PATENTS (EMPLOYEES' INVENTIONS) BILL [H.L.] (Hansard, 11 May 1965)

HL Deb 11 May 1965 vol 266 cc12-55 12

§ 2.58 p.m.

§ Order of the Day for the House to be put into Committee read.

§ Moved, That the House do now resolve itself into Committee.—(Lord Rhodes.)

§ On Question, Motion agreed to.

§ House in Committee accordingly.

§ [The LORD MERTHYR in the Chair.]

§ Clause 1:

§ Rights in inventions made by employees

§ 1.—(1) Where an invention is made by an employee in the course of his employment or in circumstances connected therewith, he and his employer shall each be entitled to so much, if any, of the benefit of the invention, and of any patent therefor, as may be just.

§ LORD WILBERFORCE moved, in subsection (1), after "made" to insert "whether solely or jointly with others". The noble and learned Lord said: This is the first of four modest Amendments which I have ventured to put down with a view to making this modest Bill, if I may so call it, slightly more effective, slightly more comprehensive and one which, so far as possible, is not susceptible to litigation in the courts. It was explained to your Lordships on the Second Reading of this Bill (and may I express my regret to the noble Lord that I was not able to be present on that occasion?) that one of its purposes was to adjust the situation which arose by reason of a decision of this House, in its Judicial capacity, given in 1955. It seemed to me that perhaps in some respects the Bill, as drafted, concentrated too narrowly on that particular decision without looking wider beyond it to see whether or not the policy which this Bill introduces, and its machinery, would be effective. It is only with a view to giving this Bill perhaps a slightly wider scope that I am proposing the Amendments in my name.

§ I need not take up your Lordships' time on Amendment No. 1: it is self-explanatory. It simply recognises the fact that in the present days of scientific sophistication the majority of inventions which are made in factories or in enterprises are 13 not the product of one man's bright idea but tend rather to be co-operative efforts in which one man may contribute an idea, another man may contribute research and another man may contribute money or facilities; or there may be several people in a large enterprise each of whom contributes one element or another to the making of a useful invention. It appeared to me that the Bill as drafted, referring as it does to inventions "made by" employees, might have the effect of depriving employees of a right to receive a benefit in cases where the employee was not the only person whose ideas had led to an invention being made, but was merely one among others. So I propose that this point should be clarified, by adding to the existing wording of Clause 1 the words "whether solely or jointly with others". I beg to move.

§ Amendment moved— Page 1, line 5, after ("made") insert ("whether solely or jointly with others").—(Lord Wilberforce.)

§ 3.0 p.m.

§ THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)
At the outset, may I thank noble Lords who have made contributions during the discussion to help clarify what we are intending to do. I think that the noble Lord's fears in this instance are groundless. The purpose of the Amendment is to make clear that the provisions of the Bill cover situations in which inventions are made by two or more employee inventors working together. Of course, it is the intention that such cases should be covered and this is implicit in the existing wording of the Bill, for the singular includes the plural by virtue of the Interpretation Act, 1889. The inclusion of a specific reference to one or more employees would create difficulties, we believe, in cases where there are two different employers. This might be thought to be a very unlikely case, but I understand that just such a case as this has been cited in a law review in recent years. We do not feel, therefore, that this is an Amendment which we can accept and I trust, with this explanation, that the noble Lord will withdraw it.

§ LORD CAWLEY
Has the noble Lord considered the case where the others are 14 not employees and the invention was made with the aid of outsiders?

§ LORD DRUMALBYN
May I also ask the noble Lord whether he has considered the scope of Section 56(1) of the 1949 Act and whether this may not have a bearing on interpretation? I am not learned in these matters and I do not suppose the noble Lord is, either, but there reference is made to an invention made by the employee either alone or jointly with other employees. I realise that it does not deal with exactly the same point, but it might be worth while considering this question between now and the next stage.

§ LORD SILKIN
The Interpretation Act, I agree, says that where the singular is used it includes the plural, and if that is applied in this case it means that where the term "employee" is used it covers employees. But I imagine that the intention of the Amendment is to go rather wider and include others who are not necessarily employees. Therefore, I should be glad if the noble Lord would be willing to consider whether in the circumstances these words are really necessary to cover cases where inventions are made not by employees alone but by employees and persons outside.

§ LORD RHODES
I think that is implicit, too, because the wording covers employers as well as employees.

§ LORD CONESFORD
With respect, I should like to reinforce what was said by the noble Lord, Lord Silkin. Surely, all the Interpretation Act does is to make "employee" mean, if necessary, "employees"; but some of the people concerned may not be employed by anybody. They may be persons working on their own account. For that reason, I should have thought that the point just put by the noble Lord, Lord Silkin, had substance.

§ LORD WILBERFORCE
I was just going to add to that that perhaps we should make this expression as comprehensive as possible. We do not want to deal only with cases where there are one or more employees involved, but also with cases, as the noble Lord, Lord Cawley, suggested, where there are other persons involved. The contribution or joint effort may be one between an 15 employee and his employer or between an employee and an outsider. Of course, if the noble Lord thinks that all these cases are covered, I should be happy to avoid adding words to the Bill, but perhaps he will give further reflection to the question whether all necessary cases are covered by reliance on the Interpretation Act, which, in my experience, is sometimes a dangerous short cut, and whether in these circumstances it might not be better to spell it out rather than trust to implication.

§ LORD RHODES
I promise to look at it again.

§ LORD WILBERFORCE
I am willing to withdraw my Amendment, if noble Lords are willing to allow me to do so, on the assumption that the noble Lord will give consideration to the points made elsewhere in the discussion.

§ Amendment, by leave, withdrawn.

§ LORD WILBERFORCE moved, after subsection (1), to insert: () In determining what is just, regard shall be had to the nature of the employment and the remuneration of the employee: the merit and value of the invention: the degree to which the employer has contributed to the making of the invention by the provision of facilities, guidance or advice and to all the circumstances of the case.

§ The noble and learned Lord said: This Amendment is of a somewhat more substantial character. It arises out of a desire, which was expressed by a number of noble Lords who spoke on the Second Reading of this Bill, that some further clarification should be given to the words "as may be just", which appear at the end of Clause 1(1). The feeling was then expressed that it would create difficulties if no guidance at all were given to the courts or tribunals dealing with this matter as to the considerations which they should have in mind. It is no doubt considerations of the same character which have prompted the noble Lords, Lord Drumalbyn and Lord Cawley, to put down an Amendment, No. 4, on the Marshalled List.

§ I appreciate, of course, that courts or tribunals can exercise their common sense in deciding as between an employer and employee, and that in a great many cases they will probably be able to apply the right criteria without having their hands 16 held for them by the Statute. Perhaps on that point I might raise an incidental question, which the noble Lord, Lord Rhodes, may be able to answer—that is, whether disputes between employer and employee as to the apportionment of benefits are to be dealt with by the Comptroller of Patents and on appeal from him by the court, as Section 56 of the Patents Act provides. Your Lordships will see in Clause 1(4) of this Bill that Section 56(2) of the Patents Act is repealed, but I, for my part, am not clear whether the new provision introduced by this Bill is to be carried into effect by the same machinery—that is, by the Comptroller of Patents and, on appeal from him, by the court—or whether something else is intended. I think it would be helpful to know what the position is as regards that.

§ However, assuming, as I hope I may assume, that the same machinery—that is, the Comptroller of Patents, in the first place—is to be applied, it may be said, in answer both to my Amendment No. 2 and to Amendment No. 4, that it is not necessary to give any specific guidance to that tribunal. In reply to that, I would make three points. The first is that this Bill is intended, as appears from the next subsection, to sweep away existing rules which have been developed by the court in relation to contracts of employment, and to substitute a new principle under which the benefit of inventions is to be divided in some way between employer and employee. I venture to suggest that when established principles are being substituted by a new principle, it is right that the basis of the new principle should be explained in the legislation.

§ The second point is this. It may be true that if a case comes before the Comptroller on a dispute between employer and employee, the Comptroller, being an expert, will know how to decide it and what considerations to apply. But one has to think of the stage before the dispute comes before the Comptroller.

§ One must think of an inventor who may be quite a modest man—an engineer, not equipped with legal knowledge—who has made some invention which he considers valuable, and is wondering whether it is possible for him to get something for it. He may go to a solicitor, who, again, may not be 17 a grand type of solicitor accustomed to patent legislation and may seek in the Patents Act for a solution to the question put to him. It seems to me that it would be most helpful at that stage of the matter for both the inventor and his solicitor to be given some sort of guidance as to the matters which the tribunal should have in mind in deciding whether he should be remunerated or not. Simply to be faced with the words "as may be just" is rather perplexing. I think that both the layman and the ordinary unspecialist solicitor would find it difficult to give advice as to whether or not he was likely to succeed. On the other hand, if he is given the guidance which my proposed Amendment suggests, or the still more detailed guidance which is to be suggested in Amendment No. 4, much greater certainty will be available to the inventor in deciding whether or not to bring forward a claim.

§ Thirdly, there is this point—an extension of the second one—that it is only a small minority of disputes or claims that ever reaches the stage of litigation; and that is how it should be. By far the great majority of claims are settled by correspondence or negotiation, and I am sure your Lordships would not wish to do anything to diminish the number of claims dealt with in that way. A claim, I would suggest, is much more likely to be disposed of by negotiation if the negotiating parties are given a formula, or an approximate formula, on which they both can appeal, and on the basis of which they can state their terms. So, for this reason, too, I would suggest that there is some advantage in giving some guidance to the persons concerned, to their solicitors and to negotiators as to the considerations which are to be borne in mind.

§ To come to the language of the Amendment which I suggest, your Lordships will see that it is fairly simple language in fairly general terms. It is, of course, less comprehensive and less technical than that in another Amendment, as to which I will say nothing at this point. All I want to say in relation to the language which I suggest is this. It is related to language already used in other parts of the Patents Act, 1949. In particular, in Section 23(4) you will find words which approximate quite 18 closely to the wording which I have suggested: the merit and value of the invention". In case it is suggested that something may be missed out, I have added a catch-all expression at the end, "to all the circumstances of the case". I would venture to suggest that this Amendment is useful. It does not tie the hands of the court; it is likely to be helpful to the parties; and I should like to place it before your Lordships for consideration.

§ Amendment moved— Page 1, line 9, at end insert the said subsection.—(Lord Wilberforce.)

§ LORD DRUMALBYN
May I ask whether the noble Lord, Lord Wilberforce, and the Committee would agree to consider the Amendment in the name of my noble friend Lord Cawley and myself at the same time as this Amendment, because it might be convenient?

§ LORD WILBERFORCE
Certainly.

§ LORD DRUMALBYN
In that case, I think it will be for the convenience of the Committee if my noble friend Lord Cawley, whose technical knowledge on this is very great, addresses your Lordships.

§ 3.17 p.m.

§ LORD CAWLEY had given Notice of his intention to move, after subsection (2), to insert: () In determining the respective rights of the employer and employee in inventions made by employees, the competent Court or tribunal shall have regard to the following considerations—

(a) the legitimate interest of the employer in the peaceful enjoyment of the fruits of his enterprise;
(b) the legitimate interest of those who work in enterprises to receive encouragement in the exercise of inventive faculties;
(c) the terms and scope of the employment including the wage or salary of the employee;
(d) the scope of the employer's business;
(e) the nature and customs of the industry in which the employee is engaged;
(f) the nature and extent of the assistance by way of guidance, skill, investment or otherwise received by the employee from the enterprise in which he is employed;
(g) the rights and obligations of the party owning the legal title to any such invention or patent as regards the prosecution or defence of any application or proceeding in 19 relation thereto, or in relation to the maintenance or enforcement of such patent or corresponding patents in other countries;
(h) the preference of the parties for the manner in which their respective rights shall be determined;
(i) any other relevant circumstances.

§ The noble Lord said: On the Second Reading of the Bill I said that this Bill, as it stood, made allowance for palm-tree justice. Unfortunately, this was put down in Hansard as "Parliamentary justice". In my submission, that is so. It is no good telling the tribunal to be just, unless you tell them what to do. The noble Lord, Lord Wilberforce, said that the Comptroller is used to this sort of thing. But the Comptroller is represented by four assistant Comptrollers who are very hardworking, clever, technical men. However, they know practically nothing about disputes between parties as to inventions, or as to anything else. In Section 56(1) it is provided that if the Comptroller thinks these matters are better heard by the court, he may refuse to hear the application. So I think we have to take that into account. If the Comptroller is going to hear the applications at all, he must be given some guidance. For it is as though a complete layman were faced with a serious decision to make as to the rights of the parties. I do not think that is fair. Therefore, my noble friend Lord Drumalbyn and I decided to put down an Amendment to give some idea of what we think ought to be put into the Bill to guide the tribunal, whether it be the court or the Comptroller, bearing in mind, of course, what Lord Reid said in this House in the Patchett v. Sterling Engineering Co., Ltd. case, when he expressed surprise that there should be no considerations in the old Act which the court might take into account.

§ It happens that this year there is an International Congress in Tokyo of the International Association for the Protection of Industrial Property, which contains experts on industrial property, which includes patents, from all over the world. The Executive Committee in Salzburg last year set down an agenda in which the first few of these considerations set out in Amendment No. 4 were discussed. I just put them forward as a suggestion to the Government

§ There is, your Lordships may think, one rather curious ground, which is ground (h), and that is, the preference of the parties for the manner in which their respective rights shall be determined". We have found in the past that certain judges—not all by any means—given their head, decide a case in a manner which they think is just, but which neither of the parties think is just. In one case that I have in mind a decision was, luckily, overruled by the Court of Appeal; but if both parties say that the judge shall take into account various considerations then, in my submission, the judge should take into account those considerations, and should not run away on his own. That is one of the dangers we run if we say that the judge shall decide these matters in a way he shall think just: because it may not be the way which the parties think just.

§ We, for our Dart, certainly do not think that this Amendment is in a form which can be accepted by the Government, because the draftsman will undoubtedly go through it and put it in the right form. With the greatest respect to the noble and learned Lord, Lord Wilberforce, I doubt whether his Amendment could be accepted in the present form. He includes in his Amendment the words "to which the employer has contributed." I would suggest, following his first Amendment, that the words, "the employer or other persons have contributed" ought to be put in that Amendment. Apart from that I ask the Government to consider whether at the next stage they can put in some grounds for consideration by the court or by the Comptroller.

§ LORD BROWN
I would seek to persuade the noble Lord, Lord Rhodes, to accept the Amendment standing in the name of the noble Lords, Lord Drumalbyn and Lord Cawley, rather than that standing in the name of the noble Lord, Lord Wilberforce, for a particular reason. I find myself in favour of the giving of guidance, but there is a matter that has not yet been discussed anent this Bill; that is, that it is frequently almost impossible to put a value on an invention until a considerable time has elapsed to see whether it is exploited in the market. I well 21 remember the so-called "Michelle bearing", which was so valuable, particularly to marine engineering. I will not describe the invention, for it would not be of interest; but it is used by all large ships to-day. I think that a period of nine years elapsed between the granting of the patent and the first use of that invention. One can imagine what would have happened if the court had attempted to value it in the first year. Indeed, the real value of an invention is constituted not only in the mechanical genius that lies behind the idea, but also in the degree of zeal with which it is exploited in the market. This is a very commonplace occurrence to-day in regard to a high proportion of patents.
I have made these remarks because the Amendment moved by the noble Lord, Lord Wilberforce, does not embrace, in the ambit of its guidance to the court, any reference to this particular problem—indeed, it is difficult to include it in an Amendment. The alternative Amendment put down by the noble Lords, Lord Drumalbyn and Lord Cawley, goes some way to embracing this type of problem, which is a very grave one, in respect of the valuation of inventions, and for that reason I would again press the noble Lord, Lord Rhodes, to consider the second Amendment, rather than the first.

§ VISCOUNT SIMONDS
May I add a few words on a rather broader aspect of this Amendment? Your Lordships will observe that the Bill puts upon the court the duty of determining what is just. In order to do that, it abrogates the existing rule of law. I think what I am saying only reinforces what my noble and learned friend Lord Wilberforce has already said. But your Lordships will observe that, the rule of law having been abrogated (that is done by subsection (2)), the court has to find what is just. Here is a fundamental misconception. The duty of Her Majesty's Judges is not merely to administer justice, but to administer justice according to law. Those of us who have taken the judicial Oath will remember it; it for ever rings in our ears. It is to "do right to all manner of men according to the laws and usages of this Realm, without fear or favour, affection or ill-will"—and that is what Her Majesty's Judges try to do. But that involves that there are laws, that there are usages of this Realm, which they are to 22 apply in administering justice. Here in this Bill there is nothing whatever to guide Her Majesty's Judges in what they are to do.
What follows from this? As my noble and learned friend has said, absolute uncertainty. I have always held that one of the most important things in the administration of our law is certainty. It is difficult to obtain, but it was that conception that guided the noble and learned Lord who sits on the Woolsack in bringing forward his Law Commissions Bill—to make the law certain that all men understand it. Here is absolute uncertainty, unless there is some guidance given up to the last point that Her Majesty's Government think it can be given. I do not know what view the noble Lord, Lord Rhodes, is going to take about this matter, but I beg him to consider that guidance should be given, so far as possible; for otherwise what happens?—there is uncertainty. One Judge thinks this just; another thinks that just. Your Lordships will remember how infinitely varied and intricate are the considerations which may well move any tribunal in determining what is just, what is common sense. The relationships between employer and employee are infinitely varied and the circumstances are as numerous as one might think.
Therefore, I say that the utmost guidance should be given, and it was in my mind to suggest to the noble and learned Lord who sits on the Woolsack, and to the noble Lord, Lord Rhodes, that this is eminently a case which might be referred to the Lord Chancellor's child, the Law Commission. Because, to my mind, although we are greatly indebted both to the noble and learned Lord, Lord Wilberforce, and the noble Lords, Lord Cawley and Lord Drumalbyn, for the proposals they have made, I do not think they would say—and I certainly am not prepared to say—that these are the last words in the guidance that might be given to the court.
Even at this hour, I would suggest to the noble Lord, Lord Rhodes, that this Bill should be withdrawn; that thought should be given to it. I would say that the Bill might well be given to the Law Commissioners as their first trial, to see what they can make of it, because it is by no means as simple as 23 appears to be thought; and if the Law Commission cannot do it, my child, the Law Reform Committee, will no doubt be willing to undertake it. I cannot expect an immediate answer, but I beg the Government, as a matter of principle, to give the utmost guidance to the court, which has nothing to guide it except its own sense of justice. And, as I have said, that is not good enough, for the court administers justice "according to the laws and usages of this realm."

§ 3.29 p.m.

§ LORD DOUGLAS OF BARLOCH
I have not spoken on this Bill before, and therefore I suppose I should preface what I have to say by mentioning that from time to time I practise in the Patents Office and in the Patents Appeal Tribunal. I want to support the clarification of this Bill by Amendments such as have been put down by noble Lords. It may be that to a certain extent they are capable of being faulted, but I am convinced that it is essential, in the interests of justice and economy, that some guidance should be given. If there is any dispute between an employee and his employer, this question will, I suppose—I am not absolutely clear and I hope the noble Lord in charge of the Bill will make it clear—come in the first place before the Comptroller of the Patents Office or one of his deputies. These gentlemen are very able in their own field and they know a very great deal about the technique relating to patents; but this is a question which is entirely outside the scope of inventions as such.
The question which has to be determined here is not the kind of question which the Comptroller or his deputies are accustomed to answer—namely, whether there is or is not an invention, whether an invention that is claimed has been anticipated by some other known invention. These questions are all within their ordinary scope and experience. But when they are asked to determine the kind of question which this Bill raises they are asked to determine a question of legal right in the invention, and that is a question which involves a very great many considerations such as are mentioned in the Amendments of the noble Lord, Lord Wilberforce, and the noble Lords, Lord Drumalbyn and Lord Cawley.
24 If no guidance whatsoever is given to the officers of the Patents Office or to the Patents Appeal Tribunal, which is the first avenue of appeal from the decisions made by or on behalf of the Comptroller of the Patents Office, what is going to happen? We shall in due course have a whole series of decisions in which questions such as those raised in the Amendments are discussed, and the courts will gradually spell out a code of conduct to be observed in the future, and will in that way create the law and solve the vexed question which is raised in this Bill of what is just. Is it really desirable that a long element of uncertainty with regard to this problem should arise until this has been threshed out by the courts, possibly ultimately, as happened in the case which occasioned this Bill, even by an appeal to your Lordships' House in its judicial capacity? It is really very undesirable that that kind of thing should take place if it can possibly be avoided.
I know, of course, conversely that it can be said that if you specify a large number of considerations which are to be applied in determining this question you can possibly start off a series of appeals with regard to the interpretation of those. But, with all respect, I think that that is the lesser evil and that it would be very much better that some amendment should be made to the Bill upon the lines which are indicated in either of these Amendments.

§ 3.34 p.m.

§ LORD STRANGE
I have been asked to give the inventors point of view on this Bill, which is rather a different angle from any that I think will have been taken in this House. I have to confess to your Lordships that I myself am an inventor. I have been a hobby inventor since childhood. My family have not been able to cure me, and now in old age I think it is incurable. As your Lordships will appreciate, inventors have a very different way of approaching a subject, and the main point of difference is that they have a different interpretation of the word "invention" and of the word "inventor" from the legal interpretation. They do not look at it all in the same way. I should perhaps mention, as your Lordships probably know, that this word has been used, and over-used, for a very long time. I 25 believe we borrowed it from the French in the year 1475 and it has been very overburdened and it bears all sorts of meanings; and I hope your Lordships will not think I am using some of the other meanings. I noticed that it is such a difficult word that the noble Lord, Lord Rhodes, when he was summing up this Bill had to mention it 35 times, because there are no shades of meaning. Therefore, you can understand that the inventor's view is different.
When it comes to expressing the inventor's view I come up against rather a difficulty as I have to confess to you that inventors are "cranks." They have a very different way of looking at life from anybody else's. I have to confess that, and I think I have to confess honestly that I also am a "crank". When I was asked to speak on this Bill to-day by the inventors I was very reluctant to do so because I knew I would have to confess that I am a "crank", and I knew also that it was going to be very difficult indeed to express briefly and coherently the inventor's point of view.
I think I had better say the worst first, and when you have got over that it may be a bit better for everybody. I am afraid that inventors find in all stages that they are bounded by the evolution system, and they do not really see any difference between the process by which a bird evolves and that by which a gramophone evolves. I think when you have got that rather difficult point, I can make it clear to you by illustrating it. I know my scientific education which I was taught as a child has been disproved since. I cling to the idea that the first bird was a lizard with off-beat wings which was found fossilised in a lithographic stone quarry in Bavaria.
In the case of the gramophone that would be the inventor or the first finder-out. That is a very important point with us. Leon Scott devised a method of recording sound on a moving cylinder in about the year 1875, and there had been nothing like it of any sort or kind before that; and we should look upon him as the inventor of what ultimately came to be the species of the gramophone. Like the evolution system it has gradually evolved. Thomas Edison adopted this idea. He added the bones of a sewing machine to it and he built up variety phonograph. I think Edison was twenty 26 years after Leon Scott. About ten years after that, Berliner came next. He took Scott's idea and put out the disc. There are tremendous disadvantages about a disc because the speed of the stylus changes as it goes over the diameter of the disc, but in the evolution system sometimes other factors change in favour, as a species survives, rather than the obvious faults. The good point about the disc was that it was very easily bred; the commercial firms could turn it out very much more quickly than the cylinder. And thus the disc gradually drove variety Edison out into offices, where it became the dictaphone, and the bird song of Mme. Patti changed to the "Dear Sir, unless …" of the office. Finally, wire and tape recorders drove it out into the polished mahogany and glass forests where it keeps company with the pterodactyl. That gives you a fairly straight pedigree, and I think if we asked the Lord Lyon King of Arms to give the tree of the gramophone he would take us straight back to Leon Scott through Berliner.
I told you it was a very difficult subject to explain. That, from the inventor's point of view, would be the first step. I might give you one other example. I might give the example of Lauste, who made sound in film, both variable density and variable area, and he made it many years before it came into use. I will give you one more example of a prime inventor. It was Goodyear, messing about with nothing much more than you get in the household medicine chest, who invented the creation, sulphur vulcanised latex, from which we suffer to-day, with all this traffic.
That is the first type of inventor, the first finder-out. But you get a second type. It is quite a fine division, and I do not think the law looks at it in this way at all. The second type has, as its best example, I think, Friese Green. At the end of the 1890s all the inventors were running about with bits of material in their mouths trying to make a nest and make the cinematograph. There was quite another material available. There was Fox Talbot's photography; there was celluloid; there was, of course, the magic lantern, and there was the flicker book, which by this time had started to revolve on its own and had become variety "What the Butler saw", and now 27 it has its marine locations. Friese Green got all this together, he added something to it, and he made variety cinematograph, which goes in a straight line to the cinematograph of to-day.
These people of whom I have been talking were people like myself; they were hobby inventors. They were men torn away from their lathes and sheds to attend to their businesses, men walking about with various dangerous chemicals in their pockets waiting for the chance for their wives to go out so that they could make the kitchen into a laboratory.
I should like to give your Lordships an example of the third type of person on the list, whom I should describe as an employee inventor. This was an old friend of mine called Peter Hartford, who joined the Navy in 1898, and when on the China station, in command of a destroyer, he invented a shackle. The Admiralty shackles were causing a lot of trouble in those days and were most inefficient. They took a lot of time to harness up in calm weather, and in rough water many men had to see the surgeon because they had broken fingers, torn off nails, and so on. Sometimes the shackles came undone from the ship which became unmoored. Peter spent a long time inventing this shackle. He made mock-ups and try-outs. It took a whole winter. Finally, he succeeded, and he tried out the ships in his flotilla. In those days there were five or six of these on the China station, and they found it a great success. He sent it to the Admiralty, and the Admiralty answered the little application that he put at the end. He put at the end a request that he might get a royalty on this shackle. I do not know exactly what the Admiralty said, but I know that he did not try to invent anything more for the Navy.
I think I have made my point fairly clear. If I may perhaps mention Hartford's shackle, I do not know what the exact position is to-day, but the position last night was that the Hartford shackle is used in special duty on ships with hawsers of the diameter 1⅞ in. or below. If my information is correct, it looks as if it evolved and lasted without being thrown out by any other species for over half a century, which is remarkable for any invention.
I come to the point. From the inventors' point of view there are three types 28 of inventor. First, there is the Leon Scott type of inventor. The second type of inventor is the one I would describe as Friese Green, and there is the third type of inventor whom I should describe as Peter Hartford. The inventors I have described got nothing out of their inventions. Leon Scott got nothing. Friese Green got nothing, and died in poverty. Lauste got nothing and died in poverty. Peter Hartford died in the Service and received no benefit. I put it this way entirely from the inventors' point of view, that I have mentioned a few people whose history I know. There must be a great number of people whose histories I do not know. I have to put it rather strongly; I perhaps have to put it too strongly. But I think I should say that there must be a lot of people who have had their brains robbed, and therefore I hope that these points will be considered when the Bill is finally rubbed into shape.

§ LORD MORTON OF HENRYTON
I had not intended to speak on this Amendment when I came into the Chamber, but perhaps I should say a few words from personal experience, because I think I am the only Member of your Lordships' House who has actually held the office of the Patents Appeal Tribunal. To that office I was appointed when I was a Judge of the Chancery Division of the High Court—and I may say that I was appalled by the prospect of having to deal with so difficult a matter. I would say that, if I had been called upon to-day to sit in that capacity, I would have thought it of the greatest assistance to have some indication of the criteria that I should have to take into account. Moreover, supposing I had no criteria at all supplied to me, I should, of course, have to resolve it from criteria of my own which I thought appropriate to the case; but it might well happen that other people, whether in the High Court, in the Court of Appeal or in the House of Lords, would take quite a different view—I might have started off on the wrong line. Accordingly, I think it would be of the greatest assistance to have some indication of what one ought to take into account in deciding this matter.

§ 3.46 p.m.

§ LORD CONESFORD
On Second Reading, I ventured to make the plea 29 that has now been made by so many noble and learned Lords, that some greater guidance should be given than is given in the Bill as it stands. What I wanted to say has been so much better said by the noble and learned Viscount, Lord Simonds, that I wish only to add this, to explain the point that is puzzling me a little. Both the noble and learned Lords, Lord Wilberforce and Lord Simonds, referred to the sweeping aside of the existing rules of law under subsection (2). In strict accuracy, I think the only rules of law that are there swept aside are those which would give either the one party or the other exclusive rights in the invention. Supposing there were any rule of law that was at all helpful in deciding what may be just under subsection (1), I think there is nothing in the Bill that would sweep that aside. Nevertheless, it seems to be extraordinarily difficult, for the reasons given by, I think, everybody who has spoken, to leave these words without any further amplification at all. I find myself greatly in agreement with my noble and learned friend Lord Simonds in hoping that this will be considered, perhaps by the Government with their own resources, or more probably by an expert body such as the noble and learned Lord mentioned.
The Amendment that has been put down by my noble friends Lord Drumalbyn and Lord Cawley seemed to me to suffer from this defect, that, if somebody had got to look at all these matters, it is doubtful precisely how much help they would give him in deciding what was just. My own view about the amplification that I should like is that we should have something on much simpler lines, such as has been suggested by the noble and learned Lord, Lord Wilberforce, in his Amendment. I once had the honour of serving in the same department and office as does the noble Lord, Lord Rhodes, and, like him, I am sure, I had the highest opinion of those who work in the Patents Office and all connected with it in the Board of Trade. I hope that they have given very careful consideration to the question whether it would be possible in any way to improve the words which stand in the Bill at present. When one considers the weight of criticism that has come from noble and learned Lords with great ex- 30 perience, not least the final advice given by my noble and learned friend Lord Morton of Henryton, it is impossible to say that the present words in the Bill are satisfactory. I very much hope, therefore, that the advice which has been given by noble and learned Lords will result in something being added to this clause.

§ LORD DRUMALBYN
I hope your Lordships will not think that in rising from the Front Bench to add a few words I am, as it were, painting the lily—if only because painting the lily leads one to think of Solomon in all his glory. One knows what Solomon, in all his glory, did when he was asked to decide what was just in the case of apportionment. I am sure that the noble Lord in charge of the Bill will be much impressed by the pressure from so many with expert knowledge in these matters, both in the courts and in regard to the devising and marketing of inventions. I am bound to say that I have not heard a single word expressed against the desirability of taking the word "just" and clothing it to give it some content.
There is obviously a difference of opinion as to how much guidance should be given. On the one hand, we have the very clear Amendment of the noble and learned Lord, Lord Wilberforce, which is quite clearly in the British tradition of law. On the other hand, there is the Amendment in the name of Lord Cawley and myself. Lord Cawley was able to find very nearly the terms as cast in a resolution before the Geneva Conference in 1964. It will not have escaped the attention of noble Lords that the actual words look as if originally they may have been written in French and at a later stage translated into English. It gives an idea of the kinds of considerations which are likely to arise in most of the cases that arise.
I agree with the noble Lord, Lord Conesford, that they will not need to be considered in every case, but it may be a good idea that in the early stages of administering the provision the court's attention should be drawn to these various considerations to make certain that they have been present to their minds. For example, Lord Wilberforce stressed three factors—factors "(c)" and "(f)" are in Lord Cawley's draft. Then he added the 31 factor of the merit and value of the invention itself. Having listened to Lord Strange, I wonder whether also the words "and originality" ought not to be added, in view of Clause 1.
The court could well be reminded that in dividing the benefits of ownership it has to think also of dividing the burdens, especially in view of the considerations put forward by the noble Lord, Lord Brown. The court would almost invariably have regard to the preference of the parties, and my noble friend Lord Cawley has referred to this point. Whether the Government decide that they should particularise those points to which they think the court's attention should be especially drawn, or whether they list the sort of points they think ought to be in the mind of the court to check against such questions as, "Have I considered this?", or "Have I considered that?", from the layman's point of view one or the other would commend itself. As the noble and learned Lord, Lord Wilberforce, said, the layman himself would then be able to see the kind of points on which he might concentrate in negotiations through his legal advisers. But both from the point of view of guidance and negotiations we feel that further guidance should be given to the courts. Whether this matter should be referred to the Law Commissioners or whether the Government are ready to come forward with some suggestions in this matter, we now wait to hear from the noble Lord, Lord Rhodes.

§ LORD SILKIN
I had not intended to say anything, but this has been such a one-sided debate that the impression might be created that there is not another side to the question. I should like to put the other point of view. I do not know what my noble friend is going to do about this. If I may respectfully say so, if he is wise he will take into consideration everything that has been said and come back on Report stage with the clause either as it stands or duly amended. What I hope he will not do is to take back the Bill and refer it to the Law Commission, the Bill in relation to which is not yet law as it has not received the Royal Assent. I hope he will not do that, because this is a matter about which Parliament is perfectly able to make up its mind.
32 The issue before us is whether we should leave it to the courts to decide what is just, or whether we should lay down certain criteria which they should take into consideration, and how much criteria we should in fact lay down. One Amendment says that there are three matters to which their attention should be drawn. Another says that there are seven. The term "just" is one which it is impossible to define. Judges with their vast experience of administering justice, can always be trusted to make up their minds as to what is just; they do not need very much guidance in that respect.
Lord Wilberforce referred to what an inventor might do if he had to get guidance on this matter—he would go to a solicitor. He might go to a solicitor who had no experience of inventions. He might, for instance, come to me; I have had no experience, or very little experience, of inventions. But if he were to come to a person like myself for guidance, that person would go into all the facts of the case. I imagine that I would consider every one of these criteria which have been set down on the Order Paper. In the light of all those, one would have to make up one's mind as to what was just. One would still have to make up one's mind as to how much weight one had to give to each of those different criteria. It is not sufficient merely to put before the judge a list of the things that he must take into account; he still has a great deal of discretion as to how much weight he should give to each of them. What I am trying to say is that, even if a person had little or no experience in matters of this kind, all these things would be taken into consideration. I cannot imagine that if a case were presented to the court the judge would not inevitably take them into consideration.
I think there is a great danger in putting before a court a large number of criteria. That is quite wrong, and it is overloading the court in asking them to take so many things into account. On the other hand, the limited number of matters which the noble and learned Lord, Lord Wilberforce, suggests should be taken into account in deciding what is justice are such that any judge looking at the matter and trying it would be bound to consider, and I can see no 33 purpose in incorporating them in a Statute.
Over and over again, judges have to consider what is just. Every day judges are awarding damages. They do not have a large list of criteria to take into account. They have to weigh the matter up as to what is justice between one individual and another, and they are fully experienced in doing it. In my own judgment, the task of deciding as to the allocation of the benefits as between an inventor and an employer would not be beyond the resources of judges who are dealing with this kind of thing every day. That is a point of view which, I am afraid, is quite different from those which have been given in the course of the discussion. But if my noble friend wishes to give further consideration to these suggestions of giving the court guidance, I should not object, although I could not agree to either of the Amendments that are at present on the Payer: the one because, with all respect, I think these are matters which any judge will be bound to take into account the moment a case comes before him; and the other, because they are so detailed, technical and complicated that I think we are in great danger of bewildering a judge.

§ 4.3 p.m.

§ LORD RHODES
This is a highly technical subject, but I must say straight away that, from what I have heard this afternoon, even though I am a layman, I am not a bit abashed because of the variety of opinions about what is just. If I were to read out all the references to what is just that I have been accumulating over the week-end, the Committee would be needing an evening meal, and I do not propose to do it. The noble and learned Lord, Lord Wilberforce, has introduced this Amendment. We are taking together the Amendment of Lord Wilberforce and the Amendment of the noble Lords, Lord Cawley and Lord Drumalbyn. We had an intervention from the noble Lord, Lord Strange, which I thought was very good indeed. I thought he put over very well the case for doing justice to those who may be unfortunate as a result of an invention. We have heard cases about employers owning an invention; we have heard cases about an employee who holds the title to an invention; and we are discussing the means whereby we can give 34 justice, a fair deal, to the people who share an invention where it needs to be apportioned. But I would remind the noble Lord, Lord Strange, that we have not heard yet the case of the legal gentleman who is also an inventor, and what happens to him, so I propose to relate one example.
On Thursday night last I was at the Speaker's Dinner, sitting next to His Excellency the Ambassador for Luxembourg. During the course of the conversation over dinner he said to me, "Do you realise, sir, what is the largest contribution that Great Britain made to happiness and to the present satisfactory condition of the economy in Luxembourg?" I said that I really did not know; I had not a clue. He said that it arose from the invention of a gentleman by the name of Sidney Gilchrist Thomas, who was a legal luminary in Kensington. He went to a lecture given by Mr. Bessemer, who said that if anyone could take the phosphorous content from iron ore, there was a fortune awaiting that particular person. So Mr. Thomas set about becoming a metallurgist as well as a lawyer. He mastered the mysteries of metallurgy and he also mastered the technicalities of ridding the iron ore of its phosphorus.
As in many cases in this country an inventor does not get the right sort of approbation and recognition, he went to Luxembourg, where he began to extract the phosphorus from the iron ore. But, unfortunately, the Germans had the idea that they would like this invention, too. So, the Ruhr being just over the border, they began to use this patent without any kind of acknowledgment. Mr. Thomas then learned German and learned German law. He fought a case in the German courts but, unfortunately, he lost it, and he was another of those inventive gentlemen who, as the noble Lord, Lord Strange, said, died in poverty.
There is some difference between these two Amendments, and if the Committee does not mind I shall deal partly with the Amendment of the noble and learned Lord, Lord Wilberforce, and will then come back to that tabled by the noble Lords, Lord Cawley and Lord Drumalbyn. The effect of the first Amendment is to lay down a number of considerations to be taken into account 35 by the tribunal before which a claim is made to some of the benefit of an invention. Claims will arise in cases in which the claimant is not himself the owner of the legal title to the invention. The Amendment seeks to give guidance to the tribunal in determining what is just within the meaning of subsection (1) of Clause 1.
It must be remembered that we are not ambitious with the alterations that we are making. The Bill has a limited object. All we are seeking to do is to restore the law to what we thought it to be before the Patchett decision in this House in 1955. In this respect, therefore, the Bill simply repeats what was in Section 56(2) of the 1949 Act, which it repeals; and, if I may say so, the noble Lord, Lord Conesford, in his comments gave an accurate answer to the points made by the noble and learned Viscount, Lord Simonds. In that subsection, as the noble and learned Viscount, Lord Dilhorne, pointed out in the Second Reading debate, the word "just" is used without any guidance being given to the tribunal in question on the considerations involved.
One of the considerations in Lord Wilberforce's Amendment is the merit and value of the invention. It is true, of course, that this is a factor which will determine the monetary award which each will eventually get from it, but it may raise the awkward problem of how to determine an invention's value in the early stage of its life. May I say to the noble Lord, Lord Brown, that his comments on this matter (coming, as they did, from his personal experience in a highly technical industry) were most welcome? He is the managing director of a highly successful firm, and knows the practical application of this inside out. I thank him for his comments, because they bring common sense to our deliberations.
I think back in terms of my own experience. I am not going to weary the Committee by relating a great many facts about this subject which are known to me, but I will mention one. In the course of the investigations into what could be done by way of extruding fibres, the process resulting in the manufacture of Terylene was produced. There is one noble Lord in the House who understands this par- 36 ticular aspect of the case probably better than I do, but I think my understanding is enough to illustrate it. This fibre was introduced, but there has been a great amount of (shall I say?) prejudice and difficulty in persuading users of other fibres to bring it in and adopt it, and to extend its use. If you are going to start writing in the value of an invention right at the outset you will be very hard put to it, especially when it comes to an invention of that sort.
The noble Lord, Lord Brown, mentioned other factors that must be considered in trying to assess the value of an invention. You have not finished when the invention has been made. It can embrace production; it might need high investment; it might need a whole series of investigations into market conditions, as to whether the possibilities are good or whether they are not. How on earth can we say at the beginning what the value is? It will be only in an exceptional case, or where the invention has already been assigned by the legal owner for a lump sum—that is, where he decides to cash in and get out—that the tribunal will be called upon to say how much actual cash is to pass from one to the other. That is simple; that is understandable. In such cases, the long-term value of the invention is not material to the decision, and the question of how much money each will eventually receive from it will be determined in the future by its commercial success—the sort of circumstances and criteria about commercial success of which I have already spoken. Therefore, there is some doubt about the aptness of this consideration.
There appears to be some division of opinion on the merits of inserting considerations into the Bill, but I feel, having listened to what has been said this afternoon, that the majority of the Committee is in favour of the insertion of some considerations. On the one hand, it is said that these considerations can only be the more obvious considerations which the Comptroller of Patents, the Patents Appeal Tribunal and the courts would take into account in any case. Many of these considerations have been itemised by the noble Lord, Lord Silkin. In that case, it might be considered that their insertion is unnecessary. On the other hand (and this is a point with which I have a great deal of 37 sympathy), their inclusion might form a useful guide to the parties concerned—the employer and employee and their advisers, who may be less experienced in disputes of this sort as to the relevant factors—and it might be that, as a consequence of some considerations being indicated, many more cases would be settled out of court. To that extent, there is no question that there is a lot to be said for inserting some considerations.
Now a word about Amendment No. 4, in the name of the noble Lords, Lord Cawley and Lord Drumalbyn. It is true that the Amendment covers most of the considerations which almost everybody agrees should be taken into account—for example, the terms and nature of the employee's employment, including his wages or salary—but may I say that some of the considerations set out in it seem rather ambiguous and positively dangerous. Take paragraph (a), where there is reference to …the peaceful enjoyment of the fruits of his enterprise … I do not think that, on examination, those words would stand up. It seems to me to be an ambiguous and a woolly phrase, and I should like those noble Lords who are far more qualified than I am to have a word about it and perhaps come to a judgment. In any case, paragraphs (a)and (b)seem more apt to describe the philosophy of the Bill in general than to guide a tribunal in assessing relative shares in the fruits of an invention.
Then, in paragraph (d), the word "scope" could mean either the nature of the employer's business or the scale on which it is carried out. Paragraph (e) refers to the "customs of the industry". I think this is a little dangerous, and undesirable; and I will say why. The Bill will not upset standard contracts covering rights in inventions which have been negotiated in a given industry between organised employers and organised labour, and we do not want to upset an agreement which has been entered into by either of those parties. Where such contracts do exist, it seems desirable—and I say this deliberately—to hope for some measure of uniformity of practice regarding awards, and not to encourage variation between industry and industry. I think that is common 38 sense. The customs of any given industry on this point may be difficult to prove with any certainty.
The matters that the noble Lords have set out in paragraph (f) seems relevant; but when it comes to paragraph (g) it seems to us that this goes more to the question of legal ownership than of rights to benefit from the fruits of the invention. The noble Lord, Lord Cawley, mentioned paragraph (h), but there again I do not think we can agree. We think it is ambiguous. In one sense, it seems to refer to the choice of the tribunal which should handle the case. An employee may wish, on grounds of expense, to have his case dealt with by the Comptroller, with an appeal only to the Patents Appeal Tribunal; and, if so, we feel he should be allowed to do so, subject only to the Comptroller's discretion to refer the case to the court under the proviso to Section 56(1).
Here, may I say, in answer to the noble and learned Lord, Lord Wilberforce, that the chain of reference is not altered. A case may be brought before the Comptroller, and there will be an appeal from him to the Patents Appeal Tribunal. Or it can be done the other way round, through the courts. I suppose it would be in the Queen's Bench Division, and I suppose there would be the usual facilities to appeal. May I say that I have tried to state fairly the advantages and disadvantages. Noble Lords have taken a lot of trouble with this and they have had a lot of patience in listening to me now, as a layman, but I would say that we have been impressed with some of these arguments and that we are prepared to look at this between now and the Report stage.

§ LORD WILBERFORCE
Speaking for myself, with reference to Amendment No. 2, I was glad to hear what the noble Lord has said, particularly after we had heard the inventor's point of view, because that adds one further reason for giving consideration. Inventors are strange people; the noble Lord described them as "cranks"—an agreeable enough description—but, at any rate, they are people of originality and determination and it is desirable that the inventors, these rather wrapped-up people, these intellectuals, should be able to see for 39 themselves that there is another side to the question of whether they should get the whole of the benefits of an invention. It is no bad thing that the inventor should be able to see that there are other points to be borne in mind.
I am grateful to the noble Lord for his co-operation. Obviously, it is very difficult for us to draft a satisfactory Amendment. I am quite sure, in view of the great Department behind him, that an Amendment much better than mine will be forthcoming. On the understanding that he has given, I am quite willing, with the Committee's permission, to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ LORD WILBERFORCE moved, in subsection (2), to leave out all words after "not" and to insert: apply where the employer has expressly agreed with the employee as to the allocation or apportionment of the benefit of the invention and of any patent therefor.

§ The noble and learned Lord said: I am sorry to have to trouble the Committee again on a rather different matter. Let me say that this is a lawyers' Amendment of some legal technicality; so those noble Lords who are not interested in this type of Amendment may take action accordingly while those who are interested in the curiosities of legal arguments may prefer to stay. The object of this Amendment is to remove what appears to me to be a degree of ambiguity in Clause 1(2) of the Bill which has been drafted with an evident eye—and, in my respectful view, too close an eye—to the Patchett decision in 1955. In order to explain it, one must go back to the Swan Committee which formed the basis of the original section. The Swan Committee, in the passage which the noble Lord, Lord Rhodes, read on Second Reading, suggested that a change had to be made where there was no written agreement. That suggestion was not carried out in the Patents Act, 1949, which used different words in Section 56(2), which says: The court … may, unless satisfied that one or other of the parties is entitled, to the exclusion of the other, to the benefit of an invention…". Those were the words which came before your Lordships' House in its judicial capacity in the Patchett case.

40 What happened in the Patchett case was this. There was a service agreement between Mr. Patchett and his employer, a company, which did not make any reference to inventions at all. Nevertheless, it was held by this House in its judicial capacity, that Mr. Patchett could not get any remuneration because, as a result of his contract of employment, even though the contract said nothing about inventions, the employer was solely entitled to the benefit of the invention. Therefore, the section could not give him anything. Clause 1(2), I apprehend, is drafted to get over that difficulty. However, as drafted, it creates a difficult distinction, on the face of it, between an implied agreement (referred to in line 11) which is over-ridden by the section and the "express terms of any agreement" (which you find on line 14) which is preserved. But when one looks at the judgments in the Patchett case, particularly the Opinions of my noble and learned friends Lord Simonds and Lord Reid (which it would give me great pleasure to read to your Lordships and which I am sure you would enjoy, but I will not take up time to do so), one finds that both of those Opinions say that the term by which an employee's inventions, in fact, belong, to an employer is not an implied term in the sense that it is something which the law adds to the contract; it is a term which is in the contract and which arises from the contract.

So, if one looks back at Clause 1(2) as drafted, it could, it seems to me, be argued that when it says effect may be "given to the express terms" of the contract, the result might be that effect could be given (as effect was given in the Patchett case itself) to a term in the contract which obliges the employee to serve wholetime, to place his inventive capacity at the benefit of his employer, and, as a consequence, to make his inventions over to the employer. At any rate, whether that is right or not, it seemed to me that here was a substantial risk of litigation, coming perhaps up to this House again, as to what is covered in the words "express terms". There is perhaps more than one way of curing that. I certainly do not claim that what I suggest is the only way of doing it. What I have suggested in 41 Amendment No. 3 is to keep the first part of this subsection (that is the part which says it applies in all cases notwithstanding the rule of law or an implied agreement) but to make clear that it shall not apply where the employer has expressly agreed with the employee as to the allocation or apportionment of the benefit of the invention and of any patent therefor.

§ I link that with what the noble Lord, Lord Rhodes, said in his speech, that there is no intention in this Bill to interfere with the ordinary and standard type of contract between employers and the persons who are likely to make inventions, such as designers, who normally have in their contracts a very carefully-drafted clause saying to whom any invention is to belong and who is to be paid what in respect of it. But I suggest that this reference made in the Amendment to "express agreements" about the patent itself is more satisfactory than what is in the Bill. The express terms of any agreement are, as explained in the Patchett case, possibly liable to lead to litigation. I beg to move.

§ Amendment moved— Page 1, line 13, leave out line 13 and insert ("apply where the employer has expressly agreed with the employee as to the allocation or apportionment of the benefit of the invention and of any patent therefor.").—(Lord Wilberforce.)

§ LORD RHODES
Would the noble Lord explain this? I gathered from his earlier comments when speaking to this Amendment that he was suggesting that there was an express agreement in the case of Patchett. I was always under the impression that it was an implied agreement.

§ LORD WILBERFORCE
I did not make myself clear. There was an express agreement about his service. There was a service agreement; but there was no agreement about the invention at all.

§ LORD CAWLEY
Though I agree with what the noble Lord, Lord Wilberforce, said about the point of this Amendment, with diffidence I think it is possible that it produces a radical change in the Bill. Up to now, if an employer has employed research staff he will have a blanketing covenant in the terms of employment, giving him all the inventions which may be made in his laboratories. That type 42 of term is expressly saved in the Bill as it stands; but this Amendment, it appears, might be read to mean that whenever an employee makes an invention he will have to negotiate a contract in express terms referring to that specific invention. I am sure that is not what was intended by this Amendment but the wording of it suggests that such might be the construction put upon it.

§ LORD RHODES
I did not expect there would be anyone else speaking on this Amendment. I agree with Lord Wilberforce, who I think was paraphrasing what was said by the Duke of Plaza Toro when he was telling the two suitors for his daughter's hand that the one who was not interested could allow his attention to wander. I support him on that. I do not think that we can accept this Amendment. It seeks to substitute new words for the words which appear in the Bill. The difference appears to be this. In the Amendment there is a contract which proposes to deal with the allocation or apportionment of the benefit, and the Comptroller of Patents will have no jurisdiction at all. Would the noble Lord, Lord Wilberforce, agree with me as far as I have got?

§ LORD WILBERFORCE
Yes.

§ LORD RHODES
Right. However imperfect the agreement, or however ambiguous and incomplete it may be, the Bill would not apply at all; and if the parties do not agree on the true construction of the agreement they must go to the Queen's Bench Courts to have the agreement construed. On the other hand, as the Bill is drafted the parties will be able to apply under the Bill to have their rights determined, but in making its award the tribunal to which they apply will be bound to give effect to those provisions in the agreement which are clear and unambiguous.
The Amendment also seems to throw some doubt as to the kind of agreement which will disapply the Bill. Must it be a particular agreement, referring to the benefit of the specific invention which the employee has made, or does a general agreement about any possible invention the employee may make exclude the operation of the Bill? It is our intention that both specific and general 43 agreements should be sacrosanct. Subject to ensuring that this last point is adequately covered, there might be some advantages and disadvantages in both solutions, the one we have advanced and the one advanced by the noble Lord, Lord Wilberforce; but on balance we feel that we cannot accept his Amendment. It is quite clear that in our method any argument or question about an agreement goes to the Comptroller and then, if there is dissatisfaction, to the Patents Appeal Tribunal. Under Lord Wilberforce's Amendment the matter does not go to the Comptroller; nor is there the chance to go to the Patents Appeal Tribunal; it goes straight away to the Queen's Bench Division. These are my own comments on the Amendment, and I would ask the noble Lord if he does not think that would be precipitating a more weighty legal course than is contained in the Bill. In view of the explanation I have given, I would ask the noble Lord to withdraw his Amendment.

§ 4.35 p.m.

§ LORD DRUMALBYN
May I suggest a consideration to the noble Lord, which is not a legal one but a practical one? If the words in the Bill are retained, will there not be a serious risk of an increase in the practice of having an express agreement entirely excluding, in advance, employees—whether they are research chemists, or even ordinary employees, such as salesmen, workmen, and so on—from the benefits of any inventions which they may make in the course of their employment? As I understand it, as the noble and learned Lord, Lord Wilberforce, has drafted his Amendment there would be less risk of that happening if his Amendment were accepted. I think this is an important point to bear in mind. He will correct me if I am wrong, but it seems to me that, as the Bill is now drafted, any employee whose agreement of employment—or other agreement in connection with his employment—expressly excludes his getting any benefit out of the inventions that he makes in the course of his employment will not be covered by this Bill and he will get no benefit from it. I am not quite certain that this is a practice that one would wish to encourage.
44 I am well aware that nowadays those who are employed in research work are much more acutely aware than perhaps they were some years ago of their rights in respect of benefits to be obtained out of their own inventions. All the same, I am sure that there are still many firms who, as a matter of routine, make an agreement—not necessarily as part of the agreement of employment, but by an exchange of letters at the same time—excluding the employee from any benefit whatsoever. This is a point to which I would draw the noble Lord's attention.
I was attracted, rightly or wrongly, to the Amendment because (though not being a lawyer I am not able to interpret it), as I understood it, it would give a much greater chance for employees to benefit from inventions. And from my own interpretation of what the noble Lord, Lord Wilberforce, said, I imagine that the word "invention" was here subsumed, so to speak, under inventions in general. This has been an agreement on inventions which would subsume the particular invention with which the agreement was concerned. But in any case, it seems to me, if I may say so, that there is rather more merit from the practical point of view, and not just from the legal point of view, in the Amendment that the noble Lord, Lord Wilberforce, has put forward than was suggested in the reply made by the noble Lord, Lord Rhodes. I should be grateful if the noble Lord would look at this again to see whether not only the legal aspects but the practical content of the Amendment might commend itself to the Government.

§ LORD RHODES
May I assure the noble Lord, Lord Drumablyn, that they will be no worse off. As I see this matter and as the noble Lord, Lord Wilberforce, has outlined it, it is a question of which route the applicant has more cnfidence in—whether it is the Comptroller and the route through the Patents Appeal Tribunal or the direct route to the Queen's Bench and on to the House of Lords. I do not think it is very important, but we have had so much assistance from the noble Lord during the course of this Bill that I will look at it again, without any hope of making any alteration between now and Report stage.

§ LORD WILBERFORCE
The noble Lord is not very encouraging, but we must 45 take the morsels he throws us. I think we are aiming at the same objective in this case, because, as the noble Lord has said, it is not the intention of his clause to exclude specific agreements between employers and employees about inventions. I had thought that the only difference between us was whether we should refer, as the Bill does, to the express terms of any agreement or whether we should more specifically refer, as the Amendment does, to an agreement about the allocation or apportionment of the benefit of the invention. The noble Lord suggested that there was a particular advantage in the Bill which was not in my Amendment, in that disputes under the Bill could be dealt with by the Comptroller, whereas the Amendment takes them out of the hands of the Comptroller and throws them into the hands of the court. I do not believe that there is that difference, because all the Bill says is that the clause does not prevent effect being given to the express terms of any agreement. It is simply an exempting clause, as it were, and where there is express terms of any agreement I have taken it that the agreement would be dealt with in the ordinary way by the Chancery Division—not, if I may say so with respect, the Queen's Bench—rather than be dealt with by the technical tribunal of the Comptroller. However, it may be that I have not understood what is in the minds of the draftsmen of the Bill.
One other point is the question, raised by my noble friend Lord Cawley, as to whether the Amendment does not too strictly tie an agreement to a particular invention. I would gratefully accept what was said about that by my noble friend Lord Drumalbyn just now. It was my intention to say that the section should not apply where there is an agreement about the allocation or apportionment of benefits which, to use my noble friend's happy word, "subsumes" the particular invention, but it may be that I have not expressed that thought adequately in the Amendment. For that reason and for the reasons stated by the noble Lord, I am glad to withdraw my Amendment, with the suggestion that perhaps he may consider whether the wording of the Bill as it stands is not likely to be a source for litigation. This is not a matter which 46 causes me professionally any disquiet, though perhaps in one's legislative capacity one must naturally attempt to secure the subject against it.

§ Amendment, by leave, withdrawn.

§ LORD CAWLEY moved to add to the clause: () Section 54 of the Patents Act 1949 shall have effect subject to the following amendment, that is to say, after subsection (5) there shall be inserted the following subsection:— '(6) This section shall have effect subject to the provisions of the Patents (Employees' Inventions) Act 1965.'

§ The noble Lord said: Section 54(1) of the Patents Act, 1949, says: Where after the commencement of this Act a patent is granted to two or more persons, each of those persons shall, unless an agreement to the contrary is in force, be entitled to an equal undivided share in the patent. It is sometimes the case that an employer and an employee may be recorded on the register of patents as the co-proprietors of a patent. There may be a dispute between them as to the beneficial ownership of the patent. So far as I can see at the present moment, this section is not overruled in any way by the provisions of the present Bill. I should like the noble Lord to tell me for certain whether this is a fact, and, if it is, to hear whether this Amendment should be accepted to make certain that that provision in the Patents Act is covered by the present Bill. I beg to move.

§ Amendment moved— Page 1, line 21, at end insert the said new subsection.—(Lord Cawley.)

§ LORD RHODES
Section 54 deals with co-ownership of patents—that is to say, where two or more persons are registered as the proprietors of a patent. If I may respectfully say so to the noble Lord, Lord Cawley, his doubts are correct. His Amendment is misconceived. The Bill does not seek to affect the title of the registered proprietor of a patent or his legal power to dispose of the patent or to grant licences for its exploitation.
The Bill puts the proprietor in the position of a trustee. Clause 1(3) states specifically that rights arising under it shall be of the like nature, and enforceable in the like manner, as beneficial interests under a trust". 47 Section 54(5) of the Patents Act already contains a provision limiting the application of subsections (1) and (2) of that section in relation to trustees. It reads: …nothing in subsection (1) or subsection (2) of this section shall affect the mutual rights or obligations of trustees or of the personal representatives of a deceased person, or their rights or obligations as such". It is the opinion of my Department that this qualification is adequate to deal with any possible conflict between the Bill and Section 54 of the Act. I hope that, with that explanation, the noble Lord will withdraw his Amendment.

§ LORD CAWLEY
I am most grateful to the noble Lord and I willingly withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 4.48 p.m.

§ LORD WILBERFORCE moved to add to the Clause: () Effect may be given to subsection (1) of this section as may be appropriate by directing that the beneficial interest in the invention and in any patent in respect thereof

(a) shall belong to the employer and the employee in specified shares, or
(b) shall belong exclusively to one party subject to the payment of a royalty or a lump or periodical sum to the other party, or
(c)shall belong exclusively to one party subject to the right of the other party to use it on such terms as the Comptroller or the Court may think fit,

or by any other such direction as may be appropriate to secure fair remuneration for each party for his contribution towards the making and exploiting of the invention.

§ The noble and learned Lord said: This is the last Amendment, and it is perhaps in the nature of an inquiring Amendment, but I hope it also may have some utility. It connects up with the wording in line 8 of the Bill— … so much, if any, of the benefits of the invention,… as may be just. The intention is to give the Comptroller or the court as much latitude as possible as to the type of arrangement which may be decided upon by the tribunal in the interests of employer and employee. The wording which was in Section 56(2) of the previous Act was …the apportionment between them of the benefit of the invention,… The suggestion was made by an eminent advocate that those words only enabled 48 a division to be made in shares, a kind of Solomonesque division, cutting the cake between the two sides. I would suggest that that would be too narrow a circumscription of what the tribunal ought to be able to do.

§ It should be able to do at least the things which I have listed in the Amendment by way of suggestion, some of which, I should think, in the ordinary use of language, would not be the giving of part of the benefit to an employee or employer but would be to say that one has the invention but must pay a fixed sum or a lump sum to the other side as a reward for his services. It may be, again, that this is a case of spelling out in the Bill what is already there. If so, then I would suggest that it is right to spell out what is inherently in the Bill for the same reasons as I ventured to give when moving the second of the Amendments—namely, that it is helpful for the parties to know what they may get, and helpful, also, for the tribunal or the court to know what they may do. Again, I do not profess that this list is a perfect or complete list. It does, however, seem to suggest the main types of arrangement which might be the subject of the court's decision, and I think it would be a matter of common agreement that as much flexibility as possible is desirable as to the arrangements which may be made.

§ There is one other point. I have drafted the Amendment in the way I have so as to fit in with the technique that one finds in Clause 1(3) of the Bill, which in effect says that the rights under this section are to be enforceable as rights under a trust. In the Amendment, I have referred to the beneficial interests in the invention as meaning the same thing as rights under a trust. The legal ownership is not affected—it will belong to whoever takes out the patent—but the beneficial interest, that is the interest under the trust, can be dealt with in the way I suggest in paragraphs (a), (b) and (c), with a general catch or provision at the end. I beg to move.

§ Amendment moved— Page 1, line 21, at end insert the said subsections.—(Lord Wilberforce.)

§ 4.52 p.m.

§ THE LORD CHANCELLOR
My noble friend Lord Rhodes has asked me 49 to reply on this Amendment. While I have done some patent cases, I should like to make it plain that my knowledge of the subject is abysmal compared with that of the noble and learned Lord, Lord Wilberforce, and no doubt, also, the noble Lord, Lord Cawley. Any Government would be most unwise not to give the most careful attention to any Amendment which the noble Lord, Lord Wilberforce, might propose. But at the moment the Government are feeling in some difficulty about this Amendment, because it would appear to result in a different Bill from the Bill which is intended. The Bill, after all, is not intended in any way to reform the Patent Law, but merely to let Section 56 have the effect which it was originally intended to have.
I remember on Second Reading the noble Lord, Lord Cawley, said that it would have been disastrous if express contracts between employers and employees had not been included. Of course, that may or may not be so. But there was no intention to reform the Patent Law as a whole. That point has not been dealt with. 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. But that point has not been considered in relation to this Bill, because the Bill has this limited object of trying to give effect to the original intentions of Section 56.
The noble Lord, Lord Cawley, will remember that this section came into effect as the result of the Swan Committee's Report, and that Committee said: The opinion has been frequently expressed that the reward or benefit which an employee receives in return for the exercise of his inventive skill is in many cases inadequate and unfair and that the employer usually gets the whole of the profits of an employee's invention. Then, after pointing out that the position of Government employees was rather better, they said: There is no simple procedure, no inexpensive tribunal to which he"— that is, the inventor employee— can have recourse in the event of a dispute arising between him and his employer as to the beneficial ownership of the patent for his invention, or as to his right to share in the profits 50 of its exploitation, unless an application for the patent has been made in the joint names of the inventor and his employer, in which case certain disputes may be referred to and settled by the Comptroller … Otherwise the only legal remedy is an action in the High Court. Then they said that there ought to be some simple way of dealing with the matter. They went on to say: We consider it desirable that suitable provision should be made for the type of case referred to above, where the circumstances are such that both employer and employee can fairly be said to be entitled to a share in the benefit of an invention, and we recommend that where a dispute arises as to the ownership of the invention of an employee, or a patent therefor, the tribunal should be expressly required, in any case in which it is not satisfied that either party is entitled to the whole benefit of the invention or patent, to make an order apportioning the interest in or benefit derivable from the said invention or patent between the parties, in such manner as it may deem just. I am not saying that in many cases the position cannot be improved.
It did not occur to the noble Lord, Lord Cawley, who gave evidence before the 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. And there were many lawyers in another place, including Sir David Maxwell Fyfe (as he then was) and Sir Reginald Manningham Buller (as he then was), and in this House the noble and learned Lords, Lord Jowitt, Lord Simon and Lord Maugham. But the intention of this little Bill being simply to restore the section, which was drafted by the Swan Committee itself as an Appendix to their Report, it is the view of the Government that the Amendment proposed would run contrary to the philosophy of the Bill, which is that the employer and the employee own from the outset just shares in any invention and that the function of the court or Comptroller is merely to determine these shares arithmetically when called upon to do so in the simple manner proposed by the Swan Committee's Report and in Section 56.
So far as the opening words of the Amendment are concerned— Effect may be given to subsection (1) of this section as may be appropriate by directing that the beneficial interest in the invention and in any patent in respect thereof (a) shall belong to the employer and the employee in specified shares …"— 51 there is, of course, in one sense, no objection, but it is suggested that this adds nothing to the provision already made. The Bill proceeds on the assumption that the court or Comptroller will specify what shares are just. Then paragraph (b), in effect, provides for the court or Comptroller to extinguish the "just" right of one or other party subject to the making of certain payments. It is not clear whether the beneficial interest is to be extinguished by the direction or whether its extinction is to be conditional upon the making of the requisite payments. In any event, the provision envisaged seems alien to the concept of giving effect to Clause 1(1). It substitutes rights different from those conferred by Clause 1(1). If a direction extinguishes the beneficial interest immediately, the direction would seem to confer a less valuable right, because the new right appears to be simply a right in personam.
Then, on paragraph (c), I would invite the noble Lord, Lord Wilberforce, to correct me if I am wrong, but, as I read it, the word "it" refers to the invention or patent. If that is so, it involves an interference with the right of the legal owner of the patent or invention to grant an exclusive licence. The possibility of a direction in the terms envisaged in paragraph (c) of the Amendment or the existence of such a direction would appear to prejudice the commercial exploitation of the invention or patent to the prejudice of all persons interested in the benefit. In general, it is undesirable that the court or Comptroller should be required to anticipate the course which exploitation of an invention will take. Subsequent events may well show that the provision made by a direction of the type envisaged by the Amendment was unrealistic or inadequate. In short, such a direction really needs to be open to review throughout its operation. It is thought that the machinery available to any beneficiary to enforce his rights under a trust is adequate to ensure that any invention or patent which has been the subject of apportionment under the Bill is properly and adequately exploited on his behalf. This machinery provides in the interests of the beneficiary for continuing supervision of the activities of the legal owner of the invention or patent.
52 A direction in the form envisaged in head (b) of the Amendment would seem to preclude an employee-inventor from ensuring that an invention is properly exploited because he will have no beneficial interest in it. It will belong "exclusively" to the employer. If the direction gives a royalty and the employer fails to exploit the invention, the employee may be in a difficult position. There is, too, the possibility that, when apportionment of the benefit is made, an invention which seems to be of little immediate value turns out at a much later date to be extremely valuable. That is why, after giving most careful attention to this proposed Amendment, the Government feel unable to accept it, because it departs from the very simple principle of the Bill—itself derived, of course, directly from Section 56—that in the circumstances in question, the Comptroller or the court should be entitled to apportion the beneficial interest. That is very simple. It leaves the legal title entirely with the employer. It does not complicate matters at all so far as third parties are concerned. It is for those reasons that the Government, as at present advised, feel unable to accept the Amendment.

§ LORD DRUMALBYN
I have listened to the noble and learned Lord the Lord Chancellor with great interest. At one time I rather wondered whether we were talking about the same Amendment. I referred to—and I have before me—the Third and Final Report of the Departmental Committee on Patents and Designs. May I quote to the House what it says?: … we recommend that, where a dispute arises as to the ownership of the invention of an employee, or a patent therefor, the tribunal should be expressly required, in any case in which it is not satisfied that either party is entitled to the whole benefit of the invention or patent, to make an order apportioning the interest in or benefit derivable from the said invention or patent between the parties, in such manner as it may deem just. The noble and learned Lord, Lord Wilberforce, will correct me at once if I am wrong, but I thought that in his Amendment he was really saying there, as between (a) and (b), that (a) was apportioning the interest in, and (b) was apportioning the interest derivable from. This, I should have thought, made no 53 difference in the intention of the Swan Committee, however they sought themselves to carry out that intention.
I should have thought that if Parliament can now carry out their intention better than they themselves were able to do so, then that would be a gain and would be in no way departing from the spirit of the original recommendation or changing the law as it was intended to be in the first case. I understood the noble and learned Lord, Lord Wilberforce, to say that all he was trying to do was to spell out the way in which the interest in or the benefit derivable from the invention was to be divided—nothing else. I am bound to say that—I am sure it is entirely my fault—I was left in some bewilderment by what the noble and learned Lord the Lord Chancellor said. For my part, I still feel there is a lot to be said for the Amendment of the noble and learned Lord, Lord Wilberforce. I am afraid, not being learned in these matters, I must leave it there for the noble and learned Lord to deal with further.

§ LORD WILBERFORCE
May I say a few words following the same lines as those which have just fallen from my noble friend Lord Drumalbyn? I certainly had not understood the Swan Committee as recommending that all that could be done with an employer-employee patent was to divide it. I have before me the passage in the body of the Report which was read on the Second Reading of this Bill, where they say: Both employer and employee may be entitled to share in and derive benefit from the the invention. That conveyed to me that they had in mind any division which might be appropriate of the benefit, in a broad sense, which might emerge from the invention. It is quite true that when Section 56(2) of the Patents Act, 1949, came to be drafted, that section referred to "apportionment of benefit." But we are surely not here mainly concerned to resuscitate that section. After all, the section has proved singularly useless in practice. This was, so far as one knows, invoked in one case, after which it became a dead letter, and we ought to do better than merely restore its wording.
When one comes to my Amendment, the Lord Chancellor is quite right in 54 saying that paragraph (a) does nothing more than provide for what Section 56(2) apparently did: that is to say, apportionment in shares; and paragraphs (b) and (c) were really inserted in the interests of both sides. If you limit the benefit of the employee to a share in an invention, you may in some cases give him something which is not of great value. He may make quite a modest contribution towards an invention, in the course of his work. The Comptroller may say, "Well he has not done very much. All the finance, research, and so on, has come from the employer. We cannot really fix a share". In such a case they might think it fair to let him have a lump sum to compensate him for the work he has done, or a royalty, if the invention proves to be exploitable.
Paragraph (c) deals with the converse case, which is very common, of inventions being made by employees but with the plant and resources of a manufacturer, and enables what is very frequently done in America: the making of an arrangement under which the manufacturer, the employer, is given a right to use the invention, which, after all, has been developed on his premises, by the use of his resources, although the legal ownership of the patent may belong to the employee. So I certainly did not think that I was departing from the policy of the Bill in any way by spelling out these matters. However, I accept, of course, that this is a matter of what the Government are intending to do. If the Government wish to provide only for a division of benefit in a very literal sense, then certainly the words in the Bill as it stands should be left, and my Amendment should not be accepted.
I would only say this in relation to Patchett's case. In that case, the claim put forward was that Mr. Patchett should be given remuneration, a sum of money, for the work he had done, which would perhaps have been the most appropriate way of rewarding him for his trigger mechanism. The objection taken was, "You cannot do that. All you can do is to divide the invention in shares and give him a share." That seemed a pity, and not to be the right way of dealing with the merits of his claim. However, I must leave it to the noble and learned Lord to decide the policy of the Bill. 55 If, on reflection, he thinks the policy is merely to divide in shares, then no doubt he will leave the Bill as it is. If, on reflection, he feels it may be wise to open the door a little wider so as to take account of the variety of cases and give it a little more flexibility, then he may come back to see some merits in my Amendment, or something like it. But at this stage I am quite content, if the Committee agrees, to withdraw it.

§ Amendment, by leave, withdrawn.

§ Clause 1 agreed to.

§ Clause 2 agreed to.

§ House resumed: Bill reported without amendment.