§ 4.15 p.m.
§ House again in Committee.
§ Clause 33 [Co-ownership of patents and applications for patents]:
§
Lord McCLUSKEY moved Amendment No. 157:
Page 26, line 26, at end insert ("and the supply of those means by virtue of this subsection shall not amount to an infringement of the patent").
§ The noble and learned Lord said: I beg to move Amendment No. 157, which is an Amendment to Clause 33. In order to explain the purpose of this Amendment, I must first refer the Committee to Clause 58(1), which details those acts which constitute infringement of a patent, and also to subsection (2) of that clause, which adds that it is also an infringement when anyone supplies a person other than a licensee or other person entitled to work an invention with any of the means, relating to an essential element of the invention, for putting it into effect, when he knows, or it is obvious, that those means are suitable for doing so and are intended to be used for that purpose.
390§ Clause 33 regulates the rights of joint proprietors among themselves and subsection (2)(a) entitles each of them to do acts in respect of the invention which would otherwise amount to infringement without the consent of the other joint proprietors, unless there is an agreement among them to the contrary. If there were such an agreement, a person who supplied a joint proprietor who no longer had the right to be supplied with the essential means would be guilty of infringement. Subsection (4) of Clause 33 relieves such suppliers of the need to inquire whether any such restrictive agreement exists among the joint proprietors of the patent in question, and the Amendment makes it plain that no infringement is committed by anyone who supplies a joint proprietor with the "means essential", whether or not the joint proprietor has ceased to be a person entitled to use the invention for his own benefit.
§ On Question, Amendment agreed to.
§ Clause 33, as amended, agreed to.
§ Clause 34 [Determination of right to patent after grant]:
§ 4.20 p.m.
§ Lord McCLUSKEY moved Amendments Nos. 158 and 159:
§ Page 27, line 2, at end insert ("whether he is the true proprietor of the patent or whether the patent should have been granted to him (in either case alone or with any other[...] persons) or").
§ Page 27, line 4, leave out from ("him") to ("and") in line 7 and insert ("(alone or jointly with any other persons)").
§ The noble and learned Lord said: With the leave of the Committee I will speak to Amendments Nos. 158 and 159 together. Clause 34(1)(a) has three distinct (although closely linked) functions. It covers questions referred under Clause 7 which have not been disposed of by the time the patent was granted. It covers questions as to whether the patent was granted to the right person (in this respect it is parallel to Clause 70(1)(b)). It also covers disputes about whether the current proprietor is the true proprietor for the time being. These Amendments taken together are intended to distinguish between these functions so as to enable the remainder of the clause and Clause 35 to be drafted by reference to them. I beg to move Amendments 158 and 159.
391§ Lord BELSTEADThis is a small drafting point. As I understand it, this Bill repeals Section 56 of the 1949 Act, which in subsection (2) provided for the court or the comptroller to apportion the benefit of an invention:
or of any patent granted or to be granted between an employer and an employee".As such apportionment is now going to be repealed, I wonder whether Amendment No. 159 should not read:or jointly with any other persons except as between an employer or an employee".The noble and learned Lord may prefer to give me an answer in writing.
§ Lord McCLUSKEYI am obliged to the noble Lord. I should prefer to write to him on this matter and I will undertake to do so.
§ On Question, Amendments agreed to.
§ Lord McCLUSKEY moved Amendment No. 160:
§
Page 27, line 14, leave out lines 14 to 44 and insert—
("(2) Without prejudice to the generality of subsection (1) above, an order under that subsection may contain provision—
§ (3) If any person to whom directions have been given under subsection (2)(d) above fails to do anything necessary for carrying out any such directions within 14 days after the date of the order containing the directions, the comptroller may on application made to him by any person in whose favour or on whose reference the order containing the directions was made authorise him to do that thing on behalf of the person to whom the directions were given.
§ (4) Where the comptroller finds on a reference under subsection (1)(a) above that a person is not the true sole proprietor of the patent, he may—
- (a) order that any other person who was a party to the reference may, subject to section (Amendments of applications and patents not to include added matter) below, make a new application for the whole or part or any matter comprised in the specification for that patent; or
- (b) if he directs that the person registered as proprietor of the patent is to remain so registered or that the patent is to be transferred to any other person who was a party to the reference, require that the specification of the patent shall be so amended as to exclude any matter specified in the order (without contravening section (Amendments of applications and patents not to include added matter) below).
§ (5) On a reference under subsection (1)(a) above an order shall not be made under this section transferring a patent or requiring the specification of a patent to be amended on the ground that the patent was granted to any person not entitled to be granted it (alone or with any other persons) if the reference was made after the end of the period of two years beginning with the date of the grant, unless any person registered as a proprietor of the patent knew at the time of the grant or of any transfer of the patent to him that he was not or would not be entitled to the patent.").
§ The noble and learned Lord said: If this Amendment is accepted, it subsumes Amendment No. 161. Amendment No. 160 is a substantial Amendment. With regard to this Amendment, the proposed subsection (2) is new. It sets out, without prejudice to the generality of subsection (1), specific matters which may be provided for in an order under that subsection. It now follows, with necessary differences, Clause 7(2), as amended. The new subsection (3) closely follows the old subsection (2). By that I mean subsection (2) in the Bill. Its provisions are however slightly wider than those in the old subsection (2), so as to cover transfers and the like, by persons having rights under a patent, as well as the proprietor of the patent. It also follows the new Clause 7(5) in simplifying the procedure for enforcing an order.
§ The new subsection (4) spells out in greater detail than did the old subsection (5) what is to happen when, on a reference under this clause, the comptroller finds that the person registered is not entitled to the patent. In particular, it enables the person to whom the patent should have been granted to file a new application for a patent. The new subsection (5) is a correction so as to follow more closely the wording of Article 27(3) of the Community Patent Convention. I think that noble Lords opposite will accept that Amendment No. 161 standing in their name is subsumed by the Government Amendment. I beg to move.
§ Lord BELSTEADI am grateful to the noble and learned Lord for his explanation of the substantial Amendment which 393 re-writes a considerable part of Clause 34. As I understand it, Clause 34 in its original form, and now the Bill as it will be amended, allows a person to refer to the comptroller the question whether the patent or any right in or under a patent should be transferred to that person, and the comptroller must make an order determining the question; and if the comptroller's decision is that the person who made the reference was the inventor of part of the patent, the comptroller shall require the specification of the patent to be amended excluding the matter which that person has successfully claimed as his invention. We all agree with that. That is perfectly all right. What is not all right is that we have put down Amendments Nos. 161 and 162 on the Marshalled List. With respect to the noble and learned Lord, I suggest that the two new subsections in Amendment No. 160 do not meet our points in our Amendments Nos. 161 and 162.
As to Amendment No. 161, in Clause 7 (3) there is a similar provision to the one to which I have referred relating to entitlement to a patent before grant, and in Clause 7 the comptroller may order that the person who made the reference may make an application for the whole or part of any of the matter which he successfully claimed as his invention. Such application shall be treated as having been filed on the date on which the earlier application was filed. Amendment No. 161 would seek to provide for someone who has successfully claimed part of the patent as his own invention not only to be able to make application for that part, but also to have it filed on the same date as the main application was filed, and published on the same day as the main application was published. For some reason, those provisions were missing from Clause 34 as it was drafted and they are still missing from the Government's main Amendment No. 160.
After all, subsection (4) of the Government's Amendment is simply the counter-part of Clause 7(3), except that of course Clause 34, as amended, is dealing with entitlement after grant, and Clause 7 deals with entitlement before grant. As Clauses 7 and 34 are supposed to match up, it seems that it would be necessary for both clauses to give the aggrieved inventor the same rights regarding filing and 394 publication, and this is the effect of our Amendment No. 161.
As regards Amendment No. 162, the Government Amendment No. 160 has omitted entirely, so far as I can see, the content of what was Clause 34(4), which provides that where someone is seeking revocation and the court or comptroller decides that the patent was granted to the wrong person, the court or the comptroller may make an order determining the right of a patent, except that the order may not include the requirement that any matter in the specification which the real inventor did not invent shall be cut out of the specification. It always seemed to me, when I was reading Clause 34 before it was amended, that it was very strange that that provision was not included in the original draft. It is not included in the amended draft because the whole of subsection (4) has now been cut out. I should like first of all to ask the Government what has happened to subsection (4). Where has it gone? Is it printed elsewhere in the Bill? If it is so provided somewhere else in the Bill, have the Government been able to look at the point which we would have made had we been able to move Amendment No. 162?
Again, I am afraid that I did not give the noble and learned Lord notice that I was going to raise these matters. If he prefers to communicate with us after the debate, I shall be perfectly satisfied.
§ Lord LLOYD of KILGERRANMay I support what the noble Lord, Lord Belstead, said about Amendment No. 161? In regard to Amendment No. 160 the noble and learned Lord said he felt that Amendment No. 161 was subsumed in Amendment No. 160. I could not follow how that happened, and for the reasons explained by the noble Lord, Lord Belstead, I wonder whether the Government will reconsider the matter arising under this Amendment. Also, will the noble and learned Lord let me know his answer to the points raised by the noble Lord, Lord Belstead?
§ Lord McCLUSKEYI am obliged to noble Lords opposite. I am convinced that there is substance in both the points which have been made. In the light of what has been said, and given the opportunity to study carefully what has been 395 said, I should like to look at both these matters again. I will undertake to do two things: first of all, to write to both noble Lords; secondly, to ensure that whatever may be necessary in order to put these matters right is brought forward at the next appropriate opportunity.
§ Amendment, by leave, withdrawn.
§ 4.30 p.m.
§ Lord McCLUSKEY moved Amendment No. 164:
§
Page 28, line 2, at end insert—
("(6A) Where a question is referred to the comptroller under subsection (1)(a) above an order shall not be made under subsection (2) or (4) above on the reference unless notice of the reference is given to all persons registered as proprietor of the patent or as having a right in or under the patent except those who are parties to the reference.").
§ The noble and learned Lord said: This Amendment introduces a new subsection (6A) into Clause 34, requiring the comptroller not to make an order under subsection (1)(a) of the clause unless notice of the reference has been given to all persons registered as proprietor of the patent or as having any other right in or under it, except those already parties to the reference. This will give the persons notified an opportunity to apply to be made parties to the reference and will ensure that their rights are not affected without their having had an opportunity to be heard. I beg to move.
§ On Question, Amendment agreed to.
§
Lord McCLUSKEY moved Amendment No. 165:
Page 28, line 6, after ("and") insert (", without prejudice to the court's jurisdiction to determine any such question and make a declaration, or any declaratory jurisdiction of the court in Scotland,").
§ The noble and learned Lord said: Under Clause 34(7), the comptroller may decline to deal with any question referred to him under subsection (1) of that clause and, if he does so, subsection (7) states that the court shall have jurisdiction to do so. The words added by this Amendment—and I think we have seen similar Amendments before—are intended to make it clear that the fact that subsection (7) expressly confers jurisdiction upon the court to determine the question is not to be taken as in any way implying that any 396 other jurisdiction which the High Court in England (or the Court of Session in Scotland) may have to make a declaration as to the rights of the parties is in any way impugned or diminished. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 34, as amended, agreed to.
§ Clause 35 [Effect of transfer of patent under s. 34.]:
§ Lord McCLUSKEY moved Amendment No. 166:
§
Page 28, line 7, leave out subsection (1) and insert—
("(1) Where an order is made under section 34 above that a patent shall be transferred from any person or persons (the old proprietor or proprietors) to one or more persons (whether or not including an old proprietor), then, except in a case falling within subsection (1A) below, any licences or other rights granted or created by the person or persons who at the time of the grant or creation were registered as proprietor or proprietors of the patent shall, subject to the provisions of the order, continue in force and be treated as granted by the person or persons to whom the patent is ordered to be transferred (the new proprietor or proprietors).
(1A) Where an order is so made that a patent shall be transferred from the old proprietor or proprietors to one or more persons none of whom was an old proprietor (on the ground that the old proprietor or proprietors was or were not the true proprietor or proprietors), any licences or other rights in or under the patent shall, subject to the provisions of the order and subsection (2) below, lapse on the registration of that person or those persons as the new proprietor or proprietors of the patent.").
§ The noble and learned Lord said: The purpose of this Amendment is to make it clear that the Bill is in conformity with Articles 28 and 40(2) of the Community Patent Convention, as regards the effect of the transfer of a patent on licences and other rights in the patent. The new subsection (1) is intended to make it clear that, following Articles 28 and 40(2) of the Community Patent Convention, licences and other rights are not normally to lapse on a transfer. This proposition needs to be stated, since it would otherwise be the case that a licence granted by persons who between them were not all the persons entitled to the patent was invalid. The reason for departing from this general rule of law is that it is desirable that the licensee of proprietors who are on the register, and who therefore appear on the face of it to be the proper persons to grant a licence, should be protected.
397§ The new subsection (1A) departs from the preceding general proposition in providing, as in Article 28 of the Community Patent Convention, that where there is a complete change of proprietorship as a result of proceedings under Clause 34 licences should lapse. Such a complete change of proprietorship can occur only within the time limits set out in the new Clause 34(5). Persons acting in good faith are protected by the provisions of subsection (2). I beg to move.
§ On Question, Amendment agreed to.
§ Lord McCLUSKEY moved Amendments Nos. 167 to 171:
§ Page 28, line 16, after ("proprietor") insert ("or proprietors");
§ Page 28, line 20, after ("invention") insert ("in question");
§ Page 28, line 22, after ("proprietor") insert ("or proprietors");
§ Page 28, line 23, after ("proprietor") insert ("or proprietors");
§ Page 28, line 29, after ("proprietor") insert ("or proprietors").
§ The noble and learned Lord said: The first, third, fourth and fifth of these Amendments are consequential on the addition of the new subsection (1A). The second Amendment—that is to say, page 28, line 20, after "invention" insert "in question"—is a drafting Amendment to make clear which invention is being referred to. As I said, these are simple drafting and consequential Amendments, and I beg to move.
§ On Question, Amendments agreed to.
§ Clause 35, as amended, agreed to.
§ Clause 36 [Right to employees' inventions]:
§ 4.35 p.m.
§
The LORD CHANCELLOR moved Amendment No. 172:
Page 28, line 36, after ("shall") insert (", as between him and his employer,").
§ The noble and learned Lord said: The intention of Clause 36, upon which we are now embarking and which raises for consideration an interesting part of the Bill, is to regulate as between an employee and an employer the legal rights in inventions made by the employee. Apparently, it happens more frequently than one might suppose that two applications for patents for the same invention are filed on the same day. If the invention 398 was made simultaneously by an employee and by a third party who was self-employed, under the clause as at present drafted the self-employed inventor might be held to have no rights at all in the invention. This is not, of course, the intention and, as I have said, Clause 36 is intended to regulate rights only as between employer and employee. This Amendment and Amendment No. 175 will I think make the position clear. I beg to move.
§ On Question, Amendment agreed to.
§
Lord LLOYD of KILGERRAN moved Amendment No. 173:
Page 28, line 39, leave out from first ("of") to ("or") in line 44 and insert ("research for which the employee had been engaged or made while he was assigned to the task of solving a specific problem;").
§ The noble Lord said: As the noble and learned Lord the Lord Chancellor has indicated, we are now entering upon the consideration of a group of clauses which are of very considerable importance from the industrial relations point of view. I have already, on Second Reading of this Bill, congratulated the Government on, for the first time in the history of patent legislation, introducing these clauses, particularly this first one in the group which recognises the rights of employee inventors. Although I do not want to go over the same ground again, I will say that hitherto there has been gross unfairness to the employee inventor in the industrial history of this country, and there has been a considerable sluggishness on the part of the Government in recognising that quite apart from the rights of other employees, there are rights belonging to an employee inventor which have been recognised in many other countries.
§ There are vast numbers of disputes on record between employees and employers, and therefore it is essential that Clause 36 should clarify the position, particularly as regards inventions which belong to the employer. So the purpose of my Amendment No. 173 is simply to make quite clear that where a firm has an employee who is employed for research purposes, or has a particular job assigned to him, and in the course of that work an invention arises that invention will belong to the employer. My Amendment would remove paragraph (a), which states that 399 the employer has the right to the invention, if it has arisen in the course of the employee's normal duties.
§
However, what are the normal duties of an employee? If they are defined in the contract of employment, that is quite easy to determine. But normally there is very considerable latitude available for dispute. Towards the end of paragraph (a), it is stated,
…that an invention might reasonably be expected to result from the carrying out of his duties.
Again those words "might reasonably be expected" may give rise to considerable dispute. My Amendment makes it clear that in the case of a research worker or employee who is assigned to a specific job, quite clearly and incontrovertibly that invention belongs to the employer. I beg to move.
§ Lord BROWNFrom an industrial point of view, I support the Amendment which has been moved by the noble Lord, Lord Lloyd of Kilgerran.
§ Lord CAWLEYI should like to raise a minor point. The noble Lord, Lord Lloyd of Kilgerran, said that this was the first time that the point had been raised in the House. In fact it is not. In 1965 this House passed a Bill called the Factory Employees (Inventions) Bill which was withdrawn in the other place.
§ Lord NELSON of STAFFORDI am afraid that I find myself in disagreement with the noble Lord, Lord Lloyd of Kilgerran. He brings out very clearly the great difficulty that is involved in defining, in some four or five lines in a Bill of this nature, a satisfactory definition of ownership. This difficulty arises throughout the whole of this part of the Bill. Normally this is a common law matter. To try to condense such a definition into four or five lines in a highly technical Bill of this nature is an extremely difficult task, and that I well recognise.
I find myself in disagreement with the Amendment because it narrows the field even further. I agree that to try to define it is very desirable, but it is impossible to do so in five lines. To narrow it down to those engaged in research work is quite unrealistic from an industrial point of view. Research work is not confined to a few people. It is not even capable of 400 definition. Where research finishes and development starts is extremely difficult to define. What is research? Whether it is done in a research department or as part of production engineering is not clearly defined. Therefore I suggest that if we must try to define this very difficult situation, the existing wording is a more desirable form of wording than that proposed by the noble Lord.
§ 4.43 p.m.
§ The LORD CHANCELLORI am most grateful to the noble Lord, Lord Lloyd of Kilgerran, for his general commendation of this part of the Bill which improves greatly the position of the employee inventor. I do not know whether the noble Lord was indicting this Government for being sluggish. Bearing in mind that the Banks Report came out as long ago as 1970 and that that is the fons et origo of much of this Bill, we have really not done too badly.
Coming to the Amendment, I share the view that the noble Lord, Lord Nelson of Stafford, has expressed about the difficulty of the language here and respectfully agree with him that the proposed Amendment narrows the field. Clause 36(1)(a) was, I ought to say at the beginning, drafted to give effect to the agreement that was reached between industry and representatives of employees in a Working Party which was set up last year at the request of the Secretary of State for Trade. It is not easy to achieve the correct balance of interest between employers and employees as regards the ownership of inventions in order to ensure fairness to both. A great deal of discussion took place to achieve the consensus that was arrived at; so I appeal to noble Lords, when they are considering this part of the Bill, to bear in mind that to make two serious alterations to that balance might endanger the whole package.
Turning to the precise terms of the proposed Amendment, research work is, of course, a limited area and would be likely to exclude from the employer's ownership many inventions made, for instance, by development engineers. I imagine that this is the kind of point which the noble Lord, Lord Nelson of Stafford, has in mind. Also it has the effect of making the test of ownership of inventions much more rigid and less able to take account of all the circumstances 401 of the employment of an employee who makes an invention. I will not claim perfection for the drafting, but it seems to me to be flexible and capable of dealing with the likely situations that may arise. With the greatest respect, I think it is better than that which is contained in the Amendment, which accordingly I fear I must resist.
§ Lord LYELLPerhaps I may interject a few minor comments at this point. I agree with the noble and learned Lord who normally sits on the Woolsack and the noble Lord, Lord Lloyd of Kilgerran, that we are beginning to consider one of the more important and crucial areas of this very long Bill. Indeed, it is far longer than the Bill which is currently occupying the attention of the place at the other end of the corridor. The Amendment which we have before us at this stage seems to help inventors or particular individuals in two specific instances. Perhaps the Committee might also consider that any invention, if it is to be of any use or benefit to anyone, has to be further developed. It has to be produced, and also it has to be marketed and sold. The potential beneficiaries, if one may call them that, of this invention, concept or idea have to be made aware that the invention exists. We may have more to say about development, production and marketing in the next Amendment.
The protection of an individual inventor or, it may be, of a collection of individuals in a research team should include other individuals whose functions are merely ancillary, or are normally thought to be so. One possible example would be designers. I understand that normally they design a particular concept or idea and tend to design according to instructions which have arrived on their desks. However, I am given to understand that on numerous occasions designers can produce an improvement. This, too, might be classified, as we understand it, under Clause 36 as a separate invention and, indeed, could be patented as such.
The second point which we should like to raise at this early juncture, and which has been touched on by the noble and learned Lord who normally sits on the Woolsack—certainly he touched on it at Second Reading at col. 311 of the debate, and he has touched on it considerably this afternoon—is that Clauses 36 402 to 40 have been arrived at as a result of the Working Party. We have heard that the relevant interests in the Bill which we have before us today were represented on that Working Party. It seems that a compromise position—I noticed that the noble and learned Lord did not choose to use that term when he was speaking of the Working Party at Second Reading, but I have decided that it would be reasonable to use it this afternoon—was reached.
Many of us on these Benches have our doubts as to how it is possible to be entirely fair to both employees and employers where there are complications and disputes as to ownership, particularly of some concept or invention which may be the result of work done by an individual in the course of his employment. Certainly we would not wish at this stage, or during the passage of the Bill, to upset what we consider to be the rather delicate arrangement which has been agreed, so we understand, between the members of the Working Party. We wonder whether it is wise to seek to gain further concessions. We wonder whether this Amendment is not seeking a further concession, and we look forward to hearing what the noble Lord, Lord Lloyd, has to say about it.
§ Lord LLOYD of KILGERRANI fully appreciate what the noble and learned Lord has said about this Amendment—that I am proposing to narrow the field in relation to paragraph (a). I am very grateful to the noble Lord, Lord Nelson of Stafford, who appreciated the great difficulty involved in being able to produce a clause which would simplify the position of the employer in those circumstances. I am sure that the noble Lord, Lord Nelson, would agree with me that there are a large number of disputes which have arisen in the past as between employers and employees, and that some attempt ought to be made to clarify the position of the employer. I am also grateful to the noble Lord, Lord Brown, for his 100 per cent, support of the words in my Amendment. Having heard what noble Lords have said, may I say that I shall reconsider the scope of this clause and come back to it on a subsequent occasion. In the meantime, I beg leave to withdrawn the Amendment.
§ Amendment, by leave, withdrawn.
403§ 4.53 p.m.
§
The LORD CHANCELLOR had given Notice of his intention to move Amendment No. 174:
Page 29, line 3, leave out ("his special responsibilities") and insert ("the high level of his responsibilities (as for example in the case of a managing director, director of research and development or other person in charge of a significant part of the undertaking)").
§
The noble and learned Lord said: When we considered Clause 36(1)(b) as drafted at present, we felt that the phrase "special responsibilities" was not perhaps wholly clear. May I remind your Lordships of the provision of the paragraph, which is that an invention made by an employee should be taken to belong to his employer if—
(b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of his special responsibilities, he had a special obligation to further the interests of the employer's undertaking.
It was because we felt that the words "special responsibility" were not very clear that we put down the Amendment that was tabled. It clarifies the position, but we now have had representations that the wording is too limited in its effect, because it refers to persons with a high level of responsibility and gives examples of that by reference to top management, as is indicated by the words "managing director", "director of research", and so on. That would leave an important grey area in the middle and senior management range out of the picture. On further consideration, we think that we should look again at the drafting of this subsection with a view to defining more clearly the category of invention which is intended to be covered by Clause 36(1)(b). In those circumstances, I do not move the Amendment.
§
The LORD CHANCELLOR moved Amendment No. 175:
Page 29, line 6, after ("shall") insert (", as between him and his employer,").
§ The noble and learned Lord said: I have the impression that we considered this Amendment when I spoke to Amendment No. 172. I beg to move.
§ On Question, Amendment agreed to.
§ On Question, Whether Clause 36, as amended, shall stand part of the Bill?
404§ Lord LLOYD of KILGERRANAs I indicated, this is a very important clause and I should like to have had the opportunity to speak to Amendment No. 174 if it had been moved by the noble and learned Lord. In view of the fact that he is proposing to reconsider the Amendment, perhaps I might say that I was proposing to support him as regards that Amendment, subject to one point. In the last line but one of the Amendment there is a reference to a:
person in charge of a significant part of the undertaking".The word "significant", it seems to me, may give rise to difficulties and there may be some better form of words to be used if, in his new draft, the noble and learned Lord proposes to use that phrase.
§ The LORD CHANCELLORI am very grateful to the noble Lord. We shall bear in mind his pointer to another part of the proposed Amendment which needs thinking about again.
§ Lord BELSTEADMay I refer to the same Amendment, because it was not moved, and ask whether the Government would consider not including special examples. I feel there is a difficulty here. The noble and learned Lord will have much more experience than I as to whether the inclusion of special examples in a Statute can be unnecessarily restricting to the courts. The noble and learned Lord may say to me that that is not the case, but I should like to put to him that several people were worried that several examples were put into the Government Amendment, which is perhaps a rather unusual way of proceeding when drafting a Bill.
I should like also to ask one question with regard to Clause 36. What would be the situation if an employee discovered an invention in breach of his contract of employment, such as through the unlawful use of his employer's facilities? May I quickly say that I may well be told that such a thing would practically never happen. I am sure that that is the case, but nevertheless, if it does, what would be the answer?
§ Lord CAWLEYI feel that a list of examples can be very misleading, because the court tries to find out whether the office, say, in this case, is ejusdem generis with a series of other offices, and considerable argument is often caused as to 405 whether or not the office concerned would be ejusdem generis.
§ The LORD CHANCELLORThis is not an easy problem. Giving examples in legislation is now regarded as very fashionable and is commended by the Renton Committee Report. But it is only fair that I should say that your Lordships will have noticed that in discussing Clause 36(1)(a) I commended the generality of the description and rather fled from the suggested example which the noble Lord, Lord Lloyd of Kilgerran, indicated. We will have another look at this to see whether some general language can be effective to cover the kind of people we have in mind in Clause 36. It may well be that at the end of the day we shall not be able to improve on "special responsibilities". However, we will have another look at it.
All I can say to the noble Lord, Lord Belstead, is that the giving of examples is now something with which we shall become increasingly familiar. The noble Lord asked me a conundrum about what happens if an employee is unlawfully using his employer's facilities and—Eureka!—hits upon an important invention. I should like to think about that one. I would suspect that it becomes his employer's invention but whether, in those circumstances, he ought to enjoy any compensation under the provisions of this Bill is a point I should like to think about.
§ Lord NELSON of STAFFORDMay I say how much I welcome the remarks of the noble and learned Lord. To specify particular posts or responsibilities is extremely dangerous because they are not by any means the same in different circumstances. The responsibilities of "managing directors" and those of "directors of research" can vary. The titles have different meanings in different places. I very much welcome the fact that the noble and learned Lord is looking at this again and will bear these points in mind.
§ Clause 36, as amended, agreed to.
§ Clause 37 [Compensation of employee for certain inventions]:
§ The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel)Before I call Amendment No. 175A I 406 should point out to the Committee that if this Amendment is agreed to I shall not be able to call Amendments Nos. 176 to 181 inclusive.
§ 5 p.m.
§
Lord BROWN moved Amendment No. 175A:
Page 29, line 8, leave out subsection (1).
§ The noble Lord said: Before I start speaking about this Amendment I should like to make quite clear just what I am talking about. One could roughly categorise employee inventors into three types: those who own the patents, those who own the patents but have licensed the inventions to their employers, and those who do not own the patents. The provisions in the Bill for giving proper treatment to the first two categories are in my view very sound indeed, so I am speaking about only the latter category of patents which, because of the nature of the employment of the employee, become the property of the employer. Clause 37(1) gives the right to such employees to claim compensation at a later date if they make a lot of money for the employer. Good as the intention is on the surface, I want to draw attention to the very grave problems to which this will give rise in the future.
§ In the first place, in British organisations which are set up to develop products or new means of manufacture—because they, too, can give rise to patents—it will create enormous jealousies and secrecy, because at present it is commonplace in those departments for a discussion to take place rather like this: "Whose name will go on this patent?" There is no objective means of determining who is the inventor because it has come out of the discussion and a lot of trials and tribulations over months, or even years, as to how to solve the problem. Nobody knows who the inventor is. No doubt in some laboratories it is a case of "Buggins's turn". This is a friendly arrangement because it does not matter so long as the department gets the credit and the firm's prosperity is increased by such an invention. However, if Clause 37(1) stands, it will matter a great deal in the future on every single occasion.
§ Lord LLOYD of KILGERRANIf I may interrupt the noble Lord, did I understand him to say that it is the 407 general practice in regard to the industries with which he is concerned that the industries do not know who the inventors are in relation to patent applications which are filed? The application is for the "true and first inventor", therefore I understood that searches had to be made as to who indeed is the inventor. I may have misunderstood the noble Lord.
§ Lord BROWNThe noble Lord has not misunderstood me one iota. The legal profession has always assumed it to be a matter of objective fact that a person's name appears—and I know very well that if one misquotes the name one can, under previous law, render the patent invalid, or so I have been told—but the fact of the matter is that, however the legal profession feels about it, this is the way it has to be done. The assumption behind the law as it stands is that one can objectively determine who the inventor is, and I am now telling the Committee that this is often not possible. It is the product of many minds. Unquestionably, and in my own personal experience, this goes on and I have discussed it on many occasions with other people. A patent comes out with a name or names on it and from then on it is assumed that they are the inventors, but the people concerned with the problem know very well that this is not so: it is indeterminate.
§ Lord LLOYD of KILGERRANI presume the noble Lord then fully realises that in those circumstances the patents can be attacked and rendered invalid. They are not in the name of the true and first inventor.
§ Lord BROWNI should very much question whether an attack of that kind would succeed in the courts, because with the circumstances displayed it would become obvious that it was very much a hit and miss business to determine precisely who made the invention. I think this is the difference between the industrial point of view and the legal point of view. In industry we have to take account of what exists in these patents and fortunately for the legal profession they do not always have to go quite so deeply into it. This clause will put industry right into this mess. Following developments of enormous importance to British industry 408 we are tending to lag on this and it puts a spanner in the works in the way I have described.
The other part of my argument is that to bring a patent through to a developed product, to "productionise" it, to make all the decisions to invest in the equipment to make it, to plan the marketing and to go ahead, is a long and costly process. All sorts of other people are engaged in this process. In the course of developing it alterations have to be made and ideas incorporated which are often as important as the original invention although they are not themselves patentable. All these people who have brought the invention to fruition are excluded from the right to claim proper compensation at a later date. If one looks at paragraphs (d) and (e) of Clause 38(3) one sees that the comptroller has to take into account the amount of skill and resources devoted to the exploitation of the patent but only from the point of view of determining the amount of compensation to the original patentee himself, not with the idea of giving the other people any compensation as well. So one gets the fortunate person whose name appears on the original application as the sole beneficiary of the work of many others involved in the application when the patent was first applied for and, still more, who helped to bring it to fruition.
The last part of my argument is this. Let us look at the problem it will give to the comptroller and possibly subsequently the Patents Court itself. In regard to the time taken to develop inventions, the period from the time of application to the grant of a patent is about 2½ years, according to this Bill; the time subsequently taken to develop it into a product of a saleable nature may be another two or three years; the time taken to "productionise" it will be another two or three years, and to create peak volume on the market, which is probably the situation which the original inventor will wish to claim, the time may add up to anything from seven to 10 years. A few of the people concerned will have left the company in the meantime and the patent comptroller will have to delve back seven, eight or nine years into the past in order to reach a conclusion. This will give rise to a large number of claims in the future. Believe me, every person employed as an inventor will have to keep his eye on this ball. The 409 number of claims will be very great indeed. My final argument is that the people we are speaking about are employed to invent. Why should they be paid twice over? I cannot see at all the underlying logic of this part of the Bill. I beg to move.
§ Lord NELSON of STAFFORDThe noble Lord, Lord Brown, has touched on a number of facets of Clause 37 on which I feel grave concern and this might be an opportunity to comment further on some of the things he has said. I spoke at some length on this aspect of the Bill on Second Reading. The point which the noble Lord has made regarding the difficulty of defining who actually is the inventor is a very real problem. If the invention is going to belong to the employer it does not really matter; everybody pulls together and the patent is registered in the name of the firm. This is the atmosphere which all of us have to try to cultivate in industrial research, which is team work, and everybody pulls together to create in an invention an idea which will be to the benefit of the firm.
There is a great fear among many of us that this clause is going to create an atmosphere of secrecy between those participating in such a team, that they will be looking to their own interests rather than to the interests of the whole. The interchange between individuals which is the essence of ideas and inventions—"Have you tried this?", "Have you thought of that?", and so on—leading ultimately to success, will be very much stultified if people think that they have a personal interest in the question of where the idea came from. This is entirely against the atmosphere which we all try to create in industrial research today.
The implication also is that in some way the employee may be done out of something as a result of his work. That is a misconception. There are a few people who live by inventions—professional inventors—but in fact very few exist today. Most of this work is done as team work against an objective, and the vast majority of people working, certainly in industrial research, look for their reward out of the success achieved by their firm, the promotion which they will no doubt get as the result of their contribution to that work, or the enhancement of their professional prestige with their professional peers which 410 will advance their career in their profession. Therefore, I must say I have much sympathy with the points which the noble Lord has put forward. The Amendment strikes at the heart of this clause; I well appreciate that, and that is why I speak to it at this moment.
I think also that the length of time involved is going to be very serious. Claims can be made many years after the invention was first made. I do not know how we are all going to keep records of who did what and when, if a claim can be put forward many years later, and how this is going to be done, either in the firm or in the Patent Office, or wherever these things are going to be lodged. I express very grave concern about the number of people involved in this. It is not patent law at all; it will be property law and every kind of contract law and everything else, as to who owns what. Therefore, I support the views that Lord Brown puts forward in his Amendment. I think we have the nub of the problem in what he has put forward.
§ Lord BROWNI omitted to give the Committee a little information. I received a communication from ICI this morning. I will not take up time by reading it. There were three parts to it: one, a brief report from a manager of a research department of a division; secondly, a report from a section leader of a research department of another division; thirdly, a report on a group discussion of research and development staff of still another division. I can hand it to the noble and learned Lord if he would like to have it. The arguments put forward are very much in line with those I have put forward in moving this Amendment, and which the noble Lord, Lord Nelson, has put forward.
§ The LORD CHANCELLORI am bound to say that this Amendment strikes at a key provision in this part of the Bill relating to the rights of employee inventors. Of course, there are difficulties in the way of identifying inventors; there will be problems of identification. But, of course, if it is merely a problem of more than one person having been concerned in the invention, Clause 40(3) provides:
In sections 36 to 39 above and this section references to the making of an invention by an employee are references to his making it alone or jointly with any other employee".411 It is fair that I should read the rest of the subsection:…but do not include references to his merely contributing advice or other assistance in the making of an invention by another employee".At any rate, it deals with a situation where more than one employee is involved in the making of the invention.What the clause does is to provide the employee who makes an invention belonging to his employer with the possibility of an award of compensation when the patent for the invention is of outstanding benefit to the employer. Normally employees who are employed to engage in inventive activity like research or development work will have no claim to compensation for their inventions, because they are no doubt being paid the rate for the job they are doing and this ought normally to be enough.
But exceptionally the clause contemplates an employed inventor who comes up with a "humdinger" of a winner, if those are suitable words to fall from the lips of a Lord Chancellor. In such cases the Working Party on Employed Inventors' Rights, to which I have referred, considered that it would be no more than fair in those exceptional circumstances to allow him a claim to compensation for the "bonanza" that he has earned for the employer. So we are not dealing here with hundreds of applications, with run-of-the-mill inventions which are patented by the thousand every year. We are dealing with the sort of invention which may revolutionise a company or perhaps even a whole industry. The Working Party took the view that in such exceptional cases there should be some recognition of the contribution which the inventor has made, and for this reason it was felt appropriate in those circumstances to allow the inventor to apply for compensation. I must invite noble Lords to consider this, if they disagree with what is proposed. I wonder what they think would be the feelings of an employee who by his remarkable invention brings this enormous outstanding benefit to his employer and gets no additional compensation or reward for it. He would, I should have thought, be entitled to be not exactly gruntled at the situation which has arisen.
§ Lord IRONSIDEIf I may interrupt the noble and learned Lord for one moment, would he not agree that very often it takes years to work out whether a particular invention has been of outstanding benefit to a firm and therefore this emphasises the truth of what the noble Lord, Lord Nelson of Stafford, has just said, that it would create difficulties in this area.
§ The LORD CHANCELLORI do not doubt that there will be difficulties, and the Secretary of State indeed will have power under Clause 112 of the Bill to prescribe a period within which claims must be made. I do not exclude the possibility that there will be difficulties. It will be difficult to decide what period of limitation to prescribe, whether it be too short or too long. But I invite noble Lords to ask themselves, if the difficulties can be surmounted in a given case, and we are dealing with an inventor, a researcher, who has made a remarkable discovery which may bring millions of pounds into the company, is it really to be said, "Oh, no, he does not deserve any compensation at all". I would think that to be a very hard-hearted and tight-fisted attitude from this normally most generous House.
I do, accordingly, take the view that, difficult though the situation may be, frail as human emotion may be, and jealousy might occasionally break in, it would be wrong to abandon what I regard as an important part of this improvement in the position of the employee-inventor, who indeed ought to be encouraged to invent. I am rather reminded of an occasion when there was a complaint in another place when Mr. Winston Churchill was Prime Minister, that Field Marshall Montgomery was claiming as his own the Articles of Surrender of the German Armies on Luneberg Heath; Mr. Churchill said,
I think we ought to encourage our Field Marshals to secure the surrender of whole armies".I think we ought to encourage our inventors to secure a "bonanza" in this way. I hope, therefore, we shall be able to proceed with this, although, naturally, we are very willing to see whether any greater precision in definition might be used.
§ 5.20 p.m.
§ Lord WAKEFIELD of KENDALThe noble and learned Lord the Lord Chancellor has throughout referred to the individual. My noble friend Lord Nelson of Stafford and the noble Lord, Lord Brown, have said again and again that so often these days it is team work that enables inventions to proceed. This is the difficulty. The noble and learned Lord the Lord Chancellor did not refer to the question of team work at all.
§ The LORD CHANCELLORWith great respect, I drew attention to a specific provision in the Bill that an invention which is produced jointly with any other employee or employees is capable of being rewarded under this scheme.
§ Lord WAKEFIELD of KENDALAlthough that is so, nevertheless is it not a fact that it is increasingly difficult to define that when so many take part in the development and evolution of an invention? That is the point that my noble friend Lord Nelson of Stafford emphasised. If we do what is suggested we should discourage—not encourage—team work. We would provide reasons for secrecy and things of that kind and, therefore, we should not progress. In this country we very much need team work in the development of inventions rather than simply individual effort.
The Earl of HALSBURYI should like to say a few words in support of the view put forward by the noble and learned Lord the Lord Chancellor. During the Second Reading debate I drew attention to the difficulties raised by the noble Lords, Lord Brown, Lord Nelson of Stafford, Lord Wakefield of Kendal and other noble Lords. I am sorry that I missed the opening remarks made by the noble Lord, Lord Brown, but as he was speaking to the same effect as I did on Second Reading, I do not think that I missed the sense of his remarks. I have been hovering ever since about which side of the fence to come down on. I think that I agree with the view expressed by the noble and learned Lord the Lord Chancellor.
I should like to tell noble Lords the story of the television. Baird of course invented everything that was easy and did not matter. The key to the whole 414 invention was the camera. It is often argued whether it was Britain or America that first invented the camera. In fact, neither was first because the two people who produced the first cameras were both Russian exiles—Zworykin in America working for RCA and Schoenberg in Britain working for EMI. When Sir Joseph Lockwood became chairman of EMI he told me that he was absolutely shocked at how little had been done for Schoenberg on whose original work a great industry was built. I appreciate the difficulties, but I think that we should confront them and not funk them. We should be liberal in our attitude and not just reflect the establishment—whether it is the industrial establishment, the Government establishment or any other establishment making life easy for itself on bureaucratic lines.
We should recognise that original inventors are people on whom our society has depended. There are very few of them. We should lay open to them some kind of machinery so that they can make a claim on it in the event that justice is not done. I quite agree with the noble Lord, Lord Nelson of Stafford, that on most occasions people are rewarded by promotion, advancement in salary or whatever. But suppose that they are not. Have they no recourse? I believe that Clause 37(1) should be left in the Bill and therefore I am against the Amendment.
§ Viscount ECCLESI take the opposite view and support the noble Lord, Lord Brown. I know only a little about this subject and that relates to the man made fibre industry. In that industry there is no question but that it is teamwork all the time that produces the modifications in the fibres which have such enormous worldwide results. There is, perhaps, only one word in this clause that saves the whole thing and that is the word "substantial". I do not believe that anyone will be able to prove whether an invention is of substantial benefit to the employer until so long afterwards——
§ The LORD CHANCELLOR"Outstanding".
§ Viscount ECCLESI stand corrected: the word is "outstanding". It means that after years one has to prove that an 415 outstanding benefit has accrued to the firm, by which time the team of course will be split up and there will be all kinds of difficulties. I understand that this has been included as a compromise. I know some of the industrial members of the working party and their view is that this will certainly lead to one dispute after another as to the degree of responsibility between one, two, three, four or fifty people who contributed to the particular invention. They said, "Never mind. If this is something that the Government want for their Working Party, the clause is now so badly drawn, do not amend it; let it go through and nothing much will happen. "That is a very unsatisfactory position. Parliament should not legislate to put into effect a compromise that has been reached by a Working Party where the drafting is such—I think I said this on Second Reading—that it is a feast for lawyers. That is all the clause is. It does not reflect the normal industrial situations which the noble Lord, Lord Brown, described very well to your Lordships.
My noble friend Lord Halsbury is perfectly right that once in a while an inventor—for example, Mr. Schoenberg or whoever it may be—will not be sufficiently rewarded. That is not what the clause is for. This compromise is to allow all sorts of people to stake claims—and they will do so whether or not the noble and learned Lord shakes his head. If the clause becomes law that is what will happen and it is a pity. We have had a good example in the devolution Statement of how the Government are willing to consult with other parties. I hope that between now and the Report stage they will consult a little further so that we can clear up this at present rather muddle-some matter.
§ The LORD CHANCELLORIs the noble Viscount against the whole idea because, if so, there is not much point in discussing it and the Committee will have to take a view? I could not quite follow whether the noble Viscount was suggesting that there might be some variation in the words, "of outstanding benefit", or some other formula.
§ Viscount ECCLESI am no more against the whole idea than I am against public lending right, but no one has yet 416 discovered the right way to put an idea into practice so that matters will not become worse rather than better. If I knew a way—and I am not a lawyer so I do not—in which a case, such as that of the television camera, could be treated in a fairer manner I should be glad to see that in the law. These matters depend on the decency of the employer and the generosity of those who make a large profit out of this or that saying, "I will share this with those who helped me on my way." I doubt whether one can legislate for that kind of generosity.
§ Lord BELSTEADAlthough I do not think that my opinions on this matter are of any great interest, perhaps it is right that the Opposition Front Bench should tell the Government which way they intend to vote if there is a Division. My noble friend Lord Eccles, as he so often does, has put his finger on the matter. He may not be against the idea in principle but he feels that the problem will arise over what will happen to the Bill in practice. I conclude that the difficulty does not lie so much in Clause 37(1)(a), to which the noble Lord, Lord Brown, drew our attention, but that the nigger in the woodpile comes later on in Clause 38 where we have this incredibly complicated machinery for seeing what the outstanding benefit will be from an employee's invention. I hesitate to tangle with the noble and learned Lord, but I should not have thought that Clause 112 will help very much. If, as people who have knowledge of industry have been saying in their remarks on this Amendment, it will take a very long time before one knows what the benefit will be, it is not going to help very much, because there happens to be a clause which says that a time will be prescribed to work out the answer.
I very much take my cue, although I do not reach the same conclusion, from my noble friend Lord Nelson who, with the noble Lord, Lord Brown, and other noble Lords who really know this subject, has pointed out that this matter is pitted with difficulties. The noble Lord, Lord Brown, put them very clearly when he was moving his Amendment. I could only wish that the voluntary schemes to which Banks drew attention with great approbation would proliferate in the future. My main worry is that under Clauses 36, 37, 38 and 39 we shall see a diminution of voluntary schemes in industry.
417 I do not reach quite the same conclusion as my noble friend Lord Nelson on this. I have a feeling that, with his experience, he is saying that because it is so pitted with difficulties he would reach the same conclusion as the noble Lord, Lord Brown. My conclusion is that which was put forward by my noble friend Lord Lyell earlier on, that this was part of a package which was arrived at by a Working Party. I think perhaps the Working Party had reason for the conclusion they reached. I would guess that with their collective experience the Working Party bore in mind that an inventor who has got ambition and drive will very often, it is quite true, gain his reward from promotion and a better salary scale, and in the normal way within his business. But I would think also that the Working Party were ready to recognise the position of the pure researcher; the man who perhaps has no worldly ambition and who is devoted to his work, and whose discovery may bring great rewards not only to his employer but also, very likely, to other employees, licensees and retailers.
I therefore hope that it may be possible for the Committee to leave this subsection as it is drafted, despite the holes which the noble Lord, Lord Brown, and other noble Lords have been able to blow into it. But perhaps we may be able to give a little more consideration to this incredibly complicated machinery which we are going to come to when we come to Clause 38. For my own part, and for my noble friends' part, we would not find ourselves in the same Lobby as the noble Lord, Lord Brown, even though we accept so much of what he says. We would accept the advice which the noble and learned Lord the Lord Chancellor has given to the Committee on this Amendment.
§ 5.33 p.m.
§ Lord LLOYD of KILGERRANMay I rise briefly in support of what the noble and learned Lord has said in his speech, and what the noble Earl, Lord Halsbury, said. We have heard the expression, "the normal industrial position", coming from many noble Lords, and particularly from the noble Viscount, Lord Eccles, and the noble Lord, Lord Nelson of Stafford. What is the normal industrial situation at the present time? It is that there are 418 many technical people employed in firms who have made at least £1 million for the benefit of their company. It is quite easy in these days for a rather obscure technical assistant, lowly paid, to make an invention which is of great benefit to a particular company. As the noble and learned Lord indicated, and it is within my own experience, there are vast numbers of men in the employ of industry who are disgruntled about their situation. It is all very well to say that they receive promotion from industry, and that they get their rewards in that way; but that does not apply to vast masses of men who have made a great contribution to the business of a firm by their patented invention.
I cannot believe that the patent departments of the great firms with which the noble Lord, Lord Nelson of Stafford, is associated can be in such difficulties that they cannot trace who invented some particular invention. But the argument produced by the noble Lord, Lord Brown, and the noble Lord, Lord Nelson, was largely based on the fact that this would probably break up research teams; that employees would be set against each other; that secrecy and hostility would be encouraged among members of research teams. I do not think that that is the present position in industry.
When this matter was being considered recently by Mr. Duckworth, who is the managing director of the National Research and Development Corporation, commonly known as NRDC, he was delivering the eleventh Graham lecture and was considering the position which had arisen in Germany in regard to the methods employed for rewards to employees. This is what he said about experience arising in Germany:
Although this factor"—the factor was that there was the possibility of breaking up the teams of research workers—is probably a very minor one, it does at least not seem to have hindered their prowess.So from the experience in Germany there has not been this disaster about which we have heard from the noble Lords, Lord Brown and Lord Nelson.Then there is the factor that it is difficult, if not impossible, to decide which of many employees is in fact the inventor. 419 May I remind your Lordships that ever since the beginning of the century this country has been a signatory to an international treaty which makes it incumbent upon a patent to have placed upon it the name of the inventor. I must assume that when a name of an inventor is put on a patent it is the name of the person concerned with that invention.
Therefore, I should like to support the speech made by the noble and learned Lord in this matter, and to thank him for his sympathy, because it seems to me that if we can get into the Statute a procedure for rewarding employee inventors, then that would be a great advance in industrial relations in this country, and will help to encourage invention in the terms used by the Prime Minister recently; it will encourage invention in the best possible way.
§ Lord BROWNIn this House we are used to gracefully acknowledging the help which we get from our noble and learned friends. I think on this occasion our noble and learned friends ought to listen very carefully to what industrial people are saying. The noble Lord, Lord Lloyd, has commented on my support of my Amendment. He has exaggerated what I have said in order to dispose of it. I never spoke of disaster; or breaking up research teams. I spoke about jealousies, difficulties in getting the right name on the patents; the long-term nature of the development which would lead to outstanding benefits; the number of cases that come before the comptroller, and the secrecy which would arise. These are real things. Those who have had some familiarity with this problem in industry would support me in saying that this would happen.
The noble and learned Lord the Lord Chancellor talked of "humdinger" inventions. This is the sort of public image of what goes on in the development laboratories—break-throughs. There are occasional break-throughs, but they are very limited in number. The normal thing is a process of intellectual and physical development of things that goes on over a long period of time. There are very few "humdingers" which can be traced to one man's inventive genius. They occasionally arise.
420 It is also argued that these people need to be encouraged. The people who work in these establishments where inventions are likely to arise are generally working in the area of industry which is most attractive to intelligent people. Do you think they need encouragement to do their job? I do not. I think they know that they are there to invent. As the noble Lord, Lord Nelson, said, if they are highly successful they will get promotion. They may very well get ex gratia payments over something very outstanding; but they do not need encouragement. That is their job, and they know it. They are scientists, or they are engineers; that is their job, and in my opinion the gratification of having discovered something very important, in their minds will exceed the later compensation which they might get, which will be regarded as a murky business because they know that much of what they have done is due to the help of other people who have been assisting them in these developments. Therefore, this idea that we are dealing with "humdingers", or winners, or break-throughs, is quite false in the generality of things.
When one comes to the term "outstanding benefit", there are lots of people who get their name on the patent who are going to assume that it has brought outstanding benefit to their employer, whether or not the courts will think this too. In any event, what is an outstanding benefit? Is it £5,000, £5 million or £500 million? Most people who have their names to a patent will need a very small assumed amount—because it can only be assumed—to cause them to take a case to the patent comptroller. And why cater for particular people who might make an outstanding contribution to their employer? It is the job of every senior person in industry to try to produce ideas of outstanding benefit to the employer in terms of production, management, industrial relations, marketing and everything else. If these jobs are well done they are all of outstanding benefit; so why single out those who happen to get what is called a patent? I think the Government are riding into great trouble over this.
I have been cogitating what to do about the Amendment. I was disappointed in the reaction of the noble Lord, Lord Belstead, and I do not think that tinkering with the next clause will help the situation. 421 I suppose the Amendment would be lost rather than gained if I were to press it. Having expressed disappointment at the reaction of the Government, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 5.42 p.m.
§
The LORD CHANCELLOR moved Amendment No. 176:
Page 29, line 8, after ("to") insert ("the court or").
§ The noble and learned Lord said: It may be for the convenience of the Committee to deal at the same time with Amendments Nos. 180, 182 and 184. Clause 37 at present requires an employee applying for compensation to make his application to the comptroller; the application would go to the court only on appeal or if the comptroller had declined jurisdiction under subsection (5). On reflection, there seems to the Government to be no good reason why the applicant should not, if he so wishes, go direct to the court for the determination of his application. Indeed, this was specifically agreed by the Working Party which discussed these questions last year. I think there is no danger that an impecunious employee will be forced by his employer into expensive court proceedings because invariably it will be the employee who will be the applicant or plaintiff, as the case may be, and the choice will therefore be his, and this Amendment with the others I mentioned will give the court the necessary jurisdiction.
§ The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guildford)Before the debate develops, I should explain that these Amendments interlock with some other Amendments on the Marshalled List; if Amendment No. 182 is agreed to, I shall not be able to call No. 181, and if No. 184 is agreed to, I shall not be able to call No. 185.
§ On Question, Amendment agreed to.
§ 5.45 p.m.
§
Lord Lloyd of KILGERRAN moved Amendment No. 177:
Page 29, line 9, after ("period") insert ("(a)").
§ The noble Lord said: With the leave of the Committee, I will speak also to Amendments Nos. 181 and 185; 177 and 422 181 are purely formal and the substantive point I wish to develop is contained in No. 185. The purpose of this provision is to set out a procedure for awarding compensation to employee inventors, it sets out a number of parameters which have to be taken into account in assessing the award and it goes on to say that the comptroller of patents should decide on any award to be made. I submit that all the papers in such a claim should be put to the comptroller and that he should be able to see whether they are in order; but the amount of the award should not be determined by him but by a separate tribunal.
§ When the papers come to the comptroller he can, as is the practice with many tribunals these days, act in a conciliatory way and try to arrive at an agreement about the dispute and help the parties to the dispute to resolve their difficulties. Having done that, he should then, if he is unable to resolve any dispute arising out of a claim for compensation, direct that the application for compensation be referred to a tribunal, and in my Amendment I suggest the form of that tribunal; it should have a qualified chairman, perhaps a chartered patent agent with knowledge of patent affairs, and other persons of experience in the commercial exploitation of patents.
§ As I have reminded your Lordships on more than one occasion, I had the privilege of being a member of the Royal Commission on Awards to Inventors which was set up after the war. It was established under the chairmanship of the late noble and learned Lord, Lord Cohen, for the purpose of deciding what compensation should be paid to persons and firms whose inventions had been used during the war. Some of them were patented inventions and the Commission decided the validity of patents and the infringement of patents in a broad and robust way. It also had to deal with unpatented inventions which had been of service of the country during the war. The Commission was composed of businessmen, scientists and lawyers and we were able to come to robust decisions having regard to all the factors concerned; that is, what kind of award, if any, should be given to applicants making claims.
§ In my view, a tribunal would be better able—I say this with great respect to the 423 comptroller—to assess an award in circumstances of this kind because the members of the tribunal would be associated as industrialists with those difficult matters to which noble Lords have referred. My Amendment would enable the comptroller to refer a claim for award to a tribunal and not to deal with it himself. There would in my view be no appeal from the award of that tribunal, in the same way that after the war awards made by the Royal Commission did not give a right of appeal. It seems to me that acceptance of the Amendment would simplify the administrative work of the comptroller and would prove of considerable value to industry. Many of the difficulties which have been referred to in the discussion of earlier Amendments to Clauses 36 and 37 would disappear because we should have a tribunal the members of which would be fully familiar with the difficult technical problems that arise in patent disputes.
§ The LORD CHANCELLORI note the interesting suggestion put forward by the noble Lord, Lord Lloyd of Kilgerran. This suggestion was considered by the Working Party on Employees' Inventions to which we have referred more than once already; namely, whether it would be appropriate for claims for compensation to be determined by a specially set up statutory tribunal. When the question was considered, there was a great deal of support for the idea of tripartite tribunals being set up at factory level by agreement between the employer and employee. Indeed, I and the Government believe that such arrangements ought to be encouraged. I was glad to note that on Second Reading the noble Lord, Lord Ironside, lent his support to that idea. Of course that is one of the purposes of Clause 37(3) of the Bill.
However, a new statutory tribunal is, I feel, a very different question and conception. After all, the Bill already provides that an employee may apply to the comptroller for determination of a compensation question, and the Amendment that we have just agreed will also give direct jurisdiction to the court if the employee should prefer to go directly to the court. Those proposals were the recommendations of the Working Party, so we already have several courses open to an employee who wishes to apply for compensation. I doubt very much whether 424 it is in the interests of the employee to set up yet another forum before which the claim can be brought. In addition, I venture to think that it would not be easy to find persons suitably qualified to constitute this tribunal and who yet had no possible interest in the decisions.
I know that what has actuated this proposal or may be influencing the approach of the noble Lord on this matter is the problem of expense. He may well think that procedure before such a tribunal might be less costly. I know that it will not be believed by any noble Lord present who is not a lawyer that lawyers are not concerned about the high cost of litigation—or, I should say, are concerned about the high cost of litigation. That was an unfortunate slip of the tongue! However, we anticipate that the procedures open to the employee to go to the comptroller, for instance, will not be expensive. It is not thought that it will cost anything more than a couple of hundred pounds at the most for that procedure to be followed, so I do not think that the cost element is very crucial in this situation.
I believe that, while we ought to encourage ad hoc and local arrangements between employer and employee in company or factory to sort these things out by agreement between themselves on a reference to a triumvirate, to set up a central tribunal with statutory powers would be an unnecessary elaboration and would be creating yet another mechanism that would have to be manned, provided and paid for. We already have an enormous proliferation of tribunals up and down the country and I am not persuaded that setting up a statutory tribunal in regard to this matter would be justified by the needs of the situation.
§ 5.54 p.m.
§ Lord DAVIES of LEEKI want to get this clear. Let us take a part of industry that is not like mechanical industry—for instance, the field of biochemistry. You get the production of a drug in a laboratory. I know from experience—I ought to declare a small interest in this—that it might take 10 or 20 scientists to produce drug A, which would have gone through the hands of a number of juniors who had just got their first degree and of many other people. DNA is an example of this. Consequently it is often very 425 difficult in such fields as the pharmaceutical and the cosmetic industries to come to a conclusion as to where the weight of the invention lies. But it is not so difficult to reach the conclusion that without A, B, C and D working in line with X who originated the idea, there would have been nothing at all. Consequently, I come down on the side of some ad hoc organisation which knows the industry that it is dealing with. Whoever would be coming to a conclusion on this must know the ramifications of molecular roulette. Am I right, therefore, in saying that some sort of organisation like that would be in existence that would cover the point of the noble Lord, Lord Lloyd of Kilgerran? Have I made my point clear?
§ The LORD CHANCELLORI think that it may be that what I was suggesting—a tripartite tribunal set up at factory level—would enlist the kind of expertise in a specialised field to which my noble friend is referring. But a centralised statutory tribunal of three men to adjudicate over the whole range of the field seems to me to present certain difficulties.
§ Lord LLOYD of KILGERRANMay I ask the noble and learned Lord a question about expense? He was quite right in thinking that one reason for putting forward the Amendment was to limit the expense. He referred to the fact that, under the procedure as set out in the Bill, £200 would be the kind of expense that would be incurred. But may I ask the noble and learned Lord whether Clause 91 gives powers for an appeal from the comptroller's decision? If there is an appeal, it will go to the High Court of Chancery and the expense will be very considerable. If the noble and learned Lord feels that it is difficult to set up a statutory committee that is always in being, I would have in mind an ad hoc committee; the comptroller could call upon people from a list of experienced men to deal with these things and could pay them on a daily basis. This would not be a tribunal requiring a big staff. A great deal of the preliminary work would have been undertaken by the staff of the Comptroller General. May I therefore ask the noble and learned Lord, in relation to expense, whether he is saying that the cost to the employee would be of the order of £200 and that there should be no appeal and no going 426 to the Chancery Court? Alternatively, would he consider an ad hoc committee to deal with this matter?
§ The LORD CHANCELLORPerhaps I can turn the question back to the noble Lord, Lord Lloyd of Kilgerran. Is he suggesting that the statutory tribunal should be a final tribunal with no right of appeal from it? If the answer to that is, "Oh there must be a right of appeal", presumably that would go to a court, so we are enmeshed in the expenses of appellate procedures either way. It would be surprising if the noble Lord were to say that this statutory tribunal should have the power to give a final decision.
§ Lord LLOYD of KILGERRANI was contemplating a tribunal made up of ad hoc persons from which there was no appeal to the court. I thought that I had indicated in support of my Amendment that the position of the tribunal would be similar to that of the Royal Commission on Awards to Inventors. There is no appeal to the courts from the decisions of that body in making their awards. I had in mind the setting up of an ad hoc tribunal from which there was no appeal.
§ The LORD CHANCELLORI am sorry to trouble the noble Lord with direct questions, but what does he mean by an "ad hoc tribunal"? What I thought he contemplated was a statutory tribunal whose composition, powers and terms of reference would have to be defined by Statute. I do not quite know what the noble Lord means by an ad hoc tribunal. Does he mean the kind of tribunal that was contemplated in the discussions in the Working Party between employers and trade unions; that is, that within the ambit of what is provided for by collective agreement there should be tribunals set up ad hoc for the purposes of a particular claim? Is that what the noble Lord has in mind? If so, there is no great difference between us. But I do not quite understand his identifying a statutory tribunal as something that he calls an ad hoc tribunal.
§ Lord LLOYD of KILGERRANI apologise if I did not make myself perfectly clear. I realise that there are complications in regard to setting up tribunals. But I had in mind that once the Comptroller General was seized of the claim 427 he could refer it to a group of individuals to decide, and it is that group that I have referred to as a tribunal. It would not be a tribunal with presidents, chairmen, and with a lot of staff and permanently appointed individuals receiving salaries. It could be a group of men, who I would call a tribunal, who would be experienced in the industrial field with which the claim was concerned, and they would decide the matter upon that basis. I am very sorry if I have not made my position quite clear, but I am sure that the noble and learned Lord, if he is sympathetic to the approach I am making, will deal with the administrative matters and provide a group of persons who are able to deal with this matter as cheaply as possible.
§ The LORD CHANCELLORI think that it was my fault in failing to understand what the noble Lord had said. I would hope that the comptroller's decision would be sufficient in a given case. I do not find attractive at the moment the proposal that the comptroller should transfer decision of a problem to a tribunal. I do not find that very practical, and I do not think it really necessary. But I am willing to look at this question, and perhaps we can come back to it again when I have understood the proposition a little more clearly myself.
§ Lord LLOYD of KILGERRANI am very grateful to the noble and learned Lord. No doubt he knows that in this connection I have the support at the present time of the Senate of the Inns of Court, the Law Society, and the Bar, who have specifically suggested that there should be some attempt made to solve this dispute at a tribunal which is similar to the Royal Commission on Awards to Inventors. Those bodies have in fact referred specific-ally to the jurisdiction of the Royal Commission on Awards to Inventors as being appropriate in these circumstances. In view of the fact that the noble and learned Lord has said that he will look at this question again, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEESNotice has been given of a manuscript Amendment by the noble Lord, Lord Cawley. That comes here at No. 178.
§
Lord CAWLEY moved as a manuscript Amendment, Amendment No. 178:
Page 29, leave out line 12.
§ The noble Lord said: We are concerned here with a minor point of principle. On Second Reading I pointed out that there was what might be described as a nonsense in subsection (1) of Clause 37 and it certainly required amendment. As the Government have not put down an Amendment, I have put one down. I do not know whether the Government consider that this is a case where the draftsman could merely take a pen and put a line through line 12 on page 29, so that it would not appear in the next print of the amended Bill. But in my submission he cannot do that, because at first sight it looks as though the sentence has been repeated. However, it has not been repeated. The second part of the sentence includes the words "among other things", whereas the first part does not include those words. So this is an ambiguity which I submit a draftsman cannot correct and we, as the Committee, ought to pass this Amendment, if it is what the Government intend, in order to resolve the ambiguity. I beg to move.
§ The LORD CHANCELLORI am grateful to the noble Lord for moving this proposal as an Amendment. Clearly the line should be left out, and while it is not a complete repetition it is, in substance, a repetition. We had anticipated that it would be done as a printing correction, since the text of the Bill as it was handed in was right, and for once the printers have made a mistake. But I am quite happy to accept the Amendment, and to agree that the matter should be dealt with formally by way of an Amendment.
§ On Question, Amendment agreed to.
§ 6.5 p.m.
§
Lord LLOYD of KILGERRAN moved Amendment No. 179:
Page 29, line 14, leave out ("outstanding").
§
The noble Lord said: I should like to remind the Committee that the claim can be considered by the comptroller general from an employee if his invention has been, according to the wording of the Bill:
…of outstanding benefit to the employer…
The noble and learned Lord, in referring to this clause, paraphrased—if that is the
429
correct term—the word, "outstanding", and he substituted a word which he felt at first rather anxious about, as it might not be appropriate for a noble and learned Lord to utter in this Chamber. He referred to it as a "humdinger" of an invention.
§ I think that most of us would find it difficult to decide what is meant by an "outstanding" invention. Therefore, I rise at this stage only in a probing capacity to ask the noble and learned Lord whether he is satisfied that, in all the circumstances, "outstanding" is the right word. Perhaps there are some distinguished industrialists here with great experience of these matters who, if they are interested, might in the course of the debate be able to suggest another word instead of "outstanding"——
§ Lord DAVIES of LEEKIf I may interupt the noble Lord, I can immediately give him an example of an outstanding invention. He will see it every night when he drives his car and looks at the cats eyes. They are outstanding enough, and they were an invention.
§ Lord LLOYD of KILGERRANI am very much obliged to the noble Lord for pointing out that invention. I say that because we are making some progress in that I have encouraged at least one noble Lord to make some observations in regard to this matter. I beg to move.
§ Lord LYELLIf I heard the noble Lord, Lord Lloyd of Kilgerran, correctly, he referred to an outstanding invention, but I do not see that mentioned in the Amendment which he is moving. What I see is a reference to "outstanding benefit to the employer". I hope that I am not being too much of a barrack-room lawyer as we are surrounded here by noble and learned lawyers; but the point which the noble Lord made about an outstanding invention—the noble Lord, Lord Davies of Leek, spoke of cats eyes which to me are an outstanding invention—is not in Clause 37(1) of the Bill, and I should be grateful for some enlightenment.
§ Lord LLOYD of KILGERRANI am grateful to the noble Lord, Lord Lyell. Of course the clause says that the invention must be of "outstanding benefit", and I am sorry about the confusion here. My Amendment is put forward so that I 430 can ask the noble and learned Lord whether another word can be substituted here, rather than meet with difficulties which would arise from trying to construe what is meant by "outstanding benefit" to the company.
§ The LORD CHANCELLORI appreciate that this is a probing Amendment because the effect of it as it stands is that everyone who has given some benefit to the employer by his invention would be entitled to a claim. We would then indeed have a lawyers' picnic, which of course I would greatly regret. But the phrase, "outstanding benefit to the employer" is perhaps not more difficult than many other phrases which learned judges have to interpret in the course of their peregrinations and day's work. I can think of no better term to express the exceptional nature of the invention which we are considering here, an invention which is of "outstanding benefit to the employer". There is a later provision as to how the amount of the compensation should be determined. There are certain guidelines present to indicate how the amount of the compensation should be decided. But this is the best word that we have been able to discover to meet the exceptional situation that this remedy and this provision has in mind.
§ Lord BELSTEADThe noble Lord, Lord Lloyd, is a distinguished lawyer at the Patent Bar. I am not a lawyer, but I have always understood that in the last 27 years the law has been interpreting the meaning of "an exceptional case" whenever some-one has applied for an extension of a patent for up to a period of 10 years; and I have no doubt that the noble Lord, Lord Lloyd, has made impassioned speeches on that subject and found that under Section 23 of the 1949 Act the judge concerned has been able to find an answer. All I would beg of the Government is that the noble and learned Lord would not keep on referring us to Section 38. I think I have been a loyal supporter of the Government from this side of the Committee with regard to these clauses so far, but I must say that Section 38 really is like a bad dream, and I would much rather not bring that into any argument until we get to the clause concerned.
The Earl of HALSBURYWhile the noble Lord, Lord Lloyd of Kilgerran, was 431 talking about the difficulties of "outstanding", I was scribbling down some synonyms—"outstanding", "exemplary", "exceptional", "super-excellent" and even "humdinger-like". Would the courts find one more difficult to construe than the other? They seem to be very much synonymous.
§ The Lord CHANCELLOROne's grandchildren would probably use the word "super", but I do not think that would be a very good term of art in an Act of Parliament.
§ Lord NELSON of STAFFORDI wish I could rise to the challenge of the noble Lord, Lord Lloyd, and produce an answer to his question, but that, I think, has been given most clearly by the words which have been used in this debate. I am, however, very glad that this Amendment is only a probing Amendment, because if we were to proceed to leave this word out I think it would negative much of the discussion we had on subsection (1) of this clause earlier on. In the meantime, I as an industrialist will give some further thought to see whether we can produce a better word.
§ Lord LLOYD of KILGERRANI am very much obliged to those noble Lords who have made contributions to this matter. In the circumstances, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§
The LORD CHANCELLOR moved Amendment No. 180:
Page 29, line 16, after ("employer") insert ("the court or").
§ On Question, Amendment agreed to.
§
The LORD CHANCELLOR moved Amendment No. 182:
Page 29, line 19, after ("to") insert ("the court or").
§ On Question, Amendment agreed to.
§
The LORD CHANCELLOR moved Amendment No. 183:
Page 29, line 25, leave out ("commencement of this Act") and insert ("appointed day").
§ The noble and learned Lord said: This is a minor drafting Amendment to preserve 432 consistency in the Bill. In all the other places in the Bill the phrase, "appointed day" is used. I beg to move.
§ On Question, Amendment agreed to.
§
The LORD CHANCELLOR moved Amendment No. 184:
Page 29, line 37, at beginning insert ("the court or").
§ On Question, Amendment agreed to.
§ 6.15 p.m.
§
Lord NELSON of STAFFORD moved Amendment No. 185A:
Page 29, line 41, at end insert ("to which a Trade Union of which the employee is a member and the employer or a body of which the employer is a member are parties").
§ The noble Lord said: The purpose of this Amendment is to make it quite clear that this subsection does not apply to those who are not parties to the collective agreements to which reference is made. It is rather unusual, I think, to have a collective agreement introduced into a highly technical Bill of this nature, and this presents a number of difficulties. In the first place, collective agreements are themselves largely concerned with conditions of employment. I am not aware of a collective agreement which involves the property rights of its members. However, that is not really quite my point. My point is that, as it reads, this applies not only to the members of the parties to the collective agreement but also to non-members; in other words, those who are not parties to the collective agreement.
§ I think this is an important Amendment, and I hope it will receive the careful consideration of the Government. There is a large number of people engaged in inventions, in research and in all the activities we have talked about who are professional men and are probably not members of a trade union. Your Lord-ships will be aware that many of the professional institutions representing professional men are searching their con-sciences at the present time as to whether they can reconcile their professional codes with the aims and objects of some of the trade unions they are being asked to join. But I think that to be involved in an obligation to give away, under this clause, their property rights in their inventions under a collective agreement to which they are not parties is not what is intended. 433 This Amendment makes it quite clear that that is not so, and I beg to move.
§ The LORD CHANCELLORI confess to a feeling of sympathy with the views expressed by the noble Lord in moving this Amendment, but perhaps he may be reassured by the fact that Clause 37(3), which we are discussing, ousts an employee's right to apply to the court or the comptroller for an award of compensation only if the relevant collective agreement is in respect of
employees of the same description as that employee".So it is not intended that an agreement between an employer and a trade union in respect of inventions made by one category of employee should affect the position of other categories of employees. The subsection provides that the right of an employee inventor to seek compensation from his employer in respect of the patent for the invention shall not apply where a collective agreement provides for payment of compensation by the employer, and the proposed Amendment seeks to confine the operation of the subsection to cases where the collective agreement is one between a trade union and employer, or a body to which he belongs, and the employee is a member of the trade union in question. In the view of the Government, the first point is met by the fact that in Clause 37(3) the collective agreement must be one within the meaning of the Trade Union and Labour Relations Act 1974; that is, an agreement made by one or more trade unions with one or more employers or employers' associations.As to the other restriction proposed by the Amendment—that the subsection should apply only where the employee is a member of a trade union which is a party to the collective agreement, which I think is the substantial point which the noble Lord is emphasising—we believe it is one which will weaken the intention of the provision, which is that disputes about compensation in respect of inventions should so far as possible be dealt with by normal negotiating machinery of industrial relations rather than by litigation itself. If it can be done on that basis, within a factory or a company in that way, that, we think, would be a more desirable state of affairs, if it can be accomplished, than recourse to litigation. That is the 434 motivation, at any rate, of the idea embodied in Clause 37(3), and perhaps, in the light of what I have said, the noble Lord would like to consider this again, although I acknowledge that there are problems in regard to this matter.
§ 6.20 p.m.
§ Lord BELSTEADMay I say a word in support of my noble friend. A point which has not arisen in the discussion so far is that it may be that a collective agreement between a trade union and the management of a company for compensation for an employee's invention may not give the inventor such a good financial return as he would get if he went to the compensation scheme in Clause 47. I do not know what noble Lords think about that point. I think that that would be an acceptable state of affairs provided the inventor is a member of the union which had signed and negotiated the agreement; but I think it would appear to be unfair—and no doubt my noble friend Lord Nelson had this in mind—if the inventor is forced to accept less compensation than he felt he would get under the statutory scheme because a trade union of which he was not a member had negotiated terms which, in his case, were less advantageous. That is one worry which arises on this Amendment.
The noble and learned Lord rightly referred us to the fact that this subsection refers only to inventors who are
of the same description as that invention to employees of the same description as that employee.I accept that this means probably that the inventor, if a collective agreement has been made by the trade union, will very likely be a member of the union. But he may not be. One remembers the obvious example given in the Banks Report when Banks was discussing the whole question of to whom inventions should belong; and Banks gave the example of a man who sweeps the floor of the factory and, through observation, manages to discover an invention. Obviously this will be that man's particular reward.One has only to go to a place of employment to find many people doing manual jobs who are either in different unions or, unless it is a closed shop, some of them are in unions and some are not. 435 Although I accept that the noble and learned Lord is encouraging us to look at the text and is saying that the text of the Bill will make this work well, I am saying that unless you have a closed shop situation then my noble friend's Amendment is concerned with something which will occur from time to time.
Finally, may I say this. The noble and learned Lord at the end of his remarks asked us to accept that it would be better if there could be a basis of agreement at plant level because there had been a collective agreement made between the trade union concerned and the management, rather than to have to resort to the Statute and to litigation. I should like to accept that as being good advice. On the face of it, it sounds exceedingly good advice. But the fact is that when we come to look at the Statute, as at present drafted, we find that one thing it will do will be to knock on the head the voluntary agreement to which my noble friend Lord Nelson will refer in connection with his next Amendment, No. 185B.
I do not know the view of the Government regarding the next Amendment, which would allow voluntary agreements to exist side by side with the statutory agreements. If the Government are going to accept my noble friend's next Amendment, I should be happy to advise my noble friend that he ought to accept the Government advice on this Amendment; but if the Government are going to resist the next Amendment, I think they would be unreasonable at least not to take away and to look carefully at my noble friend's present Amendment, and come back with a more deeply considered answer at the next stage of the Bill.
§ The LORD CHANCELLORI hope that I indicated that I have not expressed myself dogmatically about this Amendment. I am bound to say in answer to the invitation which I have just had, that I shall be expressing the view that the next Amendment should not be accepted; so that I do not want to create a false impression at this time. I will look at this Amendment again carefully before the Report stage. I cannot say more than that. I will look at it; but difficult problems are raised in this context.
§ Lord DOUGLAS of BARLOCHI am puzzled by this subsection. It appears to mean that an employee who did not happen to be a member of a trade union would not get any right at all to apply for compensation if his invention was of out-standing benefit to his employer. Surely that is not the intention. That is what it seems to me to mean.
§ Lord NELSON of STAFFORDI am grateful to the noble and learned Lord for his explanation on this point. I must confess I am still somewhat puzzled by the exact interpretation of this. I think it terribly important that we are all quite clear exactly what is intended here. It is a complicated clause and we could pursue it further to try to get to the nub of the definition. But in view of the offer by the noble and learned Lord to examine this point again and to look at the implications, probably I should not take further time on it this afternoon. But I think we ought to bear this in mind and ensure that before this Bill goes too far we are all quite clear as to exactly what is implied by this subsection. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.28 p.m.
§ Lord NELSON of STAFFORD moved Amendment No. 185B:
§
Page 30, line 1, leave out subsection (4) and insert—
(4) Subsections (1) and (2) above shall not apply to the invention of an employee where an agreement between him and his employer provides for the payment of compensation in respect of that invention provided that before entering into such agreement the employer shall have notified the employee of his right to apply to the Comptroller for an award of compensation under subsection (1) or subsection (2) above as the case may be.".
§ The noble Lord said: This Amendment is of rather a similar nature. It refers to an exception, as did subsection (3) that we have just looked at. This is a situation where the employee's interests may be worse off under the present situation. It could be that he already has an agreement of some sort with the employer which may be more to his advantage. We heard earlier about teams working together. It may be that the members of the team, in order to avoid disputes among themselves, may all decide to 437 enter into an agreement with their employer as to what their respective positions would be in this regard.
§ This Amendment endeavours to make it clear that where an agreement is entered into as between the employee and employer, it is not overruled by the sub-section in the Bill. I think that this would make it clearer as to where the employee and employer stood, and it seems to me to be within the spirit of the intention of this clause. I should have thought that where a contract had been entered into as between an employer and employee in the full knowledge of his rights under this Bill—and this must be made clear—that contract should hold and should not be overruled. This Amendment takes care of that situation. I beg to move.
§ Lord NORTHFIELDMay I say that I, too, am a little puzzled by this. It relates to later clauses, also. If the noble Lord's Amendment is accepted, the danger is that this will become standard form in all agreements between employers and employees, and they will take steps in the contracts of employment to safe-guard themselves that they are never open to claims of this kind. It will become a sort of regulation that in employing people for research purposes you get them first to sign a piece of paper to say that they will forfeit their rights under the whole of the clause. Is that not a danger of the noble Lord's Amendment?
On the other hand, I see his point that it will be rather hard on an employer if he finds, having made an agreement with his employee, that the employee could later say: "This invention has made more than I expected and I must now go to the comptroller for extra compensation". Then the employee would find the price of the product, which he had fixed early on in the absence of knowledge that this claim was going to be made, might be trans-formed by the sudden claim on him—perhaps a successful one—for very high extra compensation. I am left halfway between the two. I see the disadvantages of the noble Lord's Amendment; equally, I see that some protection ought to be given to the employer in the situation in which he might find himself, of employees deliberately overriding some agreement they had already made. I intervene only to say to my noble friend that I hope he 438 will not turn down this Amendment out of hand, but will see that there might be a need to find a middle way through this minefield.
§ Lord LYELLIf I may intervene at this stage to add our support to this Amendment, so ably moved by my noble friend Lord Nelson of Stafford, there are four points I should like to raise. First, is it not reasonable that the law of contract should not be simply overturned, particularly in view of the climate of labour relations in industry at present? We believe that climate is at least hopeful. We would not seek to use this Amendment if it became part of the Bill to seek to protect a bad or oppressive employer.
The second point is that as subsection (4) stands in the Bill at present, it seems to give the employee two major bites at the cherry—I go further and say even a mouthful of the cherry—as subsection (2) of the clause is still to apply. The employee has the option, as the noble Lord, Lord Northfield, pointed out; and the employee may at a later stage decide to exercise his option under subsection (2). I understood that was the case. It seems that any agreement which may be signed by the employee freely and without duress when he engages in his employment with the firm can, under the clause as at present drafted, be simply overturned at the express wish of the employee alone. Would not the noble and learned Lord agree that the Amendment gives the employee an option of relying on a good employer to reward him fairly and, let us remember, swiftly? Earlier on we were discussing the fact that the compensation which might come to be awarded under sub-sections (1) or (2) tends to take consider-able time to germinate. I am told it is anything up to 10 years.
Thirdly, at least the Amendment will allow the employer and. more importantly, other members of a research team to know that no individual member of that team can seize on a major part of the financial reward which may become due to the team and, we hope, to the firm as a whole as a result of their researches and successful experiments. That is a very important part of the Amendment. My noble friend Lord Nelson, and others who have spoken in the Committee, have stressed the importance of teamwork in 439 research and development and, indeed, in experimentation.
Lastly, does not the subsection, as at present drafted, encourage a member of a research team or group to wait until an invention with which he or she might have been involved at an earlier stage achieves a measure of commercial success and then to put in a claim to the comptroller under subsection (2)? The noble Lord, Lord Northfield, touched on that. This would concern other members of the research team who may have left the firm, or indeed an aggrieved person who may be an ex-employee at that stage. An ex-employee could go against his ex-employer for suitable compensation. That is why we believe that this Amendment has considerable merit. For that reason, I should like to hear what the noble and learned Lord has to say.
§ Lord DAVIES of LEEKLet us weave our way through these semantics and see whether we can make it clear. To me the logic of the semantics means this. Let us start at the bottom of the phrase before we go to the top:
…in respect of that invention provided that before entering into such agreement the employer shall have notified the employee of his right to apply to the comptroller for an award of compensation under subsection (1) or subsection (2) above as the case may be".Now I go to the beginning. It says that subsections (1) and (2) above shall not apply to the invention of an employee once he has signed an agreement—I am altering the words a little—provided the employer has told the employee, "Now look out! You are entitled to the pro-visions in subsections (1) and (2), but if you make a straight agreement with me that will no longer be so". I do not see any two bites of the cherry. Once the lawyers get at it you will not see any bite of the cherry at all!
§ 6.36 p.m.
§ The Lord CHANCELLORIt is extra-ordinary how these primitive urges emerge whenever the innocent body of men known as lawyers comes upon the scene. The advantage of allowing an employer and employee to reach a final settlement over the question of compensation at an early date was considered by the Working Party on Employee Inventors' Rights. But it was 440 finally rejected by both sides of the Working Party because to take that course would cut an employee off from further compensation when a patent proved, in the event, to be of much greater value to his employer than originally seemed likely.
The whole question of whether or not contracting out of a right to compensation should be allowed is a point which has frequently been discussed in connection with award schemes for employee inventors. I can see that there are arguments both ways on it; but I think that the Bill is right on this matter. It is very difficult for an employer, for his party, before he has started exploiting an invention, or even at an early stage in its exploitation, to guess now much benefit he will get from it. The same difficulty arises in an even more acute form for the employee himself, who will not have the employer's commercial expertise. The life of a patent will in future be 20 years, and it is asking a good deal of an employer or employee to prophesy so far ahead.
Therefore, although what is proposed in the Amendment in favour of finality has great advantages in reducing the risks of litigation, et cetera, the Government nevertheless believe that it should always be possible for an employee to make a further application for compensation if, in the circumstances which have occurred, he sees that his employer has achieved outstanding benefit and substantial profit from the invention, and he believes that it is fair that he should share in this profit. Therefore there is a danger that acceptance of the Amendment could lead to substantial injustice. What is included and provided for in the Bill has been agreed by both sides of industry within the Working Party, and therefore the Government would prefer to leave the provision of the clause in this respect unaltered.
§ Lord BELSTEADBefore my noble friend ends this discussion, it is a pity that the noble and learned Lord—in his kindly way of course—has said that he thinks that this Amendment cannot be accepted by the Government. I was surprised that no noble Lord has referred to the Banks Report. In paragraph 465 it said:
While employee inventors should be given every encouragement and recognition, we doubt whether in the context of British industrial relations this is best done by the imposition of 441 statutory obligations on the employer. A number of voluntary schemes already exist and these appear to operate well".In essence, all that my noble friend Lord Nelson is asking for is that voluntary schemes which were approved of so strongly by the Banks Committee should be allowed to operate alongside the statutory scheme. My noble friend is in no way trying to overturn the statutory scheme. The noble Lord, Lord Northfield, referred to the danger of a man signing away his rights; but surely, the employer notifies the employee of his statutory right under this Bill—and my only criticism of my noble friend's Amendment is that I should have thought the notification ought to be in writing, but possibly that is subsumed in the word "notification". Also, I think that if this Amendment were passed there ought to be a period of time written into the Bill during which the employee should be allowed to consider his position. If those things are done, all my noble friend is saying is: "Don't stop that employee from availing himself of a company scheme if he prefers to do so."The noble and learned Lord quite rightly drew our attention to the fact that the Working Party had taken the view that the danger was this. If there was a big reward to come in compensation, by acceptance of this Amendment an employee might find that he has done less well than he otherwise would have done. There are noble Lords here who could probably tell me that there are firms which have schemes that guarantee payment for patent applications, and that they then have a guarantee of a payment for grant afterwards. I believe one of the big oil companies has such a scheme, but the same cannot possibly be said of subsection (1) of Clause 37 where the employee may qualify for no compensation at all, and then only after several years have elapsed an outstanding benefit has been proved. Only a minor proportion of inventions for which a complete specification is filed each year are actually commercially used. If your Lordships would care to look at subsection (2)(c) of Clause 37, you will see that that, again, is an example of an occasion where a considerable time will elapse before an inventor will see anything coming out of the Bill, and he is going to be in some uncertainty. All I am saying, therefore, is that some employees might prefer, 442 having looked at the employer's voluntary scheme, to say that they would rather have certainty than the uncertainty which is inherent in the statutory scheme. I agree at once that the bad employer could try to take advantage of this Amendment and that the new employee might be persuaded to sign away a good deal of his right. But what is the evidence? No. That contention is not supported by one tittle or jot of evidence. If one looks at the Banks Committee Report one finds that it was definite on this point. We were given no specific example of any inequitable treatment of any employee inventor—that is paragraph 465. What I am saying is that my noble friend is not following Banks to its conclusion.
This Amendment will do nothing to upset the statutory scheme. It would give the employee a degree of choice and, incidentally, would reduce the need for litigation. I am bound to say that if one looks forward to Clause 38, many voluntary schemes I have heard of might well continue to be preferable for employees. For many inventors, a bird in the hand might be worth several in the thicket through which they will have to force their way if they are actually to see anything coming to them out of the compensation provisions of Clause 37. Therefore, provided the notification of the provisions of the statutory scheme by the employer to the employee is absolutely clear, and is made in writing, and with a period of time given during which the employee can consider his position, there is every reason for this Amendment.
There is one reason more. Without this Amendment I can visualise that the voluntary award schemes, which the Banks Committee thought so right in British industry, are going to wither away and die. That would be much to be regretted and I believe that that reason, if no other, would appear to be a very persuasive argument for this Amendment. I realise that the noble and learned Lord, after what he has said, cannot now get up and say that he will accept the Amendment. He does not believe in the arguments that I have put forward in support of my noble friend. But I would urge that the arguments in support of this Amendment should be considered very seriously. It is such a pity these days, when we have so many statutory schemes 443 and provisions for statutory boards and all the rest of it, that if there is already some sort of voluntary system, that system should not be allowed to continue to run by the side of the others. For that reason, I should be very grateful if the noble and learned Lord could at least say that he will communicate with my noble friend Lord Nelson before the next stage of the Bill.
§ The LORD CHANCELLORThis has been considered, I am afraid, and considered very carefully. When the noble Lord says that the employee will not suffer from this, of course he will lose the statutory right to compensation. It is true that it would be the result of an agreement to do so, but the agreement may have been made at a point in time when he was not in a position to know the extent of the benefit accruing from an invention, and a later discovery that he had accepted an amount which in the circumstances proved comparatively trivial would create a great sense of injustice. I am afraid I cannot give any undertakings on this at all, and I should be misleading the Committee if I were to say so.
§ Lord BELSTEADThat is perfectly fair. The noble and learned Lord is quite right to say that at this stage so that we know where we stand. But might I ask him whether he would accept the last contention I made, which is that if an Amendment of this sort is not accepted it is inevitable that the voluntary schemes in industry will wither away and die?
§ The LORD CHANCELLORI do not think so at all. I do not think this conflicts with voluntary schemes. This is a fall-back position for the employee who finds himself, having entered into an agreement, not knowing all the relevant facts at the time. I do not think it is contradictory and, indeed, I would hope that the voluntary agreements would prove so satisfactory that this kind of situation would not often arise. I was thinking of that earlier in the discussion we had on agreements that are made under collective bargaining between employees and trade unionists: they are quite tough at pushing their side of the bargain. So I do not think it conflicts with the value of voluntary agreements at all, but it is a useful fall-back protection.
§ Lord NELSON of STAFFORDI am very grateful to the noble Lords who have participated in the discussion on this Amendment. I am particularly grateful to my noble friend Lord Belstead for his support of what I have put forward. I must say I was disappointed to hear that the noble and learned Lord is not able to look at this again. I would have hoped he might have done so, because I do not think anything that has been said has altered my view on this.
The noble Lord, Lord Northfield, raised a point which was very much in our minds in drafting this Amendment; namely, to steer a middle course. It has been mentioned that it could be used as a means of allowing employers to get out of their obligations to employees under the legislation, but that is not the intention at all. One could say that you could enter into an agreement with your employee that he would claim no compensation, but it says there quite clearly
provides for the payment of compensation".Therefore, it is not intended in that way at all. We have heard during the course of the discussions today of the length of time involved in many of these inventions before they come to fruition, and of the length of time it takes to deter-mine their true value. Meanwhile, people need money, as time goes on, if money is accruing to them, and it may be very welcome to an employee to have some monetary reward built into his agreement which would be of value to him now rather than in 15 or 20 years' time, or whatever it may be, before compensation is determined under the terms of this Bill.Equally, there is the question of the number of people participating. A system like this, whereby a group can enter into an arrangement with an employer, could overcome that problem and might be a very welcome way of meeting the problem which has been touched upon on a number of occasions. I should have thought that there was considerable benefit to the employee in this, and that is my purpose in putting forward the Amendment.
I wonder whether I could ask the noble and learned Lord to look at this again, and see whether all these factors have been 445 taken into account. I rather feel that this matter has been approached from the point of view that the employee must be protected all the time. That is not the purpose of this Amendment; its purpose is to give more advantage and more flexibility. If we proceed on the basis of the present clause, the employee does not know where he is or what will happen. Anything that he does can be overruled, and anything that the employer does can be overruled. Therefore, there is no basis for the voluntary schemes which have been mentioned, because they do not mean anything, and under the terms of this clause they can all be overruled. I think that the amended clause makes the position much clearer, and I do not think it would be beyond the wit of our legal friends, who have been referred to in our discussions, to draw up a kind of agreement which provides that, if the advantages go beyond a certain point, then either the case will be reopened or the compensation can be related to the additional advantage which has accrued. That seems an easy and simple thing to do. So I beg the noble and learned Lord to have a look at this again, and satisfy himself that there is not something of merit in this Amendment.
§ The LORD CHANCELLORI have said that I am afraid I cannot give any undertakings about this, but naturally I will read the report of this debate.
§ Lord NELSON of STAFFORDI am sorry that the noble and learned Lord cannot give an undertaking, but I hope that he will be sympathetic to the points which have been put forward. We will obviously be looking at this again at a later stage, and maybe by that time he will have come to a different conclusion—I hope so. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.53 p.m.
§ The LORD CHANCELLOR moved Amendment No. 186:
§
Page 30, line 7, leave out from ("it") to end and insert—
(6) In this section "the prescribed period" in relation to proceedings before the court means the period prescribed by rules of court.
§ The noble and learned Lord said: The Committee has agreed Amendments which will give the court, as well as the comptroller, jurisdiction to hear applications by employees under Clause 37 and this Amendment is consequential on those changes. I beg to move.
§ On Question, Amendment agreed to.
§ The LORD CHANCELLOR moved Amendment No. 187:
§
Page 30, line 7, at end insert—
(7) References in this section to an invention belonging to an employer or employee are references to it so belonging as between the employer and the employee.
§ The noble and learned Lord said: This Amendment is consequential on Amendment No. 172 to Clause 36. I beg to move.
§ On Question, Amendment agreed to.
§ Lord LLOYD of KILGERRAN moved Amendment No. 188:
§
Page 30, line 7, at end insert—
(6) In any application or proceedings under this section no costs shall be awarded against the employee.
§ The noble Lord said: The clauses that we have been considering set up a procedure whereby an employee inventor can make an application for compensation arising out of the use of his invention. It would, therefore, be grossly unjust to an employee if that procedure was so expensive that it was likely to frighten him off from making such an application.
§
As your Lordships have heard from time to time during discussions on this Bill, patent disputes can be extremely expensive. Litigation of all kinds is expensive, but patent litigation is probably the most expensive. Therefore, it is with that in view that I have made the suggestion that, at least, the expense to the employee applicant for compensation could be reduced if,
In any application or proceedings under this section no costs shall be awarded against the employee.
There are other tribunals where no costs have been awarded because a claim has been made. Therefore, I hope that the noble and learned Lord will be sympathetic to my desire to reduce the costs to an employee of these proceedings, by making
447
it mandatory that in no application or proceedings shall costs be awarded against an employee applicant. I beg to move.
§ The LORD CHANCELLORI earlier indicated that I share the noble Lord's anxiety that employees who are not well-off should not be deterred by the high cost of litigation, from seeking compensation in respect of an invention which they have made. But it is the case that the applicant under Clause 37, which we are considering, will invariably be an employee and he can go to the comptroller for his remedy. In proceedings before the comptroller, costs are awarded on a very moderate scale and the risk of having to pay such costs if he loses should not act as a bar, or an excessive disincentive, to an employee who has a legitimate claim. Nevertheless, it will be sufficient to deter employees who bring unmeritorious claims against their employer. One has to keep a balance here, and I am afraid that it is necessary to retain the modest sanction that a costs order will provide to prevent the comptroller from being flooded by claims without merit.
§ Lord LLOYD of KILGERRANI must express my deep disappointment that the noble and learned Lord has taken that view. It must be remembered that an employee who makes a claim has had a patent awarded to him. In many cases, he will be in the course of employment while making that application, and I should have thought that the fact that he was bringing a claim against his employer was, in itself, a deterrent. Of course, if he has left the employment of the employer, that is another matter. It is all very well to say that the costs awarded by the comptroller are low. They are low compared with the costs that may be awarded in the High Court, but they are nevertheless substantial and, with great respect, I should have thought that, as a matter of natural justice, when an applicant considers that his invention is of out-standing benefit to the company and that fact is disputed, the applicant should be able to make an application without the sanction of costs being awarded against him.
Under the Bill as drafted, it is possible for an appeal to arise from the comptroller to the Patents Court. There may not be 448 many appeals, but when there is a conflict between an employee and an employer, and the employee is dissatisfied with the award of the comptroller, he should not be deterred from going to the court because of the sanction of costs. Therefore, I should like to make a further plea to the noble and learned Lord to reconsider this question. It is a matter of natural justice that an employee should not have this Sword of Damocles over his head, in respect of a claim of this kind.
§ Lord CAWLEYI hope that in this case the court will not be encouraged to award costs to follow the event, because that would be disastrous. Just because an employee fails to get compensation, he should not automatically have costs awarded against him. I do not know what view the court will take, but that should be done only if a claim is completely unmeritorious.
§ The LORD CHANCELLORThat is the language that I used, and I used it advisedly.
§ Lord LLOYD of KILGERRANI must again express my disappointment at the attitude of the noble and learned Lord. But this is a matter which we shall consider in the light of the discussion, and we may come back to it again at a later stage. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 37, as amended, agreed to.
§ Lord WELLS-PESTELLYour Lord-ships may consider this an appropriate time to consider further business of the House. That being so, I move that this House do now resume.
§ Moved accordingly and, on Question, Motion agreed to.
§ House resumed.