Lords Sitting of 24 January 1977

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Saint Edmunsbury and Ipswich.

TERRORISM: EUROPEAN CONVENTION
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they have taken to implement the European Convention on the Suppression of Terrorism; and whether they are aware of the abhorrence felt at the release of the terrorist Abu Daoud, the self-confessed main planner of the massacre of the Irsaeli athletes at Munich and other terrorist actions.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the European Convention on the Suppression of Terrorism is not yet in force. It opens for signature on 27th January, on which date the Government intend to sign it. We also intend to seek Parliamentary approval to ratify the Convention without reservations at the earliest possible opportunity. The Government are fully aware of the extent of feeling on this issue. Together with the other Member Governments of the European Community, they have made plain their abhorrence of acts of terrorism, notably in the European Council's statement of 13th July 1976.
Lord JANNER: My Lords, in view of the fact that the Convention itself is perfectly clear about what ought to be done in a case like this, will the noble Lord see to it that France is made aware of the fact that people throughout the world are shocked at this disgraceful release, that extradition treaties pertaining to the matter are in force and that the whole situation makes a farce of any attempt to suppress the terrorism which
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is now taking possession of the world and which, unless we move very quickly, will lead to chaos?
Lord GORONWY-ROBERTS: My Lords, I believe that all countries are well aware of the views and feelings of Her Majesty's Government and of tie people of this country on these matters. In regard to the Convention, it is of course a convention to complement the existing extradition arrangements—in particular to overcome the difficulties created by the extant definition of "political offence". We have worked very hard to do away with this definition so that hijacking, kidnapping and terrorism generally should not be regarded as political offences. This is a major step forward but, as I have said, the Convention has not yet come into force. It will be open for signature on 27th of this month. We hope to be the first to sign it and possibly the first to ratify it.
Lord SHINWELL: My Lords, may I ask my noble friend whether or not he agrees that, in the matter of Abu Daoud, to gain economic advantage by subordinating modern values deserves condemnation? Can my noble friend explain why Her Majesty's Government have not indulged in such condemnation"
Lord GORONWY-ROBERTS: My Lords, my noble friend is expressing a view which would have general support in all parts of the House and, indeed, in all quarters of the country and in other countries. It is, however, for the country concerned to apply its own law to extradition matters. It would be for this country to do so. May I repeat that the views and feelings of Her Majesty's Government on this matter, and I believe the views and feelings of the general population of this country, are perfectly well known in other countries. On the eve of the signature and ratification of the European Convention, which is designed to solve questions of extradition of this kind, it would in no way help for me to indulge in bilateral recrimination.
Lord JANNER: My Lords, is the noble Lord aware that there is consternation about the fact that our Government did not make their views clear at once? If I may ask the noble Lord one more question, is he aware that, in a statement made

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through the media on this subject, the representatives of the PLO in this country have disgraced the use of the media, and will he see to it that once again the question of whether the PLO ought to be allowed to remain represented in this country is considered?
Lord GORONWY-ROBERTS: My Lords, the position of the PLO and any other cognate organisation in this country is constantly under observation, and I have explained from time to time from this Box what the conditions are. As to the first part of my noble friend's question, I repeat that Her Majesty's Government and the British public generally have left other countries in absolutely no doubt as to their views and feelings on this and similar matters. I suggest strongly to my noble friend and to the House that the European Convention, to which he in his Question and I in my main reply referred, offers a major step forward in solving these very difficult questions of bilateral extradition. If we can secure general signature of the European Convention as from 27th January—as from this week in fact—I believe that the position for the future in regard to these matters will be greatly clarified and greatly helped.
Lord GLADWYN: My Lords, while agreeing with the Minister that, if possible, the future of the Convention should not be prejudiced in any way, may I ask whether the Government think that the reasons given by the French Government for refusing the extradition of Abu Daoud either to Israel or to Germany are legally convicing?
Lord GORONWY-ROBERTS: My Lords, they are legally convincing to the French authorities. As I have said, it is a matter for each country. Extradition is a bilateral matter, as the noble Lord knows better than most. It is for each country to apply its law to the existing extradition treaties to which it is a contractor. I take the noble Lord's second point and I welcome it. I do not think we should say or do too much in the next few days conceivably to prejudice the universal signing and ratification of a very useful Convention.
Lord SLATER: My Lords, may I ask my noble friend whether I am right in
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assuming from what he said in reply to the Question on the Order Paper that it is the intention of Her Majesty's Government to sign this Convention and that he hopes that ours will be the first signature to be attached to it? If that is the case, what is there to quarrel about?
Lord GORONWY-ROBERTS: My Lords, I often wish that my noble friend were answering at this Box. He has put his finger on the point. As the House knows, the Convention emanates from the Council of Europe which is an Assembly of 17 countries. That is a very wide span of countries which can do something effective about extradition in matters like this. Therefore, as my noble friend says, having to a great extent taken the lead in creating this Convention, we look forward on the 27th of this month to being possibly the first to sign and there by to encourage the others—although I do not believe much encouragement is necessary—so that we have a fully signed-up and very soon a fully ratified Convention, which I believe will greatly change the situation in regard to problems of extradition.
Lord AVEBURY: My Lords, while recognising that it is free to the countries which are signatories to the Convention to determine how their own law should be applied, and that in this case France has determined that it is satisfactory to its own authorities that Mr. Abu Daoud should not be extradited, what remedy is there for the citizens of another State who consider that the law of a particular country is not being applied after the Convention comes into force? If there is no such remedy, could not the Convention become a dead letter by the continual flouting of its provisions?
Lord GORONWY-ROBERTS: My Lords, I do not think it could become a dead letter. Without going into detail, the Convention itself solves a great many difficulties in regard to extradition particularly in regard to so-called political offences, and is a great step forward. I believe there is a feeling in Europe, and indeed among the 17 Members of the Council of Europe, that this Convention must be made to work, and its deficiencies, if they reveal themselves, be put right with the least possible delay. In view of the question put to me, I might add that in

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addition to this action of creating a new Convention of which 17 States will be signatories and protectors, we have taken an initiative among the Nine to secure a Convention which will be supportive of the European Convention which I have just described and should be very useful in meeting the kind of difficulty hinted at by the noble Lord, Lord Avebury.
Lord POPPLEWELL: My Lords—
Several noble Lords: Next Question!
The LORD PRIVY SEAL (Lord Peart): My Lords, I was going to allow just my noble friend to speak, although actually I agree that we ought to proceed.
Lord POPPLEWELL: My Lords, can my noble friend say how many nations propose to sign the Convention?
Lord GORONWY-ROBERTS: Hopefully, my Lords, all 17.

BBC EXTERNAL SERVICES PROPOSED CUTS
2.47 p.m.
Lord GRIDLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the proposed cut of £312,000 to the BBC's External Services in April 1977, to be increased by £229,000, making a total of £541,000, can be justified in the interests of stability in addition to a defence cut of £100 million in the year 1977–78.
Lord GORONWY-ROBERTS: My Lords, Her Majesty's Government continue to believe that the long-term interests of Britain are served by maintaining the BBC External Services at a high level. In consultation with the BBC, we are seeking to achieve the necessary savings with the least effect on the level of operations.
Lord GRIDLEY: My Lords, while thanking the Minister for his reply, which in some respects I hardly find reassuring, may I ask him whether he is aware that
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the objective, impartial, informative broad-casts in many languages of the External Services are trusted by millions of overseas listeners who value this service to the exclusion of any other foreign broadcast? Is he further aware of the immense influence for peace, stability, trade and culture, in the interests of this country and world peace, emanating from these broadcasts which are disliked by the Russians who attack the qualities of the BBC in these overseas broadcasts? Will Her Majesty's Government think again? Is this action really wise?
Several noble Lords: Order!
Lord GORONWY-ROBERTS: My Lords, I myself hesitated to intervene in what I regarded as an excellent contribution. We entirely agree on the excellent contribution, past, present and, I am sure, in the future of the BBC External Services. The Government have decided that in the light of the economic circumstances of the time no service and no Department should totally escape cuts. However, we have discussed with the BBC such cuts as are found to be necessary in regard to this excellent service. Reluctantly, but nevertheless most cooperatively, they have helped to identify the areas where the deficiencies should be met. I see that the economies which have been agreed with the BBC External Services are to be made in the engineering division, in accommodation development plans in London, together with contributions from administrative services; no cuts in transmission hours, including to Eastern European countries, are planned.
Lord HILL of LUTON: My Lords, will the Minister explain why, whenever there is a need to cut public expenditure, as indeed there is now, the Government of the day always seem to seek a disproportionate cut in the service to which he paid great tribute and which yields great dividends to this country for a very modest expenditure?
Lord GORONWY-ROBERTS: My Lords, with all personal respect to my noble friend, I am not sure whether I would entirely go along with him. I see that in 1973/74 we made available the sum of £17.8 million for this service. In 1974/75 that amount went up to £22.3

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million; in 1975–76 it went up to £28 million. The forecast total for 1976–77—that is, last year—was £34.3 million, and I find that the estimated total for 1977–78 is £36.7 million. So in four years the outlay has rather more than doubled. Even if we take into consideration the ravages of inflation, considerable as they have been in those years, I think that these cuts, which have unfortunately been found necessary, could not properly be described as disproportionate or discriminatory.

EUROPEAN PARLIAMENT: DIRECT ELECTIONS
2.51 p.m.
Lord CHELWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are now in a position to give an assurance that the Bill to provide for direct elections to the European Parliament will be given sufficient priority to ensure that the Boundary Commission can complete their recommendations for Parliament's consideration in ample time before May/June 1978; and whether they will now say what procedure and timetable they have in mind.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, the Government have already made it clear that they will introduce legislation to provide for the election of United Kingdom Members of the European Assembly;' but, as I explained to the House in the debate on 15th December, there are a number of important matters to be decided before the Bill can be introduced.
Lord CHELWOOD: My Lords, I confess that I find that reply both mystifying and very disappointing indeed. Is not time running out, and has not a lot of time been lost for unexplained reasons? May I put to the noble Lord one specific question: Have the Government decided that, when the Bill receives a Second Reading in another place and the Boundary Commission can be invited
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to start with their work, there is no constitutional or technical reason why that should not be done? Were this to be done and the Bill to receive Royal Assent by July, am I right in saying that there is no obstacle whatsoever to direct elections being held in mid-1978, something which Mr. Roy Jenkins has described as absolutely vital?
Lord HARRIS of GREENWICH: My Lords, a number of questions arise on what the noble Lord has just said. With great respect to him, I do not think that my Answer can be particularly mystifying or that I have not explained the reasons. I have given the reasons; and, as I set them out in the debate we had on 15th December, the reasons were that we were studying with a proper sense of urgency the recommendations of the Select Committee in another place, which raise a number of matters of fundamental importance. On the more detailed question which the noble Lord raises about the Boundary Commission, it is certainly true that if the Boundary Commission procedure is adopted the Boundary Commission probably could do some preliminary work before the Bill received Royal Assent.
Lord BYERS: My Lords, is it not a fact that, owing to the congestion which is arising in another place, there could be a very real danger to this Bill, and that we may not be able to meet any reasonable timetable at all? In these circumstances, would the noble Lord talk to the Leader of the House with a view to getting this Bill introduced first of all into this House rather than another place?
Lord HARRIS of GREENWICH: My Lords, I take note, of course, of what the noble Lord has said. This Bill is a matter of great importance, and certainly I will ensure that what the noble Lord has just said is drawn to the attention of my right honourable friend.
Lord CARRINGTON: My Lords, would the noble Lord accept that there are a number of noble Lords on all sides of the House who really are worried about what seems to be the Government's lack of urgency in dealing with this matter? Would he give an undertaking that a Bill will be through Parliament with enough time for the Boundary Commission to consider it in time for direct elections

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to take place? Would he also deny the rumour and the suspicion that the Government are somehow going to bargain time for the devolution Bill in another place for the direct elections Bill in that place?
Lord HARRIS of GREENWICH: My Lords, I must say it is the first time I have heard that particular ugly suggestion expressed; I take note of the fact that presumably the noble Lord believes it to be true. Certainly we recognise, as I have indicated, that this is a matter of great importance. The Bill is set out in the gracious Speech; and in the preamble to the decision on direct elections, which was agreed on 20th September last year, was included a "best endeavours" clause in which the British Government agreed with their partners that they would aim to ensure that these elections take place in the period between May and June of next year. That was our position last September and that is our position today.
Lord GLADWYN: My Lords, are the Government aware that in a recent authoritative poll conducted last November in all the Nine EEC countries, just over 70 per cent. of those interrogated said that direct elections should be held while only 14 per cent. were opposed. The corresponding figures in this country were 57 per cent. for, and I think 22 per cent. against, of which only 8 per cent., however, were strongly opposed? Will the Government therefore take all the necessary steps to overcome the opposition to direct elections of a small minority in this country which is clearly determined to sabotage them if it can?
Lord HARRIS of GREENWICH: My Lords, I take note of what the noble Lord has just said. I have no doubt that a majority of people within the Community, and indeed within this country, are in favour of the principle of direct elections. As I have indicated, that is the view of the Government.
Lord O'HAGAN: My Lords, is the noble Lord aware that his Answer is feeble and discouraging? Surely, while they hold the presidency of the Council of Ministers, the Government should be giving other Member States in the Community an example, and not lagging behind in this important step which will help to make the European institutions
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more accountable. Could the noble Lord explain the double standards used by the Government, whereby Members of the Government, speaking in this Chamber, refer to the European Parliament as the "European Assembly", while the Foreign Minister when speaking in the European Parliament calls it the "European Parliament"?
Lord HARRIS of GREENWICH: My Lords, I would not think there is anything particularly significant about that. I call it the Assembly because it calls itself the Assembly.
Lord O'HAGAN: No.
Lord HARRIS of GREENWICH: That seems to me a rather adequate reason. On the question the noble Lord has raised, I perfectly well accept that there may be some anxiety about the time-scale, but I must draw his attention to the fact that we received the Report of the Select Committee in another place only in November. There are a number of major questions involved affecting election law and practice so far as these direct elections are concerned. Certainly it is our desire to press on with this matter as urgently as possible.
Lord SLATER: My Lords, may I ask the noble Lord whether the Boundary Commission to which he refers is the present Boundary Commission which decides the boundaries governing constituency areas within this country of those sitting in the other place? Are we talking about the same Boundary Commission? Secondly, can the noble Lord tell the House what proposals have been submitted in toto from the Opposition Parties—that is the Conservative Party, looked upon as Her Majesty's Opposition in the other place and in this place, and the Liberal Party? What proposals have they submitted to Her Majesty's Government in regard to this matter?
Lord HARRIS of GREENWICH: My Lords, the Boundary Commission I was referring to was in fact the Parliamentary Boundary Commission. On the second point, the Party opposite, and indeed all political Parties, had members on the Select Committee in another place which went into this matter. They took evidence from the political Parties and a great

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many other people on the procedures which should be used during these elections.
Lord GORE-BOOTH: My Lords, may I ask the Minister, on a slightly less controversial note, whether he can give an assurance that in considering this matter the Government have constantly in mind the undesirability of our being in a minority of one in this matter? We have to do this sometimes in the national interest, but in general it is not desirable.
Lord HARRIS of GREENWICH: My Lords, I entirely take the point raised by the noble Lord. As I indicated, the Government agreed to this "best endeavours" clause last September. That was our position then, and it is our position now.
Lord PEART: My Lords, I hope noble Lords will accept that we have had a good run on this Question.
Lord CHELWOOD: My Lords, may I be permitted to ask one more supplementary question?
Lord PEART: No, my Lords. Time is getting on.

BANABAN COMMUNITY: FUTURE WELFARE
3 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what decision they have reached in response to the advice of the Vice-Chancellor in the case of the Banabans against the Crown, that the Crown should do what it considers proper in view of the fact that the Vice-Chancellor was powerless to right what he considered to be a wrong.
Lord GORONWY-ROBERTS: My Lords, Her Majesty's Government have for some time been concerned about the future welfare of the islands in this part of the Pacific, and specifically the future of the Banaban community. We have
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for long intended to help the Banabans, subject to the results of the legal actions. Her Majesty's Government's thinking has not therefore been essentially at variance with the Vice-Chancellor's remarks about obligations towards the Banabans. We have had a number of discussions with the partner Governments of Australia and New Zealand and we put certain proposals to them last year to help the Banabans secure their future after phosphate revenues end. Our partners responded sympathetically but indicated that it would be difficult in practice to reach firm conclusions in advance of the judgments.
Our thinking and discussions have been, and will continue to be, conducted in close consultation with the Governments of Fiji, Australia and New Zealand, as well as the Gilbert Islands and the Banaban leaders. Our aim is to achieve as soon as possible a settlement which takes account of the legitimate interests of all the parties concerned in the area, including the Banabans.
To assist in achieving such a solution, including its constitutional aspects, I am arranging for Mr. Richard Posnett, the former Governor of Belize, to visit the area as soon as possible and to report directly to me.
Lord BROCKWAY: My Lords, I greatly appreciate that reply which removes some of the doubts which were occasioned by an article published in the Guardian last week, although that paper is so often reliable. In view of the fact that these people have, admittedly, been exploited in the interests of Australia, New Zealand and this country, and the fact that their beautiful island has been devasted as though it were the surface of the moon, will Her Majesty's Government press upon the Governments of Australia, New Zealand and Fiji, to do everything possible, with themselves, to remove the appalling suffering of these people?
Lord GORONWY-ROBERTS: Yes, my Lords. It is our firm intention and our not inconsiderable hope that we can lead an action which will settle these outstanding questions.
Lord SHINWELL: My Lords, is my noble friend aware that an impression is gaining currency that the Government

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seek to evade their responsibility by passing the buck to Australia, New Zealand, Fiji and other countries? Has there not been a gross active injustice to the Ocean Islanders, and should it not be corrected immediately by providing adequate finance?
Lord GORONWY-ROBERTS: My Lords, there is no question of the Government evading responsibility. It is a question of identifying responsibility, and I shall not allow this country to be pilloried on its own for the mistakes of the past. I am anxious that it should play its full part—indeed, perhaps more than its full part—in rectifying as far as possible with others concerned the enormities of past colonial policy.
Lord ELTON: My Lords, would the noble Lord go further and confirm that the responsibility rests outside the Government of the Gilbert Islands, as the Banabans are subjects to the Gilbert Islands Government, and also that recourse will not be had to them for compensation? As this injustice has gone on for a long time, like Question Time, will he take steps to ensure that it is wound up as effectively as the noble Lord the Leader of this House has wound up Question Time?
Lord GORONWY-ROBERTS: The only possible answer to that question is, "Yes, my Lords".
Lord LEE of NEWTON: My Lords, is my noble friend aware that those of us who have been concerned with this matter are very grateful indeed for the reply that we have received today from him? We hope that it will result in a very fair and proper settlement for the Banabans. Is he also aware that, no matter what that settlement may be, within a few years there will be no phosphates left on Ocean Island? Therefore, is he taking into account that for revenues the Gilbertese are very dependent on their phosphates? Will he ensure that their plight is also looked after?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords. I am very grateful to my noble friend, who is a former Colonial Secretary, for pointing out that not only the Banabans, deserving as they may be, are concerned in this matter,
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but that we have a responsibility for the Gilbertese and others in the Pacific Islands, and that we also have a responsibility to be fair to all concerned, not least this country.

PATENTS BILL [H.L.]
3.6 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Patents Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
My Lords, I beg to move that this Bill be read a second time. This is an important and comprehensive Bill concerning the patent system, which plays a vital role in our economy. That system has a long history. It started to emerge as a matter of importance as long ago as Tudor times and it developed slowly. The basic principle of the system is simple: an inventor who makes a full disclosure of what he has invented is granted a statutory monopoly of limited duration in which to exploit the invention. The protection afforded by patents encourages invention and the investment by industry, whether privately or publicly owned, in new enterprises, and this way creates an ever-widening choice of goods and services for the consumer.
The course of industrial development over the years has proved the value of the patent system. A good example of an industry relying heavily on patents is the man-made fibre industry where a series of patented inventions has encouraged industrialists to invest hundreds of millions of pounds in developing the original viscose rayon, and an intervals thereafter nylon, acrylics and the whole range of other fibres. These developments include special forms of carbon fibres for which important parents have been held by the National Research Development Corporation on behalf of Government establishments where the original work was done.
The Government's concern now is to ensure that the patent system continues to be effective as an instrument for making

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known new technology, for bringing new inventions into commercial operation and for strengthening the economy. The present system is based on the Patents Act 1949 which, in turn, was largely built on the foundations of earlier Acts. This has served the country well, but it is clear from the thorough reappraisal of the whole system, which was carried out in 1967–70 by a Committee under the able and distinguished chairmanship of Sir Maurice Banks, that substantial reform is now required to provide a system better adapted to the needs of industry and inventors in these modern times. As the Banks Committee emphasised, it is in many ways necessary to make a fresh start by replacing out-dated concepts, giving effect to new ideas and taking into account the many important international developments that have taken place in the patent field in recent years.
The report of the Banks Committee was most warmly welcomed in this country by all the interests concerned with patents and inventions. Several changes in law and procedure were recommended and most of these were accepted by the Government when in 1975 they published their White Paper on Patent Law Reform, together with a Consultative Document. The comments received on those documents have been most helpful in the formulation of the present proposals.
The White Paper also indicated the Government's intention to participate in certain international agreements. There has indeed been a remarkable and healthy upsurge in international patent co-operation over the last 10 years or so. The pressure for this has come from two main sources: first from t he many industries which trade internationally in one way or another and which would obviously derive benefit if the principal national systems could be harmonised so that patentees enjoyed much the same rights wherever they were obtained and could obtain those rights without the necessity, as at present, of going from country to country; and secondly from national patent offices over-burdened with the problems created by the extensive growth in patent activity and the increasing complexity of technology.
The full results of this activity, in which this country has played a constructive
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part, can now be seen. First, there is the Council of Europe, or Strasbourg, Convention of 1963 which provides for harmonisation of fundamental concepts of patent law and is the basis on which the rest has been concentrated. Then, there is the Patent Co-operation Treaty of 1970 which was worked out at a conference of countries including the United States, the Soviet Union, Japan, our European partners and many developing countries. This treaty provides for a potentially world wide system for sharing the work of processing patent applications. It provides substantial benefits to patentees and national patent offices, and provides for a further degree of harmonisation of national patent laws. Next, there is the European Patent Convention of 1970 which goes further and will enable an applicant to obtain, via the European Patent Office and by means of a single application, a European patent having effect as a national patent in as many of the contracting States as he desires.
Finally, there is the Community Patent Convention of 1975 which goes yet further in that it provides for a single patent to be obtained via the European Patent Office, a Community patent having a unitary and autonomous effect through out the Common Market. In this connection I would draw your attention to Clause 80 which makes the provisions of the Community Patent Convention part of our national law. All these international arrangements are interlinked and should eventually give industry and inventors from the United Kingdom and elsewhere the opportunity of obtaining substantially uniform protection over much of the world and more easily than today. These international instruments cannot however stand alone. They must be grafted on to our national patent system, since this will not cease when the treaties enter into force. It will continue to serve those who are not concerned to use the European system, as well as providing the legal framework for patents obtained by one or other of the international routes.
This Bill has two broad aims: first, to bring about a radical reform and modernisation of our domestic patent law and procedure; and secondly, to enable the United Kingdom to ratify the international patent agreements I have mentioned. Part II of the Bill gives effect to

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our Treaty obligations. Patents confer monopoly rights which can have far-reaching commercial, industrial and indeed social consequences. There must therefore necessarily be complex requirements that have to be satisfied in order to obtain a grant of the patent, and also safeguard against abuse of monopoly and indeed of the patent procedure. It follows from this that the Bill is not only lengthy, but also highly technical. I am comforted by the names of noble Lords who are to speak in that they have the necessary technical skills and knowledge to assist us in our deliberations. I wish I had more of them myself in this particular part of the law, but we shall do our best. The Bill, therefore, I am afraid, involves a number of complex requirements and is a technical matter, and I propose at this stage only to highlight the more important provisions of the Bill.
In formulating the new code the Government were conscious of the need to follow as closely as possible the system set out in the European Patent Convention, which they intend to ratify as soon as possible and thus become a founder member. There are two main reasons for this correspondence between the Convention and our future law. First, to avoid duality of standards between the United Kingdom patents and European or Community patents which will also be effective here. Without this, the patent situation would be in a state of chaos and confusion. Secondly, it will obviously be of considerable assistance to practitioners and inventors to be able to adopt substantially the same practice, whether they are seeking a United Kingdom patent from the British Patent Office, a European or Community patent from the European Patent Office, or an American or other national patent via the Patent Co-operation Treaty.
For these reasons, the basic concepts of patent law in the Bill are closely modelled on provisions of the European and Community Patent Conventions. For example, Clauses 1 to 4, which concern patentability, introduce into our law the concept that an invention will not be patentable if it has previously been disclosed anywhere in the world, as opposed to the present system which relies only on disclosure in the United Kingdom. Clause 58 concerns infringement and strengthens the patent right
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by protecting it against indirect or contributory infringement. Clause 70 curtails the grounds for the revocation of patents. Clause 114 defines the extent of the protection conferred by a patent. In this connection the important Clause 118(5) declares that certain provisions of the Bill, among them Clause 114, have been framed in such a way that interpretation of them will be in harmony with the interpretation in other contracting States. Clause 22 increases the term of a patent from 16 to 20 years, as is the case for European and Community patents.
My Lords, to obtain a patent in this country it is necessary to file with the Patent Office what is called a "specification"; this contains a description of the invention, followed by the claims which define the extent of the monopoly sought for that invention. This specification is examined to ensure that it meets the requirements of the Patents Act 1949. In particular, an official search is made through earlier British specifications not more than 50 years old to find out whether the invention has novelty, and a technical examination is made at the same time to ensure that the invention is patentable, sufficiently described and properly claimed. When the Office is satisfied, the specification is published and, if not opposed by third parties, a patent is granted. This system is straightforward enough, but it involves delays and other practical difficulties in obtaining grants, and the patents when granted are not as strong as is desirable. Further, as all applications are searched and examined, the volume of work in the Patent Office is large and this is expensive in terms of technically qualified manpower. This Bill is therefore intended to simplify and strengthen the procedure.
A major criticism of the present system is that the patents when granted do not carry a sufficiently high presumption of validity. Patents of doubtful validity can often be recognised as of little value, but their existence causes uncertainty and can act as a deterrent to a manufacturer competing in the same field of technology who may not want to run the risk of being involved in expensive litigation. This can bear hard on the small firm which, for reasons of expense, is less likely than the large firm to be in a position to evaluate the likelihood of its own patents or those of others being upheld, if challenged.

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Moreover, a situation where a British patent may be obtained although a patent for the same invention may not be granted in another country operating to more stringent standards, cannot be considered as in the best interests of British industry, especially since a substantial majority of British patents are taken out by applicants from other countries. This situation cannot be allowed to continue into the future when strong European and Community patents will be effective here.
The answer to this problem is to strengthen the search and examination carried out by the Patent Office. The Bill provides for this in Clauses 14 and 15. Under Clause 14 the search is not limited, as is the case now, to discovering documents which would destroy novelty; it is extended to the discovery of documents which are of relevance in assessing inventive step, that is, in assessing whether the invention is an obvious follow-up to what is already known, or whether it represents a genuine technical advance. And, under Clause 15, the substantive examination is extended to include the consideration of inventive step. We believe that these two clauses of the Bill should enhance the value of our patent system. They are also backed up by other provisions; in particular the present limitations on the area of search are broadened.
At present, patent applications are not published until they are in order for grant and this means that, in many cases, knowledge of new technical developments does not come to the notice of the interested public for some years. The existence of a large number of unpublished applications leaves industry uncertain as to its position and makes it difficult to plan policy on new approaches to unsolved problems. The Bill therefore provides in Clause 13 for patent applications to be published at a much earlier date than is the case now. This should help to avoid wasteful duplication of effort and expense. In order to prevent others pirating the invention, Clause 67 attaches rights to the early publication which can be invoked as from the grant of a patent. In future, the substantive examination will be separated from the search. This will enable applicants to decide, on the basis only of the search results, whether the application is worth pursuing before
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further expense is incurred; it is expected also that this will assist the Patent Office by reducing the examination workload.
As the Banks Committee pointed out, the filing of patent applications now causes some difficulty which may result in an unfortunate delay in staking a claim to priority for an invention. As regards entitlement to apply for a patent, a distinction is made between different kinds of application. In some cases, the assent of the inventor is needed; in others, a declaration of inventorship is required. The Bill sweeps away these difficulties, while preserving proper safeguards for inventors. Anyone may in future file a patent application, but the right to the grant of a patent is to belong to the inventor or his successor in title. Under Clause 7, the right to a grant may be determined by the Patent Office, thus avoiding the need for an action in the courts. Under Clause 10, the inventor has the right to be mentioned in the specification of a patent granted for his invention and in any published application for such patent. The applicant is required to name the person he believes to be the inventor and, if the applicant is not himself the inventor, he is required to indicate how he acquired the right to be granted a patent.
I believe that these improvements, technical and difficult as they are to follow, will simplify matters and fit in well with international trends. To the same ends, the Bill in Clause 11 completely changes the present system based on the filing of provisional and complete specifications. The long-standing and much valued facility of being able for a nominal sum to stake a claim for priority for an invention by filing a brief description is maintained. But, under the new scheme, provisional and complete specifications as such are dispensed with; in future, every specification must be the subject of a separate application and this may proceed in its own right to grant or simply serve as a basis for priority in respect of a later application. This will strengthen the hands of those who wish to use a domestic application as a basis for a subsequent filing in the European Patent Office or other countries.
The Banks Committee also expressed concern at the delay in the granting of patents. For commercial reasons and

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especially to dispel uncertainty, it is important that the question whether or not a grant is to be made should be resolved as soon as possible. The Bill preserves the existing feature of a maximum period within which an application must comply with requirements or be treated as refused, and generally tightens up the procedure to avoid unnecessary delays. Proceedings before grant in which third parties may bring forward their objections to a grant being made have long been a feature of our law, but they frequently result in delaying grant by many years, with consequent serious uncertainty for both applicants and, indeed, third parties. The Bill therefore dispenses with such opposition proceedings, as they are called; Clause 18 enables third parties, however, to bring their observations on patentability to the notice of the Patent Office so that they can be taken into account during the examination stage, and, if there are serious objections to the grant, they can of course be brought up in revocation proceedings after the grant.
These and the many other changes reflected in the Bill serve to streamline the patent process and should result in the grant of patents with a higher presumption of validity. But, as your Lordships will appreciate, these are of little avail unless the arrangements for settling disputes are generally considered to be satisfactory. The evidence given to the Banks Committee demonstrates that all is not well in this area, and so the Bill seeks to improve the position in two ways.
First, recognising that there is considerable confidence in this country in the comptroller's court, with its relatively cheap and easy procedure, Clause 70 of the Bill removes existing differences in jurisdiction between the High Court and the comptroller in revocation proceedings. Applications for revocation may in future be made to the comptroller at any time during the life of a patent and on the same grounds as are available before the court. Secondly, the Bill in Clauses 90 and 91 provides for appeals from the comptroller to lie to a new Patents Court. This will be constituted as part of the Chancery Division of the High Court and also have first instance jurisdiction over actions for infringement and certain other matters. This change in status was recommended by the Banks Committee and is justified by industry's need, which was
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strongly urged on the Committee, for resolute decisions and more certainty in the interpretation of the law. Under the present system, appeals from the comptroller are dealt with by the patents appeal tribunal, which is technically of lower status and whose decisions therefore lack the authority of the High Court.
Provision is made in Clause 90 for the appointment of scientific advisers to assist the court. This reproduces the present law, but little use has so far been made of this facility, and cases are normally determined on the basis of expert evidence provided of course by the parties. But I know that the patent judges would welcome the greater use of scientific advisers in appropriate cases, and I shall invite the Supreme Court Rule Committee to amend the Rules of Court so that the possibility of appointing a scientific adviser will always be considered before the hearing of an action.
There are two further matters to which I wish to refer before closing. The first is Clause 49. This re-enacts Section 41 of the Patents Act 1949, which provides for a licence to be obtained from the comptroller to exploit a patent for food or medicine on such terms as he thinks fit unless there are good reasons against it. The Government's policy remains as stated in the White Paper. Although the number of applications for licences under Section 41 is small, it is believed that the mere presence of the section operates to stimulate price competition and to restrain exorbitant prices.
The Government are, however, continuing the discussions they have been having with the pharmaceutical industry and others about the adverse effects that it is claimed the section has on confidence and investment. If, as a result of these discussions, the Government are satisfied that there are more effective ways to prevent the possibility of exorbitant profits being derived from a patent monopoly in the pharmaceutical field, they will be prepared to reconsider Clause 49.
The second matter concerns Clauses 36 to 40. This important groups of clauses deals with inventions made by employees. It contains a major innovation in that it gives employee inventors statutory rights which they have not hitherto enjoyed in the United Kingdom. The rights of ownership in employees' inventions are

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presently regulated by the common law concerning master and servant. This has been much criticised by inventors as being unclear and as leaning too heavily in favour of the employer, particularly since it allows the employer to require all his employees to agree that all inventions they may subsequently make shall belong to him. Moreover, although it is true that these days several firms have established ex gratia award schemes for their employees, the law provides no right enabling employed inventors to seek a reward for their endeavours over and above their normal remuneration.
This situation is quite different from that to be found in many other countries; and it can be less than fair to employees who may contribute useful inventions which are then exploited for the sole benefit of their employers. The Government believe that it is desirable to do more for people who make inventions in the course of their work, and that the present state of affairs does not do enough to encourage invention in industry, which is so important to the economic health of our nation. At the same time, the Government fully appreciate the need for employers to be free to decide whether or not to take up inventions made by their employees and to exploit them, and to avoid administrative and other difficulties requiring more non-productive staff and involving higher overheads. The Bill, therefore, seeks to reconcile these conflicting interests in a scheme which puts on a statutory basis the law concerning ownership of inventions made by employees and provides a right for employees to obtain an award in defined circumstances. The outlines of this scheme were agreed by the Standing Advisory Committee on patents, on which industry and the TUC are represented.
Clause 36 provides that inventions made by employees whose primary duty is to invent—members of the research staff, for instance—or who are in a position of trust, such as directors and senior managers, will belong to their employers, but inventions made by employees whose duties are such that invention is not reasonably to be expected from them will belong to them. Where the invention belongs to the employer, Clause 37 provides the prospect of an award to the employee only when the employer has
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patented the invention and this has proved to be of outstanding benefit to him. Where the invention belongs to the employee he may receive an award if the employer has taken rights in a patent for the invention and the benefit obtained by the employee from the transfer of his rights is inadequate in relation to the benefit which the employer derives from the patent. There will be no right to an award under the statutory scheme where there is in operation a collective agreement as to awards negotiated between management and the trade unions, such as exists in a number of industries and companies. Indeed, it is expected that in most cases the size of the award will be settled at factory level. But, in the last resort, it will be for the comptroller or the court to decide, and Clause 38 provides for the employee to be secured a fair share of the benefit derived by the employer from the patent.
Clause 39 prevents for the future an employer taking advantage of the weak bargaining position of his employee by requiring him to sign away any rights he may have in the inventions that he later makes. Various supplementary provisions are set out in Clause 40, of which perhaps the most important is that the new scheme is, not unnaturally, limited to employees who are employed in this country. My Lords, I have apologised for the time I have taken in describing this long and technical Bill, and I am aware of the fact that, even now, I have only sketched in some of its provisions. However, I hope I have said enough to show your Lordships that the Bill, not only by strengthening and modernising our patent system but also in taking powers to enable British participation in international patent agreements, will be of much benefit to our industry, our inventors and our country as a whole. For these reasons I commend it to your Lordships. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
3.36 p.m.
Lord LYELL: My Lords, we on these Benches welcome this lengthy and, indeed, very complicated Bill for a number of reasons, and we do so all the more as it is starting its Parliamentary life in your Lordships' House. I regard this Bill as

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particularly important since, as we have heard from the noble and learned Lord who has just resumed his seat upon the Woolsack, it is closely concerned with British science and technology and with the protection that is due to the skill and persistence of our inventors and scientists both in production and in research. On looking at the list of the speakers who are to address us upon the Bill this afternoon, one can see that it includes a number of experts. Indeed, I would regard every one of them as an expert in some particular field, but I wonder whether any of us can have the really specialised knowledge of all aspects of patent law which seems indispensable. We look forward to hearing the views of the many different experts who will be addressing us, particularly on science and technology and on law, following the notable speech of the noble and learned Lord, as well as on the political aspects involved.
The Bill seems to me and, I am glad to say, to the experts in patent law and allied matters, to be the greatest event in this field over the last 15 years. We all hope that this step will clarify many of the problems and questions arising from ever more complex research. The noble and learned Lord has given us the Government's intentions in what I thought a notable speech. With the greatest respect, I hope that the noble and learned Lord is not being overworked at this juncture: I think he may find that patent law, as law, is broadly similar to the criminal law in England and Wales, while the scientific language is something in which he may not yet have acquired the high expertise which he daily demonstrates to us in other matters. Certainly, I am no scientist and my knowledge of the field is rudimentary. I am only beginning my apprenticeship as an ersatz lawyer.
As we have heard, the Bill before us today is a consequence of the Banks Committee report. Its findings were accepted by the previous Administration. We are very glad that the present Administration has been able to make time for the examination of the patent law, for updating it and, we hope, for the ratification of a number of treaties and conventions. We understand that the Government consider ratification as urgent, and we know that the experts who are most closely concerned with these laws, articles and the protocols and
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the regulations will find their work far easier.
Mere ratification of the European Patent Convention and the Patent Convention Treaty, together with the Community Patent Convention, may be simple; but we have to bring our laws into line with the provisions of these treaties and conventions, for we are considering our own domestic laws in conjunction with our own technology and inventiveness. The domestic aws and technology elsewhere will be different, and possibly more complex, and continually we have to consider patents, rights, licences and enforcement in this country and elsewhere. Other countries, for perfectly valid and good reasons, do not and have not yet ratified conventions, nor indeed have they yet updated their own domestic law on patents; yet their trade in some high technology products, apart from being a major breach of what we take as accepted patent laws, harms our own research and production here.
But it would be wrong to appear carping or ungrateful when the Bill is before us in the House, because nobody could expect to have the Bill perfect. Nevertheless, there are even at this juncture still a few gaps and omissions that we wish to discuss, particularly this afternoon. The first point we should like to raise—and the noble and learned Lord just touched on it—is that of ensuring harmony between our laws and those of the European Patent Convention. It seems that in areas concerning requirements of patent ability and validity, together with the scope of protection of inventions, our laws are to be the same; they are to mean the same, and they are to have the same interpretation. I know from personal experience of the difficulty in achieving this harmony between EEC or overseas law and our own.
However, we believe that there are one or two divergences between the Bill's provisions and those of the EEC, and these seem to concern straightforward matters of definition. In Clause 1 in the Bill we read that an inventior can be, "capable of industrial application". Yet in the equivalent Article—I think that it is Article 52 of the European Patent Convention—we find a different word, "susceptible". Apart from engaging this afternoon in a lengthy exercise in

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etymology, I wonder whether the difference in meaning is merely subtle or whether it is a major difference in meaning; because if the meaning is the same, could not the same word have been left in the text of the Bill which we are discussing today? The fact that there is a change means that there is a suspicion that the meanings of "susceptible" and "capable" may not be the same in all circumstances, and we wonder whether this is indeed desirable.
Another question which we should like to raise concerns Clause 70 and the comparable Article in the European Patent Convention; I think it is Article 138. This deals with the matter of revocation of a patent. From our Bill we can see that one of the grounds for revocation is that the matter disclosed in the specification differs from the matter disclosed in the application, and this seems perfectly, and indeed admirably, clear. Yet there seems to be a clash with Article 138, where in this Article the provisions state that the grounds for revocation include that
"the subject matter for the European Patents extends beyond the content as filed."
It would not do to become pedantic over words, yet there seems to be a gap in that the United Kingdom interpretation is certainly far more restrictive, but we shall probably be returning to this point later today, and indeed at much greater length in Committee.
The second major point that we should like to raise in the debate at this stage concerns the definition of the scope of protection. The point is connected to the previous one, but it is concerned with the restrictive attitude of United Kingdom patent law so far as the actual patent goes. Up until now we seem to have taken a more negative view; for example, United Kingdom patent law protects an invention so far as the drawings or the descriptions can show that another invention infringes the first, yet Article 8 in the Strasbourg Convention of 1963 and Article 69 in the European Patent Convention give a far wider scope for protection to the first invention and indeed to the applicant who filed it.
The extent of that protection is to be determined by, as we have it, the terms of the claim in the patent. Under the
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European Patent Convention protection is given to an invention or process which could be said to come between two definable extremes, whereas here, if the new invention is in any significant way different from the original claimant, the new invention does not appear to constitute a breach of patent law. But in our Bill we find Clause 114 and we would hope that this is the broad equivalent of Article 69 in the European Patent Convention. Yet from what we can understand of Clause 114, we believe that it does not give patentable inventions the same broad protection as we feel we ought to provide if we are to comply with Article 69 in its fullest sense. We would suggest at this early stage that some small Amendment or addendum could be made to Clause 114 at a later stage so as to provide the patentee with reasonable protection, yet certainty for third parties who may be interested in this particular process or the invention. This would be different from the present position, which may be a little restrictive for the inventor.
Next we have a further point to raise which has to do with the rights of an inventor on early publication of a patent application. The noble and learned Lord touched on this and we shall look forward to the expert views of the legal experts in this—I must not call it jungle—complicated series of laws. We look forward to hearing what they have to say. Noble Lords will know that there can often be a lengthy gap between the priority date, when the application was first filed, and the final grant of the patent, after all the relevant patent examiners have completed their task. The successful inventor can claim redress retrospectively against infringement only once the patent is granted. Yet it seems that Article 67 of the European Patent Convention will allow him one of two possible alternative types of redress. First, he may obtain full relief in respect of any infringement which occurs during the examination period, or he may claim compensation which is reasonable in those circumstances. He can claim one of these two alternatives. But this appears to be relatively easy and straightforward, so far as one can use such words about a Bill of this magnitude and complexity.
Yet it seems that in the majority of patent applications the applicant, whether

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through ignorance, whether through greed, or whether indeed through mere optimism, tends to produce a concept which leaves third parties in considerable doubt for what we would regard as an unreasonable length of time. I mentioned earlier the differing attitudes to patent law here and abroad, and the restrictive attitude adopted by the United Kingdom law would appear to be remedied by Clause 67. Yet we consider, so far as the clause is laid out, that it empowers too much licence to an inventor to claim that his invention owes its existence to any one, or to a combination of a number of ideas or concepts, which may or may not be laid out as in the patent as finally granted.
This is just a suggestion, but would not the deletion of the provision in Clause 67—I think it is the third provision—dealing with good faith and reasonable skill and knowledge go some way towards settling this query, because the court could still award redress at a reasonable level, according to what a third party could understand from the first application by the patentor? Would not Clause 67 be improved by making this small exclusion?
My Lords, another point that was covered in considerable detail by the noble and learned Lord on the Woolsack is that of appeals. We have found that, in general, appeals have been satisfactory, but there is a point that we believe could be relevant when we are considering how to make the Bill as good as it can possibly be. At present, under Clause 70, it permits the comptroller to revoke a patent, and states that all grounds for revocation be available to him. But it causes us some slight concern that provision for the continuation of the Patents Appeal Tribunal consisting of one judge should be, we understand, still in the Bill, because we had hoped to see adopted the proposals which were advanced for a three-man tribunal, where the judge would have two lay advisers with him as of right and as laid down in the Bill. However, we paid attention to what the noble and learned Lord had to say, and we note that there is provision for employing certain scientific advisers. In the Bill, I think this is in Clause 90. But this does not entirely satisfy the curiosity that some of us feel, because we regard these advisers as helping on an appeal which concerns a point of law, and the
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grounds of appeal would surely be that the legal requirements of the patent application or as regards revocation had in some way been infringed—not necessarily the technology, nor indeed the skill in the art, as it is so fascinatingly described in the Bill.
As it is, the Bill does not make clear what is to be the function of these special advisers. I think the noble and learned Lord is to reply, and I wonder whether he will be able to help us on this matter this afternoon, or possibly in the future, because we feel mystified since, so far as my own researches have been able to reveal, appeal judges in patent cases have not had much difficulty in understanding the scientific aspects of cases. But the noble and learned Lord disagreed fairly strongly with this view of mine, and therefore I would accept that, since he and his colleagues are involved, not necessarily in the matter in which they specialise but possibly in more scientific and erudite matters, possibly they require the assistance of a particular skill in the art in a separate discipline. I would at this stage accept what the noble and learned Lord has said about the scientific and special advisers, but I might wish to return to this question at a later stage. I hope that the noble and learned Lord will accept that.
My Lords, there is also, we feel, too wide a field from which to choose when considering an appeal from the tribunal. Should a litigant have what we see as a right to appeal against the comptroller, and then against the Patents Tribunal, to the Court of Appeal? And, again, should he have these two courses open to him as of right? I hope this is not trespassing on ground which I and many of my lay friends regard as still soft from Thursday's major debate, but would not the noble and learned Lord agree that there is an opportunity for needless delay, expense and litigation with this procedure as it is laid down at the moment?
There is one other small query which we should like to raise concerning the date of priority claims. It seems that, often as a result of an application being filed, research and work is continued so as to enable the patent to be adequately concise. During such work a new development may appear; and, indeed, the new process may alter the nature of the first claim, or

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may give it better protection. It seems from Article 88 of the European Patent Convention that this point is recognised; and, indeed, it gives as many priority dates as may be relevant to each process comprising the claim. Could not the Bill be mildly amended so as to bring us into line with the European Patent Convention in this small respect?
My Lords, so far we have considered these minor questions and have dealt with small points of definition and of drafting in a legal sense; but there are two major points which have caused concern and which we should like to discuss in slightly greater detail today and which we shall certainly go into in greater detail at later stages of the Bill. First, we have the vexed problem of Clause 49, which was touched upon in detail and with great clarity by the noble and learned Lord. Noble Lords will know and will realise that this particular clause is dealing with the compulsory licensing of food, drugs and (as I am told) surgical or curative devices. Would the noble and learned Lord, when he comes to reply, or indeed any other noble Lord who is to take part in the debate and is an expert, be able to help us in finding good, valid and, as I would put it, apolitical reasons for disagreeing with the recommendation of the Banks Committee that the existing Section 41 and the new Clause 49, as we have it in the Bill, be removed? The noble and learned Lord gave us some glimmer of hope that the Government's mind was not entirely closed on this matter, but I am sure that he and the House will know that there is already a scheme which is called the voluntary price regulation scheme that is in operation with the pharmaceutical industry. This particular scheme results in the United Kingdom having the lowest costs in Europe for drugs and pharmaceutical products, but I would also add that it has the lowest return of any European nation on capital invested in that industry. I regard the two as being bound up together and as being relevant.
The Government argued in their White Paper in 1975 that Section 41 operated as a fallback and that it was rarely, if ever, used. Particularly in view of the lengthy debate that took place last Thursday—and, indeed, we are discussing very complicated law this afternoon—I wonder,
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and I think several other noble Lords may wonder, why the Statute Book is to be cluttered up with a measure that has been or is deemed to be unnecessary, especially in view of the voluntary price regulation scheme and, indeed, the crown user regulations, which, as we understand it, enable the Government to have the power to break a patent monopoly in so far as medicines are concerned. Is it really the Government's wish not to improve relations with the pharmaceutical industry and not to help our particularly strong trade balance in medicines and medical products? We can hardly think that this is the case. My Lords, in case the House should think that this point is a mere lobby for one particular industry, it is only right to point out that every section of industry which we have consulted or has contacted us has asked us to see what we can do to remove what I call the Damocles provisions of Clause 49.
My Lords, the last major point which we wish to raise—it is topical but, we hope, not too political—has been raised and dealt with, with his customary clarity, by the noble and learned Lord. It concerns employee inventors and, of course, Clauses 36 to 40 of the Bill. We understand that under almost all contracts of employment within technological and science-based industries in the United Kingdom the employees virtually yield up their rights to patent any invention at which they, alone or in concert with anybody else, may arrive. This of course concerns the normal work carried out by an employee; but where he carries on experiments in his own home, albeit using his employer's facilities rarely, then clearly there is a case where the employer and the employee can come to what we hope is an amicable, negotiated arrangement. All that we are seeking in this particular matter is that the protection for employees should not be widened further than is in the Bill at present in Clauses 36 to 40, as explained by the noble and learned Lord.
My Lords, we have listened to the noble and learned Lord in his excellent speech and we look forward to many more speeches by specialists in many fields, as inventors, lawyers, industrialists, technologists, scientists. I think that all noble Lords who are going to speak this afternoon will contribute to our knowledge of what is to be covered by this Bill. We

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welcome this Bill as a major step towards improving our relationship with the EEC and with the rest of Europe. The Bill will enable the Government to ratify a number of important treaties and conventions. What we in this House have to do is to ensure that the Bill complies with articles and provisions contained in all of these treaties and conventions.
It may seem odd that the United Kingdom, as a champion of free trade, seeks to tighten up the law protecting monopolies for a number of years, yet I (and, I believe, many others) see no inconsistency in seeking to encourage our inventors, scientists, chemists and engineers so that they are not left entirely unrewarded for their skill, work and tenacity. I believe that there is still room for the small man and for what I may call the backyard inventor. It may be difficult for him to arrange an application for a patent, and the examination which must be carried out will be long, exhaustive and, indeed, costly; but, once granted, that patent will, should the Bill go through, protect this idea of the small man and, we hope, will reward him properly. For the sake of the inventors and for all those with skill, initiative and imagination, we should like to commend the aims of this Bill.
4.1 p.m.
Lord LLOYD of KILGERRAN: My Lords, the noble and learned Lord who sits on the Woolsack is to be congratulated upon his admirable and comprehensive review of this complicated Patents Bill which is designed to set up a new codified patent system for this country and to harmonise the position with foreign States. I do not think that it would be a breach of any international conventions leading to restrictive licences and revocation of proceedings if I were to say that the nearest thing that the noble and learned Lord got to patents practice in his distinguished career was when he kindly vacanted his chambers to allow me as a mere junior with a few other juniors to occupy those pleasant places for our patents operations. In my capacity as President of the Institute of Patentees and Inventors I would wish to pay tribute to the Comptroller-General, Mr. Armitage and his staff, to the Standing Advisory Patents Committee and to Mr. Ellis, Chairman of the Law Committee of that
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very distinguished body, the Chartered Institute of Patent Agents, for the vast amount of preparatory work they have undertaken over the years to prepare the background for this Bill.
I agree that this Bill will be of great advantage to large firms, to multinational firms, and will help them greatly in the acute competition which occurs in international business and will enable them to protect their investments in technology. But the fundamental criticism I have of this Bill is that it will not encourge innovation by the small, individual inventor, or by small or medium-sized firms. In practice, it will be far too expensive to operate and therefore in my view the individual inventors and the small firms will consider it to be another expensive monster in the jungle of national and international patent regulations and law. Many small and medium-sized firms have complained repeatedly that the cost of operating the patent system makes it not conducive for them to patent their inventions after the application stage. This Bill will increase the cost of patenting. Indeed, the Financial Memorandum to the Bill points out that costs are likely to be increased because the Patent Office will be situated in Germany, with all the expenses that will be entailed in applications for European patents. This Bill may, therefore, force the individual inventors and the small and medium-sized firms more and more to take risks by operating outside the patent system; relying largely on secrecy, largely on the law of confidential information and on their own ability to exploit their inventions commercially as quickly as possible.
The only fundamental cricitism, therefore, that I make of this Bill is that there appears to be no adequate provision to remedy the existing expense of the present procedures relating to patent protection. It is in the public interest, as the noble and learned Lord pointed out, that innovation should be encouraged at this time. Apart from the question of expense, I should like to congratulate the Government on introducing into the Bill Clauses 36 to 40 which recognise the special rights of employee inventors and also introduce an award scheme to encourage inventions by employees. The Institute of Patentees and Inventors have campaigned internationally, as I have done

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over the years, for a recognition of the rights of employee inventors.
In connection with the Amendments which will be introducted in this Bill, we have collaborated recently with members of the Trades Union Congress Economic Committee in connection with the clauses with which I am now about to deal. We welcome the effect of Clause 39(2) which, in effect, puts an end to the iniquitous general clauses in contracts of employment compelling employees to divest themselves of the rights of their inventions without any compensation. However, Clause 36, relating to the rights of an employee to his invention, in my view requires clarification. The use of such words now in the clause as "normal duties" and "reasonably expected", for example, is not sufficiently precise and can only lead to disputes.
The clause would be improved if it were made clear that where an employee's main duty under his contract of employment is research or inventive work or where he is specifically directed to inventive tasks, the employer can claim the whole interest in the employee's invention and any patent granted thereon. This is a clear and unequivocal position and will be most likely to cover the state of affairs in the vast majority of cases where a patented invention arises. But where an employee is not employed specifically under his terms of contract in the way I have mentioned and although his invention may have been made with the materials, aid, or assistance of his employer or within the employer's time, the employer should be able to claim, first, the right to a licence to exploit the invention and, secondly, the option to purchase further rights. Where there is no connection at all between the employee's duties and the creation of the invention, the employer should be able to claim only a prior right to purchase the rights in that invention.
My Lords, my next proposition concerns the assessment of awards. In my view, the employee should have the right to claim compensation for all the rights claimed by the employer. The right to claim compensation should not be limited, as at present in Clause 37(1) that the claim can only be made if the "patent…has been of outstanding benefit to the
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employer", whatever that means. Obviously if an inventor is specifically employed to invent or research and the benefit of his invention is no more than that which may be fairly expected from his having been paid and promoted in the firm, he would only get a nominal compensation, if any. The inclusion of restriction on the employee's right of claim only when the benefit to the employer is outstanding, as stated in the present Clause 37 could lead to confusion and unnecessary legal disputes.
My next point is that any award should be assessed by a separate tribunal and not by the Comptroller General of Patents as at present contemplated. The general guidelines as to the assessment set out in these clauses seem perfectly reasonable. The claim should be submitted to the Comptroller General of Patents, as stated in Clause 37, but he should not have the powers to award compensation as now proposed. He should of course deal with all the formalities, rule out frivolous claims and act as a conciliator in trying to effect an agreement between the employee and employer. But if there is a dispute—and there may be only comparatively few such disputes—the amount of compensation should be assessed by a separate tribunal of three persons composed of a representative of the employer, a representative of the employee and a chartered patent agent or a lawyer familiar with patents and industrial matters as members. I feel sure that clarification on these lines will avoid misunderstandings and simplify immensely the administration of this award scheme.
I had the privilege after the war of being associated with the noble Lord, Lord Cohen of Birkenhead, when he was chairman of Royal Commission on Awards to Inventors. That commission, composed of businessmen and civil servants, was able to deal with most complicated patent matters in relation to inventions that had been used for the purposes of the defence of the realm during the war. These businessmen and some lawyers were able to give robust justice which was widely accepted, and the validity of patents and infringement of patents were considered in a robust way, to use the words which the Banks Committee mentioned. I am glad to see that the noble Lord, Lord Kings Norton, is nodding his head (I hope in agreement

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with me) because we had the privilege of hearing him regarding some experiences of the work of that Royal Commission. Therefore I should like to make an appeal to the Government that these clauses should be reconsidered again. The admirable principle embodied in them should be made more realistic in practice so as to save industry and their employees a great deal of trouble and heartburn which does arise in this field.
The next matter to which I must briefly refer is the question of the term of a patent. Under the present 1949 Act all patents can last, if the fees are paid, for 16 years and, in exceptional cases, it is possible to get a further extension. The present Bill proposes that the term of patents should all be 20 years. This will make the patent system of this country conform in this respect with many other countries abroad. If those patents that have been recently granted under the present Act last for only 16 years, there might be some hardship for industry, particularly at the present time, when the research based industries have to compete for their technology with European, Japanese and United States firms.
It would be fairer therefore—and, indeed, lessen the load on the Patent Office—if some compromise position could be reached, perhaps on the following lines: all patents could be extended for 20 years. That might be going too far, and a better compromise would be to say that all patents that have more than five years to run under the 1949 Act should be extended for 20 years. No further extension would then be envisaged, as is now contained in Clause 7(1) of the present Bill, and this would relieve the Comptroller General of Patents of some administrative costs. Of course, the position of a licensee who has been planning his business on the basis that a patent was going to expire at a particular date can be taken care of by allowing that licensee to have a free licence. Also, a further safeguard would be to allow provisions as to licences of right to be available during these years of extension, and that the right of renewal in that period should be limited to the patentee. Perhaps the Government will be good enough to look again at what might at the present time cause considerable hard ship to research-based industries in their competition with countries abroad.
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I return to this question of expense of patent proceedings. The White Paper on patent law reform in paragraph 21 recognised this. I quote:
"Existing arrangements for dealing with disputes over patents and appeals from Patent Office decisions are unsatisfactory."
This passage echoed the evidence which had been submitted to the Banks Committee. It does not seem that the provisions of the Bill go far enough to meet this important practical point. It would be helpful therefore for industry (and particularly small and medium sized firms) to have some reassurance on the question of the immense cost associated with patenting an invention. Litigation is always expensive; those who have been concerned with patent matters will know that patent litigation is outstandingly expensive. In this connection may I quote some statements from a modern textbook on patents for inventions by a distinguished Queen's Counsel who is still practising at the Patent Bar. Page 8 of his 1962 edition says:
"That the High Court was an unsuitable tribunal in which to try patent disputes was long ago recognised by the courts themselves".
He quotes distinguished judges' observations in support of this generalisation. The Banks Committee thought so too, and I think, even as modified in the Bill, these High Court proceedings could be unsatisfactory. On page 331 the same distinguished lawyer, in a chapter on legal proceedings, quotes the then Master of the Rolls, Lord Esher, who said
"A man had better have anything happen to him in this world than have a dispute about a patent".
These are judicial pronouncements, and this Bill does not meet the problem posed by the Government White Paper. Perhaps in the public interest the Government will review the position again.
There are a few other points to which I should refer briefly. The noble Lord, Lord Nathan, had hoped to speak at this debate but, owing to the postponement, he is unable to attend. He has asked me to raise the same points as the noble Lord, Lord Lyell, raised regarding the clarity of the words used in Clause 1(1)(c), that an invention must be one capable of industrial application. The noble Lord, Lord Lyell, quoted the corresponding sections in the International Convention about this. There is a question of

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translation which might be looked at again at another stage in order to get the matter cleared up. The noble Lord, Lord Nathan, also suggested that I might raise a point on Clause 120(3), which has considerable topical interest. That clause states:
"Her Majesty may by Order in Council provide that the provisions of the Act shall apply.…in territorial waters…or in connection with the exploration of the seabed or subsoil or the exploitation of their natural resources in any area designated by order under section 1(7) of the Continental Shelf Act of 1964."
As your Lordships may know, there has been an extension of United Kingdom tax jurisdiction to activity on the United Kingdom Continental Shelf and it is now well established that these matters are of some considerable importance and difficulty. It is not, judging by the way the tax provisions have been interpreted, merely a matter of exercising jurisdiction over inventions used on the oil rigs. It may also apply presumably to foreign ships involved in the exploitation or exploration of the Continental Shelf. For instance, if a foreign ship is engaged in pipe laying, inventions involving the making of joints, valves and so on, may be exercised on board; but would it not be preferable to eliminate this clause from the Bill and wait until there has been an agreement within the EEC countries on what may be a troublesome matter? The Government might perhaps think that this matter relating to the use of inventions above the Continental Shelf should be the subject of a separate decision by Parliament rather than something which is done by ministerial action and that it should be in a separate Bill.
As the noble Lord, Lord Lyell, has indicated, there are a number of other matters which fall to be cleared up under this Bill in due course. Of course, it is in the public interest to encourage patenting so that information relating to the invention is published, as indicated by the noble and learned Lord the Lord Chancellor. But I should like to end by quoting from the inaugural address by the noble Lord, Lord Nathan, to the Royal Society of Arts, published in the Society's journal for December 1976. The noble Lord, Lord Nathan, said this—and he is well versed in the intricacies of international patent procedure:
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"A patent system can collapse by being too complicated or too expensive and by failing to adapt to current needs.… A situation can be reached in which it is thought that there is more to lose than there is to gain by applying for patents. If that situation arises, patents will die out and secrecy, with all its disadvantages and dangers, will be the only source of protection".
I think it was Dr. Busch, the famous head of the Massachusetts Institute of Technology, who said that if an industrialised country had a patent system that had been running for 50 years it should take steps to consider how far it could be abolished. He went on to say that if there were a developing country which had no patenting system, it was about time they thought of introducing one. I am sure that the noble and learned Lord the Lord Chancellor would agree that any new code of patents should encourage and stimulate investment at all levels of industry, particularly at the present time; and it seems to me that the question of expense in carrying out the provisions of this Bill after the application stage is crucial to success.
4.25 p.m.
Lord BROWN: My Lords, I rise to speak about this Bill not from a legal point of view, of which I am ignorant, but because I have spent a large part of my life in industry and, unfortunately, have had quite a lot to do with patents during that time. I am going to deal with only three points; and the first is one which has already been touched on by the noble Lords, Lord Lloyd of Kilgerran and Lord Lyell. With great respect to both of them, although I may not have heard accurately, I thought that the proposals they were making separately were likely to lead to a more complicated result than the Bill at present would produce—and God forbid that it should be more complicated!
I think the House knows what Clause 36 implies; namely, that if you are not employed as an inventor or assigned to a job which implies invention, then the invention belongs to you. That is quite clear; and I think that something should go into the Bill about a person being employed under contract to invent. Another way of dealing with this would be that when you are given a special assignment you should be given something in writing to show that you are on that special assignment. Then there would be no doubt that the invention belonged to the employer.

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The point really is this. When the invention belongs to the employer, nevertheless the employee has a later claim to compensation if the benefits to the employer have been very large. The justice of this seems to me very doubtful indeed. It could equally be argued in equity that any employee who shows creative but non-patentable endeavour should have an equal right. The trouble about drafting patents Bills is that of course they become obsessed with patents; and in fact only a tiny fraction of the work done by individuals which leads to success in industry is concerned with patentable ideas. Brilliant creative ideas are frequently produced by employees in their roles in product development, in manufacture and in marketing, which are not patentable. I fear that successful claims made by those who are able to make such claims under this clause will cause great jealousy among equally creative people who have no right to make similar claims.
That is not the only objection. Have the Government seriously considered just how many claims are likely to arise, and in what circumstances? It is no exaggeration to suggest that the peak of successful market exploitation of an invention is not likely to take place in much less than ten years after the application. That may surprise some people, but when one considers the period of time taken to develop the invention from an idea into something concrete and then to productionise it and get the market to accept it, I do not think the statement is an exaggeration. Therefore, possibly ten years after the event the comptroller must, in response to an employee's claim, consider six criteria which are listed in Clause 38(3)(a) to (f). I was going to read those paragraphs out, but I shall not do so. There are six of them, and the comptroller will have to go into matters affecting other people associated with the invention but whose names do not appear. One of the matters he must investigate is how much assistance the employer gave; and it goes on and on and on.
I would suggest that the clause as it stands sets the comptroller an almost impossible task. Inventions in industry are increasingly a product of team work. It is almost a platitude to say that. Very frequently, it is almost impossible to say honestly which person or persons were truly the inventors. The name which
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goes on the patent has not up to date always been particularly important—but watch what will happen if this clause becomes part of the Act. The question of whose name goes on the patent is going to be very important indeed.
Lastly, the potential number of cases which the comptroller may have to deal with alarms me. Every person employed in R and D in industry, or in other places, will watch the progress of the invention even if he leaves the employ of the firm, and will later come back and have a go. He might get a great deal of money if it has been successful. I hope that the Secretary of State will have second thoughts on subsection (1) of Clause 37. At first sight, its contents look like an attractive piece of justice. But when the underlying circumstances are revealed, the whole idea of paying a few selected employees twice over for doing good work is exposed as fallacious, and very difficult to administer into the bargain. Patented inventions are but the start of a very long process of development, investment in plant, development of production techniques and marketing. The ultimate commercial success is as dependent on the effective creativeness of many employees as it is on the person whose name appears on the patent application.
I now wish to refer to Clause 90, which establishes a Patents Court. This has already been touched on by the noble Lord, Lord Lloyd of Kilgerran. It is sound that this court is not an inferior court, as is the present Patents. Tribunal which, incidentally, is not a tribunal either, and one judge sits. But it is regrettable that, as with the present Patents Tribunal, the judgment is to be made by a single judge, albeit with advisers. What I have to say now is very much an industrial point of view, and I think it will not be acceptable to legal minds, unless they can get into the way of thinking of industrial people. Litigation about patents can cover the entire field of science and technology. Judges have done pretty well in the past in grasping complexities, but science advances at an ever increasing pace, and I doubt whether they will do as well in the future. I would therefore press the Government to provide the Patents Court judge, under this Bill, with two technical advisers who should both be parties to judgments of the case. Three minds are better than one on technological matters of this kind.

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Industrial confidence in judgments made by three people will, I submit, be much greater than if made by a single judge, who will not usually be an expert in the area under judgment and will have to be kept informed all the time the case goes on. This Bill will make it easier for litigants to appeal from the Patents Court to the High Court than heretofor. The more confidence that there is in Patents Court judgments, the less appeals there will be, and vice versa. Businessmen are unusual litigants, because, invariably, they are not concerned with their personal assets. Litigation is a grave interruption of their normal work and they specially object to litigation. Confidence in judgments has a great bearing on whether or not appeals are made, but increasingly it will seem to businessmen that the opinion of experts on such questions as obviousness, novelty and technical points is necessary for just decisions.
May I briefly quote a case in which I was much involved, which has dogged my career? In 1929, an American company took out patents on a brilliant invention. In 1930, they dropped the patents. In 1931, they invented fresh claims and got a patent, albeit, obviously, a rather weak one and gave free licences to all their American competitors. They then proceeded to licence other companies, and licensed a company in this country. In 1937, a British company sought to get the patent withdrawn before the comptroller, and it was withdrawn. In 1938, it was reinstated before the Patents Tribunal. The terms of the verdict in that case smacked of a feeling on the part of the judge that this was too complicated a matter for him, and it had better go to the High Court. I will tell your Lordships what happened.
During the war, the Government became involved and had to give an indemnity in order to enable a British company to manufacture. In 1947, it went to the High Court. In 1948 or 1949, it went to the Appeal Court. In 1950, it went to the Lords and the verdict was against the British company. It went to the taxing judge and he refused to interpret the verdict. Twelve years of litigation went on, which I believe would have been avoided if the Patents Tribunal had done its job, and I think that if there had been two experts on that case they would have
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decided it in a manner which would have saved thousands of pounds worth of expense and interrupted production during the war. That is why I am pressing the Government very strongly to reconsider this question of the set-up of the Patents Court.
My last point is one that has not been raised so far and it is this. There is no provision in the Bill for Governments to look at licence agreements, or agreements for British companies to pay royalties to foreign patentees overseas, and I suppose that many people think that that is a very good thing. If one has experience as a licensor around the world, one finds that in nearly every other country the agreements which one is going to make with licensees are subject to scrutiny by their Governments. In some countries, if a licence fee is too large, the licensee in that country is not allowed to charge the fee against his profits for purposes of taxation, so he suffers a tax loss. The result of this practice on the part of many other Governments overseas is that if you are a British licensor, and you want what you think is a reasonable down payment, or a reasonable period over which the licence exists or what you think may be rather a large licence fee, because it is a very novel idea, the licensee in the other country will say: "I agree with you. It is fair and all the rest of it. But my Government will not agree", because these agreements have to go to the Government for scrutiny.
I suggest that a clause should be put into this Bill which would put British businessmen negotiating overseas in the same position. So that when they seek to get a licence out of American, German or Japanese companies, and those companies demand—as has happened in recent years—something like 10 per cent. on turnover for the benefit of having the right to use their patent, the British company can say: "You can ask for 10 per cent., but you will not get it from anybody in this country because these licence agreements have to go to the Government and they will certainly exclude any such fee as 10 per cent." In due course, we shall save ourselves a substantial amount of foreign currency by so doing.
I am informed that at the present moment we have a balance-of-payments

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surplus on licence fees and fees for know-how, et cetera, of about £25 million per annum. We are not a very large country and, unfortunately, I predict that in due course that will turn into a deficit because of the immense technological effort going on in the United States, in the USSR, in Japan and elsewhere. Smaller countries will always get into that position, and it will be very costly to us if British companies are going to be forced to negotiate with one arm tied behind their back, because there is no such provision for scrutiny of these licence agreements. So I propose to move an Amendment at the Committee stage introducing a new clause into the Bill in which I detail those provisions.
May I end on this note. When one hears noble Lords on the Opposition Benches criticising the Labour Government for the mass of legislation which they introduce into the House, one has some sympathy with them. But what is always at the back of my mind is the fact that there are certain types of legislation, such as the Companies Acts and Patents Acts, such as the Bill which we are now discussing, which have always seemed to me to be almost the prerogative of the Conservative Party, and it is most singular that the two major Companies Acts—that in 1948, and the latter one in 1967—have had to be introduced by a Labour Government. They have had to find a place in their timetable for legislation which should really have come from the other side of the House. In the case of Patents Acts, the position is the same. The 1949 Act and this Bill have come from Labour Governments. A major portion of this present Bill has been necessary for years, and so with the Companies Acts. Therefore when noble Lords opposite think and voice these criticisms, perhaps they would bear in mind the fact that Labour Governments tend to do a great deal of what occurs to me as belonging naturally to the Conservative Party's work. I hope that this thought will tend to make the passage of the Bill a little more expeditious than was the case with a number of Bills in the last Session.
4.40 p.m.
The Earl of HALSBURY: My Lords, in rising to support the Second Reading of this very welcome Bill into which so much hard work has gone, I shall en-
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deavour not to duplicate what has been said already by the noble Lord, Lord Lloyd of Kilgerran, and the noble Lord, Lord Brown, with a great deal of which I am in very substantial sympathy. I think that we may find ourselves batting together during the Committee stage.
I hope that your Lordships will allow me the indulgence of referring to my own career. Since graduation, my professional career can be divided into three equal blocks of time. In the first I was an employee-inventor, concerned only to win promotion and advancement in my profession by satisfying my employers, to whom I assigned the products of my research without the slightest question. I was only too glad that somebody in the legal department would attend to the chores of the assignment. The second third of my career was spent as a public servant: as managing director of the National Research Development Corporation where I was involved in administering, developing and exploiting the inventions which resulted from public research. I had to administer something like 1,500 patents at a time in out portfolio. I learned that patents in middle age are rather like girl friends in flaming youth: that there is safety in numbers. Provided that you have 1,500 patents to look after, you cannot get over-involved with any particular one of them. The third chunk of my career has been spent as a director in industry exercising a supervisory and monitorial role over research activities, hopefully to procure further useful inventions to be the subject of research and development.
The Institute of Patentees and Inventors, of which the noble Lord, Lord Lloyd of Kilgerran, is the distinguished president, invited me a few years ago to give the Spooner Memorial Lecture based on my known academic interest in the profile of inventors, the sociology and the economics of invention, the psychology of inventors, and so on. I took this opportunity to publish what I suppose one could call the research of a lifetime: the case histories of 100 significant inventions which had matured during the course if lot of my own lifetime that of my father and myself. An offprint of this lecture is in the Library, and anybody who is interested in looking at some of the vital statistics contained in it will find them there. However, I am going to deal with only

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a few of these statistics in order to illustrate to your Lordships what the profile of an invention in time is in the statistical sense.
Not every one of my 100 cases illustrates with full clarity every stage of the course of an invention. Some of them have grey areas but I can at least pick out 28 cases which illustrate the latent period which, with the wisdom of hindsight, one can see elapsed between scientific discovery, which made an invention possible, or the piece of science fiction which predicted it—Jules Verne, H. G. Wells and so on—and the time when somebody got down to the business of trying to reduce it to practice. The first set of figures illustrates the very wide range of dispersion between extreme cases. The average for this latent period is 31 years, but it can range from 120 years in the case of the self-winding wrist watch to two years for the hydrogenation of vegetable oils and fats to simulate animal oils and fats and enable the production of margarine to be undertaken on a very large scale.
The next stage is derived from 27 cases where, the activity having started in the mind of an ultimately successful inventor, a period has to elapse before he produces the first operable patent. He may produce many inoperable ones. The average period is 10·9 years, although the dispersion can be from 30 years to one year. The third period is from the first operable patent to marketability. The average is 17 years, with a dispersion of from 47 years to one year. Lastly, from marketability to profitability is 7·5 years, with a dispersion of from 12 years to one year.
If we smooth out these periods over the average inventor and look at what he gets out of the present patent system, he puts in 21·6 hard working years from the time he takes off his coat and gets down to it to the time when his invention becomes profitable. And what is left to him of his rights? He is left with a 5·3 year residue of his original 16 years of patentability. The present Bill increases that period by a factor of four years: from 5·3 to nine years. It practically doubles the effective life of the patent in the hands of the patentee. Your Lordships may think that 10 years of effective royalty earning for 21·6 years of work is not exactly over-remuneration. Nevertheless, it is
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at least double what inventors get at the moment, so one must welcome it.
What about the man, however, who does not represent the average but against whom fate is operating so that he is represented by the long end of the dispersion? Let us suppose that he determines to invent something at the age of 21, that he lives to be 80 and that his invention is just beginning to be profitable. All he has is a patent which expired 13 years ago. Therefore do not let us suppose that in this very complicated field we can ever hope to do more than rough justice.
Three factors dominate the inventive situation. The first is the qualified individual. Of the 100 inventions, I have to associate with them 124 inventors because some inventions involve the work of more than one person. One hundred and four of them were all qualified in their own field; two of them were qualified in associated fields, and only nine were amateurs. However, among those amateurs were the two music graduates who laid the basis for modern colour-photography, so you cannot write off the amateur; he is still capable of very significant inventive steps. The second dominating factor is pre-established industry. Of my 100 inventions, all except 19 were absorbed straight away by firms engaged in the industry concerned. Nineteen attempted to set up on their own, and of those 14 failed. Only five succeeded in establishing new firms, whose names are household words today. So once again there is very little more than rough justice to be got out of this subject.
Here let me pass to what has been said about Clauses 36 to 40. I want to reinforce without duplicating what has been said by the noble Lord, Lord Brown. It is possible, because one is afraid that justice is rough, so to try to refine it by Statute that you end up by doing no justice at all, through promoting ill-feeling between one person and another. It is extremely important that we should not spoil employer/employee relationships through Statutes that open the gateway to the barrack room lawyers and to the sea lawyers who are out for trouble. In the scope of my duties as an inventor, do I have the duty to my employer to have a bath every day? Supposing that for my own pleasure I like wallowing in hot

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water, have I a duty to put my mind to my employer's problems while doing so? They keep me awake at night, but do I have a duty to keep these vigils?
It is precisely the kind of man who says "No," and "Since that is how I thought of this, therefore I have to be especially treated" who is going to make trouble between employer and employee. And much worse than that. Let us suppose that I am the director of research in a pharmaceutical firm and that to mark WRY in 1977—those initials stand for World Rheumatism Year—I inspan a multi-disciplinary research team consisting of a chemist, a biochemist, a pharmacologist, a physiologist and a consultant rheumatologist to work on this problem. Let us further suppose that I say to them, "Go to it; here is the money", and that at the end of five years they have the equivalent of both gold on the one hand and cortisone on the other, with all their advantages and none of their limitations. The probability then is that only the chemist would be able to say that he was the true and first inventor of the particular pill, potion or whatever it might be. The others would not be able to say that they were the true and first inventor; only the chemist would be able to say that, and therefore to put him in a preferred position over his pharmacological and physiological and rheumatological colleagues would be just making trouble between fellow employees. The wording here must be watched very carefully at Committee stage.
Turning now to Clauses 48 and 49, I fear that here the Government are to some extent rather playing hide and seek between Britain and the European market because the European market has no Section 49, so at one moment we are told that we must do something in order to homogenise our legislation with Europe's, but at another time the British bulldog breed with small "c" conservatism—no disrespect to the Opposition—proceeds to stick to present practice because it is too obstinate to take the advice of the Banks Committee and let us do away with the new Clause 49 and the old Clause 41. I think Clause 48 is very proper. If a virtual monopoly is being abused there ought to be some remedy, but why do we take the mickey out of the food and drugs industry? What is wrong with them? Does anybody grudge the doctor his fee? Does any real beneficiary of a pharmacological discovery grudge the
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price of the drug? No, my Lords; one pays it only too gratefully, as I have said before in this House.
I now come to just a few Committee points that I want to make the noble and learned Lord on the Woolsack aware that I shall be raising at a later stage. First, in Clause 1(2)(f) the computer programmes are referred to. I think we ought to use the words "computer software", to make it quite clear that we are not dealing with built-in hardware; and I think the words "computer software" are now sufficiently part of the language to be able to find their way into a Statute.
In Clause 1(3)(b), which deals with the patentability of biological processes, and so on, it is now possible to implant a pedigree embryo into a non-pedigree host and thus to accelerate very considerably the breeding of pedigree stock. I cannot see why apparatus facilitating this process should not be the subject of a patent. In Clause 4(2), on the question of surgical appliances, what about the artificial lung which makes open heart surgery possible? Why should the inventor who designs a successful artificial lung be debarred from a patent? Or take a kidney machine: I was once involved with making kidney machines; they are a definite field for electronic and chemical engineering expertise and I cannot see why the inventor should not have a patent on them.
I come then to Clauses 19 and 20. Here I should be grateful if at some stage the noble and learned Lord would clarify the position of the visiting scientist abroad. I once received a letter from a Nobel Prize winner—a professor in a British university but also the holder of an honorary appointment in an American university and of a consultancy in America. He wrote to me and said:
"I enclose provisional specification which my attorneys in New York have taker out, together with a form of assignment to the National Research Development Corporation. Will you please complete and return and I will make a Convention application when I get home."
Now under Clause 20 would he be breaking the law in doing that, and ought he to be breaking the law in doing that? Time will not wait on the convenience of lawyers and bureaucrats.
Let me tell your Lordships the history of the hovercraft. Sir—Mr as he then

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was—Christopher Cockerell had his invention put on the secret list by the Ministry of Supply (as it then was) until within one week of the collapse of his Convention date application. They then told him he was a free man and could patent it anywhere he liked, without any provision having been made for doing this. So, wisely, he went to his old employers, the Marconi Company, who were represented in his own mind by the noble Viscount, Lord Caldecote, who sent him to me. I got the machinery moving and we had that patent application through by the lapse of the Convention date. Christopher Cockerell's invention was patented all over the world, but had one day gone by he would have had to re-file in London and a Swiss inventor who had filed in Geneva during the course of the Convention year would have had the priority. That is why time matters and we ought not to pass Statutes which make it impossible for English inventors who have a bright idea in New York to have to wait until they get home before they can file.
It used to be the practice—I do not know whether it was in this country but it was so in other countries, when the patents in Amsterdam were much more methodically examined than in any other capital—to file in Amsterdam and then in the rest of Europe. Almost certainly if you got a patent from the Amsterdam patent office you had a stronger patent. I do not know whether this is still possible—perhaps it is not even necessary—but I am sure it is necessary to look at all these things.
I should like to raise one last point arising out of what the noble and learned Lord said about Clause 90(4), the provision of advice to the comptroller of the Patent Office. I believe one could take the matter a little further, and I shall put up a cockshy draft in Committee stage in order to get the matter discussed. I think probably a very high proportion of the claims in chemical patents would be found invalid in the courts. The ghost of a very old doctrine still lingers: it is that the course of a chemical reaction is unpredictable. In terms of the modern electronic theory of valency this can only be partially true in some circumstances. The result is that you have a very long chemical synthesis, such as the
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synthesis of cortisone which is in over 30 stages: you convert substance one into substance two, into three, into four and so on, with progressively diminishing yields in each case, which is why it is so expensive. A great many of the reactions by which these stages are converted into one another are textbook reactions which ought not to be the subject of claims, but I think the Patent Office ought not to be the arbiter in this matter.
In America the patents system permits what is called "examination by subject matter", that is to say, that civil servants at the American Patent Office are allowed to say whether or not something will work or whether it is inventive. The result was that they denied Orville and Wilbur Wright a patent on the aileron, which was what made heavier than air machines possible, on the grounds that heavier than air machines were impossible and so no invention had been made. That is what can happen if you allow a bureaucracy to take charge of things; but I think it might be possible to give the comptroller of the Patent Office power to appoint an advisory committee to schedule and publish a list of disallowed reactions—reactions which are so much textbook reactions that they ought not to be the subject of claims in a multi-stage synthesis on the basis of the old doctrine that the course of a chemical reaction is unpredictable. In this case we should have fewer, cheaper and stronger patents issued in the chemical field. I simply speak as a professional chemist and I may be torn to pieces by some of my colleagues in the industry for saying what I have said, but I think there is a case for examining this matter and I shall raise it at the Committee stage.
4.59 p.m.
Viscount ECCLES: My Lords, I must first declare my interest as the Chairman of the British Library, of which the reference division holds the national collection of patent literature. That said, my remarks are not going to be those of the Patent Library but purely my own. I am no lawyer; I am no patent agent; I am just a layman interested in this subject.
This Bill may deal effectively with the decision of the European Community to rationalise their patent system. I

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accept that. We are members and play according to the rules. But for the United Kingdom the Bill spells out a very sad story. We have to change our law in ways which more expert noble Lords than myself have already shown to be partly undesirable, and we have to say goodbye to the leading position we have held for so long among the Patent Offices of Europe.
The European Patent Office is not to be in London; it is to be split between Holland and Germany. London has been bypassed: London, where we have had unrivalled experience, where the collection of patents is unsurpassed and where the collection of supporting technical literature is by far the best in Europe. My Lords, that pre-eminence is not unconnected with the fact that well over half of the whole of the world's patent business is conducted in the English language, and the preservation and spread of English is one of our greatest international assets. Yet we have lost out to the Continent.
During the crucial years, from that Convention in 1963 to 1970, for deciding the shape of the European patent system we were not a member of the Community. But we were not out of the running to get the European Patent Office. Why did we not get it? It appeared to me at the time—I was then chairman of the Trustees of the British Museum which at that period was responsible for the Patent Library—that our patent community, and not least our Government officials and Ministers, were too complacent. We had so much to offer that they thought Europe would have to come to London. They left it too late for the gallant effort made by the controller of the Patent Office to have any chance of success. That was defeat.
Europe decided against London and the decision shows all the signs of political compromise. The library resources and the searches for patents are to be in the Hague; the applications for patents are to be processed hundreds of miles away in Munich. We know very well in London what this will mean in extra costs and time taken, for we operate the United Kingdom patent system in four separate buildings. At least they are in the same city and not all that far apart. As my noble friend Lord Ironside—who I am glad to see is going to speak in this debate—will
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probably tell your Lordships, we have long looked forward to the day when a sympathetic Government will provide us with more convenient accommodation.
What is going to happen now? Gradually in respect of inventions of importance the European patent will replace the national patent issued in the member countries. The British Patent Office will decline into a branch of the Hague and Munich Offices. And a main purpose of this Bill—not recognised by the noble and learned Lord the Lord Chancellor—is to put that inevitable decline into legal form.
I must call your Lordships' attention to one formidable change brought about by our joining the European system which is enshrined in this Bill. Today, a British inventor has only to publish his invention once; that is when he has been granted the full protection of a United Kingdom patent. In future he will have to pay the costs of publishing twice. First, he must publish the substance of his idea; then he must wait while the examiners decide to give him or not to give him full protection. If they grant him a patent, he will have to publish all the details of his invention. I inquired about this and I am told that this procedure will increase the cost of getting a patent to something between £2,500 and £5,000, and that is probably on the low side. This is a very stiff bill for the small inventor; I doubt if many of them can face it.
Further, whatever the costs may be, the small firm and the individual inventor—and maybe some of the bigger firms—will hesitate to take the risk of publishing the substance of their ideas before they know whether they will be granted full protection. They will see what money they can get by exploiting or selling their invention in secret. Whether this turns out to be in the public interest it is difficult to say. But at least one result of this Bill is certain. The patent system will move further and faster in favour of the big company advised by expensive agents and lawyers and the possessor of the related know-how. Of course, the trade unions and the present Government look with favour on the growth of large-scale institutions; so this is in line with their policy. They are not, like noble Lords on this side of the House, much concerned with what happens to the small man and the small business. I begin to

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wonder whether on balance the whole patent system is now operating against the best interests of the consumer, taking the developed and underdeveloped countries as one world. Patent agents and the legal profession would rise in wrath to combat such a view. No doubt they are the gentlemen who have briefed most of your Lordships about this Bill. But we must remember that patents are one huge meal for the professionals. No one knows how much wealth these experts exact as a result of the contrived and ever-increasing complexities of the patent system.
My Lords, if the poorer nations are to enjoy a better standard of living, the advanced nations must accelerate the rate of innovation and without delay share that innovation with the others. In meaningful terms, that implies not only sharing the new ideas but also the processes by which the ideas can be turned to practical ends. It is very interesting to note that this was the original purpose of patents. In the 16th and 17th centuries patents were granted by the King to stimulate the inventor to put his ideas into practice and make some money, not only for himself but for the benefit of his Sovereign and his country. Rights and duties were wrapped up in the same package when the patent was granted. But now the owner of the patent, if after a longish period he does not exploit it himself, can still with the aid of lawyers spin out the time before he must give a licence to someone else to exploit the invention. I wonder how far it is now true that most patents are taken out not to do anything but to prevent everyone else from doing something?
In our technological age, patents are generally useless without the complicated know-how of the manufacturing process required to put the idea into production. Know-how is not at all easily patented. Yet it is often much more valuable than the patented invention to which it is applied, and that is one of the reasons why Clauses 36 to 40 are so unsatisfactory. My Lords, could the ICI have patented the tapes which someone recently stole and for which they demanded a ransom of £200,000? I very much doubt it.
The defenders of the system claim that without patents, innovation would be
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stifled. I doubt whether that is anything like as true as it was. If there were no patents, how many firms could sack their research teams? With no legal protection against their competitors they would be under pressure to put their secrets into production as quickly as possible. That would not hurt the general public. As for the research teams, they would become even more vital and presumably better paid to find and keep their secrets.
I am very much in agreement with the remarks of the noble Lord, Lord Brown, and the noble Lord, Lord Lloyd of Kilgerran, as regards Clauses 36 to 50. When I first read them I thought that the foundation had been laid for compensating employees who had invented something of advantage to their firms. However, on further examination I came to the same conclusion as the two noble Lords—the clauses are extremely obscure and they appear to do nothing more than provide a feast for lawyers and will very likely imperil the relations between the salaried employee and his employer.
I wish to add only one point to the admirable remarks made by previous speakers. Foreign companies, notably American and, perhaps, German, often invest money in research in this country. They will not do so if they read Clauses 36 to 40, because they will not know the extent of the risk they are put to when these remarkably vague terms have to be interpreted and how much—if the research is successful—must be paid to one or other members of the team concerned. That might be very serious, especially in the pharmaceutical industry.
Of course, there are some industries—Pharmaceuticals again and electronics—in which it is said that if there were no patents it would be impossible to secure the capital required for research and development. My Lords, it is impossible to prove that statement. It is one of those things which people say but one can never be sure about the extent to which it is true. Even if it might be true in a small section of industry, perhaps electronics, would it balance out the restrictions, the costs, and the delays that patents bring in other branches of industry—for example, in general engineering, in the making of bits and pieces for a motor car? What real use is the patent system today except, of course, to the agents and lawyers?

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As for the freelance inventors, the problem is how best to reward them. They, like authors, artists and craftsmen, are hard hit by inflation and the rising level of rewards in other occupations. It would be worth asking them if, from their point of view, patents are still the best system. It would be worth trying to find out, if there were some system of grants in place of patents, to what extent innovation by the self-employed inventor would suffer. It is very difficult to find out, but I think that we should ask.
I am particularly interested in this possibility, because for a time I was connected with the textile trade. One cannot patent the texture or the design of a fabric; one cannot patent a dress, a shirt or a bath towel. However, that does not mean that there are no constant hectic changes in fashion. Quite the contrary. The Paris dress designer has only a few months for the exclusive sale of his models before they are copied all over the world. Is that a bad system for women in London, Sydney or Los Angeles who are on the look out for something new to wear? My Lords, the textile trade does quite well without the protection of patents for designs and fabrics.
We must believe that mankind in general benefits from the spread of knowledge. In spite of the fact that innovation is some times used for evil purposes, we must take the risk and welcome new ideas as they come. In the past there was quite a strong case for saying that industry would learn a lot, and did learn a lot, by searching through patent specifications. However, are not these searches becoming too expensive for the small firm? And to what extent does the big firm still get its know ledge that way? I recognise that some inventions applied to the hardware of defence must somehow be kept secret, and that for one country to contemplate abandoning patents while others keep them would be very difficult, if not impossible. However, we are members of the European Community and this is just the sort of thing that the European Community should examine. For the immediate purpose of keeping in step with our friends in Europe, your Lordships may agree that this is a necessary Bill. But for the wider purposes of spreading the fruits of innovation, not just in Europe but the world over, and to meet the particular need to discriminate in favour of the small
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business and self-employed individual, I beg leave to doubt its value.
Any of your Lordships who share my doubts may wish to ask fundamental questions about the role of the patent in an age when the frontiers of knowledge should be wide open and the big public and private institutions restrained from mopping up the small fry and taking away the livelihood of the self-employed man and woman. These questions deserve patient study. Here and now we must give the Bill a Second Reading. However, do not let us forget that we are also the servants of mankind, everywhere in every corner of the world. What the advanced countries insist on protecting by acres of legal barbed-wire, the rest of the world might one day come and demand by force.
5.17 p.m.
Lord GLENKINGLAS: My Lords, I rise for a very few minutes to address your Lordships' House because I have three connections with the Patent Office, all of them at least to me important. The first was when, just before I joined the RAF Bomb Disposal Squad, we discovered, very thankfully, that a German had patented all the fuses of the German bombs at the Patent Office, which made my life very much safer. The second was when I was in charge of the Board of Trade and Sir Maurice Banks, as he now is, published his report. It was a great pleasure for me to meet him and his committee and to thank them warmly for the great deal of work that they had done which, on the whole, was very successful work. Our Government accepted the main recommendations in principle soon thereafter.
Lastly, one of the more curious tasks that I had to perform was to be chairman of the Veterinery Therapeutic Substance Testing Board, an appointment for which I was suggested as chairman by the Agricultural Research Council because I had no knowledge of any part of that sort of industry. Over the course of the two years or so that I was in the chair of that august body I spent a great deal of my time looking at the research and testing of medicines, vaccines and so on, mainly in my case for animal consumption rather than human consumption. I saw a great deal of what went on in these generally

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rather large pharmaceutical and chemical businesses.
I am very much attracted by some of the thoughtful and philosophical suggestions put forward by a former President of the Board of Trade, my noble friend Lord Eccles. It may well be that he is right and that the world would be better if we abolished patents altogether, but in this particular field I think there would be considerable difficulties. It is not like a dress that you can draw out and design, and the lady wears it and makes a great success and you sell a number of copies and you do very well over a few years. If he or I were to start mixing potions for certain ill-effects to which humans or animals were subject, and sold them right, left and centre, I think before long we should be in danger of killing off a number of our friends or our animals. So in this field I think possibly you need some proper control, and if you are going to have control you may need to have patents to protect it.
I am making my speech extremely short this afternoon because the noble and learned Lord the Lord Chancellor, the noble Lord, Lord Lyell, and the noble Earl, Lord Halsbury, have all referred to Clause 49, which I believe has no possible purpose whatever in this Bill. The Government argument up to date has been that it is there rather on the housemaid's baby argument, "There is so little to worry about that it should not be noticed". Secondly—and this I find much more frightening—they say that it is a useful provision in terrorem of industry doing something wrong. With out wanting in any way to be Party controversial I think that in one shape or another the present Government have enough things in terrorem of industry to be able to remove this one. As the noble Lord, Lord Lyell, said, the cost of medicine in the United Kingdom is the lowest in Europe and the return on capital in the pharmaceutical industry in the last year of which we have any record, which is 1974, is 14·7 per cent. You can get more than that by investing your money with some amiable local authority and running no risks whatever. It is not very attractive for firms to carry out a considerable quantity of often difficult and sometimes dangerous research for a return of that nature.
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But if one looks as it on a wider basis—and I have as one of my duties at the moment, as your Lordships know, the task of trying to export British goods and know-how overseas—it is extremely important that our research effort in these fields should be maintained and, if possible, improved. Though I take the point that what one wants to do in many cases is to support the smaller inventive firms, in this field it always has to be the big firms because of the nature of research required, and if one is to support that, one has to give an adequate incentive to the best research scientists in the medical field that we can afford. If we go on with the process that we must frighten them into charging the lowest possible price and so making no money, we shall inevitably increase the brain drain and lose the export effort and know-how which go with these developments and inventions.
I think, on the whole, that this Bill is a good one. I agree with people in bringing specific criticisms against a number of things. I am particularly against Clause 49 because it is a complete non sense in the context of the industry at the moment, and I hope that the Bill will be supported but much improved at its Committee stage.
5.24 p.m.
Lord BROADBRIDGE: My Lords, in our long list of speakers I think that I add up to about half-time, and in that sense I wish I could herald the bringing on of the oranges for those who are to remain to sit right through our Second Reading of this complex, important serious subject. I hope in turn, with all humility, that my own observations will not turn out to be lemons.
I welcome the debating birth of this Bill, although, as the noble Lord, Lord Carrington, implied in his Question in this House last May, would that it had been born sooner. I deduce also that patents are a complex subject, since the practitioners are not agreed even on the pronunciation of the word "patent": but complexity is to be expected, being inherent in the nature of inventions submitted for protection, given the advanced state of modern science and technology.
While those responsible for drafting the Bill should be thanked for getting the measure of a complex subject in most

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areas, there are, I believe, not surprisingly perhaps, pieces of drafting where obscurity has become a substitute for clear exposition and this, the Second Reading, is the appointed and appropriate place to ventilate opinions on such matters. It is also the time to draw attention selectively to differences between the present law and proposals embodied in the Bill which may not be obvious to everyone or, if apparent, would none the less do well to be emphasised. I therefore welcome this Bill in broad principle and in much of the detail, subject to some reservations in the areas I have just mentioned which I will try to express as clearly as possible.
Finally, in beginning, I should like to state that I have no pecuniary interest to declare in these matters inasmuch as I am not a patent agent or one involved in a field where, as the Bill puts it:
"…an invention might reasonably be expected to result from the carrying out…"
of my duties. However, patent agents, and not a few patentees, commonly have a degree in chemistry and I must declare myself to be the holder of one such from Oxford—a qualification shared with the Leader of the Opposition in another place, and one which will, I hope, impart a fellow feeling there, encourage an understanding of the Bill's nature and importance, and speed its passage through that place. And so to the Bill.
As we have heard, it is most important that, after the signature already by 19 countries, this country should ratify the European Patent Convention as soon as possible: the situation otherwise is almost desperate. Ratification by only six countries is required to form, as it were, a quorum and get the thing effective and starting to operate. Germany has already ratified, and present French and Dutch law requires very little alteration. Ratification, therefore, by only three more countries, which could well be comparatively insignificant countries, would make the EPC go "live" and enable the heavy weights, such as France and Germany, perhaps to influence the programme to their own advantage. What seems certain is that if this country does not ratify as one of the first six, or very soon after, our Patent Office staff—some of the most skilled practitioners in the world—will risk not getting appointments or being able to influence developments at Munich, or both.
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Secondly, other non-EPC signatory countries will not come to this country to get the European patent, whatever country or countries it is to designate, for the very good reason that our people will not be qualified to handle EPC grants. The resultant loss in invisible earnings was quantified last summer as being in the order of eight figures—and a noble Lord has mentioned the sum of £25 million—of export turnover per annum. In this context it should be emphasised that an advantage that this country holds over many other potential ratifying countries is that London will hold physical files and also examiners, the latter albeit under sub-contract to the EPC office at Munich. Not by any means all countries will have this advantage.
A feature of the present law is that for more or less coincidental applications a degree of overlapping is allowed. How ever, under the proposed Bill a second applicant will be treated for purposes of anticipation as though the application of the first applicant had already been granted: a not necessarily undesirable change but a significant one whose presence in the Bill may not be fully realised everywhere. Another feature of the proposed Bill is that a patent may be granted only for an invention which is substantially identical with that described in the initial application; that is, it must be right the first time. Patents of addition, allowable at present after the original application, are not allowable, however, under the proposed Bill. Admittedly, amendments may be applied for at any time before grant, but only with the proviso that they must not extend—
"…the matter disclosed in the application as filed".
That is in Clause 16(2) and that proviso would be expected to lead to most amendments not being allowed.
Under the present law, a first provisional patent is filed and provided a complete specification is submitted within one year and the claim is substantially identical with that first filed, then the priority date may be taken as that of the first provisional filing. The procedure embodied in the Bill is different. Under the Bill, an application may be filed and if a somewhat differing one is filed within one year, the priority date may be taken as that of the first provisional filing,

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providing either that the first application is abandoned or that the original is kept unchanged. This means, in effect, that new claims can be added to the original. This seems a substantial difference to our present law, embodying more flexibility and of course the possibility of international recognition, and it is to be welcomed for these reasons. Priority dates are of course very important because they establish who can knock out whom in contested proceedings where the matter disclosed and claimed is substantially the same.
I should be grateful if the noble and learned Lord the Lord Chancellor would explain when he replies, or look into, one apparent implication of the Bill overall which would seem to be likely to lead to an unsatisfactory situation. This is the matter of single inventions receiving two types of grant.
The LORD CHANCELLOR: My Lords, I am afraid that, owing to the distance at which the noble Lord is standing from the microphone, and possibly my longevity, I am finding it rather difficult to hear him from the Woolsack.
Lord BROADBRIDGE: I apologise, my Lords. I should be grateful if, when the noble and learned Lord the Lord Chancellor replies to the debate, he would explain or look into one apparent implication of the Bill overall which seems likely to lead to an unsatisfactory situation. This is the matter of single inventions receiving two types of grant and is perhaps best illustrated by an example. A resident of the United States might, under the Bill if passed, apply to London for a United Kingdom patent "under the Act", as our domestic grant is called, and, under a more rigorous examination in Munich, for a European patent designating the United Kingdom for the same invention, provided he makes both applications within 12 months of his original application in the United States. As a result, the form and coverage may, indeed almost certainly will, be different in the two patents for the one invention because of the differing forms and procedures of the two offices. Hence, the proprietor of the invention would appear to have two rights under which he could separately sue in
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the United Kingdom for the infringement of one invention. Is this the case and is it intended? If not, can a drafting alteration be made?
A totally new provision of the Bill is that contained in Clause 37 (2) where extra compensation for the employee is dealt with. That is, the employee, whose benefit, after assigning or granting rights in the invention to his employer, is deemed to be
"inadequate in relation to the benefit derived by the employer from the patent".
This is not only new but appears to introduce an element of inequity in that a non-employee who acts similarly is presumably not able to apply for extra compensation—or, put another way, the employee does better than anyone else. This does not seem to be a fair and satisfactory state of affairs, if I have understood it correctly.
Clause 70 deals with power to revoke patents on application. Under the present law, if a patent is revoked a licensor is not required to repay any royalties paid to him by a licensee. Under the Bill, the position is not clear. For example, a party issues a writ and institutes litigation as a claim for revocation at some period after the patent has been granted. Judgment is duly given in favour of the applicant. When is the revocation deemed to take effect—from the date of judgment, from the start of litigation, or even from a possible earlier date of an implied in fringing action which leads the applicant to start proceedings to claim that the patent be revoked? Perhaps this could be clarified.
Under the Bill, all applications are to be published automatically as filed or amended after 18 months, unless they are withdrawn. This has been mentioned already. This will normally be before they have been examined and is a departure from United Kingdom practice, which will lead to the publication of many applications that will subsequently be thrown out by the examiners. This procedure could surely frighten many people operating a process into an, albeit temporary, belief that a process that they considered to be safely covered by a patent, or alternatively not patentable, was to be taken away from them by a successful patent grant to another party.
Finally, under Clause 67(2)(b) I am surprised at the language of line 3 which

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speaks of infringement of a specification. On a small point of language, I do not think it is possible to infringe a specification, any more than, say, the Lord Chancellor's hat; his powers, yes, but his hat, no. But far more important, the five lines of subsection (2)(b) clearly imply that an applicant can take proceedings to a successful conclusion by showing that an act infringed the specification; that is, the descriptive disclosure in the application and not simply the claim only. A typical patent application contains much description and a comparatively short claim. For example, an application is published and discloses details of a new type of motor-car door lock, but the applicant has claimed very widely—"I claim a motor car". The trade laughs, but later a patent is granted for a door lock, something which was originally an element of the descriptive disclosure; that is, the claim has changed from a general and obviously untenable one to one developed from material contained in the disclosure part of the original application.
Applicants can take proceedings to a successful conclusion by showing that an act infringed the disclosure in the application and not simply the claim, as I mentioned earlier. This seems unreason able. Interested parties are hard pressed to monitor the claims being made by others in the light of their own operations, but this new provision would seem to place upon them the great additional burden of scrutinising all descriptions, or "specifications" as the Bill calls them. In other words, they must read the lot, the whole application. This seems, in addition to placing both a potentially great burden for additional scrutiny on operators of processes, to destroy a distinction between specification and claim. Previously it was possible to contest material only following the words, "I claim…" whereas now it would seem that the specification may be protected, too. I hope that my observations will be of some use in framing the best possible Bill for our inventive people and others who, provided we do not delay, will bring their inventions to us.
5.40 p.m.
Lord NELSON of STAFFORD: My Lords, I think it very significant that, in the debate on this Bill, in which there are
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very many things to commend, so many of your Lordships have homed in on the new provisions relating to employees' inventions—namely, Clauses 36 to 40 and particularly Clause 37, which deals with the right to claim compensation. This is where my thoughts have been directed and it is on this part of the Bill that I should like to say a few words. I do not wish to take up your Lordships' time in duplicating what has already been said. I agree with all the comment that has been made relating to the subject, but there are four points which I should like briefly to make on this occasion.
The noble Earl, Lord Halsbury, gave us some very interesting anecdotes relating to his experiences in dealing with patents in many aspects during his career. My career has been largely concerned with organising people into teams to create designs and inventions and to produce things. It ha; been my concern to create an atom sphere of confidence between one employee and another and between the employee and his firm, and to establish a feeling that fairness will reign all round This is extremely important to the successful working of any industrial research team. I am sure that your Lordships will under stand that most inventions today arise from team work of one sort or another. It is very difficult to pinpoint one man as having invented a particular design. He may have had the inspiration while he was shaving in the morning, bit what was the last thing that somebody said to him as he left the laboratory the night before? What happened at the discussion at the lunch table the day before, or the day before that? All these factors add up and contribute to an invention. It may be in the name of one man but it springs from the contribution of many. So, from an industrial point of view, the greatest thing we need is a sense of confidence and understanding among all the people who are working together.
My concern is that is proposal could do great damage to that particular aspect of the work in our great laboratories and industries. It could engender a feeling of secretiveness, a desire to make progress not by playing in the team but by getting compensation for oneself—a desire to withhold information from the other fellow in case he jumps on the bandwagon

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and gets in first. That would be a highly undesirable state of affairs and it worries me greatly so far as this proposal is concerned.
I have two secondary points here for consideration in Committee. The first relates to Clause 37, in which the aspect of collective bargaining is brought into a subject which I should have thought was already complicated enough without that. I am not quite sure where this will lead us in the future, but I believe that your Lordships should give attention to this clause in Committee. Also, I think it rather questionable to bring in the matter of freedom of contract in Clause 39. Here we have the situation that contracts entered into can apparently be overruled by a third body. I think that that too, is undesirable.
My second main point relates to the vagueness of the terms. Reading through Clauses 37 and 38, as I am sure many of your Lordships have, I have never seen such a collection of vague terms in my life. What compensation? Who is responsible? What is "outstanding benefit"? What value is to be put on this and what on that? Who is to be the Solomon who will sort out all these vaguenesses at the end of the day and adjudicate on compensation when a claim is made? I hesitate to think.
That leads me to my third point, which is the reference in the Explanatory and Financial Memorandum to the Bill to the fact that the number of people employed will decrease as a result of this Bill and of more work being done in Europe. Certainly in relation to this matter of employees' inventions and compensation, I shall be very surprised if there are not substantial additions to personnel—personnel of quite a different nature from what is normal in the Patent Office. They have experts in patents and law. They are extremely good but they do not have commercial and technical experts who understand all the things that are involved in adjudicating on a claims for compensation; nor do they have the numbers of people to handle all the paper work, particularly as a claim may not happen tomorrow nor the day after tomorrow but may in a year's time, five years' time, ten years' time. The matter will be able to be reopened and even taken to the courts. I
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do not know how many people will be required for this. It also seems to me that a large quantity of records will have to be preserved and filed if these matters may be reopened at a later stage, which, according to the Bill, will be the case.
My fourth point relates to the dangers that this provision can have for our commercial interests internationally. The handling of patents in many industries is not related to a single patent but to a history, a collection, a package of patents which is continually added to. Each enhances the value of the package and that package is very often negotiated on an international basis in exchange for another. This particular aspects of the Bill will introduce a grave sense of uncertainty into the minds of firms because they do not know what it will cost them nor will they know until they have been through all this procedure. Claims can continually be made and firms will not know what figures to put in their estimates nor how to negotiate across the international frontiers of the patent world. Therefore, I believe that these clauses will introduce many uncertainties, all of which are highly undesirable. Your Lordships will, I am sure, be giving much attention to these in Committee, so I will not take up your time further by dwelling on the point, but there are here some very important aspects for your serious consideration.
The noble and learned Lord the Lord Chancellor in introducing this debate, referred to the report of the Banks Committee. This has clearly formed a substantial part of the background to what we are now looking at, but I am puzzled that it should be said to form the background to this particular aspect to which I am referring; namely, compensation to employees for their inventions. I should like to quote one section of the report. It says:
"When an employee makes an invention which it is his duty to make and which accordingly belongs to his employer by common law, we would not wish to recommend legislation entitling such employee to any special reward. We were given no specific examples of any inequitable treatment of an employee inventor…"
That is a quotation from the Banks Report which seems to me to be completely at variance with the proposal which is before us.
Lord ORR-EWING: My Lords, can the noble Lord give us the paragraph number to aid us in finding that valuable quotation?
Lord NELSON of STAFFORD: I shall certainly do so, my Lords. I think that I have made my point. Your Lordships have heard two industrialists, one from this side of the House and one from the other side, speak on this point. You have heard distinguished scientists speaking on the same issue. There must be something in this, and I am sure that your Lordships will bear it very much in mind in Committee.
5.50 p.m.
Lord CAWLEY: My Lords, I should start on an autobiographical bent, like the noble Earl, Lord Halsbury. Up to three years ago I had practised for 27 years at the Patent Bar, so I had some knowledge of the 1949 Act. In fact on numerous occasions I crossed swords with my learned friend the noble Lord, Lord Lloyd of Kilgerran. I should say at this juncture that my noble friend Lord Eccles suggested that a lot of money was made at the Patent Bar; well, I personally did not make very much. He also suggested that his textiles were not protected, but I think that he must have left the textile field before the Design Copyright Act 1968, which I had the honour to pilot through this House, which I think has given textiles very considerable protection. Looking at this Bill it certainly appears to be a lawyers' feast, and in some ways I am glad that I retired when I did, because there will be two Acts which will both be in operation: the 1949 Act, most of which will remain on the Statute Book, and this present Bill when it becomes an Act. I hope that the Lord Chancellor can tell me that there will be a consolidation Bill after this Bill has become law.
In a country depending on industry any Bill to reform patent law after 27 years is certainly welcome. I know that my noble friend Lord Lyell said 15 years, but in fact it is 27 years since we had revision of the patent law. I cannot help thinking that the present Bill has been put on now only because of extreme pressure from our EEC partners to do something about it. I should like to point out that though patents are vital to industry, so are trade marks, and the last trade marks Bill was in 1938, which is 39 years ago. Many industrialists think that trade marks are far more important than patents, and I hope that
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we can have the assurance that n the near future there will be a trade marks Bill. I say this not from any partisan stand point because I think that this side of the House has been equally as remiss as the other side in not dealing with these matters, which are so important to industrialists.
I am afraid that this Bill shows signs of hasty preparation. I invite the noble and learned Lord to look at Clause 37(1), where he will see that a proof-reading error has in fact led to an ambiguity. I hope that that is put right at the Committee stage. It is the duty of this House to knock the Bill into an intelligible form before it goes to another place, and I have little doubt that we shall do so; I certainly hope that we shall.
My Lords, there are certainly matters that I want to raise. They might be said to be Committee points, but each of them raises a matter of principle. The first is a very important one; it is the question of Crown prerogative. Part I of the Bill is called New Domestic Law. It is a great pity that the Government did not really make it a new domestic law, and get rid of Crown prerogative, because in Section 102(1) of the 1949 Act, which is preserved in this Bill, it says this:
"Nothing in this Act shall take away, abridge or prejudicially affect the prerogative of the Crown in relation to the granting of letters patent or to the withholding of a grant thereof."
That means that the Law Officers Department can refuse any patent without giving any reasons.
Your Lordships might think that this is an academic point, but it is not. Between the wars, about 50 years ago, the Patent Office made it a rule that it would never grant any patent that had anything to do with contraception. The Patent Office was not going to be drawn into an argument as to whether or not such inventions were immoral. The late Mr. James Mould represented an applicant who had invented a slide rule for showing the safe periods; it was a mathematical instrument. The Comptroller-General refused this. Mr. Mould went to a hearing, and he was bristling with the idea that he would argue that it was not an immoral invention because this, at any rate, was sanctioned even by the Catholic Church. When he came before Sir Stafford Cripps, who was Solicitor-General and who then had charge of

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patents (he was the predecessor to the Patents Appeal Tribunal) the answer was, "No, we do not grant patents for this sort of thing. It is refused". To his dying day Mr. James Mould bore a grudge that he had never been able to argue under the Act that it was not an immoral patent.
Surely this is a very dangerous provision to leave in. If one seeks to register a trade mark one does not have over oneself the threat of the prerogative. But this prerogative is based on history. It is based on patents still being letters patent, and in the middle of the last century if one sought a patent one had to get the Great Seal applied to it. Charles Dickens wrote a short story in which the wretched inventor had to pay a gratuity to a gentleman called the Deputy Chaff-wax. Of course that was all abolished, and the seal of the Patent Office now takes the place of the Great Seal. But surely it is time that we made a patent monopoly the entire creature of Statute and got rid of the Royal prerogative?
There is another very curious doctrine which is still existent today in patent law. It is the doctrine of obtaining overseas. This doctrine means that if you can steal an invention across the Channel, and bring it here and patent it here, you are entitled to the patent. It comes from the Middle Ages before the Statute of Monopolies, when such kings as King Edward IV used to lure foreign craftsmen, particularly from Flanders, to bring their "mistery" to this country. When they got to this country they were given a monopoly, which was a way of stealing it. This still goes on; it still is the law. Of course it has been very much cut down now because a patent would be invalid for disclosure anywhere in the world, even in a conversation between two Chinamen in a train in Patagonia, which is usually the example given. I should like it confirmed that this doctrine of obtaining overseas is definitely no longer part of our law, and I would suggest that the noble and learned Lord considers putting in the Bill a clause to that effect.
The next point is the question of inventive step. This is a very vexed question. Up to now in this country an inventive step has been considered by the courts only on the hearing of oral evidence,
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except for the very slight loophole which is in the 1949 Act and a comptroller can decide whether the invention is obvious and clearly does not involve an inventive step. But Clause 3 of the Bill provides,
"An invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard"—
here I paraphrase—to information obtain able by the public anywhere in the world.
Examiners at the Patent Office are not persons skilled in the art. While they are very highly qualified scientists, it is extremely difficult for them to decide whether or not a patent has inventive merit. I feel that if there is any doubt they will let any patent through, and this will not be any guarantee that the patent is any more valid than it would have been if this inquiry had not been included. I have examples of this. My brother made an invention. It was for sticking polyvinyl chloride to polyester fibreglass in order to make large plastic fabrications. On paper, it seemed to be absolutely obvious, but it was a very good invention although it was very simple. He went to the Patent Office in Munich, where they consider these matters, and he really had the most terrible time getting over the inventive hurdle because the Patent Office examiner was not a person skilled in the art of plastic fabrication. I feel that if we are to get these matters properly seen into we shall have to recruit large numbers of examiners from industry, which at the present moment I think is highly undesirable. My Lords, I was going to say quite a lot about Clauses 36 to 40.
Lord DAVIES of LEEK: My Lords, may I ask the noble Lord a question? I have to declare an interest, being interested in the pharmaceutical industry. When the noble Lord's brother went to the Patent Office in Munich with this invention what happened about the problem of language and of getting an expert in the subject whose language was fluent enough to get across the philosophy of the invention? This is one of the things which, in the pharmaceutical industry and, it may be, in others, is of vital importance to some people.
Lord CAWLEY: Of course, my Lords, he had to use a German patent agent, but I think it was put over. At any rate, he got his patent in the end, after consider able trouble.
Lord DAVIES of LEEK: This is an additional expense.
Lord CAWLEY: Most certainly. My Lords, I was going to say a certain amount about Clauses 36 to 40 but I have a sort of sense of déjàa vu about them because in 1965 there was a Bill which came before this House called the Patents (Employees' Inventions) Bill. It was passed by this House but was dropped by the then Socialist Government in another place. On the Second Reading of that Bill on the 27th April, 1965, I said:
"This Bill is certainly woolly. It is also full of good intentions …"—[Official Report, Vol. 265, col. 510.]
My Lords, what I can say about these clauses is that they are certainly a little less woolly—I say "a little less woolly" advisedly—and they are certainly full of good intentions; but so many other noble Lords have spoken about these clauses that I do not think I need say any more.
There is a curious point about jurisdiction. There is nothing in this Bill to say what is the jurisdiction of the Court of Session in Scotland and the High Court in Northern Ireland to revoke patents. For example, if you start a patent action in Scotland—which, if the infringement takes place in Scotland, you have to do—and you counterclaim to revoke the patent, is the order of the Court of Session applicable to the whole of the United Kingdom, or is it applicable only to Scotland? The same thing applies to Northern Ireland. With devolution coming along, this is surely quite an important point. A conflict of jurisdiction has not occurred up till now, but it certainly might. You might get the ludicrous position of the High Court in England granting a certificate of validity under Clause 63 and the Court of Session in Scotland revoking the patent. Up to now, I think it has been the case that if the High Court in England has revoked a patent it has been revoked for the whole of the United Kingdom. I think it would be a good thing to put into this Bill some indication as to the powers of the High Court in Northern Ireland and the Court of Session in Scotland.
Now we come on to Clause 104(b). That says:
"Neither the Secretary of State nor any officer of his.…shall be liable for anything purporting
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to have been done in pursuance of this Act or any such treaty or convention."
This is new, or partially new. In the present Act, the comptroller is only not liable if his searches go wrong; that is to say, if he does not turn up a relevant document, he is not liable for it. But he is liable for other negligence. This provision has been put in arising out of a case, in which I appeared for the applicants, called The Queen v. Comptroller-General of Patents Ex parte Glaxo Laboratories, which I think the noble and learned Lord will remember. It is the bank holiday case. I think this is a little extensive.
In that case the comptroller was within an ace of making himself liable to very large damages for negligence, or possible negligence. I do not say he was negligent, but there was possible negligence. If in fact something has been done which does very serious damage, as in this case, to a number of patentees, I see no reason why the Department should not be responsible. All professional men are responsible for negligence in respect of everything that they do, and that includes even members of the Bar, except for what they do in court—and they are indemnified in that respect only for other other reasons, not in order to preserve their skins. It is, of course, so that you will not have another layer of appeal, by suing your counsel. I think the comptroller ought to be in the same position and that he ought to have only limited protection against applications for relief for negligence.
Clause 102(7) provides:
"No person shall be registered in the register of patent agents unless he is a British subject or a citizen of one of the other member States."
Of course, I say, to start with, that there is no definition of what a Member State is, but I presume it means a member of the Community Convention. But this appears to me to be entirely against all the legislation we have been passing recently. This is straightforward discrimination against people because of their nationality. I have inquired of the Law Society, and they say that this provision has been removed from the Solicitors Act and that there is no nationality bar to anybody becoming a solicitor. Is it not rather odd, therefore, that the Comptroller of Patents, who is obliged to accept a solicitor as an agent—in fact, a solicitor can do everything that a patent agent can do—who is obliged to accept an Afghan subject, let us say, as a

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solicitor, cannot admit the same man as a patent agent? I cannot help thinking that this ought to be altered. It is in fact a rehash of the section in the former Act, with "a citizen of one of the other member States" added to the exclusion. My Lords, I think that is all I need say at this stage, though I have no doubt I shall say quite a lot more at the Committee stage.
6.8 p.m.
Lord IRONSIDE: My Lords, I think that most people will acknowledge that property rights of one sort or another have a long history and are the basis of our society. As such, therefore, they are bounded by many legal complications and subtleties which are sometimes difficult for anyone but a practising professional to understand. However, I believe that such rights are tremendously important to our way of life, and I am therefore glad to see that the Government have introduced this Bill; but in passing I must express some regret at seeing the killing of another moveable property Bill, the Public Lending Right Bill, last Session in another place, when the Government were full of good intention and seemed to have the wind behind them on the matter of moveable property rights.
Generally speaking, my Lords, the question of landed property rights is not viewed with the same sense of under standing, and one sees these rights being eroded rather than developed. The Minister may well argue differently on this matter; but I will not pursue this line other than to say that, whereas the land lord of fixed property is perhaps regarded as an ogre, the proprietor of moveable rights can exploit his asset with a great deal of freedom and little interference and regulation, and is encouraged to do so—and, in the case of patents, under an arrangement which might be described as the equivalent of a 16-year leasehold, now to be extended to 20 years. As I think Lord Halsbury said, we must be thankful for small mercies, and this is a great improvement, in fact.
My Lords, I want to draw attention to a few general points about the Bill as well as one or two specific issues, and in doing so I will declare my interests. First, I am vice-president of the Institute of Patentees
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and Inventors; and, secondly, I am chair man of the Advisory Committee for the Science Reference Library, which has incorporated the Patent Office Library. First, my Lords, let me emphasise Lord Nathan's words, which were repeated by Lord Lloyd of Kilgerran, that it is important to bear in mind that if individuals and companies come to the conclusion that there is more to lose than to gain by seeking patent protection then the system will fall into disuse and the secrecy shutters will, of course, go up.
Hence, I believe that we must bear this fact in mind at all times during the passage of the Bill so as to encourage rather than inhibit inventors or applicants or even inventor/applicants. The inventor is not normally an inhibited person. Quite the reverse! He may sometimes be penniless; but he is certainly not inhibited. The patents process must essentially be uncomplicated and we must ensure employees' rights are properly protected, particularly where an invention brings benefits to an employer. For one moment, let us look at this situation. The employer has many options on exploitation. He can continue manufacturing orthodox products or he can, for example, develop his employee's invention. This costs money. It costs £1 to do research; it costs certainly £10 to do development and £100 to go into manufacture. It is a progression like that. To bring benefit to the employer it is probable that the invention has to be highly successful. The invention may qualify for the Queen's Award; but how many of the 20,000 British resident patents per year are going to be a roaring success? Very few, I would suggest. Where they are, the employee concerned usually goes along with the development, getting a better job, greater security and a greater reputation.
However, it is the average case and the case where the employee comes up with an invention outside his line of work that we are most concerned with. In these circumstances, it may be desirable for the employer to prove a right to the patentable invention. However, I think that at the same time it is worth saying that it is possible that an employee has more to gain through Statutory award schemes lying outside patent law, which have been operating successfully in other countries. Such schemes give incentives to employees. Many firms in this country already operate

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private schemes, as the noble and learned Lord has already mentioned; and I think that they give much encouragement to employees.
But let us remember, if we are acceding to the European Patent Convention and the Community Convention, that in due course we may be faced with harmonisation in this field. The proposals in this Bill may be difficult for industry to live with and noble Lords have already referred to this situation. They are, in any case, a departure from the present British law and we must look very carefully at these cases which involve employees' inventions.
One of the matters which the Banks Committee was asked to have regard to was the preponderance of patent applications in the United Kingdom from countries other than the United Kingdom. If this was to be interpreted as a point of strength rather than weakness then I would go along with it, as I believe that such a preponderance results in benefits in the form of the expansion of international trade. The Committee, so far as I can see, did not examine the matter in depth, but it is interesting to note that such a preponderance applies for 1974 in all the countries of the Community of Nine; but most noticeably in France where it was roughly 3:1, in this country, 2:1 and in Germany 1.1:1. This contrasts with the USA where the ratio was a reverse one of 3:2. In the case of Japan, there was a similar reverse ratio but it was of 5:1.
My Lords, I do not know the basis for this, but I should have thought that it lies rather in protection than in anything else but especially in tighter scrutiny of patents. I do not think I need elaborate further. However, looking at the Community as a whole for 1974, we have a situation in which there is now parity of patent stock-in-trade (with the USA but not Japan) and where the resident applications of the Nine in total have numbered slightly more than those of the USA; that is, 70,000 against 64,000, in 1974. The advantages therefore inherent in the European Patent Convention and the Community Patent Convention must be broadly apparent in so far as the technological base of the Community looks stronger and probably will be so. I hope therefore that this Bill will allow a satisfactory accession to these conventions.
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In the Community, the role of innovation is recognised by the Commission in the proposal for developing a common research and development policy. It is proposed that where Community finance is used to support development, the contractor will be given priority in exploitation and will remain the owner of any rights. In return, the contractor will have to be compliant in meeting the requirements of the Community; other wise the Community will want to reserve the right to license third parties; but all of this is as yet unclear.
The value of industrial property rights lies not so much in the patent specification but in the know-how behind it so that there is a tradeable package; and I hope that we can have Her Majesty s Government's views as to how this Bill at this stage can be reconciled with any form of Community policy in this field, which is extremely hazy. As the Minister knows, Sub-Committee "F" is about to study the common R and D policy, but I am sure that anything that the Minister the noble and learned Lord on the Woolsack can say will be welcome. I fear that innovation policy will conflict with other policies designed to overcome distortions in trade—and what is a patent but a monopoly licence? As I have said, we may also have to consider Statutory award schemes outside patent law, as lack of them could be regarded in the Community as unfair competition.
My Lords, one of the principles of moveable property rights, to state the obvious, is that they are moveable and capable of being assigned, succeeded to, inherited or otherwise transferred. It generally appears to me that the Bill recognises the individual's rights in this context as in Clauses 9 and 40, for example. But if an employee has a grievance about patent rights—and, so far as I can see, under the 1975 Employment Protection Act and under many collective bargaining arrangements in industry he might well have one—would it not be better to use conciliation machinery at company level before resorting to other more expensive remedies involving the comptroller and litigation?
My Lords, I am not an expert when it comes to legal matters, but it strikes me that the new Patents Court will take away from the comptroller much of his powers

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to settle disputes and many miscellaneous matters at his level, where settlement can be rapid and involve minimum expense. The net effect is surely that the wealthier potential litigant in the Patents Court gains at the expense of the impoverished inventor or objector who cannot afford to resist. We presume that there will be no legal aid. Would it not be wise, therefore, and fair to curtail some of the rights of appeal from decisions of the comptroller in the interest of those with modest means? Legal remedies are very desirable, but we are concerned with time limits and smooth innovation in the face of competition. By reading Banks, I get an impression that the argument runs like this. Because the High Court has so little to do and the comptroller is so overworked, why not pass some of the load up along the line so that the comptroller can concentrate on what is really his task, that is to grant strong patents?
I should have thought that the real argument for a Patents Court would be that the patents law is likely to become more specialised and not because the comptroller is overworked. Also, if an Act gives rise to constant litigation then it cannot be in the best interests of industry, even if it is in the interest of the legal profession.
Like the noble Lord, Lord Lyell, on the constitution of the court, I do not under stand the purpose of the scientific advisers. To my mind, if the court is in need of scientific advice it relies on advice from expert witnesses who, by virtue of their knowledge, professional qualification and practising status, are the best placed to expound on the technical issues. Both patents judges, I am told, have no difficulty in grasping the points, so why are scientific advisers needed? Or are they really specialist advisers? And if they are needed, should they not be selected by the appropriate professional body? I hope that the noble and learned Lord will explain in more detail to the House what the Government have in mind. He said that the patent judges welcome the idea. But, as I understood what he said, they have scientific advisers under the existing law and they are able to appoint them. So how are things different? Or is it a case of plus ca change plus c'est la même chose? I do not know, but I think that most of the
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House would welcome further words on this subject from the noble and learned Lord.
We are now facing under this new Bill a situation in which applications will be more closely scrutinised before grant. It is a stiffening up process which is considered to be necessary, and which is in accord with the systems operating in many other countries. The question that of course arises is whether the facilities for search and examination can support the framework outlined in the Bill. There would be little point in proposing a system and introducing it without giving some attention to means available to implement it. My Lords, we have in this country a most reputable patent service, backed by what is undoubtedly an unrivalled Science Reference Library service, born of the Patent Office Library. The Patent Office Library connection is of course the best one that exists in Europe, and in the English language, I believe. But the system is physically stretched at the seams. This matter is referred to in chapter 6 of the Banks Report and supported by evidence in Appendix H on page 220 by Standing Advisory Committee on Patents.
Banks states on page 54 that the procedure proposed will mean more work for the Patent Office, not less. He also suggests quite plainly that the quality of the Patent Office is dependent on the examiners, who must have the support of the comprehensive Library. The report recommended on these issues:
"The provision as a matter of urgency of a new building for the Patent Office coupled with the endorsement of the Standing Advisory Committee's note that the proper housing of the NRLSI [now SRL] is a vitally urgent matter."
We have been promised a new building, which, if the resources are available, will be started on the Somers Town site in the Euston Road in 1979. It will, even now, not be ready to use until some time in the mid 'eighties, yet here we are entering a new patent era where, in one step the information backing service will become very much more important while we have no firm prospect for the completion of the new building.
The noble Viscount, Lord Eccles, is chairman of the British Library Board and he voices its fears as follows in his recently published 3rd Annual Report:

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"Last year the Board accepted the Government's proposal that the urgently needed new building for the Reference Division should be built on a site in the Euston Road at Somers Town."
He said:
"Construction should start in 1979 if economic conditions at that time permit."
He went on to say—and this is very important:
"Meanwhile, for the next decade, the Board must make the best use it can of the 17 buildings occupied by the Library in London, and try to ensure that book stock and services do not deteriorate and that adequate working conditions and amenities are provided for the staff. Additional temporary accommodation will be required if the momentum of advance is not to be halted in the interval before the new building is ready for occupation."
"Seventeen buildings", my Lords.
These are serious words. Therefore, can the Government now express some firm resolve about this matter? The debate to my knowledge has endured for 25 years, as we trip from one proposed site in London to another, progressing in a piecemeal fashion. But we must remember that the English language patent applications are in a preponderance; adequate handling of them means much to this country and smooths the path of the one man we do not wish to drive to despair, the British resident inventor.
In conclusion, I should like to refer to the issue of computer programmes. This is Lord Halbury's point, but I should like to go further. It makes me too wonder whether the drafting specialists have got it entirely right in the Bill. Banks devotes a whole chapter to this matter and concludes—wisely in my opinion—that by qualified definition a computer programme should not be patentable. However, the report recommends that the question of patentability should be kept under review, particularly in the light of international developments.
This is probably the right course to take, but it must be remembered now that the demarcation line between a computer programme, which is at present not patentable, and an electronic circuit which is patentable, is very unclear and is becoming more so. I should like to draw the attention of the House to the recent ruling in the USA by the US Court of Customs and Patent Appeal, that two software-based products, a raster-scan graphics system—this is a type of information display—and a procedure for continually monitoring and changing the
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priorities of programmes in a multi programming environment, are both patentable. This reverses earlier court rulings on the same products. Although software is generally held to be unpatentable, what I feel is necessary in this Bill—and I think the noble Earl, Lord Halsbury, will agree on this point—is protection for the inventor of an electronic circuit which, through rapid advances in the state of the art of electronics, could only be described as a programme.
This I think is a possibility as I have already illustrated, and therefore I feel that the exclusion in Clause 1(2)(f) should be reworded to make it plain that what is meant by a programme is a programme in the form of a coded or plain language instruction. This follows much more closely what has been written in the clauses of the European Patent Convention. They state the exceptions are under this heading:
"Schemes, rules and methods for performing mental acts, playing games, for doing business and programs for computers".
It is quite clear that those who drew up the Convention feel that programmes for computers are very much allied to schemes, rules and methods. This would not prejudice the present position; it would not frustrate inventors of fixed circuitry, and it would not kill a programmer's possible aspiration for copyright or some other right. I agree that patenting genuine software would be to the detriment of the manufacturers and the users, worldwide; but we must give adequate protection to the inventor of electronic circuitry.
There are many technical details incorporated into this Bill which are not appropriate for a Second Reading airing. But I hope that it makes good progress in your Lordships' House, and finally enters the Statute Book as something which will strengthen industry and encourage inventors and applicants alike, as opposed to frustrating their efforts through excessive costs and tortuous procedural machinery.
6.27 p.m.
Lord ALEXANDER of POTTERHILL: My Lords, when I first entered your Lordships' House I made the promise to myself that I would never speak on any matter before your Lordships unless I had a reasonably good knowledge of the

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topic under discussion. I should start by conceding that I am breaking that promise completely tonight. I know nothing about patent law; but I have a certain interest. I have taken out two patents in the course of my professional career; fortunately they were in no way part of my contract of service. I was a chief education officer when I invented a potato eye-ing machine. I had complete rights relating to the patent and I thought I was going to make a fortune. I regret to say I did not make anything at all. I have a second interest, which is more relevant: a son engaged in the profession of patent agent. As a result, I was approached, quite properly, by the Chartered Institute of Patent Agents to bring before your Lordships points of view which they have relating to this Bill with which they are deeply concerned. Most of these points have been brought before your Lordships in this debate.
I thought it right to fulfil that obligation because I believe that in matters of this kind the views of those professionally engaged in the day-to-day operation should be known before this Bill becomes an Act, and the Bill should emerge as the most effective workable instrument possible. There are a multiplicity of points which will no doubt be raised in Committee. I have been given 11 pages of Amendments; I hope that somebody else will move them and that it will not be necessary for me to do so.
There is one point of major principle to which I should like to draw attention. I believe—and the noble and learned Lord the Lord Chancellor indicated this in his opening—that one of the major purposes of this Bill is to bring our patent law into line with the European Patent Convention and the Community Convention. I think it imperative, if that is to be so, that the Bill should not vary the wording of the Conventions. The noble Lord, Lord Lyell, at the beginning of this debate indicated a very simple example, where the European Patent Convention refers to the patent as being "susceptible of industrial application". One of the clauses of this Bill uses the phrase "capable of industrial application". It may be that "capable of" is a better term—I would not wish to make a judgment—but either it means the same as
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"susceptible" or it means something different.
If, in fact, different words are used, particularly in the knowledge that this House knows the words which were used in the European Patent Convention, your Lordships must be presumed to have done so by choice, because they meant something different. In that case, as I see it, if we ratify these Conventions we could be held to be in breach of the Conventions we have ratified. I very much hope, therefore, that great care will be taken throughout the Bill, and particularly in the reconciliation of Parts I and III, to use the words of the Conventions which we shall be ratifying, in order not to create difficulties which are avoidable.
Apart from that, my Lords, there are a number of detailed matters which will need to be looked at, including clarifications to which reference has already been made, and a good many verbalisms which I think will have to be put right. However, I very much hope that the Bill will have a speedy passage. It is a Bill for which those concerned have waited some 15 years. I hope they will not have to wait very much longer before it becomes an Act.
6.33 p.m.
Lord AUCKLAND: My Lords, there is little doubt that this Bill is a necessary addition to the legislation of this country, particularly in view of the tremendous work which the Banks Committee have put into it. It is a highly technical Bill, which really only those with experience of patent law or of having had inventions patented can properly understand. At a time when we are in tremendous com petition in industry, particularly with regard to exports, it is a good thing that this Bill should start in your Lordships' House.
I want to say just a word or two about Clause 49 of the Bill, which is probably the most contentious clause. The profits of industry have always generated a certain amount of emotive power in certain sections of our community. Many people feel that profits are overdone, but there is a good deal of exaggeration of the profits which are made; and the overturning of the Banks Committee recommendations that Clause 49 should be deleted from the

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Bill seems to be a retrograde step. This clause is a positive disincentive to pharmaceutical companies that are engaged in research; and to say, as has been intimated in some circles, that drugs are overcharged does not coincide with the fact because drugs, and particularly proprietary drugs, in this country are cheaper to obtain than in most countries throughout the globe.
I would hope that some consideration will be given to Clause 49. Some 9,000 people are engaged in research in the pharmaceutical industry at the present time. Many of them are young graduates, and at a time when we are seeing considerable breakthroughs, if not in relation to curative properties at least in relation to the prolinging of the lives of those suffering from malignant diseases, it is all the more important that every encouragement should be given to those engaged in medical research, especially in the pharmaceutical industry.
I do not think this is the occasion, on Second Reading, to pursue this matter very far, and therefore I conclude by saying it is very unfair that companies who do not engage in research should, by the inclusion of Clause 49 of the Bill, be virtually put on a par, vis-à-vis capital, with those who are engaged in research—because the whole intention of this industry which is so vital to the survival of mankind, is that research should be encouraged as much as possible. During further stages of this Bill, clearly much more investigation will be needed into the reasons for the inclusion of this particular clause.
6.38 p.m.
Lord ORR-EWING: My Lords, first, I owe an apology to the House in that I had set aside Tuesday, 18th January, for this debate and owing to the change of date I was not able to be here until 5.15 p.m. today. I understand that, unfortunately, I have missed some excellent and entertaining speeches. Like other speakers, I broadly welcome this Bill, although I am critical of some aspects, more particularly Clauses 36 to 40 and also Clause 49. My only excuse for speaking is that after merrily obtaining a science degree I started work in the research and development laboratories of EMI, and therefore have considerable sympathy for those who work on research
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and development—the inventors, the initiatorsߞand the rights to which I believe they are entitled.
I recently checked certain contracts of service, as they affect research and development personnel. These make inventions the property of the employer, who, of course pays the patent fees and other costs and, I would say, is also called upon to invest in a lot of test equipment, instrumentation and the like, behind every research and development engineer who is employed in laboratories. I remember that when I was at Oxford Lord Rutherford came to lecture us. In those days he was concerned with the atomic physics which led to such out standing achievements worldwide. He started to lecture his team by saying "Gentlemen, we have very little money"—this was in 1930—"So we must use our brains." I only wish that that attitude pervaded now in a wider context, because I am afraid that today there is a great deal of capital investment behind every research and development engineer. But I would make the point that normally, if a good firm benefits through profits, through savings or through a better competitive position, it will always make sure that an employee shares in those benefits.
I would endorse wholeheartedly the point made by the noble Lord, Lord Nelson of Stafford. I have worked in various research and development teams, and it is the leader of the team, and the cross-pollination which results that so often produce ideas and inventions. It is sometimes very difficult to say, "That man is the man who really did all the work, and he is therefore entitled to all the benefit." It was the conversations over lunch—and I recall a conversation at Hayes swimming pool on a very hot afternoon—which stimulated the minds of all those concerned, and produced some inspiration; but it was the leader of the team who generally asked the questions, and probed and prodded and produced results. So that it will be difficult to pin the responsibility on any one person.
I would also add, by the way, that under the present incomes policy it may be rather difficult to reward people exceptionally for anything they do. But I suppose that it will be short-lived, and I

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hope that in due course the position will be remedied. I recall that one of the most outstanding inventions in recent years has been the Brain Scanner, from the same laboratories of EMI where I was brought up. In that instance the instigator, the head of that very successful operation, which has not only renewed our reputation for inventions world wide but particularly in the USA, has been made head of the department and has wider responsibilities, so in that case the company has been able to provide a reward. If a company does not reward adequately—and you do not have to have Acts and laws under this aegis—a man is always free to go, and perhaps sell his services and even his ideas and his patents to someone else. So I am not sure that we do well to try to make everything legal and watertight.
I would also add that I am rather allergic to Clause 49. I understand that the noble and learned Lord the Lord Chancellor put some hopeful little words in his first speech to the effect that he was not wedded to its exact form. It was a Labour Government which set up the Banks Committee in 1967 and, as others have said, that Committee were extremely firm on this issue and said that Section 41 in the Act of 1949 should be rescinded and withdrawn. We now have exactly the same phraseology, so I am hopeful that the Government, in their wisdom, will in the later stages of this Bill either radically amend or even take this one out.
I normally admire the skill of the Parliamentary draftsman. Not being trained in legal language, I always find these phrases a little difficult to under stand. But I wonder whether he is right, because he believes that the EEC Patent Convention is rather loosely drafted and in rather general terms, whereas the wording in this United Kingdom Bill is much more precise. But I wonder whether it is not a mistake, rather than an asset, if we break away from the Community and do not conform with its normal patent laws. After all, this new wording which we are now contemplating may mean that there are different interpretations in various countries of the EEC, which can only lead to confusion, delay and, in the long run, extra costs for the inventors and for the obtaining of a satisfactory patent.
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I must say that, having drafted it in what I believe are called more precise terms, there is a classic example of trying to undo what you have done at the top of page 88 in Clause 118, which I would merely draw to the attention of the noble and learned Lord the Lord Chancellor. It lists some 15 sections and says if they
"are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention, the Community Patent Convention and the Patent Co-operation Treaty have in the territories to which those Conventions apply".
It seems to me that if you are going to say that, you may as well adopt the same wording, and not have completely separate wording and then say, "By the way, if there is a different interpretation it should read the same as these other Conventions".
Lastly, if we discuss Amendments to this Bill, as I hope we shall, particularly to the clauses to which I have referred, then, without any doubt, we should stick to the wording of our EEC partners and not seek to make differences and even improvements. I believe that, in the long run, we will strengthen the law and will strengthen justice and the rewards for inventors if we do not make clauses for differences, but make clauses for more complete understanding and more complete uniformity throughout Western Europe.
6.46 p.m.
The LORD CHANCELLOR: My Lords, in the course of his speech the noble Earl, Lord Halsbury, said that the patent system did only rough justice. I am afraid that my closing speech at the end of this debate with a mass of scientific skill, technicality and wisdom from great scientists, industrialists and businessmen will also only do rough justice to the polished quality of the debate. What worries me is that so many points have been raised, and there has been a fore warning of so many others that are going to be taken in Committee. To implement this Bill is urgently necessary. We have got to be in on the act on this matter, and I hope that we shall be one of the early founders of the new set-up—that is, of the European Patent Convention and Office. Therefore, I beg noble Lords to bear that in mind. While it is, of course, vitally important that we should get the Bill right, I hope that when we come to its

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later stages we will do our best to keep an eye on achieving finality as soon as we can. It is, of course, a very important Bill and it effects very significant changes in our law.
I was sorry that I was temporarily absent during the speech of the noble Viscount, Lord Eccles, because he made rather a fierce attack on the whole conception. The noble Viscount explained to me that for family reasons he could not now be present. He challenged the very idea of the patent system as a whole, and I was very interested to see that the Banks Report looked at the question: do we really need a patent system? It came to the conclusion that the answer was in the affirmative, and I am bound to say that I know of no alternative system that could achieve the valuable contributions which the patent system can give by way of encouraging innovation in the field of industry and discovery. I think, there fore, that he was rather a lone voice in wanting to scrap the whole idea, although here again I sympathise with what has been happening while the patent system has been in existence, and I am sure we all sighed at the fascinating statistical experience of the noble Earl, Lord Halsbury, as to the length of time it has taken to give effect to these matters. But we will have to do our best, and I hope that one of the benefits of this Bill will be to shorten the time factor, as I hope to indicate in a moment.
Before I leave the noble Viscount, Lord Eccles, he painted a gloomy picture that the United Kingdom Patent Office will become a branch of the European Office, and that the Bill puts our decline into legal form. Of course, the European Patent Office will be in Munich. We made a strong attempt to get the office in London—I see that the noble Lord agrees with this—but our attempt was unsuccessful because at that time we were not a member of the EEC. Not surprisingly, that was regarded as a somewhat serious objection.
It is not right that the United Kingdom office will become a branch of the EPO. It will stand on its own feet and it will operate the British patent system for the benefit of those who wish to use it. The fact is that our patent experts took a vitally important part in the work on the Convention. A number of our own
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experts have indicated their willingness to go to Munich to take part in the office there. So I reject the picture of gloom that was painted by the noble Viscount, Lord Eccles.
A number of main themes emerged from the debate. I am sure that noble Lords will forgive me if I do not endeavour to deal with all the points that were raised, even if I were competent to do so. This is quite apart from the fact that it would take me about an hour and a half, that I see that the Chief Whip has entered and that she would take a very poor view of such an offer of assistance to the House.
One of the matters which gave concern to several noble Lords was Clause 49 of the Bill. The noble Lord, Lord Lyell, the noble Lord, Lord Glenkinglas, the noble Earl, Lord Halsbury, the noble Lord, Lord Auckland, and the noble Lord, Lord Orr-Ewing, and others deplored the retention of the clause. I stated the Government's view of the matter as carefully as I could in my opening speech, but of course the views that your Lordships have expressed will be taken into consideration. The important point is that the Government and the public of this country should be able, by whatever means are available, to prevent exorbitant charges and prices in the vital field of pharmaceuticals. If the discussions which will continue produce a satisfactory result, then the sanctions in terrorem of retaining Clause 49 will go; but unless we get that satisfaction I am afraid that they must stay.
A good deal of the discussion centred on the provisions in the Bill to improve, as I have put it, the position of the employee inventor. I do not take the view of the noble Lord, Lord Brown, that it would cause envy and jealousy in a factory. I do not think sc at all. Naturally, however, in view of the criticisms and suggestions which have been made by the noble Lord, Lord Lloyd of Kilgerran, the noble Lord, Lord Brown, the noble Earl, Lord Halsbury, the noble Lord, Lord Nelson of Stafford, and others, we shall pay attention to the various points that have been raised on the clauses.
I ought to hasten to dispel the anxieties of the noble Lord, Lord Nelson of Stafford, who seemed worried about the sinister head of collective bargaining coming on to the scene. This referred

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to the fact that in many industries and factories arrangements have already been made between employers and trade unions for provision to be made for payment to employees for patents and inventions. There is nothing more sinister in it than that. Indeed, when the question of rewarding employee inventors comes to be worked out and calculated, I greatly hope that this, as I said in my opening speech, will be done on a factory basis. If in regard to the suggestion of the noble Lord, Lord Lloyd of Kilgerran, they think at that stage that a tribunal for that purpose, arranged between employer and employee, trade unions and employers, will be of assistance, so be it. However, I feel that this statutory right should exist, and that the employed inventor, in the last resort, at any rate, should be able to go to the court to get his remedy.
Naturally when we devised (if that is the right word) the scheme to reward employee inventors, which we have done in Clauses 36 to 40, we bore in mind that the Banks Committee were not in favour of a statutory award scheme for employee inventors. They recognised, however, the need for industry to give greater encouragement to inventive ability. Nevertheless, they were obviously persuaded by industry that a statutory scheme would be difficult to implement. Similar schemes are in force in many other developed industrial countries, however, and seem to be working without any great difficulty, but the committee were disposed to rely upon voluntary award schemes. However, I believe and the Government believe that such schemes need to be supplemented by a statutory scheme.
My right honourable friend the Secretary of State for Trade, set up a Working Party which included representatives of industry and the TUC, and they agreed on the outlines of the scheme which is to be found in Clauses 36 to 40. The scheme has been approved by the Standing Advisory Committee on Patents, which itself includes representatives of the TUC and the CBI. While I willingly undertake that the Government will look at the precise provisions, those clauses are something of a balance of view—I will not use the word "compromise" because apparently it has become a somewhat disreputable word, although I do not quite know why—and
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therefore I hope that the scheme will be allowed to remain, at any rate in substance, when we have given it further detailed examination.
Anxiety was expressed by the noble Lord, Lord Lloyd of Kilgerran, that the proposals would be damaging to the small man. I think that his anxieties are not well founded. The Bill preserves the existing and much valued facility for staking a claim for protection for a relatively small fee; and if the invention concerned shows promise the stronger patent which will result from the provisions of the Bill will be of as much benefit to the smaller man as it will be to the large enterprise. The noble Lord has himself, as a distinguished practitioner in patent matters and as a distinguished Queen's Counsel, identified also the high costs of patent litigation. I agree entirely with him, but I regret that the noble Lord did not give any indication of where economies could be made. I await valuable suggestions from the noble Lord on behalf of the Bar, who are practising so profitably in this lucrative field, before the Bill leaves this noble House.
Concern was expressed about the proposals contained in the Bill that a Patents Court should be set up as a division of the High Court. There was a suggestion that there should be a mixed court, with a judge and two assessors, or whatever they might be called, sitting alongside him. That was not the view of the Banks Committee. Nor, if I may say so, is it my view, either. The Banks Committee recommended the abolition of the Patents Appeal Tribunal. We have followed their recommendation. It was the Banks Committee which proposed the creation of a new Patents Court of High Court status to hear both actions at first instance and appeals from the comptroller. I do not believe that the introduction of lay members would be an advantage and indeed the selection of lay members would be a difficulty in a highly technical field. The learned judge will be a lawyer of great experience in the patent field. There are distinguished patent lawyers who are now judges dealing with patent matters. They would be assisted, of course, by the submissions of experts, explaining the matters in issue, and there is provision in the Bill for the employment of scientific advisers; and I have been asked by several noble Lords to state their precise function.

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As I think the noble Lord, Lord Cawley, pointed out, the Rules of Court at present enable the court to appoint a scientific adviser—and I quote:
"To assist the court or to inquire and report upon any question of fact or of opinion not involving questions of law or construction."
It is for the court to settle the questions which are submitted to the scientific adviser. I am proposing to pursue the question of Rules of Court to require to be asked and considered the question: Is a scientific adviser likely to be helpful in this particular case? The scientific adviser may either give the court technical advice informally during the course of the proceedings, so that the court may better understand the points that have been raised, or be required to make a formal report on a particular matter if that is what the court wants.
Under Clause 90(4) the use of scientific advisers will be drawn to the attention of the court by the proposed rule, but it must be left to the court's own discretion to determine whether they need a scientific adviser in a particular case and what help he can give them. If a formal report is supplied I would expect—indeed I intend that the rule shall provide for this—that a copy of that formal report should be supplied to the parties as well as to the court and that the scientific adviser, on the application of a party, could be cross-examined upon it. However, that would not apply where the scientific adviser gives formal advice on technical matters during the course of the proceedings. That is the kind of thing we have in mind and if there are any further questions with regard to that matter perhaps we may deal with them in Committee. It has been urged by industry that there are cases where a scientific expert as adviser would be very helpful, and frankly I think that is a better pattern, coupled with the availability of scientific experts giving evidence, rather than a tribunal of a judge and assessors sitting alongside him.
One point which was referred to by a number of noble Lords, including the noble Lords, Lord Lyell and Lord Alexander of Potterhill, was the desirability, where we are harmonising our own domestic law with the provisions of the Convention, that we should so far as possible use the same language. Of course, the difficulty we are in here is the
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difficulty of translation. I remember some time ago addressing the Council of Europe and I referred to the "common lawyers of the United Kingdom". This was translated as "les juristes très ordinaires du Royaume Uni"! So we do confront these questions of translation, but we are certainly prepared to examine the delicate question that was raised in regard to Clause 1 of the Bill as to the alternative words that were used there. But in principle, obviously, if we are going to apply the same law we should try to do our best to use the same language.
There were a number of what I hope I may describe without discourtesy as "miscellaneous points". I will not promise to pick them all up but there was one interesting suggestion made by my noble friend Lord Brown; namely, that patent licensing involving foreign firms, out of which he thought we did—or could do—pretty badly, should be subject to Government control. I can see difficulties about that, but perhaps my right honourable friend the Secretary of State might pursue the matter further with the noble Lord at a later stage.
The noble Lord, Lord Cawley, is, of course, a distinguished practitioner in this field and we look forward to receiving his help, along with that of the noble Lord, Lord Lloyd of Kilgerran—another distinguished practitioner—at later stages of the Bill. The noble Lord, Lord Cawley, raised the point that it was important that there should be a trade marks Bill also. I agree that it is important, but I am afraid I can make no promise that such a Bill will be introduced, and I will tell the noble Lord why. Negotiations are now taking place for the establishment of a Community trade mark and I think the noble Lord will probably agree with me that it is important to get that right so that whatever changes we make will harmonise with the Community proposals.
The noble Lord then raised a question in regard to the Crown prerogative. As I understand it, the position about the Crown prerogative is that it simply is not included in this Bill. I would anticipate that in future the grant of a patent will be regulated entirely in the terms of the Statute. As I understand it, if the inventor can satisfy statutory requirements hereafter he will have the right to a

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patent and cannot be denied one by use of the Crown prerogative. I do not think I can take it further than that at the moment. The noble Lord then asked whether there would be a Consolidation Bill. Clearly there will be need for a consolidation of this legislation with the 1949 Act. I am sure the whole House will have noted the remarkable record of achievement of the Law Commission in consolidation, and I am sure they will get on with this as a matter or urgency.
I had difficulty in hearing the noble Lord, Lord Broadbridge, until he made use of our modern technology in the Chamber and got somewhat nearer to a microphone. He raised a number of interesting points on the Bill which will be considered, but I can assure him that it is not the intention to allow a firm to patent the same invention in this country by both a British and a European patent. The noble Lord made a number of other points which we shall look at and some of which I may deal with in correspondence with him.
My Lords, I cannot claim that I have covered anything like the whole ground that has been raised in the debate. I am most grateful to noble Lords for the suggestions they have made and the light they have thrown on what for me were admittedly some dark places in regard to this highly esoteric and technical field. I am learning fast. I am sure I shall learn more before the end of this Bill. But on the whole, with only one exception, it has received a warm welcome from the House and, as I ventured to say earlier, I hope I shall get the assistance of noble Lords in getting it through the House, not only in a proper shape but as soon as may be.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COUNTER-INFLATION (PRICE CODE) ORDER 1976 (AMEND- MENT) ORDER 1976
7.10 p.m.
Lord ORAM Lord ORAM rose to move, That the Counter-Inflation (Price Code) Order 1976 (Amendment) Order 1976, laid before the House on 24th December, be approved.
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The noble Lord said: My Lords, I beg to move that the Counter-Inflation (Price Code) Order 1976 (Amendment) Order 1976 be approved. This order amends two paragraphs of the Price Code. The more important of the changes is the Amendment concerning sales of alcoholic drink and tobacco products, and I propose to deal with that first. It is an underlying principle of the Price Code that firms should not make a profit on indirect tax increases. The way in which the Code has tried to ensure this has changed over time. It may, therefore, help the House to better understand the order if I explain a little of this evolution.
Before they could calculate net and gross profit margins as percentages of sales firms were required—under Price Codes prior to August 1976—to deduct from the value of their sales the cash value of indirect tax increases made since the beginning of the Code. In this way, no profit could be taken on the tax increase. Distributors of alcoholic drinks and tobacco objected to this approach, arguing that it caused an unjustifiable erosion of their net profit margins. For this reason, they pressed to be allowed to make a margin on indirect tax increases. In 1975 we asked the Price Commission to examine this question. They found that distributors' margins had held up as well as any other sectors of distribution. There was, there fore, no reason to change the basic principle that firms should not profit from tax increases.
But the Commission also found that distributors of alcoholic drink and tobacco products were unable to work out accurately the cash value of duty increases on the goods they were selling. This was due to the fact that manufacturers and importers, rather than distributors, usually pay the excise duty. The Commission therefore recommended that standard rates of deduction should be applied, and these were introduced in the new Code which came into effect on 1st August last year.
The rates introduced in August reflect only the increases in indirect taxes from the start of the Code until last August. As a result of the higher excise duties announced by the Chancellor on 15th December, it is now necessary to increase the standard rates of deduction to allow for the extra tax. If this is not done,

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firms would be entitled to apply their permitted maximum net and gross profit margins to sales values which are inflated by the tax increase. In effect, they would then be taking a margin on the tax increase. The main purpose of the order before the House is to prevent this.
The order proposes that from 17th January this year the standard rates of deduction will increase from 15 per cent. to 20 per cent. in the case of alcoholic beverages and from 20 per cent. to 25 per cent. in the case of tobacco products. These proposals are to be applied by amendment of paragraph 87 of the Code and therefore apply directly to net profit margins. Indirectly, they apply also to gross margins, by virtue of paragraph 110. In the case of both alcoholic drink and tobacco products, the increase in the rate of deduction is to be 5 per cent. The figure is an average one. For wines and beers the effect of the extra duty is rather less than the 5 per cent. figure would suggest. On the other hand, 5 per cent. is not high enough in the case of cigarettes and spirits, for example. The Government believe that a relatively broad-brush approach is inevitable if we are to avoid excessive increase in the complexity of the Code. On this basis, an increase of 5 per cent. in the standard rates of deduction is, in our view, the right overall figure for distributors of alcoholic drink and tobacco products.
As I said, the higher rates became effective from 17th January this year. Although the higher duties came into effect at the beginning of this year, traders will not feel the effects immediately. They first have to sell off old stock carrying lower duties. The date at which the new duties affect traders—and, therefore, the date at which they should, in theory, begin to apply the higher rates of deduction—depends on how quickly they sell off old stock. This will, of course, vary enormously from firm to firm.
I think the House will agree that it would have been impossible to have a multitude of starting dates for the new deductions. The 17th January date is, therefore, a compromise. Some traders will find that they have to apply the new deductions before they feel the effects of the higher taxes. In other cases, it will be just the opposite. But looked at on the broadest basis, the Government consider that the
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proposed starting date is the right one for all distributors taken together. It is a feature of the Price Code that, whatever a particular provision might say, there is usually a safeguard to make sure that firms are not unduly damaged by the inflexibility inherent in any written set of rules. So it is in the case of this provision before the House today.
The primary safeguard is in the levels of the duty deductions themselves. Last August the Government set deductions which were more generous to the distributors than had been recommended by the Price Commission. When the Price Com mission suggested the introduction of standard rates of deduction, they recommended they be set at 20 per cent. of sales in the case of alcoholic drink and retail sales of tobacco and 25 per cent. for whole sale sales of tobacco. And, indeed, the higher duties introduced in the April 1976 Budget would have justified figures several percentage points higher than those recommended by the Commission.
However, the deductions actually introduced were only 15 per cent. for alcoholic drink and 20 per cent. for all tobacco products. By setting them at fairly generous levels, we tried to ensure that traders suffered no ill effects from the introduction of standard rates. Despite the increases in the rates proposed in the order, much of the original benefit will continue, thereby safeguarding distributors' legitimate interests. Should there be any firms who find themselves in difficulties there are further safeguards specifically written into the Code to help them. Paragraph 87 itself provides that firms may apply to the Price Commission for a lower deduction if this appears justified in the light of their particular sales mix.
Furthermore, should the new deductions or a decline in the volume of sales unduly depress distributors' net profit margins then the Code allows them to increase their gross margins to take account of this. I think the House will agree, there fore, that, so far as the extra duties on alcoholic drink and tobacco products are concerned, two important points are met. First, the amendment proposed in the order adequately prevents firms from making a profit out of the higher taxes; and, secondly, because of the levels at which the deductions were originally set

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and with the safeguards written into the Code, no firm should be significantly damaged by the proposed Amendment.
I turn now to the second of the changes proposed in the order concerning certain port charges in Northern Ireland. This is a simple technical change tidying up an anomaly in the Code. As there must be a substantive change to the Code to take account of the higher duties on alcohol and tobacco, we are taking this opportunity to make this minor amendment as well.
In the revised Price Code introduced last August, certain port charges in Great Britain were exempted from control. We did that because under the Harbours Act 1964 parties affected by an increase in ship, passenger and goods dues have a right of objection to the National Ports Council. We saw little point in controlling such port dues under the Price Code when there was already a designated authority with responsibility for them. The order before the House will extend exemption to the same category of port charges in Northern Ireland. The reason for doing this is the same. Under the Harbours Act (Northern Ireland) 1970 there is a right of objection to the Department of Commerce against increases in ship, passenger and goods dues. In the circumstances the Government felt that control in this case should also be left to the designated authority.
Interested organisations have been consulted about our proposals through the issue of a Consultative Document on 15th December. Although some organisations in the distributive field object to the proposals, we felt it right to go ahead with them for the reasons I have explained. No objections were made to the changes concerning Northern Ireland ports.
If I may sum up, the order before the House proposes two changes in the Price Code. The new rates of deduction for indirect tax increases will prevent firms from making a profit on the higher excise duties announced by the Chancellor. In addition, certain port charges in Northern Ireland are placed on the same footing as charges in Great Britain and become exempt from control under the Code. The measure before the House is therefore a modest one, but none the less
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of some importance, particularly to the consumer. I therefore commend it to the House.
Moved, That the Counter-Inflation (Price Code) Order 1976 (Amendment) Order 1976, laid before the House on 24th December be approved.—(Lord Oram.)
7.24 p.m.
Lord LYELL: My Lords, we are very grateful to the noble Lord for presenting what I thought was to be a fairly simple measure. I think that he maintained it was fairly simple but it took him 12 minutes to explain it clearly and in detail. Nevertheless, we are grateful to him for putting so much effort and detail into these small changes, as he put it, in the Price Code. We are interested that there is so much difficulty in working out the various and relevant increases in direct taxes on tobacco products and alcoholic beverages. In my professional life whenever I attempted to obtain figures from tobacco firms I always found it exceeding difficult to obtain the net and gross of tax. I am sure the noble Lord will agree that we suffer together in this particular matter.
In the course of his observations the noble Lord pointed out that increases of 5 per cent. had been taken. He thought that this was a fairly broad brush attitude after all the calculations had been made. Perhaps he would give a reasonable estimate of the effect in pounds, in quantity, in a full year. We should be very grateful for such information. We were also pleased to see that under paragraph 87 firms could apply to the Price Commission in the light of their particular circumstances. I believe that the noble Lord said:
"…in the light of their sales mix".
Some firms which might sell a high proportion of wines as opposed to spirits might be unduly harmed by these measures, but under that paragraph they would have a right of appeal to the Price Commission. We are grateful for that safeguard. Would the noble Lord please note that he seeks to minimise what he calls the "damage" to any firm. In the light of his observations he might possibly have chosen a more suitable word. It seems that there is some malevolence there. I do not think that the noble Lord, nor indeed the Price Code, intend this. We

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are grateful that he explained in detail the measures which apply to Northern Ireland. It was interesting that, in spite of the fact that objections could be raised on port increases, none in fact was. The noble Lord has explained these rather complicated transactions in great detail. I do not think we wish to quibble with either him or the Government. We thank him for putting them forward.
Lord ORAM: My Lords, in view of the noble Lord's rather uncritical acceptance of my remarks, for which I thank him, I do not need to add greatly to the 12 minutes which I have already taken. I am not in a position to give the figure in pounds sterling, but I shall let him know if that figure is available. I agree that
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the word "damage" was rather a hard one. However, distributors have claimed that this system causes damage 1o some of their members. We do not think it does. But that is why I used that term. The noble Lord was quite right in saying that if a particular trader has what I called a mix of sales, which means that this formula works to his disadvantage, he has the right to go to the Price Commission for some relaxation. That is all I need to say. I commend the order to the House.
On Question, Motion agreed to.
House adjourned at twenty-eight minutes past seven o'clock.