good. I am strengthened in my belief that these words will be an improvement to the Bill by the views expressed by the noble Lord, Lord Wilberforce, and I would ask the noble Lord to say that he will reconsider this matter with his advisers.
§ LORD CAWLEY
My Lords, if the spirit of this Amendment, may I say—because I am not certain whether it is in the correct form—is not accepted, then any person in the unfortunate position of Mr. Overton would in effect get nothing at all. He would have a dog-in-the-manger employer sitting on the invention, merely working it in his own factory, and the share of the invention, when that invention is a small part of a machine in his own factory, would be infinitesimal. In all probability the inventor would not work the invention outside his own factory. If Mr. Overton had been given the rights outside the factory, then at any rate he would have had the opportunity to exploit the invention. He might have made nothing, of course; but good luck to him! If, as I believe, the Bill in its present form allows only for a numerical division of the invention, that would not be allowed. Possibly the noble Lord could tell me whether in the present Bill the question of shop rights—that is to say, dividing the rights up, not on a purely fractional basis—is envisaged or whether it is outside the Bill. I think it is outside the Bill, and the point of this Amendment is to put it within the Bill: that is to say, that the rights need not be divided merely on a fractional basis.
The Amendment may not be in a proper form, but what I have indicated is in fact what we are trying to do. I would ask the noble Lord to consider this matter because it is important, and particularly with reference to what happened in the United States of America when dealing with employees' inventions. If he would consider this matter before the next stage I should be most 1051 grateful. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.