§ 4.28 p.m.
§ The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)
My Lords, I beg to move that the Bill be now further considered on Report.
§ Moved, That the Bill be now further considered on Report.—(Lord McCluskey.)
§ On Question, Motion agreed to.
§ Clause 28 [Nature of, and transactions in, patents and applications for patents]:
Lord BELSTEAD moved Amendment No. 38A:
Page 24, line 7, leave out ("void") and insert ("unenforceable").
§ The noble Lord said: My Lords, Clause 29(6) and Clause 28(6) prescribe the form of assignments and mortgages in Scotland and the rest of the United Kingdom respectively. Such instruments are to be void under Clause 28(6) unless they are in writing and signed by both parties, while Clause 29(6) apparently merely requires that such instruments should be executed in the form or fashion of a deed; that is, there is to he no requirement that an assignee should execute an assignment. I presume that the requirement that both parties should execute such instruments has been introduced into Clause 28(6), to which this Amendment is directed, in order to bring the Bill into line with Articles 40 and 72 of the Community and European Patent Conventions respectively.
§ If I am right in that assumption, first, there seems to be nothing in the Conventions to suggest that such instruments should he void if the formalities are not complied with; secondly, the law proposed for Scotland will not correspond to the above Articles in the Conventions. I understand that a requirement of execution by the assignee would be a major change of practice in England, causing inconvenience and expense. This would at least be reduced if the requirement was purely procedural, which seems to be the most that the Conventions are demanding, rather than one affecting the validity of the assignment or mortgage. It is for those reasons that this Amendment will delete the word "void" and insert instead the word "unenforceable" into Clause 28(6). I beg to move.1141
§ Lord McCLUSKEY
My Lords, I have listened with interest to what the noble Lord has said, but I think that the Government's hands are effectively tied by the Articles of the European Patent Convention to which the noble Lord referred. In particular, Article 72 states that an assignment of a European patent application shall be made in writing and signed by both parties. Surely it follows that a transfer not in writing and not signed by both parties is utterly void and ineffective. I admit that it would have been possible for us to implement this Article in relation only to European applications and to make different provisions for domestic applications and patents. However, during the course of our deliberations, both in Committee and on Report, noble Lords opposite have frequently, and rightly, emphasised to the House the need to keep in conformity with Europe; and for good practical reasons I think it would be right to do so, anyway, in this case. We want to avoid a duality or any variety of standards and practice. We want to ensure that, so far as is possible, practitioners and others are not faced with a multiplicity of different rules applying to the different sorts of patents. This point is of particular importance to the small inventor. We have heard from several noble Lords how the new European system may present difficulties to the small inventor. It would be even more difficult if it were possible for him to be caught out by different sets of rules.
In any event, I am not clear how the proposal which is contained in this Amendment will work. If the transfer was not in accordance with Clause 28(6) it would be, on this proposal, apparently valid but unenforceable. That presumably is the meaning of the Amendment substituting the word "unenforceable" for the word "void". Presumably it would not be registrable, and so after six months the right under Clause 66 to sue for infringement would lapse. Would the transferee be able to recover his money or the transferor his patent? Could the transferee sue the transferor for infringement? Would the doctrine of part performance apply? These are just a few of the points that occur in relation to the wording of this Amendment. Clause 28(6) applies to both patents and applications. It also applies to European applications. In relation to European applications we are 1142 bound by Treaty obligations to have it, and we would be unwise not to adopt a common practice for all patents and applications. For reasons both of Treaty obligations and conformity with Europe I must therefore oppose this Amendment.
Perhaps I might be forgiven for not replying to the particular Scottish point that was raised. There is an issue there and we are looking at Clause 29(6). It is likely that that will give rise to an Amendment because it is thought that as presently worded Clause 29(6) may achieve the wrong result. I ask the noble Lord not to press this Amendment.
§ Lord BELSTEAD
My Lords, I am grateful to the noble and learned Lord for the answers which he has given on this Amendment, and also for suggesting that it may be necessary to alter Clause 29(6). I certainly do not wish to press this Amendment which I now beg leave to withdraw.
§ Amendment, by leave, withdrawn.
§ Clause 31 [Requirement for registration or notice]:
§ 4.35 p.m.
Lord McCLUSKEY moved Amendment No. 39:
Page 26, line 34, leave out from ("would") to ("unless") in line 37 and insert ("be entitled to that property or right apart from that transaction, instrument or event,").
§ The noble and learned Lord said: My Lords, noble Lords will recall that the noble Lords opposite and the Government set down Amendments in Committee—they were Nos. 144 and 145—with a view to clarifying the obscure passage in this clause. Noble Lords opposite kindly withdrew their Amendment, expecting me to move the Government Amendment. I was not satisfied with the wording of the Government Amendment at that stage and said that in due course another Amendment would be tabled to correct it. We have now arrived at that stage and this is the Amendment that I promised. In the circumstances it is no more than a drafting Amendment. I beg to move.
§ On Question, Amendment agreed to.
§ Lord McCLUSKEY moved Amendment No. 40:1143
Page 27, line 16, leave out ("transferring a patent") and insert ("—
(i) transferring a patent or application").
§ The noble and learned Lord said: My Lords, with the leave of the House I should like to take Amendments Nos. 40 and 41 together. These are again allied drafting Amendments which aim to clarify the wording of Clause 31(4)(e). They do so by splitting the rather long provision contained in that paragraph into smaller sub-paragraphs, and they also insert the words "and in either case", which have the effect of ensuring that the following words apply to both the alternatives set out in the new sub-paragraphs (i) and (ii). I beg to move.
§ On Question, Amendment agreed to.
§ Lord McCLUSKEY moved Amendment No. 41:
Page 27, line 16, leave out from first ("or") to first ("the") in line 20 and insert—
("(ii) that an application should proceed in the name of any person;
and in either case").
§ On Question, Amendment agreed to.
§ Clause 35 [Determination of right to patent after grant]:
§ Lord McCLUSKEY moved Amendment No. 42:
Page 29, line 32, leave out subsections (2) and (5) and insert—
("(2) Without prejudice to the generality of subsection (1) above, an order under that subsection may contain provision—
§ (3) If any person to whom directions have been given under subsection (2)(d) above fails to do anything necessary for carrying out any such directions within 14 days after the date of the order containing the directions, the comptroller may, on application made to him by any person in whose favour or on whose reference the order containing the directions was made, authorise him to do that thing on behalf of the person to whom the directions were given.1144
§ (4) Where the comptroller finds on a reference under subsection (1)(a) above that the patent was granted to a person not entitled to be granted that patent (whether alone or with other persons) and on an application made under section 70 below makes an order on that ground for the conditional or unconditional revocation of the patent, the comptroller may order that the person by whom the application was made or his successor in title may, subject to section 74 below, make a new application for a patent—
- (a) in the case of unconditional revocation, for the whole of the matter comprised in the specification of that patent; and
- (b) in the case of conditional revocation, for the matter which in the opinion of the comptroller should be excluded from that specification by amendment under section 73 below;
§ (5) On any such reference no order shall be made under this section transferring the patent to which the reference relates on the ground that the patent was granted to a person not so entitled, and no order shall be made under subsection (4) above on that ground, if the reference was made after the end of the period of two years beginning with the date of the grant, unless it is shown that any person registered as a proprietor of the patent knew at the time of the grant or of the transfer of the patent to him that he was not entitled to the patent.").
§ The noble and learned Lord said: My Lords, I should like to mention Amendment No. 113 at the same time as this Amendment—it is consequential. The main purpose of Amendment No. 42 is to set out more clearly than does the present wording of Clause 35 the conditions under which a new application may be filed. The Amendment corresponds closely to Committee Amendment No. 160 which I spoke to in Committee but withdrew following cogent criticisms made of it by the noble Lord, Lord Belstead, and supported by the noble Lord, Lord Lloyd of Kilgerran. I hope that the new Amendment now meets these criticisms.
§ The new subsection (2) sets out the specific matters which may be provided for in an order under that subsection. It now follows, with necessary differences, Clause 7(2) and the new subsection (4) deals with the filing of a new application. It was always the Government's intention that what is now Clause 35 should contain a provision along the lines of subsection (4) of the proposed insertion into Clause 35, that is to say one allowing a new back-dated application to be filed. The noble Lord was right in saying that Committee Amendment No. 160 was 1145 open to criticism in not providing for back-dating. The only point of difference remaining between us is that he wanted the publication date as well as the filing date to be back-dated. I hope that on reflection he would agree that, as his proposal would back-date the new applicant's Clause 67 rights—that is the provisional protection rights—and as the claims of the new application might be quite different, the interests of third parties would be unduly and unfairly prejudiced by what he proposed. Some quite innocent person might have found that what he had been doing for several years was an infringement, when he could not possibly have known at the time that it was.
§ The points made by the noble Lord, Lord Belstead, in Committee on his Amendment No. 162 were in fact supposed to be met by Government Amendment No. 281, but that was not moved because it was consequential on Amendment No. 160 which was withdrawn. So with the one exception that I have mentioned I hope that we have now met all the points that were discussed at that time. Briefly, in relation to the allied Amendment No. 113, since under the new subsection (4) the filing of a new application is dependent upon the revocation, wholly or partially, of the earlier application upon action being taken under Clause 70, it is no longer necessary to refer to Clause 35 in Clause 70 (3) and that is what Amendment No. 113 achieves. I beg to move Amendment No. 42.
§ Lord BELSTEAD
My Lords, it is the case that, when this substantial Amendment was brought forward in Committee by the Government, the drafting did not appear to meet two points. The first point was that, if someone successfully claims a patent, or part of a patent, as his own invention, he ought to be able to make an application for the matter in the specification which he invented to be granted as his patent and to have the application filed on the same date as the application had been filed by the other party. There was no provision for this in the Government Amendment in Committee. I should like to thank the noble and learned Lord for putting that right in this Amendment, and I, of course, accept the explanation which he has given to me about the question of publication.
1146 The second complaint was that, when someone successfully contests the right to a patent under Clause 35, the court or the comptroller may make an order determining the right to that patent and the order should provide that any matter in the specification which the real inventor did not invent shall be cut out of the specification; but for some reason that provision was specifically excluded from the clause as originally drafted and nothing was being done to rectify the matter in the Government's Amendment in Committee. Once again I should like to thank the noble and learned Lord for putting this matter right and for bringing forward this redrafted clause.
§ Lord McCLUSKEY
My Lords, with the leave of the House, may I thank noble Lords opposite—and particularly the noble Lord, Lord Belstead—for their help in enabling us, I hope, to get this right at the end of the day.
§ On Question, Amendment agreed to.
§ Clause 36 [Effect of transfer of patent under s.35]:
§ 4.42 p.m.
§ Lord McCLUSKEY moved Amendments Nos. 43. 44 and 45:
§ Page 31, line 7, leave out from first ("the") to ("any") in line 8 and insert ("patent was granted to a person not entitled to be granted the patent)")
§ Page 31, line 13, leave out from beginning to ("resulting") in line 14 and insert ("Where an order is so made that a patent shall be transferred as mentioned in subsection (2) above or that a person other than an old proprietor may make a new application for a patent and before the reference of the question under that section")
§ Page 31, line 25, at end insert (", so far as it is the subject of the new application").
§ The noble and learned Lord said: My Lords, with the leave of the House, I seek to take Amendments Nos. 43, 44 and 45 together and to move them en bloc. This group of Amendments is consequential upon the Amendments we have just considered to Clause 35. No change in effect is intended. Amendments Nos. 43 and 44 are plainly drafting Amendments, and Amendment No. 45 now makes it clear that the old proprietor's rights under Clause 36(3) are restricted to the invention which is the subject of the new application. I beg to move Amendments Nos. 43 to 45 en bloc.
§ On Question, Amendments agreed to.1147
§ Clause 37 [Right to employees' inventions]:
Lord LLOYD of KILGERRAN moved Amendment No. 46:
Page 31, line 43, leave out ("his") and insert ("those").
§ The noble Lord said: My Lords, this Amendment raises a chancery point of a purist character which has been pressed upon me by distinguished chancery members of the Bar. I am encouraged to raise this point in the light of the indication by the noble and learned Lord earlier this afternoon of the desirability of avoiding, "duality in practice", to use the expression he used, and in particular in a matter of interpretation in the High Court of Chancery.
§ It is clear that it is necessary to have as little ambiguity as possible. If you read the subsection with which this Amendment is concerned, you will see that it is concerned with, first of all, "the normal duties of the employee" (that is on page 31 at line 38) and then on the next line it refers to another type of duty, the "course of duties falling outside his normal duties". So as far as this subsection is concerned, you have two classes of duties.
§ Therefore, if you then in the last line of this subsection on the page, line 43, now refer to "his duties", then as a matter of interpretation this leads to a third class of duties. Therefore, it was felt that it might be helpful as a matter of pure interpretation if, instead of referring to "his duties" that "his" should be replaced by "those", and therefore "those duties" would include the first two categories of duties and would not raise even very lightly a third class of duties. I beg to move.
§ The LORD CHANCELLOR (Lord Elwyn-Jones)
My Lords, I was a little intimidated to be told that this raises a Chancery lawyer's point of a purist character, which always puts me into a tremble. I wondered how it links with Amendment No. 47 which follows and with which it is presumably interrelated. It may be convenient if we could discuss the two together. If the noble Lord will look at it in that light, perhaps I might return to the point.
§ Lord LLOYD of KILGERRAN
My Lords, I cannot, of course, resist the encouragement given to me by the noble and learned Lord the Lord Chancellor that with the leave of the House I refer to Amendment No. 47 in my name. Amendment No. 47 also has the point of trying to reduce ambiguity and to clarify the position in regard to the duties of an employee. The clause raises new rights for an employee. I have already congratulated the Government on introducing for the first time in a Patents Bill this very important Amendment dealing with the rights of employees.
So far as Amendment No. 47 is concerned, I feel that, in any discussion about the duties of an employee, or any discussion about those duties arising under this subsection, or indeed his duties, it will never be presumed against the employee that an invention is expected to result from the carrying out of those duties, or his duties, unless it is specified in his contract of employment. In Amendment No. 47 I have referred to "his duties", and I am advised that in that part of the subsection it would be legitimate and helpful from an interpretation point of view to refer to "his duties" rather than to "those duties". But again that aspect of the matter is purely a chancery point.
The main object of Amendment No. 47 is that an employee must be in the position to rely upon the terms of his contract of employment. Therefore, there should be no presumption against an employee that an invention is expected to result and, therefore, fall into the ambit of the employer's rights to any patent which might be granted on that invention, unless it is specified in his contract of employment. Therefore, with the leave of the House, I also speak to Amendment No. 47.
§ The LORD CHANCELLOR
My Lords, I am much obliged to the noble Lord, Lord Lloyd of Kilgerran. In so far as Amendment No. 46 stands alone, I should like to give consideration to the Chancery point of a purist character which he has raised with me. As to Amendment No. 47, I am afraid, however, that I cannot go with him in regard to what he proposes, impressed, as I always am, with his proper and admirable concern for the rights of employees. First, there are many thousands of employees in respect of whom 1149 contracts of employment have already been drawn up. There can, therefore, be no question of those contracts containing any such term as the Amendment envisages. In respect of those, therefore, it follows that the Amendment would not have any effect.
Even as regards contracts of employment entered into after the passing of this Bill, it must be doubtful whether the Amendment would be effective. So far as I know, there is no presumption of the kind contemplated in the Amendment against an employee, and it would appear that the principal effect of the Amendment might well be to drive employers to include in all future contracts of employment a term that inventions are expected to result from the carrying out of the employee's duties, which, I should have thought, would be a rather intimidating term of the contract.
In truth, an employee's duties are not immutable—they change from time to time—and indeed Clause 37(1)(a) refers among other things to:duties specifically assigned to an employee".I suggest that it would be fanciful to imagine that the relationship between an employer and his employee could be fixed for all time at the very outset of their relationship; far better to look at the actual circumstances prevailing at the time when an invention is in fact made. Moreover, there must be a danger that even if a contract of employment were to contain a clause to the effect that inventions were expected to result, that clause might be construed as contravening Clause 40(2) of the Bill, which renders unenforceable against employees terms in contracts which diminish their rights in inventions made after the appointed day and the date of the contract. For these reasons, I think the Bill is better as it stands without this proposed Amendment.
§ Lord LLOYD of KILGERRAN
My Lords, I am obliged to the noble and learned Lord for his careful and lengthy reply. As he was also referring to my Amendment No. 47, I will not need to move that. In the meantime, I beg leave to withdraw No. 46.
§ Amendment, by leave, withdrawn.1150
§ 4.52 p.m.
Lord LLOYD of KILGERRAN moved Amendment No. 48:
Page 32, line 1, leave out from ("made") to end of line 5 and insert ("while he was engaged in a senior capacity and had a special responsibility to further the interests of the employer's undertaking.")
§ The noble Lord said: My Lords, this is another attempt to clarify the position of an employee in relation to the scope of his duties and, thus, to assist in deciding how far the rights in any invention arising from his employment shall belong to the employer or the employee. I have always indicated that where an employee is employed on research or has a very senior position in the firm, the employer should, at least in most cases, have the rights to the invention. Or where an employee has very special responsibilities in relation to the conduct of the company's affairs, again the employer should own any invention arising in the course of such special responsibilities.
The Amendment is designed, therefore, to clarify the position of an employee. For the purposes of the ownership of the invention by the employer, the employee must be engaged in a senior capacity; in that senior capacity it would be wrong for him to be in a position to claim against his employer. The same occurs if he has a special responsibility to further the interests of the employer's undertaking. I realise that the drafting of the Amendment is capable of improvement and, with the leave of the House, I would draw attention to Amendment No. 49 in which the Government would delete "his special responsibilities" and insert:
the nature of his duties and the particular responsibilities arising from the nature of his duties".
It may be for the convenience of the noble and learned Lord the Lord Chancellor if I were to reserve any further comments I have to make on this subject until I have heard his remarks about Amendment No. 49.
§ The LORD CHANCELLOR
My Lords, when we considered this matter in Committee I said that the Government were not satisfied with the expression "his special responsibilities" in Clause 37(1)(b), and at that stage I did not move an Amendment that had been tabled and said we would have another look at the point. We 1151 have done so; Government Amendment No. 49 has been tabled and that seems to deal with the noble Lord's Amendment No. 48. If the noble Lord will forgive me, I think the language of Amendment No. 49 is more apt to deal with the difficulty with which he also has endeavoured to deal, and if he finds No. 49 acceptable, perhaps we need not tarry longer over No. 48.
§ Lord LLOYD of KILGERRAN
My Lords, I am grateful to the noble and learned Lord for introducing Amendment No. 49 and, in the circumstances, I beg leave to withdraw my Amendment No. 48.
§ Amendment, by leave, withdrawn.
The LORD CHANCELLOR moved Amendment No. 49:
Page 32, line 3, leave out ("his special responsibilities") and insert ("the nature of his duties and the particular responsibilities arising from the nature of his duties").
§ The noble and learned Lord said: My Lords, I have already been permitted to speak to this Amendment. I beg to move.
§ Lord BELSTEAD
My Lords, I wish only to say a word of thanks to the Government for bringing forward this Amendment. There were people, myself and some of my noble friends among them, who were a little worried on the last occasion when it seemed that a Government Amendment which had been tabled was referring not so much to the breadth of the responsibilities of an employee as to the height of the employee's position as to whether he should come within the scope of this provision. I think this Amendment has put that right. With respect to the noble Lord, Lord Lloyd of Kilgerran, what I did not like about his Amendment No. 48 was that it referred to the "senior capacity" of an employee; I did not think that that was a very well conceived way of wording such an Amendment. I therefore warmly welcome this Government Amendment.
§ The LORD CHANCELLOR
My Lords, we have been struggling with this, and the new language that is expressed seems to us to be a little clearer and more specific. I cannot help my noble friend more than that; if the language proposed does not help him, I am sorry.
§ The LORD CHANCELLOR
My Lords, it is a matter of opinion whether the words,the nature of his duties and the particular responsibilities arising from the nature of his duties".are more expressive and specific than "his special responsibilities". I think they are and the House will have to make a decision on it. I know the skill of my noble friend in matters of language, but this is the view which the draftsmen and those advising me have on the matter, and I think they are probably right.
§ On Question, Amendment agreed to.
§ Clause 38 [Compensation of an employee for certain inventions]:
§ 5 p.m.
Lord LLOYD of KILGERRAN moved Amendment No. 50:
Page 32 line 18, after ("below") insert ("having had the assistance and advice of independent advisers with experience in the commercial exploitation of patents and industrial relations.")
§ The noble Lord said: My Lords, this is an Amendment to the first subsection of the clause which deals with the compensation of an employee for certain inventions. As the Bill now stands, the High Court of Chancery or the Comptroller-General may award him such compensation of an amount to be determined under a subsequent clause. I have maintained that it would be more helpful if the amount of the compensation were dealt with by a tribunal which had among its members persons concerned with industrial relations and who had knowledge of patent matters in a commercial sense.1153
§ The use of the word "tribunal" was not considered happy at the Committee stage or on Second Reading. At any rate, I received no sympathy for suggesting that the awards should be made by a tribunal. In this part of Clause 38, I am suggesting that the court or the comptroller should be in a position to deal with the amount of the compensation, subject to the court or the comptroller having had the assistance or advice of independent advisers with experience in the commercial exploitation of patents and in industrial relations. At Second Reading, I quoted from distinguished judges of the High Court who said that the High Court of Chancery was an inappropriate tribunal to deal with patents. We are now coining to a new right given to an inventor. We are therefore dealing with new procedures for awarding compensation to an inventor. Accordingly, in my submission, such a change in the jurisprudence and in the relationships between employer and employee in patent matters will require a new approach to the method of paying an employee any compensation.
§ I do not in any way derogate from my admiration for the work of judges of the High Court in the Chancery Division who have to deal with inventions and with the actions taken and the jurisprudence so excellently carried out by the comptroller general and his staff. However, it seems to me that it would he of assistance to both the court and the Comptroller-General if, in assessing compensation, they had the assistance of independent advisers and not only that they should have such assistance but that it should be seen by the employees and their trade unions that such assistance was being provided for them. I beg to move.
§ The LORD CHANCELLOR
My Lords, as the noble Lord, Lord Lloyd, has explained, the Amendment would require the court or the comptroller to obtain the advice and assistance of "independent advisers" with the experience specified whenever they were determining the amount of an award of compensation to an employee under Clause 38(1) of the Bill. Your Lordships will recall that, under that clause, the employee must establish that the patent in question has been of "outstanding benefit" to his employer. To do that, he must adduce a 1154 good deal of evidence to show what the patent has been worth to the employer; and no doubt the employer, for his part, will seek to produce counter-evidence to show that it has been worth a great deal less. The parties will also have the opportunity to make submissions to the court or the tribunal on the subject.
For my part, I should have thought that all this would provide the court or the comptroller with a great deal of information on which to base the awards, without their being in need of any further assistance. Moreover, if independent advisers were to be used, they would have to be present throughout the whole hearing so as to ensure that they were aware of all the evidence and submissions advanced by the parties. I believe that it would be difficult to obtain the services of people of the right calibre who would be prepared to undertake such a commitment, and I cannot think that it would be the best use of their time and their skills. They would also have to be paid for their trouble and that would add considerably to the cost of proceedings under the subsection. Furthermore, as noble Lords will know, Clause 93(4) already provides power for the court to be assisted by experts in appropriate cases. I have drawn attention to that more than once and it is already being more fully realised and recognised. Accordingly, in the light of those observations, it may well be that the noble Lord will not be disposed to press the Amendment.
§ Lord LLOYD of KILGERRAN
My Lords, it appears that the main difficulty of carrying out my suggestion is that of manning such a court and getting the advisers to sit. I have no information at all about this matter but, coming from the noble and learned Lord who sits upon the Woolsack, I assume that I must accept that the Government would find difficulty in getting independent advisers to sit with the Comptroller-General or one of Her Majesty's judges.
The noble and learned Lord's second point was the cost of these advisers. So far as I understand the Bill, where other advisers are present to assist the court, the cost is borne not by the participants but as part of the costs of the court. It is not borne by the parties to any dispute.
1155 The third point raised by the noble and learned Lord was the matter in Clause 93 in relation to which he quite rightly pointed out that, under the Bill, the court can now appoint advisers to assist it. But that subsection refers only to scientific advisers. I submit that, for the purposes of assessing compensation to an employee in the new circumstances proposed by this part of the Bill, the independent advisers should be not merely scientific advisers but should be advisers having knowledge of the commercial exploitation of patents and particularly of industrial relations.
Whatever may be the view of noble Lords, it is apparent that, in this age, trade union representatives find it difficult to accept that lawyers are experts or know very much about industrial relations. Within my own knowledge, in the case of, for instance, disputes concerning employees in the Civil Service, they have for years expressly avoided having lawyers to represent the employees before patents tribunals, and it seems to me that where a tribunal has to deal with the position as between an employee and an inventor, it would be helpful to the industrial relations activities in industry that there should be experts of this type. However, having regard to the observations of the noble and learned Lord and to a further Amendment which is down in my name, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 5.10 p.m.
Lord LLOYD of KILGERRAN moved Amendment No. 50A:
Page 32, leave out lines 38 and 39 and insert ("and if the amount of compensation cannot be determined by agreement, the court or the comptroller may direct that the application be referred to a special Assessment Panel comprising a barrister-at-law and two advisers whose decision as to any award shall be final").
The noble Lord said: My Lords, this Amendment, too, is directed as to the form of the panel, or court, or tribunal, or any word that would express the body which faces an employee when he has a dispute with an employer and has to have it dealt with outside the company. It has been suggested that if the amount of compensation to an employee cannot be met by agreement between the employer and the employee, the matter should come to the court or the comptroller for dealing
with the administrative matters that are bound to arise under subsection (1) of Clause 38. But once the court or the comptroller is seized of the matter quite properly, and the papers and the position are in order, the court or comptroller should then direct that the application for compensation should be referred
to a special Assessment Panel comprising a barrister-at-law and two advisers whose decision as to any award shall be final.
§ Therefore, two points arise under my proposed Amendment. First, the court or comptroller should direct that the application be referred to a special Assessment Panel; the words "special Assessment Panel" would be new to the Bill. I am in a position to say that this form of wording has been discussed very fully with representatives of the economic committee of the Trades Union Congress, and that the words "special Assessment Panel" were suggested by a representative of the economic committee of the Trades Union Congress. I understand that the suggestion has also been put forward to the Minister concerned with these matters in another place, and it has not been received unsympathetically.
§ The second point is the composition of this tribunal. In my previous submissions to your Lordships on Amendments as to the form of what I then referred to as a tribunal for dealing with assessment of compensation, I suggested that possibly the chairman could be a chartered patent agent. I have tried to assess the information that has been put to me about the form of the tribunal, to which I now refer as a panel, and it has been suggested that perhaps it would be more appropriate, in view of the fact that the court and the comptroller are concerned with the matter, that a practising member of the Bar should be the chairman of this panel, rather than the chartered patent agent to whom I referred in previous speeches.
§ Another aspect of the Amendment is that the award should be a final award, and with the leave of the House may I therefore speak also to Amendment No. 51, which in another context says that when an award has been made it should be a final award. It is very necessary, when dealing with industrial relationships between an employer and an employee, that there should be early finality in 1157 deciding what is appropriate to be paid by way of compensation. This Bill allows so many of the disputes to go to the High Court or to the Comptroller General, and a sequence of appeals to other courts is laid down in the Bill.
§ Where an employee knows all the circumstances surrounding the application (so clearly set out in Clauses 37, 38 and 39 of the Bill) and goes before a panel, knowing that the panel will deal with him not only justly and fairly but with knowledge of industrial and commercial matters, by means of men of experience on the panel, then the employee should understand that he cannot appeal from such an award, except in the exceptional circumstances where the panel may have done something quite illegal or contrary to the normal law.
§ As I have mentioned to your Lordships on many occasions, I had the privilege, after the last war, of being associated with the Royal Commission on Awards to Inventors, which was chaired by a Member of this House, the noble and learned Lord, Lord Cohen. Patent disputes and disputes on inventions of all kinds were brought before that Commission as a result of the actions of the Government during the war, and the Commission, for part of its jurisdiction, replaced the High Court, but that Commission insisted that its award should be final. Of the many hundreds of cases which came before that Royal Commission, which awarded millions of pounds, there was no attempt at all to dispute an award which the Commission had made. I beg leave to move Amendment No. 50A.
§ The LORD CHANCELLOR
My Lords, the effect of this Amendment is to take away from the duty of the court or the comptroller the making of the appropriate award of compensation referred to in Clause 38(2), and to transfer that responsibility to a special Assessment Panel comprising a barrister-at-law and two advisers. So great apparently is the confidence to be placed in that body that its decision is to be final. There is to be no right of appeal whatsoever. The noble Lord adds here: "except that they may go wrong in law". Of course there would in any event be the normal procedure by remedy such as certiorari, and I am not aware, though perhaps I missed it, 1158 of any specific reference to that exception in the noble Lord's Amendments.
However, I have no reason to doubt the competence and the capacity of the court and the comptroller to come to an informed and a just decision on the matter which falls to be decided, and by the noble Lord's sotto voce indication I do not think that he quarrels with that generalisation. I think that this would add a further and excessive elaboration to the machinery for dealing with these matters. I agree that they will often be complicated matters, but the court, or the comptroller as the case may be, will be assisted by the parties and their own advisers, and, frankly, in my view, there is no reason for lack of confidence in the comptroller or the court which has had much experience in this field. Therefore, my view is that we should leave it to the trusted court and the comptroller to deal with this matter.
With regard to Amendment No. 51, I think that the ordinary facilities for appeal should be open, and in any event, as the noble Lord has intimated, the finality of this body's decision—that is, the barrister and the two advisers—would not preclude the possibility of review by higher courts, by, as I have indicated, use of the orders of prohibition or certiorari, as the case may be. It was found that the absence of a right of appeal from the patent appeals tribunal led to the making of applications for these orders, and ultimately it was decided that it would be far more convenient to allow a right of appeal, and the result was the enactment of Section 46 of the Courts Act of 1971, which added a paragraph conferring a right of appeal from the tribunal on specified grounds. Perhaps the noble Lord will care to reflect upon those considerations, and will perhaps take the view that at this stage he should not press the matter further.
§ Lord BELSTEAD
My Lords, I wonder whether I may ask the noble and learned Lord one question. I have listened while the noble and learned Lord has explained that, in the view of the Government, there should be a right of appeal from decisions under Clause 38, and, having no legal training myself, I am of course quite ready to accept that advice. But I have noticed that the Government have also set down Amendment No. 55, which we shall be reaching shortly, which provides that: 1159… the refusal of the court or the comptroller to make any such order on an application made by an employee under section 38 above"—that is, an application for a compensation order—shall not prevent a further application being made under that section by him or any successor in title of his".Do the Government envisage that there will be more than one application in many cases?
§ The LORD CHANCELLOR
Yes, my Lords, we envisage that. There may be cases where new circumstances have arisen, and new facts have emerged, which entitle the applicant to make a second attempt to get his remedy. That is the only significance of that.
§ Lord LLOYD of KILGERRAN
My Lords, I listened very carefully as the noble and learned Lord read from his brief, and in view of the contents of that brief I want to say once again that, in the submissions I have made to your Lordships, there is no question that I have any lack of confidence in High Court judges or in the Comptroller General of Patents—none whatsoever; except that, of course, when you are dealing with a new jurisdiction involving employees and employers, in my submission you require an entirely new approach to a method of assessing compensation of this kind.
The noble and learned Lord referred to the position of the Patents Appeal Tribunal. I have had the privilege of appearing before the Patents Appeal Tribunal on many occasions, but the considerations arising in regard to the judgment of the Patents Appeal Tribunal and the reasons why it was found simpler to allow a right of appeal in the circumstances in which the Patents Appeal Tribunal operated were totally different from the position which arises in a dispute between an employer and an employee as to the amount of money which should be paid to the employee. You are dealing with a factual matter, as to the quantum of an award, and you are dealing with it in the circumstances of the employment of the employee in a factory or in a company. I would think that a Chancery judge or the Comptroller-General would have enjoyed the opportunity to have an independent adviser with him who knew 1160 something about the commercial exploitation of patents and who, above all, knew something about industrial relations in the activities of the company.
I fully realize (and, of course, I do not wish to appear to have any such intention) that by pressing this Amendment perhaps I am embarrassing the noble and learned Lord who sits on the Woolsack. I am embarrassing him, perhaps, in his capacity as the distinguished head of the Judiciary of this country, in suggesting that in some way the High Court and the Comptroller-General, as indicated in this Bill, should have their judicial operations to some extent qualified by the presence of these advisers.
In those circumstances, therefore, it may be that this is an administrative problem. I fully realise that when you have a new conception introduced into a Patents Bill for the first time there will be difficulties. There will be difficulties of administration; there will be misunderstandings on the side of an employee as to his rights, and there will be misunderstandings as to the rights of employers, no doubt. It may be that this matter of the form of the tribunal or panel for assessing the compensation payable to an employee will be better dealt with under the administrative rules to be associated with this Patents Bill, and in view of the fact that this matter may be capable of being discussed in connection with those rules I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ 5.25 p.m.
The Lord NELSON of STAFFORD moved Amendment No. 51A:
Page 32, line 42, at end insert ("to which a Trade Union of which the employee is a member and the employer or a body of which the employer is a member are parties").
§ The noble Lord said: My Lords, may I first say a general word about the Amendments standing in my name and in those of my noble friends Lord Belstead and Lord Lyell? They relate to the section of the Bill dealing with employees' inventions. Your Lordships will probably be aware that there is a great deal of misgiving in industry as to the desirability or the workability of this section of the Bill relating to employees' inventions. There is much concern that the attempt to codify 1161 in a few lines the accumulated common law experience will introduce more problems that it solves. The Banks Committee examined this question in paragraphs 465 and 467 of its report, and saw no necessity for change.
The White Paper on Patent Law Reform also states in paragraph 34:
The common law on the owership of inventions made by employees is clear and straightforward".
These opinions very much represent the views of industry; and, while there is much to be welcomed in this Bill, many would much have preferred it if this section had not been included. I recognise, however, that the Government attach considerable importance to this section, and my Amendments are put forward to clarify and improve on what is now proposed in this Bill and to remove some important ambiguities and uncertainties which still remain after the Committee stage, where they were raised.
§ I turn now to Amendment No. 51A. Clause 38(3) of the Bill provides for any collective agreement entered into between trade unions and employees to override the property rights conferred upon an inventor by subsections (1) and (2). This means that this is the sole exception to the principle of Clause 40 of the Bill, under which no agreement entered into by an employee with his employer can invalidate his property rights under this section of the Bill. In other words, trade unions are given the power to enter into valid agreements relating to property rights of an employee. This is in itself a new departure for trade unions, who previously have had no such rights, their powers being related to bargaining on behalf of their members on wages and working conditions. This is something new; and, while some may object, at least it is understandable as related to members of trade unions who desire this to be done on their behalf. What seems to me to be not understandable and even undesirable is for trade unions to have powers over the property rights of employees who are not even members of the unions involved.
§ Noble Lords will appreciate that many employees in technical offices and departments, where many of the inventions originate, are not members of trade unions. The Amendment which I am putting forward makes it clear that this 1162 I subsection applies only to a employee or employer who is himself a member of a trade union or of a trade association which is party to the collective agreement. I think it is very desirable that this should be made quite clear. This Bill will have to be interpreted right across the country in many offices and departments, and in many negotiations between officials on both sides of industry. I think it should be made clear, and I hope your Lordships will think that the proposal which I am putting forward is both equitable and reasonable in its arguments. I hope, equally, that it will commend itself to the Government. I beg to move.
§ 5.30 p.m.
§ The LORD CHANCELLOR
My Lords, we discussed this matter at an earlier stage of the Bill and I undertook to give further consideration to it and I have done so. But subject to what may be further said in the course of the debate on it, certainly my view as of this moment is that I cannot recommend acceptance of the Amendment. When we were discussing the clauses about employees inventions in Committee I informed the Committee that they were drafted to give effect to the agreement which was reached between industry and representatives of employees in a Working Party which was set up by the Secretary of State for Trade. A good deal of discussion took place about the proposals and subsection (3) was part of that agreement. I certainly would not wish it to be rejected without the awareness that it could upset the delicate balance then achieved. I am sure that it is not the wish of any of us to do that.
The second point which I venture to make is that there is perhaps more appearance than reality in regard to the fears that the subsection would or might work an injustice to an individual employee and could lead to an employee receiving less under a collective agreement to which he had in no way himself consented than he would have got under the statutory award scheme. But I invite your Lordships to the view that trade unions would be very unlikely to enter into a collective agreement in regard to compensation for inventions if the sums obtainable under it are going to be less than the statutory scheme provisions. Furthermore, it is, after all, not 1163 at all unusual for trade unions to negotiate collective agreements covering all the employees in an industry or category of work, union members and non-members alike. The latter enjoy the benefits of those agreements just as much as do the former.
The final point that I venture to make on this Amendment is that disputes about compensation for inventions should, I think noble Lords will be disposed to agree, preferably be dealt with as far as possible by the normal negotiating machinery of industrial relations rather than by litigation. If that can be achieved, as I think it can, I believe that it would be the preferable way of resolving these disputes. I think that the subsection as it now stands could be useful in moving things in the direction of negotiation instead of litigation. Therefore, I am afraid that, as at present advised, I cannot accept the Amendment.
§ Lord LLOYD of KILGERRAN
My Lords, may I briefly presume to support the noble and learned Lord in the reply that he has given to the speech by the noble Lord, Lord Nelson of Stafford, in moving this Amendment. As the noble and learned Lord has pointed out, trade unions negotiate collective agreements in certain industries with all members of a company, whether members of the trade union or otherwise. The noble Lord, Lord Nelson of Stafford, in introducing his Amendment, referred to the fact that there was great misgiving in industry about these new rights given to employees; he appeared to give the impression, at least to me, that he was speaking on behalf of the whole of the industry, whatever that may be.
It would be presumptuous of me to make any comparison between my experience and the great industrial experience of the noble Lord, Lord Nelson of Stafford, but I would say this: in my limited experience, getting into touch with many businesses, large and small, there is in many of these companies the acceptance that these new clauses dealing with employee and employer relationships in regard to inventions may have two advantages. First, they improve industrial relations between employee and employer in certain areas of industry; and, secondly, they encourage innovation in employees who know that, if they make an invention, they 1164 may get some compensation or award for it. That aspect of these clauses in the Bill is, in my view, not without great importance in encouraging innovation in industry which is much required at the present time.
It is understandable, as I have said before, that when you have a new provision of this kind, both employers and employees will have misgivings at this stage about how these sections of the Patents Bill will work. They will have doubts about the administrative difficulties which may arise. I was glad to hear the noble Lord, Lord Nelson of Stafford, say that it would be incumbent upon all departments of industry to try to make these clauses work.
§ Lord BELSTEAD
My Lords, may I say a few words in support of my noble friend who has moved this Amendment. We have a provision here in Clause 38(3) which, in some circumstances, could favour the employer and, in other circumstances, perhaps favour the employee, but which is to be allowed if it is to be the subject of a collective agreement within the meaning of the Trade Union and Labour Relations Act 1974. I am saying, as the noble and learned Lord has said, that probably a trade union will be very careful not to conclude a collective agreement unless it is going to be to the advantage of their members to depart from the statutory provisions of this Bill. One cannot be absolutely sure; one does not know.
Although, as my noble friend Lord Nelson has explained, it is a departure from existing law and practice for trade unions to have power to vary the property rights of an individual, and especially if the individual is not a member of the union, if the Government feel that this provision in the Bill about collective agreements is on the right lines, I, certainly, am not going to stand in the Government's way. But I think it is inequitable to include within the scope of subsection (3) either employees or employers who are not members either of the trade union or the employers' side of the collective agreement. I think it is not as helpful as it might be for the Government to draw attention to the provision which follows at the end of this subsection that the employee must be of "the same description" as the employees represented by the trade union in the collective agreement.
1165 When we were in Committee, the noble and learned Lord sought to reassure us by saying that a collective agreement for one category of employees would not affect the rights of other categories of employees. Of course, the noble and learned Lord was quite right to be drawing to our attention this part of the subsection; but the fact of the matter is that employees of the "same description" at a particular place of work are liable to be able to join either different trade unions or no trade union at all.
As drafted at the moment, the effect of this subsection will be to make it more desirable for closed shops to be the order of the day at a place of work; because, clearly, if a collective agreement is going to be concluded by a union and it is going to extend to those who are not members of the union, those who are not members of the union might heed the argument that it would have been better if they had joined the union in order at least to have had a voice in the collective agreement. The noble and learned Lord and the noble Lord, Lord Lloyd of Kilgerran, have pointed to the desirability of hammering out agreements about compensation for employee inventions under this Bill at plant level, and not having always to resort to the provisions of this Bill. As I understand the Amendment of my noble friend Lord Nelson, he in no way departs from that desirable objective. All my noble friend is doing is simply adding a provision to subsection (3) that if a person's statutory rights to an invention are going to be varied by a collective agreement, then in all justice that person really must, by his membership of the trade union or, where applicable, by membership of the employers' association, have been represented in that collective agreement.
It would be a pity if this Bill, which is technical in content and has been treated in that way the whole way through, is going to import into one of its clauses not a technical provision but a provision which is related to the desirability of closed shops which are of political disagreement between the Parties. I should have thought that my noble friend's Amendment is moderate; it does nothing to upset the objectives of subsection (3), and I should have hoped that the Government could agree to it.
§ 5.42 p.m.
§ The LORD CHANCELLOR
My Lords, I do not like being too dogmatic about this. I am grateful for the support of the noble Lord, Lord Lloyd of Kilgerran, about this matter. I wonder whether there might be a possibility of finding some kind of compromise: to amend the Bill to empower the Secretary of State, on receipt of a complaint, to examine any relevant collective agreement with a view to its revision—that is to say, a complaint from an employee that the collective agreement might operate to his disadvantage. Whether anything on those lines might meet the concern of the noble Lords who have spoken in favour of the Amendment and would be attractive to them, I do not know.
I would be willing to look at something on those lines and perhaps discuss the matter also with the noble Lord, Lord Lloyd of Kilgerran, to see if something could be evolved. If so, I should be willing to do that between now and Third Reading. I am sorry to be inviting your Lordships therefore to enable me to have a third bite at this rather indigestible cherry, as it is proving to be. If that is acceptable, perhaps the noble Lord, Lord Nelson of Stafford, might be willing to withdraw the Amendment at this stage, with the assurance that I should give serious thought to something on those lines if he thought it was of value. Otherwise, the matter will have to go to a Division.
§ Lord NELSON of STAFFORD
My Lords, I am most grateful to the noble and learned Lord the Lord Chancellor, first of all for the thought he has given to this matter since it was raised in Committee and in what he has said today. It is a matter of considerable principle. I should like to make it clear from the start that I am not against collective agreements in putting this forward. What I am against is collective agreements being binding on people who have no connection with those agreements: people who are not members of the trade unions concerned or who are not in firms which are parties to those collective agreements. This seems to be quite unacceptable, particularly when one bears in mind that in many of the research establishments and technical departments a very large number of people concerned are not in trade unions.
1167 Note the term "collective", which probably means not only does it involve a lot of people but may involve a lot of other factors as well. In other words, it is part of a general negotiation relating to a lot of other matters of which this may be one. Imagine an inventor, an engineer, working in a research department, who thought he had a valid claim. Imagine he tried to put this forward only to be told that he could not do so because there was a collective agreement with a federation, association or a trade union. If he said that he was not a member of that group, or his firm was not a member of that, he would be told, "Ah! but under the Bill it applies to you just the same". These are the inventor's property rights; the agreements are nothing to do with him. The association does not represent his firm; the union does not represent him; he is not a member of it. Yet, for some reason or other, he is bound by this agreement to which he is not a party.
I have not the feelings which have been expressed that a collective agreement will give this engineer a better deal than he could negotiate on his own. I do not think that this is so. If we look at the history of collective agreements, we see that, by and large, they have tended to level down and not level up, hence some of our difficulties with differentials of skilled workpeople, and so on, today who have been very dissatisfied with collective agreements and the results they have had. If such an agreement exists, and I am a member of the union and they negotiate on my behalf, I am not against it. But I do not see why it should apply to others.
§ The noble Lord, Lord Lloyd of Kilgerran, if I may reply to his remarks, implied that I was against employees' rights. I am not against employees' rights at all. I am in favour in every way of encouraging inventiveness. I agree with Lord Lloyd's concern. I am concerned that this will work the other way round: that these rights will work against collective effort; they will tend to foster secretiveness. Here we have a case under the collective agreement where, even if I had the maximum amount of inventiveness, somebody else is going to decide what I get.
§ The noble and learned Lord the Lord Chancellor has kindly put forward a suggestion that this might be solved in another way. I would not do other than give that very careful consideration; but I am concerned about references to Secretaries of State. They have a lot put on their plates these days. Casting my mind on the situation that I have outlined to your Lordships—an individual finding himself committed by a collective agreement to which he is not a party—I think it is right that this Amendment should be put to the House to get your Lordships' opinion. If your Lordships agree with my Amendment, it can go forward and be reviewed in another place in due course. I should like to see this matter clarified and, with that in view, I wish to let my Amendment stand.
§ 5.49 p.m.
§ On Question, Whether the said Amendment (No. 51A) shall be agreed to?
§ Their Lordships divided: Contents, 56; Not-Contents 40.1169
|Alport, L.||Emmet of Amberley, B.||Mowbray and Stourton, L. [Teller.]|
|Amherst of Hackney, L.||Falkland, V.|
|Amory, V.||Ferrier, L.||Nelson of Stafford, L.|
|Atholl, D.||Garner, L.||Newall, L.|
|Auckland, L.||Gisborough, L.||Nugent of Guildford, L.|
|Barnby, L.||Greenway, L.||Rankeillour, L.|
|Belstead, L.||Halsbury, E.||Rochdale, V.|
|Caccia, L.||Hanworth, V.||St. Aldwyn, E.|
|Carrington, L.||Hawke, L.||St. Davids, V.|
|Cathcart, E.||Home of the Hirsel, L.||Sandford, L.|
|Coleraine, L.||Hornsby-Smith, B.||Sempill, Ly.|
|Colville of Culross, V.||Hylton-Foster, B.||Spens, L.|
|Cullen of Ashbourne, L.||Killearn, L.||Strathcona and Mount Royal, L.|
|Daventry, V.||Long, V.||Swansea, L.|
|de Clifford, L.||Lyell, L. [Teller.]||Trefgarne, L.|
|Denham, L.||Mancroft, L.||Tweedsmuir, L.|
|Drumalbyn, L.||Marley, L.||Vivian, L.|
|Elles, B.||Merrivale, L.||Wakefield of Kendal, L.|
|Elton, L.||Morris, L.||Ward of North Tyneside, B.|
|Aylestone, L.||Janner, L.||Ponsonby of Shulbrede, L.|
|Banks, L.||Leatherland, L.||Ritchie-Calder, L.|
|Bruce of Donington, L.||Lee of Asheridge, B.||Sainsbury, L.|
|Collison, L.||Listowel, E.||Segal, L.|
|Cooper of Stockton Heath, L.||Llewelyn-Davies of Hastoe, B.||Stedman, B. [Teller.]|
|Davies of Leek, L.||Lloyd of Kilgerran, L.||Stone, L.|
|Douglas of Barloch, L.||Lovell-Davis, L.||Strabolgi, L. [Teller.]|
|Elwyn-Jones, L. (L. Chancellor.)||McCluskey, L.||Wallace of Coslany, L.|
|Fisher of Camden, L.||Mais, L.||Wells-Pestell, L.|
|George-Brown, L.||Oram, L.||Wigg, L.|
|Gordon-Walker, L.||Pannell, L.||Willis, L.|
|Hale, L.||Parry, L.||Wynne-Jones, L.|
|Henderson, L.||Peart, L. (L. Privy Seal.)|
|Jacques, L.||Phillips, B.|
Moved accordingly, and, on Question, Motion agreed to.
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ 5.56 p.m.
§ Lord NELSON of STAFFORD moved Amendment No. 51B:
Page 33, line 4, leave out subsection (4) and insert—
("(4) Subsections (1) and (2) above shall not apply to the invention of an employee where an agreement between him and his employer provides for the payment of compensation in respect of that invention:
Provided that before entering into such an agreement the employer shall have notified the employee of his right to apply to the court or the comptroller for an award of compensation")
§ The noble Lord said: My Lords, I beg to move Amendment No. 51B. It raises another point of clarification concerning the property rights of an employee. As I understand it, the intention of this whole section of the Bill, among other things, is to spell out the rights of an employee in an invention. He can apparently enter into any arrangement relating to these rights, with others, with only one exception: that is, his own employer.
§ Subsection (4) of Clause 38 removes the right of an employee, except as part of a collective agreement, to exercise his own property rights, and conclude a valid and binding agreement with his own employer, even though that may be to his advantage. In other words, he could perhaps negotiate for cash immediately, which might suit him much better than 20 years later, particularly if he is getting on in life. I believe an employee should have that right, provided—and I would emphasise this—that he is fully aware of his alternative course to apply to the court or the comptroller for an award of compensation.
§ We all know that there are many cases where agreement is better than litigation, as 1170 has been referred to on a number of occasions. In many cases, certainty is better than uncertainty. The noble Lord, Lord Lloyd of Kilgerran, mentioned earlier that finality was often a very good thing to aim at. I think that should receive consideration, and I would draw your Lordships' attention to the recommendation of the Banks Committee. In paragraph 469 they recommended what I am proposing. I am sure that much mistrust and misunderstanding can he avoided if the employee-inventor has this right. I also think that much work over the recording of information could be avoided because many of these things, if they are not settled, have to be kept going for years and years under this legislation. It is for that reason that I put forward this Amendment. I should also like to mention that Amendment No. 55A is consequential upon this Amendment. I beg to move.
§ The LORD CHANCELLOR
My Lords, I venture to think that this Amendment really runs counter to the spirit of the provisions in this part of the Bill and accordingly I greatly hope that it will not be pressed. The provisions in this part of the Bill are aimed at ensuring that an employee has a statutory right to a fair share of the benefit which his employer has derived, or may reasonably be expected to derive, from a patent. I venture to think that this Amendment would enable that aim to be defeated. An employer and an employee might reach an agreement in all good faith, but it might nevertheless result in the employee receiving far less for his invention than he would have done under the statutory scheme. In the hands of some employers —and I am afraid we have to legislate for the employer who is not as good as the normal employer—the proposed new subsection could provide an easy way to 1171 evade the purpose of these provisions in the Bill.
It would certainly lead to employees being subjected to pressures to enter into agreements detrimental to their interests, and I can see no good reason why they should be so subjected.
There is, after all, nothing to prevent an employer agreeing to make a payment or payments to his employee in respect of an invention. That payment or payments would then be taken into account in determining whether what the employee had obtained was a fair share, in the circumstances, of the benefit which the employer had derived, or might be expected to derive, from the patent for that invention. If that did result in the employee gaining a fair share, the employer would have nothing more to pay and nothing to fear. But there could be cases—and I think it prudent and proper that we should provide for them—where the invention might turn out to be far more profitable than could ever have been envisaged at the time of entry into the agreement. Then the employer would do very well out of it, but the employee would do very badly indeed, because he would have got less than the fair share which the Bill says he ought to have. Therefore, I venture to think that the provisions as they stand would not be harmful to the employer operating this scheme in good faith, as most employers of course would, and accordingly I hope that this Amendment will not be pressed.
§ Lord BELSTEAD
My Lords, the noble and learned Lord bases his argument to a considerable extent upon the fact that my noble friend's Amendment might lead to an employee not getting a fair share of the benefit deriving from an invention, as is laid down at the moment in this Bill. I think that that argument does not bear a very great deal of inspection. The noble and learned Lord may remember that when he was speaking on this Amendment in Committee on 24th February, at column 440 of Hansard, he said,It is very difficult for an employer, for his part, before he has started exploiting an invention, or even at an early stage in its exploitation, to guess how much benefit he will get from it. The same difficulty arises in an even more acute form for the employee himself, who will not have the employer's commercial expertise. The life of a 1172 patent will in future be 20 years, and it is asking a good deal of an employer or employee to prophesy so far ahead.My argument on this Amendment is a very simple one. Taking the argument of the noble and learned Lord himself, for many inventors compensation payable under this Bill will not be forthcoming until after they are dead. I have consulted the life tables in Whitaker's Almanack and the statistics are quite clear on this point. Only if an inventor is under the age of 53 will he be able to hope, on an average expectation of life, to see compensation during his lifetime, if that compensation is not to be paid out for 20 years. A woman would be rather better off by some five years. I think that those statistics throw a rather sobering light upon this Bill's splendid compensation scheme.
The employee-inventor has to wait until it becomes clear that outstanding benefit from the invention has accrued to the employer, if the invention belongs to the employer from the start; or the employee-inventor must wait until it is clear that his benefit under an assignment has been inadequate, if the invention has belonged to the employee from the start. After those provisions have been fulfilled, the court or the comptroller must go through complicated assessments of how much compensation should be paid, as provided for in Clause 39. It was the noble and learned Lord the Lord Chancellor, not I, who contemplated that the full term of 20 years for a new patent might be needed for these processes to be fulfilled, and what I am saying is that at the end of the story the average man inventor, if his invention has been discovered after he is 53 years old, will be dead. I do not think very much of that for a compensation scheme.
Let us be realistic for a moment and admit that, although the statutory scheme may be preferable for some inventors—and I am not trying to suggest that it is not—for other inventors it will not be at all attractive. The age of the inventor is one consideration, and I have sought to deal with that in what I have already said. Before we leave this point, let us remember that this applies especially to inventions in the chemical industry, which I understand account for some 20 per cent. of applications filed every year. I think I am right in saying that inventions 1173 in the chemical industry very often need to be developed over a period of many years. The probability of a patent being granted and being successfully marketed is another consideration as to whether an employee may feel that the statutory scheme is a good one, for only a small proportion of inventions are commercially successful. The consideration of whether or not the invention is a product of team work is a further consideration, for under the Bill it is only the one employee who gets compensation and not everyone.
In these circumstances, I am saying that many an inventor may wish to opt out of the statutory scheme in this Bill. His company may well have a voluntary scheme, which overcomes the problems of delayed payment by having a payment for an application and a further payment for grant of a patent; and there are such schemes, as your Lordships may very well know. Such payments would also be preferable if an invention is not going to be commercially successful, and in many cases employees may favour a scheme which will pay all the members of a research and development team. All one can say with certainty is that Banks was absolutely clear, as my noble friend has reminded your Lordships, about the value of voluntary schemes, and absolutely definite that such schemes, despite what has been said by the Government, did not offer inequitable treatment to an employee-inventor; and of course Banks' conclusion was that voluntary schemes should become the accepted method of compensating employee-inventors.
In conclusion, may I just say rather the same as I sought to say in support of my noble friend on his last Amendment. My noble friend Lord Nelson is not following Banks to his logical conclusion, and is not trying to sweep away the provisions of the statutory scheme in this Bill. This Amendment will do nothing to upset the statutory scheme, which is set out in Clauses 38 and 39. It will simply enable those employees who want to avail themselves of their company's voluntary scheme to be able to do that. If this Amendment is not accepted, then I must say I am convinced that the voluntary schemes will be discontinued, and I think that that will be a very great pity. So I hope that my noble friend will, if necessary, consider carrying this Amendment to a Division. But if the noble and learned 1174 Lord feels that perhaps the Government could look at it once again, without any commitment or undertaking, then possibly it would be worth withdrawing the Amendment and waiting to a later stage.
§ 6.10 p.m.
§ Lord LLOYD of KILGERRAN
My Lords, I am disappointed at the speech of the noble Lord, Lord Belstead, because he introduced a spirit of militancy which seems to be totally incompatible with the way in which this Bill has so far been discussed. I have always been very reluctant to introduce the acrid atmosphere of Party controversy into a House where so few noble Lords are sitting. When I submitted Amendments which I sincerely believed to be good Amendments that had the support of the Trades Union Congress, I desisted from dividing the House because I believed that it would be a great mistake to have a Division which could mean only a result on Party lines.
The noble Lord, Lord Nelson of Stafford, mentioned my name when he moved the Amendment. Very briefly, may I ask noble Lords to put themselves into the position of an employee who has made an invention and who is going to be dealt with, all in good faith, by any of the great companies with which the noble Lord, Lord Nelson of Stafford, has been associated. I cannot resist saying in passing that the observations made by the noble Lord, Lord Belstead, indicate that he has no very deep experience of what happens in relation to the activities of an employee in—
§ Lord BELSTEAD
My Lords, if I may interrupt the noble Lord, I was relying on what was said by the Banks Committee who were perfectly clear about the matter. There was no evidence of any kind of inequitable treatment under the voluntary schemes.
§ Lord LLOYD of KILGERRAN
My Lords, I am very much obliged to the noble Lord, Lord Belstead who interrupted me when I was in full spate and when I had not completed my sentence. However, I forgive him everything in the happy atmosphere that we have created during so many hours of debate on the Bill. The noble Lord, Lord Belstead, tempts me, nevertheless, to go into all kinds of irrelevancies. He speaks about the Banks Committee. The Banks Committee indi- 1175 cated that they had received no evidence that there was anything wrong, and that is the basis upon which I am approaching the matter. I am approaching it on the basis of what is fair to an employee in the circumstances of his employment.
May I now continue with asking noble Lords to put themselves in the position of an employee in a big firm such as those with which the noble Lord, Lord Nelson of Stafford, has been associated. If he is offered a certain sum of money for an invention, what can he do? He really cannot argue with his employer about that sum of money. It would be the duty of the executives of the company to pay as little as possible, in view of the vagueness of the many parameters upon which they have to assess the matter. In those circumstances, why should pressure be brought to bear on the employee to accept the sum which has been worked out, all in good faith, by the employer?
I should accept the Amendment of the noble Lord, Lord Nelson of Stafford, if he were to say, as indicated by the noble and learned Lord who sits on the Woolsack, that this was a payment on account. May I ask the noble Lord, Lord Nelson of Stafford, perhaps rhetorically, because I am not asking for an answer, whether or not he thinks that it would be good industrial relations to offer so much money by way of compensation early in the development of an invention which comes within the scope of subsection (1) of Clause 38? It will not be every invention which comes within the scope of that subsection, but there will be good inventions which are of benefit to the company.
Does not the noble Lord, Lord Nelson of Stafford, consider that it would be good public relations to offer compensation at an early stage in the life of the patent? To tell the inventor, "You have rights under the Patents Act and we do not mind if you make an application later on for compensation, subject to one thing: that you tell them that you have already received a payment from your employer and that amount is taken into account", seems to me to be common sense in the circumstances in which the employee finds himself. It is common sense not to bring pressure to bear upon him, all in good faith, at an early stage in the life of the patent to accept a sum as a final payment.
The Earl of HALSBURY
My Lords, this is a difficult part of the Bill, because we are attempting something new without a foundation of experience upon which to build. On Second Reading, I voiced the apprehensions which the noble Lord, Lord Nelson of Stafford, has voiced this afternoon: that we might, without intending to do so, be legislating in such a way as to cause employer-employee relationships to deteriorate. Since the Second Reading, however, my attitude has distinctly hardened in favour of the employee. Although the noble Lord, Lord Nelson of Stafford, comes from a long line of industrial statesmen with emancipated and enlightened attitudes towards employer-employee relationships, since the Second Reading I have spoken to one or two people whose attitude towards employee-inventors is one of such arrogant contempt that my attitude has hardened against them and in favour, in this context, of the inventor.
I followed the noble Lord, Lord Nelson of Stafford, into the Division Lobbies on his last Amendment because he carried me with him in what I felt was a very powerful winding-up speech. In a sense I went with him because I do not like closed shops. However, I have to confess that I cannot support him on this Amendment. If it goes to a Division, I feel that I must support the noble and learned Lord who sits on the Woolsack, and it may be the first time that I have supported the Government during the transactions leading up to the Bill. As I see it, if this Amendment is not there, there is nothing to prevent an industrialist and his employee from coming to any arrangement that they like between themselves. If the arrangement does not work out satisfactorily, then the statutory provisions in the Bill act, in effect, as a court of appeal.
One of the considerations that the court of appeal, if I may so call it, would obviously take into account is how much the employee has already had. Clearly, the employer would come to give evidence on that point. If the treatment of the employee had been equitable, it might be that the court would award nothing further. This would be perfectly feasible. What the noble Lord's Amendment would achieve would be the removal of the court of appeal. This seems to be not in favour of the inventor, whom I personally 1177 seek to protect. If, therefore, the noble Lord takes the matter to a Division, I am afraid that I must follow the noble and learned Lord who sits on the Woolsack.
§ Lord LYELL
My Lords, after such an eloquent speech by the noble Earl, Lord Halsbury, I hesitate to intervene. However, I am sure that the House will remember that at an earlier stage I spoke in support of my noble friend Lord Nelson of Stafford on an Amendment which was broadly similar to the one we are discussing today. At that stage I asked the noble and learned Lord who is sitting, even now, on the Woolsack four questions. First, I asked him whether the law of contract should be overturned. This is what it seems to me to be, put in fairly simple terms.
Secondly, I asked the noble and learned Lord whether the employee should be able to have two bites at the cherry. As he will appreciate, that employee would have to forgo a much swifter, less grudging and far simpler reward from his employer, should he be able to agree upon a voluntary scheme and, above all, agree to something which would not drag into the negotiations the processes of the law.
Thirdly, inventions are made almost entirely as part of a team. It seems to me that the clause in the Bill today gives too much licence to the individual to disrupt teamwork in the industry concerned. This may seem to be abrasive and hard on the individual. However, I believe this to be so in almost all the cases of inventiveness and inventive concepts which we have discussed. Of course, we want to ensure that an individual is not harshly dealt with. Nevertheless, is it at all easy, I wonder, to look at the practical effects in order to find out how far an individual can have contributed to an invention on his own, without the aid of other individuals who together form a team? It seems to me that the clause gives too much of an opportunity to an individual member of a team to push too far to the front his own part in that team work.
Lastly—and this has been referred to by the noble and learned Lord—there is the question of timing so far as the firm is concerned, in that an employee could continue in what I would call litigation with his erstwhile employer at a time when 1178 all the relevant facts are in the dim past and indeed when that particular employee might well have retired. As we are aware, the life of the patent is 20 years, but the employee might well have been away from the firm for 10 or 15 years and the inventive work in which he was concerned might only have come to fruition after he had retired. Is it reasonable and is it at all easy for that firm to keep all the relevant documentation? Indeed other members of that inventive team might also have a case. It seems to me that there is too great a possibility of stirring up dust at that stage.
In reply to my noble friend Lord Nelson, at an earlier stage of the Bill I remember the noble and learned Lord sitting on the Woolsack referring to what he called the "primitive urges" which he seemed to think came into the minds of men whenever—as he called it—the innocent profession of the law came into the arena of employer and employee bargains. Yet it seems to my innocent and non-legal brain that this particular clause permits the law to enter an arena where I wonder whether it is necessary for it to enter. It is for that reason that I rise to ask the noble and learned Lord these questions and I hope they are not too abrasive.
§ The LORD CHANCELLOR
My Lords, in view of the fact that I have been asked questions I imagine that gives me permission to address your Lordships again. I am little a surprised at the nature of the questions that have been addressed to me by the noble Lord, Lord Lyell, because he seems now to be challenging and questioning the whole basis of the proposal to set up a scheme to give a statutory right to the employee inventor to be awarded compensation for his invention. The whole basis of the new proposals is for the first time to create that statutory right. It does not of course do away with the ability of the employer and employee to reach terms of agreement; but if later on, after the agreement has been entered into, evidence becomes available that the benefit that has accrued to the employer is far in excess of what was expected and known to be likely to arise at the time the agreement was made, it is proper, once the statutory right is created, that the employee in those circumstances should be given an opportunity, in the absence of a further agreement, 1179 to seek the entitlement which this statutory right would give him.
I am greatly troubled about this Amendment because as I understand it the idea of opting out was exhaustively discussed in and by the Working Party and this really goes to a quite fundamental part of the whole package that was then agreed, with give and take on both sides, and one of the reasons why we have proceeded so well so far on the Bill is that, broadly speaking, we have done our best faithfully, so to speak, to keep the package alive and intact. This would do serious damage to an important part of it and frankly I should be disturbed at the consequences which might flow.
Therefore, I hope there will be a willingness on the part of those supporting this Amendment to take that in mind among the other considerations which have been so helpfully mentioned by the noble Earl, Lord Halsbury. I would much rather have him on my side than against me; I find the latter always a somewhat disturbing experience. In the light of the opinion which has been expressed on the Cross Benches and the Liberal Benches, I hope this matter will not be pressed.
§ Lord NELSON of STAFFORD
My Lords, I find myself in somewhat of a dilemma on this Amendment because I think we are all arguing to the same purpose and arriving at different conclusions. As I stated in my opening remarks, what surprised me here was that, while we were giving statutory rights to compensation to employees, it was at the expense of removing their right to deal with their own affairs. The purpose of my Amendment was that the employee should have the best of both worlds: he should have the statutory rights contained in this Bill but at the same time he should still have the right to deal with his own affairs if he so wished.
The noble and learned Lord the Lord Chancellor has obviously given careful consideration to this, and for that I am grateful to him. I am rather surprised that he struck at the root of the matter, as one might say, because I did not see it in that way at all. I think perhaps I have a higher regard for inventors and engineers than have some of your Lordships, and particularly the noble Lord, Lord Lloyd of 1180 Kilgerran, which rather surprises me. Perhaps it is understandable that I have a higher regard for employers than some noble Lords, but there again it is the desire of most employers—and I have not met the exceptions referred to by the noble Earl—to inspire their technical staff, to encourage inventions and to encourage the teamwork that goes with inventions. So we are left in the dilemma that I am advocating an Amendment to strengthen even further the position of these men and women whom I hold in high esteem.
I find myself in conflict with the noble and learned Lord on the Woolsack and also with the noble Lord, Lord Lloyd of Kilgerran—and indeed also with the noble Earl, Lord Halsbury. I was influenced by those to whom I had spoken and also by the Banks Report, to which reference has been made, and I am indeed grateful to other noble Lords who have spoken in support of what I put forward. I am in favour of strengthening the position of inventors in this matter, and I would not wish to appear to be otherwise. In view of the remarks made by the noble and learned Lord the Lord Chancellor, and by the noble Lord, Lord Lloyd of Kilgerran, who have asked me to give careful consideration to the other side of this equation, I feel that I must bow to their judgment on this matter. Therefore, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.29 p.m.
§ Lord LLOYD of KILGERRAN moved Amendment No. 52:
Page 33, line 16, at end insert—
("(8) In the circumstances of subsection (1) any award of compensation to an employee determined under section 39 below, shall have regard to the nature of the costs reasonably incurred by the employee in relation to this said application under this section and no costs reasonably incurred by the employer shall be awarded as against the employee in respect of his said application.")
§ The noble Lord said: My Lords, again this is an Amendment which endeavours to safeguard the interests of the employee in the circumstances in which he finds himself when he has a dispute with his employer about an award of compensation and he is considering whether he should go before this court or the Comptroller-General of Patents to have his compensation assessed. If I may ask your Lordships once again to put yourselves into 1181 the position of an employee, he has to ask himself what it is going to cost him to press the dispute to a hearing before the court or before the Comptroller-General of Patents. It seems to me that he should be assured at the outset that if he gets no compensation, no costs should be awarded against him, and if he does get some compensation the court or the Comptroller-General will consider, when assessing the amount of the award, what reasonable costs he, as an employee, has had to incur to press the dispute to a finality before that court.
§ It will be said against me, of course, that you should never assure the employee that it will not cost him anything if he takes his case to the court or to the Comptroller-General for assessing that award. It will be said we must have costs awarded against him as a kind of deterrent to other people. In my view, that is to put a wrong view, an unhelpful view, in the context of employee/employer relationships.
§ All I am suggesting in this Amendment is that if an award is to be made, the court should consider the circumstances, the costs which an employee has reasonably incurred, and should include some amount in the award for his costs. Again, the implication in the Amendment is that no costs should be awarded against him. I remember the noble and learned Lord who sits on the Woolsack saying at the Committee stage that this would be dangerous because you have the vexatious kind of litigant who keeps on coming to the court pressing the same kind of case irrespective of the judgments of the court. My Lords, that kind of person can be dealt with other than in the Patents Act.
§ I think it is justice to the employee, and good industrial relations, that when he is considering whether he should press his claim for compensation he should know that costs would not be awarded against him, and that the court and the comptroller will consider that he, in his position as an employee, has had to incur reasonable costs. I emphasise that the costs must be considered to be reasonable. Then he will have some payment included in the award in respect of the costs which he has so reasonably incurred. I beg to move.
§ The LORD CHANCELLOR
My Lords, I fear that there are serious 1182 objections to this Amendment, and I am sorry to say so, knowing the concern of the noble Lord, Lord Lloyd, to keep down costs and protect employees from having costs awarded against them. But, with respect, the Amendment appears to confuse a little the costs incurred in a given case with the amount to be awarded to the employee by way of compensation. The two, of course, as the noble Lord knows, are quite distinct, and there is no reason why an employee who is successful in obtaining an award of compensation under Clause 39 should not, in addition, be awarded his proper costs. Equally, it seems proper that an employee who is unsuccessful should be liable, at the discretion of the court or the comptroller, to pay such of the costs as are incurred by his employer as would be thought appropriate. As I ventured to say in Committee, the amount of costs awarded by the comptroller are calculated on a moderate basis. Bearing in mind what I said earlier about the need for some ultimate sanction against the groundless claim, in those circumstances perhaps the noble Lord will not press this matter.
§ Lord LLOYD of KILGERRAN
My Lords, I am grateful to the noble and learned Lord for again expressing the views of the Government on an Amendment which attempted to modify the form of Amendment I previously put forward, and again I must express some sympathy with him in having to deal with this matter on this further occasion. I feel I ought also to mention that, on the question of costs to employees, so far as I recollect nobody from the Conservative Party has spoken in any way in favour of endeavouring to reduce costs in these specific cases of the employee who is a party to a dispute which has appeared before the court. In those circumstances, having regard to the fact that this Amendment has had no effect upon the Government since the Committee stage, I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ Clause 39 [Amount of compensation]:
§ 6.34 p.m.
§ The LORD CHANCELLOR moved Amendment No. 52A:
Page 33, line 28, at end insert—
("(2A) Where the Crown in its capacity as employer assigns or grants the property in, or any right in or under, an invention, patent or application for a patent to a body having among
its functions that of developing or exploiting inventions resulting from public research and does so for no consideration or only a nominal consideration, any benefit derived from the invention, patent or application by that body shall be treated for the purposes of the foregoing provisions of this section as so derived by the Crown.")
§ The noble and learned Lord said: My Lords, this is a technical Amendment intended to protect the interests of the employees of the Crown who make inventions. It sometimes happens that the Crown decides not to exploit the invention itself, or to make an application for a patent itself, or to develop or work an invention in respect of which a patent has already been obtained. In such cases the Crown may assign its rights in the invention, application or patent to a body whose functions include developing or exploiting inventions resulting from public research.
§ In some cases the Crown may require its employee to assign his rights in the invention direct to such body without title to it ever having been vested in the Crown. As the Bill stands, such a body might not be a "connected person" so far as the Crown is concerned, within the meaning of that term as defined in Clause 41(8), because it may be an independent statutory corporation. An example which comes most readily to mind is that of the National Research Development Corporation.
§ At one time in the past inventions relating to jet engines were assigned to a company known as Power Jet Limited —not a bad title really for engines, come to think of it—but that practice has now ceased. It is, however, conceivable that it might be desirable to transfer inventions relating to, say, flight control to the Civil Aviation Authority for development, or to transfer inventions relating to atomic energy to the Atomic Energy Authority for the same purpose. This Amendment will have the effect that any benefit derived by any such body from the invention, patent or application, will be treated as if it had been derived by the Crown. In that way the position of Crown employees will be maintained, in that they will be no worse off simply on account of the way in which the Crown decides to develop or exploit inventions. I beg to move.
The Earl of HALSBURY
My Lords, I do not want to take up the time of the 1184 House unduly on this matter. I support the Amendment, but I suspect that the Third Reading of the Bill may not be entirely a formal matter and there would be time perhaps to incorporate further thoughts on this. This is at the moment pointed at the National Research Development Corporation, and perhaps for the interest of the House I should recite that the 1948 Development of Inventions Act constituted the Corporation as a proper body in which public invention could vest, but nothing in the Act itself gave any directive to public bodies to vest their inventions in the NRDC. This was accomplished by Treasury directive. Some 28 years ago I was a party to negotiating the terms on which inventors would be compensated under this scheme; it was agreed as part of a general arrangement with the Treasury that they would be entitled to make claims on the Departmental Committee on Awards to Inventors and that the NRDC would give evidence as to the earnings of their inventions. The independent Awards Committee would make an award which would then be payable by the NRDC.
That system has worked quite satisfactorily for nearly 30 years, and this Amendment incorporates the effect of that arrangement in a Statute. The arrangement is simply based on a Treasury directive, which could in principle be rescinded, and now embodying it in a Statute gives employees statutory protection. I think it is admirable that they should have it.
This is what I want to commend to the noble and learned Lord on the Woolsack; there are certain bodies—they are the Science Research Council, the Medical Research Council, the Agricultural Research Council, the Environmental Research Council and the Social Sciences Research Council—of an autonomous character constituted by charter in order that their members may have unfettered scientific judgment as to how they dispose of the funds entrusted to them by the Treasury. Their employees are, of course, employees of the Research Councils, which are corporate bodies. However, they are, in effect, scientific civil servants and come under the general arrangements for the scientific Civil Service. I believe that if the Crown inventors are to have this statutory protection there might be a case—which I shall not argue this 1185 afternoon—for extending it to the employees of the Research Councils so that they too are protected by Statute rather than by Treasury directive.
I saw this Amendment only this morning and have not had time to do any research on it. I should like to put the noble and learned Lord upon the Woolsack on notice that I may wish to raise the matter again on Third Reading, and I hope that he will use the interval to inform himself about the merits of the case.
The LORD CHANCELLOR moved Amendment No. 53:
Page 33, line 40, leave out ("employee") and insert ("person").
The noble and learned Lord said: Clause 39 (1) states that the amount of compensation to be awarded to an employee under Clause 38 is to be such:
…as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which his employer has derived or may reasonably he expected to derive from the patent".
Subsection (3) lists matters which, among other things, are to be taken into account by the court or the comptroller in determining what the fair share is. As at present drafted, the list includes in paragraph (c):
the effort and skill which any other employee has devoted to making the invention jointly with the employee concerned…".
This carries with it the possibility that the inference is intended to be drawn that the court or comptroller is not to take into account the contribution of any joint inventor who is not a fellow employee. That is not what is intended. On the contrary, the contribution made by such a person to the making of the invention ought to be taken into account, as it is highly relevant to the determination of what is a fair share of the benefit so far as the applicant employee is concerned.
§ Indeed, this Amendment may give some reassurance to the noble Lord, Lord Lyell, who raised points in this neck of the woods, if I may so describe it, earlier in the debate. It would be wrong when a joint inventor happened to be an outsider to credit the employee as against his employer with having been responsible for the whole of the making of the invention, other than what fellow employees have contributed. The Amendment seeks to put matters right by requiring consideration to be 1186 given to the contributions of all persons who are joint inventors and not merely to the contributions of fellow employees. This Amendment will, indeed, bring Clause 39(3)(c) into line with the similar provision in Clause 39(4)(b). I beg to move.
§ 6.44 p.m.
§ Lord NELSON of STAFFORD moved Amendments Nos. 53A, 53B and 53C:
§ Page 34, line 2, leave out ("and")
§ Page 34, line 2, after ("working") insert ("and marketing")
§ Page 34, line 14, at end insert ("and, so far as relevant the nature of the employee's duties and the contribution made by the employer to the developing, working and marketing of the invention as mentioned in subsection (3)(d) above.")
§ The noble Lord said: My Lords, Amendment No. 53A should stand together with Amendment No. 53B and, with your Lordships' permission, I shall also speak to Amendment No. 53C. Amendment No. 53A is a straightforward Amendment. It is merely to make it quite clear that in determining the contribution made to a patent belonging to an employer, the employer's contributions to the value of the invention may include relevant investments in marketing, either before or after the invention. In certain conditions the marketing investment can he very high and can make an important contribution to the patent's ultimate value. I think that this should be made clear and be allowed for specifically. It is for that purpose that I have tabled this Amendment.
§ Amendment No. 53C is a similar Amendment, but it also repeats not only the question of marketing but the same criteria for determination of benefits—but in this case related to the patents belonging to an employee as distinct from the patents belonging to an employer. Therefore, I beg to move these Amendments.
§ The LORD CHANCELLOR
My Lords, in the light of the earlier disagreement that I had with the noble Lord, Lord Nelson, I am happy to say that on this occasion I am very willing to meet what he has in mind. I agree that Clause 39(3)(d) should cover marketing, but I should like an opportunity to study further this pair of Amendments—Amend- 1187 ments Nos. 53A and 53B—simply because I am not certain whether "marketing" is not already covered by the word "working", which is a word with a very wide ambit in this context which might well already be taken to encompass "marketing".
We must also bear in mind the implications which inserting a reference to "marketing" in this part of the Bill would have on other parts of the Bill where the word "working" is used. Subject to seeing the implications of that, and approaching the matter with a firm intention that "marketing" shall be covered—and if there is any doubt about it that will be done—I hope that, in the light of that assurance, the noble Lord will be willing to withdraw Amendments Nos. 53A and 53A.
The noble Lord spoke to Amendment No. 53C. Again, I wish to consider the matter and give the terms of the noble Lord's Amendment further consideration. Amendment No. 54 has already passed into limbo. However, I am willing to give further consideration to the concept behind Amendment No. 53C because I accept that it would be right to add to the list in Clause 39(4) a reference to the employer's contribution by way of developing and working the invention—and to the marketing of it, if it is thought necessary and appropriate to make that addition. Therefore, I am fully aware of the intent and purpose of that Amendment, and I hope that when we come to the Third Reading I shall be able to put forward the idea in terms which will be acceptable to the noble Lord.
§ Lord BELSTEAD
My Lords, before my noble friend replies, I should like to make one comment. As the Bill was left drafted at the end of the Committee stage, the expenditure of the employer on research and development was not to have been included in assessing compensation for an invention which originally belonged to the employee. That was an oversight and the Government rectified it by tabling Amendment No. 54.
I believe that I owe the noble and learned Lord an apology, because what I should have done—indeed, the noble Lord, Lord Lloyd of Kilgerran, has done it elsewhere in the Marshalled List—is to table an Amendment to the Govern- 1188 ment's Amendment by adding the words "and marketing" on behalf of my noble friend Lord Nelson, whose Amendment in fact I tabled. Being ignorant of the correct procedure, I rather brashly lifted the Government's Amendment, put in the words "and marketing" and claimed it as being my Amendment and that of my noble friend. I then felt even more awkward about it when I found that the Government had crossed out their Amendment—I felt that I had added insult to injury. I apologise about that and I am sure that my noble friend will accept the line of attack which the noble and learned Lord is suggesting.
§ The LORD CHANCELLOR
My Lords, there is no ground for apologising. I got into the department of confusion myself. The wheel has turned circles, but it seems to have ended up in the right place in the end.
§ Lord NELSON of STAFFORD
My Lords, I am delighted to find that on this occasion in putting down this Amendment I have the support of the noble and learned Lord. Looking at this as a technical man, I should have thought that "marketing" and "working" were two separate matters. However, I am happy to leave that discretion in the noble and learned Lord's hands, and I beg leave to withdraw these Amendments.
§ Amendments, by leave, withdrawn.
§ 6.51 p.m.
§ The LORD CHANCELLOR moved Amendment No. 55:
Page 34, line 17, at end insert—
("(5A) Without prejudice to section 32 of the Interpretation Act (which provides that a statutory power may in general be exercised from time to time), the refusal of the court or the comptroller to make any such order on an application made by an employee under section 38 above shall not prevent a further application being made under that section by him or any successor in title of his.")
§ The noble and learned Lord said: My Lords, this Amendment seeks to make plain that the refusal of the court or the comptroller to make an award of compensation on an application under Clause 38 does not prevent a further application being made under that section by an employee or his successor in title. It is thought that Section 32 of the Interpretation Act 1889 would in fact permit such further applications but that 1189 it is desirable to say so in the Bill itself. The new subsection might be expected to work in this kind of way. For example, an employee might make an application under Clause 38(1) but the court might not be satisfied that the patent in question was at that time of "outstanding benefit" to the employer and so it would refuse to make an award in favour of the employee. Subsequently, the invention might be wonderfully successful and undoubtedly of "outstanding benefit". In those circumstances it would be wrong to deprive the employee of an award because his previous application had been premature. Similarly in a Clause 38(2) case where the benefit derived by the employer might increase dramatically after an unsuccessful application had been made. At the time of that application the benefit derived by the employee from the assignment contract might have been adequate in relation to the benefit which his employer had then derived from the patent. In the changed circumstances it might not be so adequate.
§ Fears that the new subsection could lead to the harassment of employers by unscrupulous employees who might bring an incessant series of claims against them are, I believe, without foundation. For one thing, there would be the discipline imposed by costs, which I ventured to refer to in an earlier Amendment; the unsuccessful applicant could find himself having to bear not only his own but also those of his employer. If that were not enough, as we have already considered, the "vexatious litigant" procedure could be used in an appropriate case. I beg to move.
§ Clause 40 [Enforceability of contracts relating to employees' inventions]:
The LORD CHANCELLOR moved Amendment No. 56:
Page 34, line 35, at end insert ("or").
§ The noble and learned Lord said: My Lords, this Amendment simply inserts the word "or" between paragraphs (a) and (b) in subsection (1) of Clause 40, thereby making it plain that they are in fact alternatives and not cumulative. It is a purely drafting Amendment. I beg to move.1190
§ 6.55 p.m.
Lord NELSON of STAFFORD moved Amendment No. 56A:
Page 34, line 38, after ("term") insert ("other than a term imposing an obligation of confidence").
§ The noble Lord said: My Lords, with your Lordships' permission, I will take Amendments Nos. 56A and 56B together. These Amendments relate to the problem of confidentiality. In many fields of industrial research and development it is usual for people engaged on this work to be bound by agreements of confidentiality. This can, under certain circumstances, be very important to the firms' interests, as information on what is being done and what is not being done, and what is being worked on, can be of immense value to a competitor, and even, going further, naturally, details of the work achieved.
§ In the world market the flow of such information to a foreign competitor can be worth even more, and could be very damaging not only to the firm but to the country as a whole, in relation to its ability to be competitive, achieve overseas earnings on its products, or overseas licensing fees. Noble Lords will realise that the filing of a patent application itself involves disclosing details relating to the invention which could, under certain circumstances, offend this confidential situation to which I have referred.
§ Under this clause an employee in using such confidential information to establish a claim for himself is released from his obligation of confidentiality, thereby making such agreements virtually worthless. This places in jeopardy the interests of the companies working in these advanced fields, the employees themselves, and the country as a whole. The object of this Amendment is to make it clear that this clause does not negate agreements on confidentiality between a firm and an employee as related to unpublished information. It is important that the principle of confidentiality is clearly maintained, and Amendment No. 56A, coupled with Amendment No. 56B, is tabled with this intent. I beg to move.
§ The LORD CHANCELLOR
My Lords, I am aware of the deep concern which has been expressed by the noble Lord, Lord Nelson, with his great experience and high responsibilities in the industrial field, and of the deep concern of 1191 the industrial interests to protect their trade secrets and know how—information which, although it is not patentable, is obviously of enormous importance and value to them. I can understand their reluctance to rely upon an obligation which the Bill left to be merely implied by the general law.
It is, I understand, common practice to include a term in contracts of employment requiring an employee not to disclose to others information which he acquires in the course of his duties about his employer's business. Employers, I am told, fear that Clause 40(2), if left as it is, would render such a term unenforceable. Therefore, the noble Lord and those noble Lords who support him have, not surprisingly, tabled these Amendments with a view to ensuring that such a term may continue to be inserted in service contracts and continue to be enforceable.
Consequently I ask myself whether Clause 40(2) would render such a term unenforceable. I do not believe myself that it would. That subsection renders unenforceable terms which diminish an employee's rights in inventions. It is therefore concerned with proprietary rights in inventions. It is not concerned with any right which an employee may be said to have to talk to third parties' about the information which they have about inventions which belong to their employers. They have no such right. It follows that such a contractual term as is envisaged in this pair of Amendments, which imposes an express contractual obligation of confidence, would not, in my opinion, be rendered unenforceable by the subsection. Therefore, I feel that the Amendments are probably directed at removing a fear for which there is no real foundation, and may therefore not be necessary.
However, I appreciate the sentiment of noble Lords that something stronger than an opinion of mine, more expressed in statutory form, is required in this important field. As I cannot guarantee that the words of Clause 40(2) would never be interpreted in the way noble Lords fear—I apologise for having taken rather a long time to get round to this—I feel that the most prudent course would be to alleviate the anxieties that have been expressed (by the noble Lord, Lord Lye11, in some engaging exchanges we had earlier on this subject. and today by the noble Lord, 1192 Lord Nelson) by my agreeing to accept their point in principle. I undertake to table at a later stage an Amendment which would expressly provide that Clause 40(2) does not render unenforceable such a term of a contract of employment as they envisage and as I have mentioned; that is, one imposing an obligation on the employee not to disclose information obtained in the course of his duties. Accordingly, I hope noble Lords will feel that that will meet the needs of the situation.
§ Lord NELSON of STAFFORD
My Lords, I am grateful to the noble and learned Lord for explaining the position, for accepting the anxieties which exist on this matter and for his assurances that the point will be taken care of at the next stage of the Bill. Accordingly, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 41 [Supplementary]:
The LORD CHANCELLOR moved Amendment No. 57:
Page 35, line 23, after ("section") insert (", except so far as the context otherwise requires,").
§ The noble and learned Lord said: My Lords, I think it will be for the convenience of the House if we consider Amendment No. 58 at the same time. No. 58 substitutes the word "person" for the word "employee". This would have the effect that Clause 41(3) would then operate so as to make references in Clauses 37 to 41 to the making of an invention by an employee references to his making it alone or jointly with any other person, instead of alone or jointly with any other employee. It would make it more evident that awards could be obtained by employees for inventions in which they are joint inventors and any other joint inventor is not a fellow-employee. There is no change of substance in this. Both Amendments are simply drafting changes aimed at clarifying what is intended.
The LORD CHANCELLOR moved Amendment No. 58:
Page 35, line 25, leave out ("employee") and insert ("person").
§ 7.3 p.m.
§ The noble Lord said: My Lords, by Clause 41(5) the benefit of an award to be derived by an employer passes on his death to his personal representatives and, by the present drafting of the provision, this benefit may be transmitted by those personal representatives by an assent. My Chancery friends advise me that the word, "assent" is usually used in a technical sense where there is a vesting of property rights in an intestacy. That seems to be an unnecessary limitation on the powers of the employer's personal representatives and it is suggested that the words involving the word, "assent" should be deleted and replaced by the phrase, "their successors in title thereto". It may be that an employer's estate may not be sufficient to pay all his debts without the realisation of all the assets, and I understand that a limitation such as is included at the end of subsection (5) would place a serious limitation on the employer's personal representatives' rights in disposing of the benefit of an award.
§ The LORD CHANCELLOR
My Lords, it is true that the effect of Clause 41(5) is that benefit derived from the patent by anyone to whom the personal representatives of a deceased patentee have assigned it, otherwise than by vesting assent, will not be taken into account for the purposes of the award. The reason for this is that it was decided at an early stage in the discussions on the award scheme that patents should be transferable without encumbrances.
Clause 41(5) provides that, while the personal representatives of the deceased employer carry on the business, any benefit they derive from the patent is to be taken into account. The Bill goes on to provide what is to happen when the personal representatives assign the patent. If they sell the patent on the open market, then that is the benefit derived. If, on the other hand, the patent is to pass to someone under the employer's will or on his intestacy, then there will be no sale and it is necessary to deal with that case.
In Committee I put forward an Amendment to deal with the point and that was agreed. The effect of that Amendment was that if the personal representatives vest the patent in any person by an assent 1194 —that is, in non-legal language, transfer it to him without consideration under the will or the laws of intestacy—then, as far as calculation of benefit is concerned, what the new owner gains is taken to be benefit derived by the personal representatives. The reasons for that are twofold. In the first place, it is likely that if the patent is vested by assent rather than sold, the new owner will be someone who is carrying on the business. Secondly, if the patent is a valuable one, it would be unfair to burden the estate by treating the personal representatives as having received a large lump sum.
I should add a further word of explanation. The liability will not be that of the new owner but that of the personal representatives. The reason for this is to avoid imposing a charge on the patent in the way the Working Party decided against. In practice, the personal representatives will not give their assent unless they are satisfied that they have sufficient assets to pay any claim. If they are in any doubt, then they will take an indemnity from the new owner. The Bill is drafted in this way to enable the personal representatives to clear the estate as soon as possible.
The Government believe that they have kept as close as they possibly can to the scheme drawn up by the Working Party in dealing with this highly technical and difficult problem. The solution adopted was endorsed by your Lordships in Committee without dissent and I urge your Lordships strongly to keep to what we agreed then. Therefore, while I do not claim any limpid clarity in what I have said in this highly technical field, I hope that the noble Lord will nevertheless accept it.
§ Lord LLOYD of KILGERRAN
My Lords, I associate myself with the final words of the noble and learned Lord in the limpid clarity which I also have in discussing this subject. I ant grateful to him for his full explanation; I accept his advice; I will read carefully in tomorrow's Hansard what he has said and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 7.10 p.m.
Lord LLOYD of KILGERRAN moved Amendment No. 60A:
Page 35, line 42, after ("representatives") insert ("or their successors in title thereto".).
§ The noble Lord said: My Lords, this is a manuscript Amendment and I apologise for the fact that Amendment No. 60, for which it is substituted, had a mistake in it. Clause 41(6) deals with the position in regard to the employee's estate. I am advised that the present form of wording, if retained, would seriously handicap the employee's estate. However, it may be that the advice given by the noble and learned Lord in regard to this Amendment will be similar to that given in respect of the previous Amendment. That Amendment deals with a technical, Chancery point and it needs no further clarification to your Lordships as far as I am concerned. I beg to move.
§ The LORD CHANCELLOR
My Lords, this Amendment runs contrary to the general principles of law which forbids assignment of rights of action. Clause 41(6) makes it clear that personal representatives can pursue a claim which the deceased employee has or could have instituted but prohibits them from assigning the right to anyone else. An application under Clause 38 has to be brought by the employee personally and he cannot assign it. It would therefore be illogical to permit his personal representatives to do so. It would also be contrary to the general principle of law to which I have just referred. For these reasons I have to advise your Lordships not to accept the Amendment.
§ Lord LLOYD of KILGERRAN
My Lords, I am very grateful to the noble and learned Lord for the advice that he has given and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
Lord LLOYD of KILGERRAN had given Notice of his intention to move Amendment No. 61:
Page 35, line 44, leave out ("but they may not assign that right").
§ The noble Lord said: My Lords, I did not specifically ask the leave of the House to refer to Amendment No. 61 when moving Amendment No. 60A. In the circumstances, I do not propose to move the Amendment.
§ Clause 42 [Avoidance of certain restrictive conditions]:
§ The noble and learned Lord said: My Lords, this is a purely drafting Amendment, which I can deal with very quickly. It is to ensure that the words in subsection (3) which follow the word "containing" apply in both the cases previously mentioned; that is to say, when there was either a contract or a licence of the types previously referred to. I think I need say no more. I beg to move.
§ 7.17 p.m.
§ Lord LYELL moved Amendment No. 63:
Page 37, line 31, at end insert—
(7) For the avoidance of doubt it is hereby declared that any condition or term of a contract as referred to in this section which requires the person supplied, or the licensee to utilise in pursuance of the contract raw materials or components of a specified design, constitution or quality shall not be void by reason only that such raw materials or components are for the time being obtainable only from the supplier or licensor or his nominee.".
§ The noble Lord said: My Lords, this Amendment was moved by myself at Committee stage and I seem to remember that it was the noble and learned Lord, Lord McCluskey, who replied. We were interested to note that, while he and the Government recognised the advantages of our Amendment, they said that, as drafted it might be possible for the main intention of the clause to be avoided. It was indicated that the Government would therefore like to think about the Amendment to see whether its objectives could be achieved without any further disadvantage. The intention of our earlier Amendment was not necessarily to protect the interests of a patentee by creating a simple monopoly for him as a supplier of raw materials or components. This was expressed in Article 85 of the Treaty of Rome, which prohibited such a practice. Indeed, we adhered to that most strictly. However, I seem to remember referring in my earlier remarks in Committee to that extraordinary thing called the "Christmas message" which emanated from the Commission in Brussels in December 1962. There, it was held that, in order to achieve what the Commission called "quality and standards " for the technically perfect exploitation of a patent of a product, a patentee could legitimately 1197 place an obligation upon a licensee to secure supplies from a particular source. That was the intention of the 1962 Christmas message.
§ The position can only be temporary. As we have it in our Amendment, it says, "for the time being". I appreciate that this is possibly a rather indefinite indication. Nevertheless, it is contained in the Christmas message and we understand that it meets Article 85 of the Treaty of Rome. We are pleased to see that our Amendment provides this. Indeed, the intention of the Amendment is to assist the working of a patent. If the Government do not approve of the Amendment as we have worded it, perhaps they may have a view as to how we can meet our obligations to the EEC Commission and as to how those obligations could be written into the Bill. I remember that, at as earlier stage of the Bill, the noble and learned Lord, Lord McCluskey, pointed out that with the passing of the centuries, the Christmas message had become more complicated and less appealing. I hope that I have not skated over too much of the same ground. The deliberations on the present Bill in your Lordships' House are certainly becoming more complicated, but I regard it as more appealing, certainly not less. I beg to move.
§ Lord McCLUSKEY
My Lords, as the noble Lord, Lord Lyell, has just referred to what took place in Committee, I need not detain your Lordships by going into that at any length. This is not simply a question of wording. The Government have, as I undertook they would, given most careful consideration to the Amendment as moved in Committee and as now moved again, but they do not feel that they can agree to it. The addition of the proposed new subsection (7) would open up a possible and perhaps an easy way for people to evade the prohibitions imposed by Clause 42(1), those prohibitions being the reason for the existence of the clause. All that a patentee or supplier would have to do in order to evade them would be to ensure that the relevant contract or licence contained a term requiring the use of components of so highly individual a design that it would not be worth anyone else's while to enter into competition over their manufacture, or one requiring the use of raw materials of a particular constitution or quality of which the supplier or 1198 patentee had a monopoly. Thus the Amendment would provide an easy means for the main purpose of the clause to be defeated. Consequently, it cannot be accepted.
In relation to the Christmas message, I feel that we are getting nearer next Christmas than last Christmas! This was the message issued on 24th December 1962. As the noble Lord, Lord Lyell, said it was to the effect that patentees could lawfully put obligations on licensees of their patents to use particular sources of supply. The purpose would be to ensure the technically perfect exploitation of the patent in order to protect the name and reputation of the patentee and of the licensee himself. However, I believe that the context was rather different. It was that the Commission was mainly concerned to prevent the creation of obstacles to the free movement of goods. We are concerned to prevent the imposition of restrictive conditions in contracts, so as to ensure that patentees do not use the law of contract to extend artificially the term of their patents. I repeat that the general point is we see this addition as being one which would enable the whole purpose of the clause to be readily defeated, and for that reason the Government would oppose this Amendment.
§ Lord LYELL
My Lords, I must say that we are a trifle disappointed that the rather encouraging remarks which the noble and learned Lord made at the Committee stage have not borne fruit. We have certainly listened to what he has said. We would wonder how we can fulfil what is, after all, Article 85 of the Treaty of Rome, and how this would seem to clash with the good intentions of Clause 42 of the Bill. The noble and learned Lord will appreciate that there is a keen feeling on both sides of the Border, in both English and Scottish law, that restrictive practices should be eliminated. Yet I think that this particular obstacle, which is a legal obstacle, is a matter possibly for one of the EEC Sub-Committees on which I have the honour to serve, so that it can be seen how best our own law can tally with the articles of the Treaty of Rome.
I repeat that we are a trifle disappointed that the Government have not been able to come a little way further. The noble and learned Lord mentioned that it was 1199 perfectly feasible that supplies should be obtained from a particular source to ensure the technically perfect exploitation of a product and a patent. We are somewhat at a loss to discover why it is that these provisions of Clause 42 might inhibit the technical perfection of products and indeed goods being exported from this country. But I think that at this stage it would be best not to delve nearer to next Christmas, 1977, but rather that we should leave the matter there. For that reason I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 43 [Determination of parts of certain contracts]:
§ 7.22 p.m.
Lord McCLUSKEY moved Amendment No. 64A:
Page 37, line 40, leave out ("any such product") and insert (" the product or invention ").
§ The noble and learned Lord said: My Lords, I should like to point out that there is a printing error here, and I hope that it can be accepted as such. In line 40 of page 37 of the Bill the words are "any such patent". This has been wrong several times, and it has defied the attempts of numerous persons to put it right. So I hope that this time it may be treated as a printing error, and accordingly the Amendment that I would seek to move is that we leave out the words, "any such patent " and insert the words, "the product or invention."
§ As will be realised, the purpose of Clause 43 is to prevent patentees from, in effect, extending the term of their patents by getting their customers or licensees to accept contractual terms capable of continuing after the expiration of the patent. The clause, as at present drafted, enables the parties to contracts or licences containing terms like that to determine them to the extent to which they relate to such patents (and only to that extent), once the relevant patents have ceased to have effect: and that is done by giving the other party three months' notice in writing. It is however possible for a contract or licence to be drafted in such a way that the customer or licensee would still be obliged to go on buying the articles or working the invention, even though the relevant patent has ceased to have effect. The Amendment would pre- 1200 vent this because it would link the right to cancellation of terms relating to the patented product or the patented invention. I beg to move.
§ Lord BELSTEAD
My Lords, it occurred to my noble friends and me that the wording of this Amendment might bring about a situation that where a patent expires—and the noble and learned Lord, Lord McCluskey, has explained how Clause 43(1) will have effect—a know-how arrangement might also be said to have expired at the same time. I think I am correct in saying that very often where a licence is given to someone else, the licence will refer not only to a patent, but also to a know-how arrangement, meaning an arrangement where all the secrets as to how to use the invention are contained. I should not wish to stop the Government from putting this Amendment in the Bill, but I should like them to look at it again to make absolutely certain before the Bill leaves your Lordships' House that this does not have an undesirable effect of bringing to an untimely end a know-how arrangement at the same time as a patent expires, without the Government meaning to achieve that effect.
§ Lord McCLUSKEY
My Lords, I am grateful to the noble Lord for raising that point, and I will adopt his suggestion and consider the matter.
§ Lord McCLUSKEY moved Amendment No. 65:
Page 37, line 43, leave out ("Subsection (1) above applies") and insert—
("In subsection (1) above "patented product" and "patented invention" include respectively a product and an invention which is the subject of an application for a patent, and that subsection shall apply in relation to a patent by which any such product or invention was protected and which was granted after the time of the making of the contract or granting of the licence in question, on an application which had been filed before that time, as it applies to a patent in force at that time.
(2A) The foregoing provisions of this section apply.").
§ The noble and learned Lord said: My Lords, we have here two Amendments, No. 65 standing in the name of my noble friend Lord Oram, and Amendment No. 66 standing in the name of the noble Lords opposite. Amendment No. 66, tabled by the noble Lords opposite, is identical to one which they tabled in 1201 Committee. On that occasion I said that the Government would like to study it more closely, and it was then withdrawn. Now they have, quite properly, set it down again, and I am happy to be able to say that in the interim the Government have accepted the principle behind their proposed Amendment and differ only on the terms in which that principle is to be enshrined in the Bill. So our Amendment (No. 65) has precisely the same aims as their Amendment, No. 66. The only difference is in the drafting, and I hope that the noble Lord, Lord Belstead, will be able to accept Amendment No. 65, and will not move Amendment No. 66. I beg to move.
§ Lord BELSTEAD
My Lords, my noble friends and I certainly accept Amendment No. 65 and we thank the Government for tabling it.
§ Lord McCLUSKEY moved Amendment No. 67:
§ Page 38, line 1, at end insert ("any rule of law relating to the frustration of contracts and").
§ The noble and learned Lord said: My Lords, this is a purely drafting Amendment seeking to bring out the fact that the power conferred by subsection (1) of Clause 43 to determine contractual terms in the circumstances specified, is in addition to, and not in derogation from, the existing law on the subject of frustration of contracts. I beg to move.
§ Clause 50 [Opposition, appeal and arbitration.]:
§ Lord McCLUSKEY moved Amendment No. 68:
§ Page 45, line 12, leave out from ("shall") to end of line 13 and insert ("consider the opposition in deciding whether to grant the application.").
§ The noble and learned Lord said: My Lords, this is a proposed drafting change corresponding to Amendment No. 35 to Clause 25, which the House has accepted. The point is that, as drafted, Clause 50(1) puts the emphasis on the question of whether the opposition is justified. The opposition is of course important—and I mean that in the context of the Bill—and the objections raised by the opponent must certainly be considered. But the task of the comptroller is to decide whether or not to grant a licence. The 1202 Amendment therefore makes that position clear. I beg to move.
§ Clause 52 [Special provisions where patented invention is being worked abroad.]:
Lord McCLUSKEY moved Amendment No. 69:
Leave out Clause 52.
§ The noble and learned Lord said: My Lords, under Articles 47 and 82 of the Community Patent Convention, which are given direct effect by Clause 83 of the present Bill, if the demand for a patented product in one Member State is being met by working of the invention in another Member State, a compulsory licence in respect of the relevant patent shall not be granted in the first Member State, except where the public interest demands otherwise. Clause 52 permits this privilege to be extended to non-EEC States on a reciprocal basis. However, it is now recognised that the provision could be simplified without affecting its intention. The simplification takes the form of the elimination from the clause of references to the Community Patent Convention. That is what we seek to do—replace the old clause with a new one, which has the same intention and effect, but in a more simple form.
§ In the second part of Amendment No. 70 your Lordships will find a reference to "a country other than a member state". That puzzled me, and lest it should puzzle other noble Lords I would say that the words "member state" are defined in all time coming in the European Communities Act 1972, unless the matter is specifically altered, to mean Members of the Community. I beg to move.
§ 7.30 p.m.
Lord McCLUSKEY moved Amendment No. 70:
After Clause 52 insert the following new clause:
§ Special provisions where patented invention is being worked abroad.
§ .—(1) Her Majesty may by Order in Council provide that the comptroller may not (otherwise than for purposes of the public interest) make an order or entry in respect of a patent in pursuance of an application under sections 46 to 49 above if the invention concerned is being commercially worked in any relevant country specified in the Order and demand in the United Kingdom for any patented product resulting from that working is being met by importation from that country.1203
§ (2) In subsection (1) above "relevant country" means a country other than a member state whose law in the opinion of Her Majesty in Council incorporates or will incorporate provisions treating the working of an invention in, and importation from, the United Kingdom in a similar way to which the Order in Council would (if made) treat the working of an invention in, and importation from, that country.
§ The noble and learned Lord said: My Lords, perhaps I did not make it sufficiently clear that I was taking these two Amendments together, so I would simply now beg to move Amendment No. 70.
§ Lord BELSTEAD
My Lords, before the Question is put, perhaps I may thank the Government for bringing this new Amendment forward. In Committee, we were indeed trying to achieve what Amendment No. 70, the new clause after Clause 52, will achieve. We are delighted to see it there, and of course support the Government in this Amendment.
§ Lord McCLUSKEY
My Lords, perhaps I may thank the noble Lord opposite for his contributions, both in respect of this matter and in respect of the previous one. The Government are grateful for the help we have received.
§ Clause 53 [Use of patented inventions for services of the Crown]:
§ Lord McCLUSKEY moved Amendments Nos. 70A, 70B, 70C, 70D, 70E and 70F:
§ Page 47, line 12, after ("department") insert ("and any person authorised in writing by a government department").
§ Page 47, line 16, after ("may") insert ("—(i)").
Page 47, line 17, after second ("or") insert ("sell or offer to sell it where to do so would be incidental or ancillary to making, using, importing or keeping it; or
(ii) in any event,").
§ Page 47, line 20, leave out ("to any person ") and insert ("for any purpose whatever").
Page 47, line 26, leave our paragraph (c) and insert—
("(c) without prejudice to the foregoing, where the invention or any product obtained directly by means of the invention is a specified drug or medicine, may sell or offer to sell the drug or medicine;")
§ Page 47, line 38, leave out subsection (2).
§ The noble and learned Lord said: My Lords, with permission, I would speak to all those Amendments bearing the number 70—that is to say, 70A, B, C, D, E and F—together. Clause 53 defines the powers of 1204 the Crown to use patented inventions for the services of the Crown. Subsection (1) sets out the powers of Government Departments, and subsection (2) sets out the powers of persons who are authorised in writing by Government Departments. The intention of these subsections is to do no more than to preserve the powers of the Crown as defined in Section 46 of the 1949 Act, which was considered and interpreted in the well-known case of Pfizer v. Ministry of Health. The Banks Committee strongly recommended the preservation of these powers; and, indeed, it is essential to preserve them with a view to avoiding the frustration of Ministers' efforts to perform their several statutory functions.
§ However, in drafting Clause 53 for the purposes of this Bill, it was necessary to amend considerably the wording of the old Section 46 to line up with the new wording adopted elsewhere in the Bill, bearing in mind especially that, unlike the 1949 Act, this Bill contains, for consistency with the Community Patent Convention, a definition of "infringement" which does not include the old expression, "make, use, exercise and vend". This has caused problems, and on further reflection we are not satisfied that sub-sections (1) and (2) as they now stand are expressed in such a way as to preserve the powers of the Crown and its authorised users. This is because Clause 53(2)(b) confers upon authorised users an unrestricted power in too limited circumstances. What is in fact needed is a power to sell where such a sale would be ancillary or incidental to a permitted use. It is considered that the existence of this power is apparent from the speeches of their Lordships in the Pfizer case, which I have just mentioned, when that case was before this House. I am able to tell your Lordships that this power is not only frequently used but also gives rise to no complaints on the part of the patentees concerned, who are of course adequately compensated for such use of their inventions as does occur.
§ For these reasons, Amendment No. 70F proposes the deletion of subsection (2), and other Amendments transfer to subsection (1) the powers of authorised users and defines those powers in the terms necessary to give effect to the Government's intention to preserve the existing powers; that is to say, existing under the 1949 Act. 1205 It will be noted that by these Amendments a Government Department itself will also have the power to sell where this would be incidental or ancillary to making, using, importing or keeping a patented invention for the services of the Crown. This does no more than define a clear and logical development of the principles enunciated in the Pfizer case, and coincides with existing practice.
§ Amendment No. 70E is essentially one of drafting. It is intended to extend Clause 53(1)(c) to cover the case where the specified drug or medicine is not itself the invention but rather is the product of a process constituting the invention. The provision will run parallel to paragraph (a), which deals generally with Crown use of a patented product, and paragraph (b), which deals generally with Crown use of the product of a patented process. The other Amendments are simply consequential drafting changes, and I beg to move Amendments Nos. 70A to 70F en bloc
§ Clause 54 [Interpretation, etc., of provisions about Crown use]:
§ Lord McCLUSKEY moved Amendments Nos. 71 and 72:
§ Page 49, leave out line 31 and insert ("In this Act, except so far as the context otherwise requires,").
§ Page 49, line 38, at end insert ("and "use for the services of the Crown" shall be construed accordingly.").
§ The noble and learned Lord said: My Lords, again, with permission, I would speak to Nos. 71 and 72 together, and would seek to move them together. These Amendments together introduce a generalised definition of the term, "the services of the Crown" and the term, "use for the services of the Crown". This is a drafting change necessary following the introduction in various clauses other than Clauses 53, 55 and 56 of references to use for the services of the Crown. I beg to move Amendments Nos. 71 and 72 together.
§ Clause 55 [Rights of third parties in respect of Crown use]:
Lord McCLUSKEY moved Amendment No. 72A:
Page 51, line 3, leave out ("commencement of this section") and insert ("appointed day").
§ The noble and learned Lord said: My Lords, I can deal with this in a sentence. This is a purely drafting Amendment for consistency with similar alterations elsewhere in the Bill. I beg to move.
§ Clause 56 [References of disputes as to Crown use]:
§ 7.38 p.m.
Lord LLOYD of KILGERRAN moved Amendment No. 73:
Page 53, line 6, at end insert ("On any such reference the court shall be assisted by advisers.").
§ The noble Lord said: My Lords, this Amendment deals with the nature of the court which would consider and decide upon a dispute between a patent owner and the Government Department, and it is directed to saying that a court, when it has to consider such a dispute which has been referred to it, shall be assisted by advisers. My Lords, I have had considerable experience of dealing with disputes between owners of patents and the Crown, and I have found that many a High Court judge has had to be assisted, both on matters in relation to the commercial aspects involved and also as to the nature of the Government service or the Government Department with which the invention is concerned. Again, if I may say so, when I was concerned with the Royal Commission on Awards to Inventors and when disputes in relation to patents arising between a patentee and the Crown were being considered by the Royal Commission instead of by the courts, the noble and learned judge at that time, Lord Cohen, often used to say what a great assistance it was to him, when determining a dispute between the owner of a patent and the Government Department, to have with him colleagues from business and from Government Departments. There were senior civil servants on that Commission, and men with great experience of business.
§ My Lords, when the court is dealing with a dispute between the Crown and a patentee there are very serious technical matters arising on which evidence is required, maybe lengthy evidence, and in my view this evidence could be shortened if the court had the assistance of somebody with commercial experience in these patent matters. Also, one matter which would arise is the fact that the Government Department has had a record of the 1207 invention and the way that that invention has been developed or dealt with in Government research establishments in determining aspects of that side of the case. My experience has been that it would have been helpful for the court to have had the presence of a senior Government servant to assist them.
§ I should have liked to thank the noble and learned Lord, Lord McCluskey, for the letter he wrote to me about various other aspects in relation to these clauses dealing with disputes between patentees and the Crown. I have suggested that the court should have advisers, not in any way derogating the position of the judges of the High Court and their capacity to absorb and deal fairly and justly with the evidence. In my submission, my Amendment would shorten the proceedings and thereby save cost to the applicant in this kind of dispute. I beg to move.
§ Lord McCLUSKEY
My Lords, the Amendment perhaps has certain technical defects, if I may respectfully say so. The Amendment does not make clear the role which such advisers would play in the proceedings nor, indeed, what qualifications would be required by the advisers. Therefore, I would ask the House not to accept the Amendment as drafted. But the Government's view on the substance of the Amendment is that there is no clear need for the Amendment at all. There has been some discussion earlier this afternoon between the noble Lord and the noble and learned Lord the Lord Chancellor on a similar point; but I would remind him of Clause 93(4) under which Rules of Court are required to be made providing for the appointment of scientific advisers to assist the court. In Scotland, assessors can be appointed under the existing Rules of Court and so a comparable power exists. In England, a Rule of Court has recently been made under existing powers derived from Clause 84(2) of the 1949 Act and this is a Rule of the Supreme Court. It is entitled Rules of the Supreme Court (Amendment) 1977 No. 532 (L 14)). It requires the question of appointing a scientific adviser in patent proceeding to be considered on the hearing of the summons for directions. That Rule came into force on 18th April this year. That helps to show how the wishes of the House, as expressed in Committee in regard to this matter of 1208 the appointment of scientific advisers, have been met.
In view of the existing provision, therefore, I would suggest that we do not need to impose advisers on the court, circuit judges discharging the functions of an official referee or arbitrators or arbiters; in other words, we leave them with this option. Moreover, it will be as well to bear in mind the difficulties that could arise in ensuring that there were appropriate advisers in attendance on every case. That would not only be difficult to arrange but it could be a prodigal waste of highly-qualified manpower. The difficulties of procuring suitable advisers for each case would delay litigation to the detriment of the parties, and their presence would surely increase the cost of litigating. I suggest that it ought to be left to the parties in each case to decide whether they want scientific advisers to assist the court rather than to put them to the additional expense unnecessarily.
Accordingly, on the submission that the existing provisions of the Bill are adequate, I would invite the noble Lord to reconsider the matter and not to press this Amendment.
§ Lord LYELL
My Lords, before the noble and learned Lord finishes his preliminary remarks, may I, as a layman, intercede. I was not aware of what he calls the option being available to the parties to obtain all the advice they deemed to be necessary. I listened carefully to what the noble and learned Lord has said. I also heard the noble Lord, Lord Lloyd of Kilgerran, say that his intention, and I believe it was well-founded, was to speed up the proceedings and hence to reduce the costs. I wondered whether the noble and learned Lord could tell me and explain if I have missed the point—and the noble Lord, Lord Lloyd of Kilgerran, might appreciate this. It does not seem to me that the clause at the moment gives the parties the option of obtaining all the advice and advisers that they may require.
§ Lord McCLUSKEY
My Lords, perhaps with the leave of the House, may reply. I was contrasting the wording of the Amendment which provides that,On any such reference the court shall be assisted by advisers",1209 so that there must be advisers in every case; with the effect of Clause 93(4) where,Rules of court shall make provision for the appointment of scientific advisers to assist the Patents Court in proceedings under this Act …I did not envisage in every case that the court would have to have scientific advisers simply because there was a provision such as subsection (4) for the making of Rules of Court.
§ Lord LLOYD of KILGERRAN
My Lords, whenever I have raised the question of having a panel or tribunal of the court with advisers I have been met with the stock reply, if I may so call it, that it is very difficult for the Government to find the people to man such panels or tribunals to help to advise the courts. If I may say so, that is a little inconsistent with part of the letter dated 7th April 1977 which the noble and learned Lord sent me, where he thanked me for my tribute to the Ministry of Science Patents Department, which I now echo. But he said that nearly always the Department has been able to achieve settlements in respect of Crown use of patents satisfactory to both parties. This is evidenced by the very small number of disputes which have to be referred to the court for determination. If there are such a few disputes, I am sure that they will be very difficult disputes.
Nobody lightly takes on the Crown in disputes on patent matters. They will probably be disputes involving vast sums of money and I should have thought that it would be quite within the powers of the Government Department to find, with the assistance of the parties concerned, suitable advisers to assist the court. I am grateful to the noble and learned Lord for reminding me of that rule of the Supreme Court published on 18th April 9177; but I must confess I have not yet had the opportunity of looking at it. I will consider what the noble and learned Lord has said and, in the circumstances, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 7.48 p.m.
§ Lord McCLUSKEY moved Amendment No. 74:
Page 53, line 27, at end insert—
(3A) If the validity of a patent is put in issue in proceedings under this section and it is found that the patent is only partially valid, the
court may, subject to subsection (3B) below, grant relief to the proprietor of the patent in respect of that part of the patent which is found to be valid and to have been used for the services of the Crown.
(3B) Where in any such proceedings it is found that a patent is only partially valid, the court shall not grant relief by way of compensation, costs or expenses, exceptwhere the proprietor of the patent proves that the specification of the patent was framed in good faith and with reasonable skill and knowledge, and in that event the court may grant relief in respect of that part of the patent which is valid and has been so used, subject to the discretion of the court as to costs and expenses and as to the date from which compensation should be awarded.
(3C) As a condition of any such relief the court may direct that the specification of the patent shall be amended to its satisfaction upon an application made for that purpose under section 73 below, and an application may be so made accordingly, whether or not all other issues in the proceedings have been determined.".
§ The noble and learned Lord said: My Lords, this Amendment inserts three new subsections after subsection (3) in Clause 56. The first three subsections of that clause relate to proceedings before the court on the reference to it of disputes as to the exercise of the Crown use powers conferred by Clause 53 on other disputes arising in connection with Crown use. Under Clause 72(1)(e), the validity of the patent may be put in issue in such proceedings. The three new subsections will enable the court to deal with those references in which it finds that the patent is only partially valid.
§ The new subsection (3A) enables the court to grant relief in respect of that part of a patent which is found valid. Subsection (3B) requires that the court only do so where the proprietor proves that the specification for the patent was framed in good faith and with reasonable skill and knowledge and gives the court discretion as to costs and expenses and as to the date from which compensation is to be awarded. Subsection (3C) allows it to require amendment of the specification of the patent to its satisfaction as a condition of granting relief. I beg to move.
§ Clause 57 [Special provisions as to Crown use during emergency]:
§ 7.50 p.m.
§ Lord McCLUSKEY moved Amendments Nos. 76 to 78:
§ Page 54, line 25, leave out from ("invention") to ("and") in line 26 and insert ("includes, in addition to any act constituting such use by virtue of section 53 above, any act which would apart from that section")
§ Page 54, line 30, at end insert (", and any reference in this Act to 'use for the services of the Crown' shall, as respects any period of emergency, be construed accordingly").
§ The noble and learned Lord said: With permission, my Lords, I will speak to Amendments Nos. 76, 77 and 78 together and seek to move them en bloc. Amendments Nos. 71 and 72, which we have just dealt with, introduced generalised definitions of the words "services of the Crown" and "use for the services of the Crown". These definitions refer to Clause 57, which deals with Crown use in periods of emergency. These Amendments are the ones which assign to those expressions an extended meaning in times of emergency. I beg to move.
§ Clause 58 [Meaning of infringement.]:
§ Lord ORAM moved Amendment No. 79:
§ Page 56, line 3, leave out from ("use") to end of line 5 and insert (", exclusively for the needs of a relevant ship, of a product or process in the body of such a ship or in its machinery, tackle, apparatus or other accessories, in a case where the ship has temporarily or accidentally entered.")
§ The noble Lord said: My Lords, this Amendment corrects a small defect in Clause 48(5)(d). As now drafted, infringement is exempted only in respect of use of a patented invention in the machinery, tackle, apparatus or other accessories in a ship which has temporarily or accidentally entered British waters. However, under the Paris Convention for the Protection of Industrial Property our obligations go further, and to comply fully with such obligations the Amendment therefore extends the exemption so as also to cover use of the patented invention in the body of the ship itself. This Amendment makes no change in the existing law as set out in Section 70 of the Patents Act 1949. I beg to move.
§ Lord ORAM moved Amendment No.80:
§ Page 56, line 38, leave out from first ("the") to ("and") in line 39 and insert ("Convention for the Protection of Industrial Property signed at Paris on 20th March 1883 (as revised by subsequent conventions);").1212
§ The noble Lord said: My Lords, this is a drafting Amendment. Under the Bill as drafted "Union of Paris" is defined in Clause 122(1) by reference to the Convention for the Protection of Industrial Property signed at Paris. The Amendment simply imports the definition into Clause 58(7) and makes no material change. When we come to it, I shall be moving Amendment No. 161 to delete the definition of "Union of Paris" in Clause 122(1) since it is no longer necessary. I beg to move.
§ Lord LLOYD of KILGERRAN
My Lords, in my capacity as a vice-president for many years of the British Association which deals with the protection of industrial property, and is colloquially known as "PIP", may I at once declare an interest and express thanks to the noble Lord for correcting the name of that Convention.
§ Clause 59 [Action for infringement of patent]:
Lord ORAM moved Amendment No. 81:
Page 57, line 4, leave out ("further") and insert ("any apprehended").
§ The noble Lord said: My Lords, Clause 59(1)(a) is defective in assuming that there must have been an actual act of infringement in order to justify the granting of an injunction. This is not the intention and the Amendment makes it clear that any injunction granted includes a prohibition against intended acts of infringement whether or not such acts actually take place. The word "further" in the present draft is also misleading in that it implies that there must necessarily have been a prior act of infringement before an injunction may be obtained. This also is wrong. The Amendment cures both defects. I beg to move.
§ Lord ORAM moved Amendment No. 82:
Page 57, line 16, at end insert—
(2A)The proprietor of a patent and any other person may by agreement with each other refer to the comptroller the question whether that other person has infringed the patent and on the reference the proprietor of the patent may make any claim mentioned in subsection (1)(c) or (e) above.
(2B) Except so far as the context requires in the following provisions of this Act—
(2C) If it appears to the comptroller on a reference under subsection (2A) above that the question referred to him would more properly be determined by the court, he may decline to deal with it and the court shall have jurisdiction to determine the question as if the reference were proceedings brought in the court.")
§ The noble Lord said: My Lords, under Section 67 of the Patents Act 1949, a patentee and any other person may by agreement with each other refer to the comptroller any question as to whether the patent has been infringed; he then has power to decide whether it has been and to award damages not exceeding £1,000. The procedure is a relatively inexpensive one but has been little used, perhaps partly because the parties had to get together and to agree to use it and perhaps partly on account of the limited damages obtainable. The Banks Committee thought that the section did not serve any useful purpose and recommended its repeal.
§ However, after listening in Committee to the repeated appeals by the noble Lord, Lord Lloyd of Kilgerran, for the institution or retention of inexpensive methods of determining disputes and to the plea made by the noble Lord, Lord Lye11, when moving Committee Amendment No. 271, which sought to give the comptroller jurisdiction under the Bill to decide infringement disputes referred to him by agreement between the parties and then to award damages, I was pleased to accept that Amendment in principle and promised to bring forward a Government Amendment on Report giving effect to the intention behind the noble Lord's Amendment. It is now my pleasure to do so and I wish to thank all the noble Lords whom I have mentioned for their part in bringing about this improvement to the Bill.
§ The Amendment now before the House achieves the desired effect by way of the insertion of three new subsections in Clause 59; that is, subsections (2A), (2B) and (2C). It will be seen that it is subsection (2A) which is the operative one, and noble Lords will observe that it will enable the comptroller to award the remedies 1214 specified in Clause 59(1)(c) and (e) in cases where the parties agree to refer an infringement dispute to him; that is to say, he may award damages or grant a declaration or declarator of infringement. It should also be noted that the £1,000 limit on the damages which he can award under Section 67 of the 1949 Act will not apply to references made to him under the Bill. The new subsection (2B) merely contains necessary drafting provisions, while the new subsection (2C), like the proviso to the old Section 67(1), will enable the comptroller to decline to deal with cases which he considers should more properly be dealt with by the court and confirms that the court will have jurisdiction to deal with them.
§ Perhaps this would be a suitable point to mention Lord Lloyd's Amendment, No. 83, which would require the comptroller to be assisted by advisers on any such reference. We have discussed this matter of adviser recently and in particular in relation to Clause 56 and Amendments Nos. 73 and 75. The reasons which my noble and learned friend Lord McCluskey put forward then apply equally with regard to Amendment No. 83. For those same reasons I wonder whether the noble Lord, Lord Lloyd of Kilgerran, will consider not moving this particular Amendment.
§ Lord LLOYD of KILGERRAN
My Lords, may I first thank the noble Lord for his explanation of these new subsections and, through him, thank the Comptroller-General of Patents for adding to his great burden some further jurisdiction. I am sure, however, that will be found to be of considerable value in the public interest and we are grateful to him for accepting it. The noble Lord mentioned my Amendment No. 83 which says:On any such reference the comptroller shall be assisted by advisers".The noble Lord, Lord Oram, said that the arguments adduced by the noble and learned Lord, Lord McCluskey, in regard to my previous Amendments suggesting that advisers should be there to assist the court and the comptroller would still apply. There is one argument which moved me very considerably when submitted by the noble and learned Lord: that was that the rules of the Supreme Court had been amended on 18th April to enable the court more freely to have 1215 advisers. I do not think the rules of the Supreme Court would apply to the Comptroller-General of Patents. I wonder, therefore, whether the noble Lord would consider this matter again. He might prefer that the question of advisers should be brought up in the rules associated with this Bill, instructing the comptroller to act in particular ways. It may be a matter which could more readily be dealt with under the rules.
My Lords, I have taken note of that last point made by the noble Lord. He has pointed out that there is that difference between this Amendment and the earlier one we were discussing. I will look at the point and write to him on the matter.
§ Lord LYELL
My Lords, we are very grateful to the noble Lord, Lord Oram, for pointing out in considerable detail that the original Amendment was in reply to one which we moved at the Committee stage. We are most grateful to the noble Lord and his advisers for meeting almost all our points.
§ Lord BELSTEAD
My Lords, there is one point, a perfectly genuine one, which I omitted to put to the noble Lord. The noble Lord may prefer to write to us later. As I remember it, the old Section 67 of the 1949 Act applied to both the proprietor of a patent or an exclusive licensee and any other person being able to go by agreement to the comptroller. For some reason, the right for an exclusive licensee to do this has been removed from what is now Amendment No. 82. If the noble Lord can answer that point now, of course I shall be grateful. However, he may prefer to write to me and in that case I shall be quite content.
No, my Lords, I have not an answer at the moment to that question; but it is a valid one and I will write to the noble Lord, as requested.
§ Lord LLOYD of KILGERRAN
had given Notice of his intention to move Amendment No. 83:In subsection (2A) at end insert ("On any such reference the comptroller shall be assisted by advisers.")The noble Lord said: My Lords, I am very grateful to the noble Lord, Lord 1216 Oram, for saying that he will write to me. In those circumstances, I shall not move Amendment No. 83.
§ Lord ORAM moved Amendments Nos. 84, 85. 86 and 87 en bloc:
§ Page 57, line 20, after first ("court") insert ("or the comptroller")
§ Clause 60, page 57, line 34, after ("court") insert ("or the comptroller")
§ Page 57, line 35, after ("it") insert ("or he")
§ Page 57, line 44, after ("court") insert ("or the comptroller").
§ The noble Lord said: My Lords, with your permission, I should like to move these four Amendments en bloc. They are all directly consequential upon Amendment No. 82 to Clause 59, giving the comptroller power to hear actions for infringement in certain circumstances. Nos. 85, 86 and 87 extend to proceedings before the comptroller the restrictions on recovery of damages for infringement as they apply to the court. Amendment No. 84 requires the comptroller to apply the same principles as to relief as the court does; namely, those that were applied by the court before the appointed day. I beg to move.
§ Clause 61 [Relief for infringement of partially valid patent]:
§ 8.5 p.m.
Lord ORAM moved Amendment No. 88:
Page 58, line 3, leave out from ("if") to ("and") in line 4 and insert ("the validity of a patent is put in issue in proceedings for infringement of the patent").
§ The noble Lord said: I beg to move Amendment No. 88. Clause 61, as drafted, deals with the situation that arises when a patent is found to be partially invalid as a result of a counterclaim for revocation in infringement proceedings and, in particular, it specifies what relief is available to the patentee when such a partially invalid patent is infringed. However, following the introduction of Clause 72 in Committee, the reference in Clause 61 to a counterclaim for revocation is no longer appropriate and should be replaced, as this Amendment proposes, by a reference to the validity of a patent being put in issue. I beg to move.1217
§ Lord ORAM moved Amendments Nos. 89 to 102 en bloc:
§ Page 58, line 5, after ("court") insert ("or the comptroller")
§ Page 58, line 8, leave out from ("Where") to ("shall") and insert ("in any such proceedings it is found that a patent is only partially valid, the court or the comptroller")
§ Page 58, line 12, after ("court") insert ("or the comptroller")
§ Page 58, line 14, after ("court") insert ("or the comptroller")
§ Page 58, line 16, after ("court") insert ("or the comptroller")
§ Page 58, line 18, after ("its") insert ("or his").
§ Clause 63, page 59, line 6, after ("court") insert ("or the comptroller")
§ Clause 63, Page 59, line 8, after first ("court") insert ("or the comptroller")
§ Clause 63, Page 59, line 8, after second ("court") insert ("or the comptroller")
§ Clause 63, Page 59, line 12, after ("court") insert ("or the comptroller")
§ Clause 63, Page 59, line 16, after ("court") insert ("or the comptroller").
§ Clause 65, page 59, line 29, leave out ("take") and insert ("bring")
§ Clause 65, page 59, line 35, after ("court") insert ("or the comptroller").
§ Clause 66, page 60, line 6, after ("court") insert ("or the comptroller").
§ The noble Lord said: My Lords, I think I can save your Lordships' time if I am allowed to move these Amendments en bloc. With the exception of No. 100, a purely drafting Amendment, this group of Amendments is directly consequential upon the Amendment to Clause 59, which gives the comptroller power to hear actions for infringement in certain circumstances. I therefore beg to move en bloc Amendments Nos. 89 to 102.
Lord ORAM moved Amendment No. 103:
Page 60, line 8, leave out ("an") and insert ("such a subsequent").
§ The noble Lord said: My Lords, I beg to move Amendment No. 103. Under Clause 28(7) in respect of England and Wales, and Clause 29(7) in respect of Scotland, where a patent or an application for one is assigned, the assignor may also assign to the assignee the right to sue for infringements which took place before the assignment. Clause 66 is intended to deal with infringements taking place after a person has, by virtue of a transaction, instrument or event, become entitled to a patent and to prevent his being awarded damages or an account of profits in respect 1218 of those infringements, unless he registers the transaction within the period specified in the clause. In that way, the Bill encourages speedy registration. However, as the clause is at present drafted, it would also prevent his getting damages or an account in relation to infringements which took place in the time of his predecessor-in-title under Clauses 28(7) or 29(7).
§ The Amendment would confine the operation of Clause 66 to those infringements which take place after a person has become entitled to a patent by virtue of a transaction, and the right to sue for infringements which took place during the proprietorship of his predecessor-in-title which have been assigned to him under Clauses 28(7) or 29(7) would be unaffected. I beg to move.
Lord ORAM moved Amendment No. 104:
Page 60, line 12, after ("court") insert ("or the comptroller").
§ The noble Lord said: My Lords, this is another of those Amendments which are consequential upon Amendment No. 82. My Lords, I beg to move.
§ Clause 67 [Infringement of rights conferred by publication of application]:
§ 8.10 p.m.
Lord ORAM moved Amendment No. 104A:
Page 60, line 17, after ("(2)") insert ("and section 72(3B)").
§ The noble Lord said: My Lords, in moving Amendment No. 104A, I should also like to speak to Amendments Nos. 112, 113A, 115 and 117A, since they are all linked together. Amendment No. 104A is purely a paving Amendment for Amendment No. 117A. Amendments Nos. 113A, 115 and 117A are all consequential on Amendment No. 112, and therefore perhaps I should explain that first.
§ Amendment No. 112 reflects a change in policy. The noble Lord, Lord Belstead, will, I am sure, be pleased to see that the change includes that which he urged upon us when he moved an Amendment in Committee; namely, that revocation under Clause 70(1)(b) should be only at the suit of the person entitled to the patent. Paragraph (a) of the Amendment deals with this point. The Government 1219 were, of course, aware that in allowing revocation on the ground of non-entitlement at the suit of any person, we were departing from the Community Patent Convention, although, as I pointed out, in so doing we were keeping to the present law. However, the Government have been convinced by what the noble Lord said in Committee, and by representations received subsequently, that, on balance, it would be right to follow the Community Patent Convention in this respect.
§ Paragraph (b) of the Amendment requires that no such revocation may be brought, unless the applicant for revocation commenced proceedings under Clause 35 within two years of the grant of the patent, and unless the proprietor of the patent knew at the time of grant that he was not entitled. This, again, corresponds to the Community Patent Convention. Article 56(1) of that Convention, by referring to a person entitled under Article 27, imposes a similar time limit. The Government have felt it right to do likewise.
§ I will now, if I may, deal with the Amendments which are consequential on Amendment No. 112. Amendment No. 113A deletes subsection (4) of Clause 70, which is replaced by Amendment No. 117A. Amendment No. 115 is essentially a drafting Amendment, made necessary by Amendment No. 117A. As regards the first subsection of Amendment No. 117A, it is clearly right for practical reasons that, if a particular ground of objection would not be available in revocation proceedings, it should not be possible to plead it in other proceedings where invalidity may be put in issue. Otherwise, one would get the absurd result of a patent being held invalid, but nothing could be done about it.
§ The second subsection of Amendment No. 117A replaces the existing Clause 74 which, as I have said, is deleted by Amendment No. 113A. As the comptroller now has jurisdiction, in certain circumstances, to hear infringement actions, proceedings under Clause 67 and to make declarations under Clause 69, as well as to hear revocation actions under Clause 70, it is considered that the provisions prohibiting the institution of proceedings before the comptroller, where proceedingsare pending in the court, should refer specifically to the clauses in point and that is the effect 1220 of the second subsection of Amendment No. 117A. I felt it right to go through the whole story, although Amendment No. 104A is simply a paving Amendment for the others which I have attempted to explain. My Lords, I beg to move.
§ Lord BELSTEAD
My Lords, I should just like to say that we are grateful to the noble Lord for meeting the points which we made in Committee, which I know are only part of the story. None the less, we are very grateful for what he has said on that.
The Earl of HALSBURY
My Lords, I am not entirely happy about this and it just illustrates the difficulty. The noble Lord, Lord Oram, has tried to oblige the noble Lord, Lord Belstead, following his remarks in Committee, hut from a purely practical point of view the result gives me grounds for thought. I was once involved in a most difficult situation, where the true and first inventor of something did not believe in the patent system and would not patent it. The problem as to whether some of his colleagues could have obtained a patent in their own name was a very difficult one to determine, and it took a lot of diplomatic, tactful discussion to persuade this distinguished, but slightly eccentric, individual. The noble Viscount, Lord Eccles, is not in his seat this evening, but he told us on Second Reading that he did not believe in the patent system, and this distinguished inventor took the line that it should be dedicated to the public and so on.
I am not trying to make difficulties, but let us suppose that you have an obdurate true inventor, who does not believe in the system and will not take any action, and somebody proceeds to jump his claim and get what ought to be an invalid patent, but it has been granted by the comptroller and therefore needs revocation. The eccentric true inventor is the only person who can bring a suit to get a revocation, but he does not believe in the system and so the world at large is stuck with an invalid patent which ought to be revoked, but nobody can bring a suit to revoke it. I am not trying to invoke a hypothetical case, because this happened and I was there.
My Lords, it is very difficult to legislate for eccentricity, but I understand from the noble Earl's ex- 1221 perience that such things occur. Rather than offer an opinion on what would happen in the kind of case that he described I would prefer to take advice on the matter and will certainly write to him. I hope that his difficulties about the matter do not extend to the point of objecting to the general case that I put forward, which the noble Lord, Lord Belstead, acknowledges meets the case that he put forward in Committee. I give an undertaking to look into the point and to write to the noble Earl.
The Earl of HALSBURY
My Lords, of course, I shall not raise my voice against the Amendment, if the noble Lord will comply with what he has just said and look into the matter. Possibly some relief would be obtained if the Law Officers could intervene in such a situation. That would entirely cover my point.
§ Lord LLOYD of KILGERRAN
My Lords, I should like to support the noble Earl, Lord Halsbury, in this and take issue, gently but firmly, with the noble Lord, Lord Oram, in his use of the word "eccentricity". The noble Lord, Lord Oram, is signalling that it was the noble Earl, Lord Halsbury, who used the word "eccentricity", but the noble Lord used the word in a different context and sense from that in which the noble Earl used it. In my view, it is not eccentric for a co-inventor suddenly to say, "I do not like the patent system. I want to dedicate my invention to the public, in the public interest". That is not eccentricity; it is a desire not to take advantage of his rights, and he can therefore give away his rights. I think I know the case that has been referred to, and I believe that I was concerned in a similar one. I should be very grateful if, in writing to the noble Earl, the noble Lord, Lord Oram, would be good enough to send me a copy of his letter.
Lord ORAM moved Amendment No. 105:
Page 60, line 21, after ("court") insert ("or before the comptroller").
§ 8.21 p.m.
Lord LYELL moved Amendment No. 106:
Page 60, line 23, after ("60") insert ("(1)").
§ The noble Lord said: My Lords, if it is convenient to the House, I should like to speak to Amendment No. 106 and also to Amendment No. 108, both of which stand in the names of myself and my noble friend Lord Belstead. I hope that the House will see that the Amendments are interconnected. The two Amendments are applicable to Clause 67 which we are discussing at this stage. Also, both Amendments are in line with Amendments Nos. 263 and 267 which I moved in Committee.
§ I recall that, in speaking to these two Amendments, I mentioned that the reply of the noble Lord, Lord Oram, on behalf of the Government resembled that traditional object, the curate's egg. It seemed to me to be good in parts and, in some respects, it satisfied what we sought to propose. The House will be aware that the noble Lord told the Committee that he could not accept our later proposed Amendment, which is the equivalent of Amendment No. 108 that we are discussing now, because he considered that the courts would have no difficulty in awarding damages which might, or would, be reasonable in each case.
§ I wonder whether we could consider a little further Amendment No. 106 and the reason for excluding subsection (3) from the provisions of Clause 60 as they apply to this clause. Does not the noble Lord, Lord Oram, agree that the court has to decide the amount of good faith and the reasonable skill and knowledge which is used in drafting any specification? If the patentee wishes to amend the specification, the court again has to decide how much care, skill and knowledge he used in drawing up the original specification. The House will be grateful to hear that I shall not attempt to illustrate my argument with the, by now, traditional shoe soles, roller blinds and car hoods. These processes are now becoming familiar to the House and, indeed, to all noble Lords who speak in the debates and listen to them. Nevertheless, nowhere in the reply 1223 of the noble Lord, Lord Oram, was he able to parry my comments on what tends to happen in the Federal Republic of Germany and also in the Netherlands; namely, that patentees, it seems, file as broad a claim as they can, so as to leave any third parties in considerable doubt as to the specification or—the noble Lord, Lord Oram, has used this expression in previous comments—the generic claim.
§ It seems to us that the Community Patent Convention allows only reasonable compensation in cases where the patent has been reasonably infringed by a third party. Would not the noble Lord, Lord Oram, consider that this gives far less protection to a patentee? We understand that a narrow protection and the remedies available to patentees under the Community Patent Convention are likely to make respective patentees file patents under national laws, since far wider protection is likely to be available under these national laws than is available under the clause which we are now discussing. The noble Lord, Lord Oram, pointed out at the Committee stage that the intentions of my noble friend and the Government are broadly similar and that mere words separate us. We are concerned—very much so—that the result of the words in the Bill may still not be the same as we or, as we hope, the Government wish them to be. It is for that reason that I put forward the Amendment and beg to move it.
§ 8.25 p.m.
My Lords, as the noble Lord, Lord Lyell, has said, he moved virtually identical Amendments to these two Amendments during the Committee stage. I indicated then that the Government felt themselves unable to accept them, and to the best of my ability I gave their reasons for declining to do so. Now, quite rightly, the noble Lord, not satisfied with what I said, has again put down the Amendments. Since he has done so, the views which I then expressed have been very carefully reconsidered in the light of the discussion which took place in Committee. Again, I have listened carefully to what the noble Lord has said today, but I am sorry that I have to say that I still cannot advise your Lordships to accept these two Amendments.
1224 As regards the first of the two Amendments, Amendment No. 106, which seeks to cut down the reference in Clause 67(1) to Clause 60 so that it refers only to subsection (1) of that clause—I think it is agreed that subsection (2) has no relevance—the result is to exclude the application of subsection (3) of Clause 60. It remains the view of the Government that it is important that applications should be drafted in good faith and with reasonable skill and knowledge. Whether a patentee should be allowed any recompense for an act by a third party which infringed the application for a patent in the period between publication of the application and the grant of the patent is surely a factor which ought to be taken into account. Unless so satisfied about the drafting of the published application,it remains the view of the Government that the court should refuse damages.
As regards the second Amendment, Amendment No. 108, to which the noble Lord also spoke, the point of difference between the noble Lord and myself on behalf of the Government appears to be whether the term "damages" contemplates a measure of damages fuller than the " compensation reasonable in the circumstances ", which I think is the wording in Article 67(2) of the European Patent Convention and Article 34(1) of the Community Patent Convention, that contracting States are required to provide. I am advised that there is no difference in fact. The two expressions are the same. "Damages" is the name by which the remedy is known in the United Kingdom, and the courts would be surprised if they were told that the damages which they award are anything other than "compensation reasonable in the circumstances". In making its assessment, the court will normally take all the relevant circumstances of the case before it into account.
The Banks Committee considered what rights should be granted on early publication. They were aware at that time of the Council of Europe's proposals from which the European and Community Patent Conventions resulted: that an infringer of a published application should pay fair compensation. They concluded that a right to damages should be given to the applicant, provided that the acts complained of fell within the scope of the claims as originally published and granted, 1225 and provided also that the claims as originally published were framed in good faith. This is precisely what Clause 67(2) provides. It is for these reasons that I regret—having, as I have said, given very careful consideration to this issue as it was raised in Committee and as we have listened to it again tonight—that I must recommend your Lordships not to accept these Amendments.
§ Lord LLOYD of KILGERRAN
My Lords, I should have liked to support the noble Lord. Lord Lyell, in this matter and I am wondering whether the noble Lord, Lord Oram, is laying much weight on what the Banks Committee had to say. The Banks Committee reported six or seven years ago, before we were concerned with European matters so intimately. The word "damages" is a common law remedy and common law actions are not understood very well on the Continent. I should have thought that the introduction of the word "compensation" would give far more flexibility and would he more in conformity with the European attitude to these matters, and I should have supported Amendment No. 108.
§ Lord LYELL
My Lords, I am grateful for the highly qualified support of the noble Lord, Lord Lloyd of Kilgerran, who, as we know, is a skilled practitioner (I think those are his words) in the art of patent law. The noble Lord, Lord Oram, mentioned "67(2)". It is interesting that we are discussing Clause 67(2) as well as Article 67(2) of the European Patent Convention. I am sightly disappointed at what the noble Lord, Lord Oram, said. I hoped that I had varied my attack slightly. I noted what the noble Lord, Lord Oram, said about damages, that possibly this might appear to be an emotive term in that naturally the court would not seek to enforce damages on an infringer which might be more than reasonable.
I think we must regret that the noble and learned Lord, Lord McCluskey, is not able to be with us because I am sure he could have corrected me, but I seem to remember from some fairly highly intensive legal studies that I was forced to undertake about 14 years ago that, certainly under Scottish law, damages do not necessarily just go as far as reasonable 1226 compensation but can have—and I understand still can be under Scottish law, and the noble Lord, Lord Lloyd, placed it under Common law which I think would apply to Scotland—a punitive element. Certainly that had crossed my mind when I was considering the comments made by the noble Lord, Lord Oram. Nevertheless, I thought tit not to produce a quasi-legal argument at this stage.
I think we should not seek to argue this further. I agree with the noble Lord up to a point that Clause 60(1) is certainly applicable. We agree that subsection (2) of Clause 60 is not applicable but nevertheless there is a certain amount of ground between us which words cannot camouflage, on what is reasonable skill and knowledge. Indeed, in view of the breadth of protection given by the Bill as we have it, and the somewhat narrower protection which is envisaged by the European Patent Convention, particularly in view of what I was mentioning, which is the practice in Federal Germany and in the Netherlands, where inventors file fairly broad claims, I think we are in danger of arguing over the same ground. The noble Lord has varied his answer slightly from that which he gave at the Committee stage. With those comments, and with renewed thanks to the expert, the noble Lord, Lord Lloyd, for his support in these matters, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
Lord ORAM moved Amendment No. 107:
Page 60, line 28, leave out ("take") and insert ("bring").
§ The noble Lord said: My Lords, this is purely a drafting Amendment. I beg to move.