HL Deb 22 December 1982 vol 437 cc1100-18

1.34 p.m.

Lord Campbell of Alloway

My Lords, I beg to move that this Bill be now read a second time. As is apparent to your Lordships from the short Explanatory Memorandum, the intendment of this Bill is limited to the implementation of the recommendations which the Mathys Committee in 1974 made in paragraph 70 of their report. This committee included among its members eminent industrialists and lawyers having specialist expertise in all aspects of industrial property. If I may remind your Lordships, paragraph 70 of the report contains this recommendation:

  1. (i) "That provision should be made in the Trade Marks Act for the registration of marks used or proposed to be used for distinguishing services offered in the course of trade or business.
  2. (ii) That the provisions relating to marks for goods in the Trade Marks Act should apply so far as is feasible to marks for services.
  3. (iii) That the prohibition of registration of identical and nearly resembling marks for services should apply in the case of closely related services.
  4. (iv) That there should be provision for the refusal of marks for services which conflict with the same or nearly resembling marks already registered for closely related goods and vice versa."
The machinery adopted in this Bill to secure this intendment is to amend the Trade Marks Act 1938 following in substance—but not in form—the Australian precedent. The first draft of this Bill using the Australian precedent was prepared by my learned friend (as we say at the Bar) Mr. John Burrell, QC, who is chairman of the Industrial Property Committee of the Society of Conservative Lawyers. That is a committee that I set up some years ago and on which I still continue to serve as a member. It is right that your Lordships should know that this Bill is not introduced at the instigation of any association or at the behest of any sectional interest. The way it comes before your Lordships' House is the way—perhaps a rather haphazard way—that I have described. There is no political motive whatever. But, since its introduction in this rather curious way, it has, as I shall inform your Lordships, received unsolicited very substantial support.

The scope of this Bill is strictly limited to the intendment, the simple single concept, of implementing paragraph 70 of the Mathys Report to which I have referred. In the list of speakers today noble Lords from both branches of the legal profession are to speak on a plane which transcends party political considerations. Other noble Lords with practical experience of industry are also to speak. It would be wrong—and I do not propose to do it—to anticipate such measure of support as this Bill may be given. It is however, as I mentioned before, only right that your Lordships should know that, since its First Reading a short time ago, the Bill has received unqualified support—and I have the documents in my possession if any noble Lord wishes to see them—from the Trade Marks, Patents and Designs Federation, which represents the owners of industrial property in British industry; the Association of British Chambers of Commerce; the Institute of Trade Mark Agents; the Institute of Directors; the CBI and other associations.

Why is this so, my Lords? It is because—as they appreciate—if we delay and wait for the European Community legislation and for the Bill which must follow such legislation, the owners of service marks which are at present not registrable but would be under this Bill will by, say, 1985, 1986 or 1987, have lost priority against other countries in Europe since no prior registration of these marks will exist in the United Kingdom. No doubt, in say, 1985, 1986, 1987, or 1988, the whole system of trade mark law must come under review, leading to some new consolidating Bill to implement the European Community legislation. But this in no way detracts from the case for this Bill: indeed it enhances the case for immediate legislation. Furthermore, as the Trade Mark Registry is now being reorganised under the Rayner studies, there is, in submission, no reason why service marks should not form part of such a reorganisation.

In that context, it is right that your Lordships should know that correspondence with the department, which I have in my possession, shows that although an increase in style would be required in the registry, which could provide perhaps a little employment for some of the unemployed, an all-round increase in fees for goods and services would avoid the need for subsidy on account of any additional expense. That is in an exchange of letters which I have in my possession. This was based on the anticipated 3,000 applications a year for the registration of service marks, as compared with about 17,000 a year for goods.

I informed your Lordships that the scope of this Bill was limited to the intent, as it assuredly is. The scope is limited to ordinary marks. No amendment is contemplated in respect of certification marks, defensive marks and cotton marks. The amendment relates only to registrable trade marks now limited to goods, and in no way affects the criteria of registrability, distinctiveness and so forth, laid down in the master Act.

The case for this Bill is not limited to European Community considerations, which demand the immediate introduction of this type of protection. It also arises quite apart from such considerations. May I deal first of all with the European Community position. As your Lordships know, but with your permission perhaps I may remind you, the majority of the industrial countries of the world—Australia, Canada, the United States and 64 other states including the USSR, four member states of the European Community (Denmark, France, Italy and Germany) and Benelux legislation will be in probably by the end of 1983 or January 1984—now provide for registration of service marks in their national legislation.

The absence of such a facility in the United Kingdom not only places the service industries at a disadvantage with manufacturing industry but also is especially detrimental to our interests when the Community trade mark is introduced in the years ahead, for the reasons that I have given. It is of importance to repeat that under the commission's proposals a trader will not be permitted to oppose an application for Community registration unless he has a national registration, which is exactly what this Bill seeks to provide. Thus the creation of a United Kingdom service trade marks register is no less than essential to place British service industries in a position to protect themselves and their goodwill when the Community trade marks system in the years ahead comes into force.

It is perhaps unnecessary to stress to your Lordships the importance of the service industries to our economic survival and revival. It has been mentioned so often in your Lordships' House. Since the Mathys Report in 1974, starting in 1978. representations have been made to the department, all to no avail. In June 1980 the Institute of Trade Mark Agents submitted a memorandum to the department seeking amendment of Section 68(1) of the Act of 1938 to this end (see page 6 of their memorandum)—all to no avail. On 17th November 1981 representations to this effect were made to Sub-Committee "E" on the introduction of legislation on service marks well before any EEC law on European trade marks was to come into force (see paragraph 167 of the transcript of evidence).

On 9th June 1982, with the leave of your Lordships' House, I asked Her Majesty's Government when it was proposed to implement these recommendations of the Mathys Committee concerning the registration of service marks in line with the practice now adopted in other countries, some of which were Commonwealth countries and some of which were Napoleonic code countries, many of which were our competitors. It was accepted on all sides of the House that there was a case of urgency. I refer in particular to the support of the noble Lord, Lord Lloyd of Kilgerran, whose expertise on this subject is again available for the assistance of your Lordships today. I refer also to the support of the noble Lord, Lord Davies of Leek. I see that he is again to assist us in this matter, as is the noble Lord, Lord Spens.

Apart from some perhaps irrelevant exchanges about the export of oil, the views expressed on the subject of the question were clear and unequivocal: the Hansard reference is vol. 431, No. 100, cols. 193–6. It was perfectly plain that the mood of the House sensed the urgency; but all to no avail. My noble friend Lord Cockfield, while not opposing implementation of the Mathys Report in principle, rejected the case of urgency on the grounds that a draft regulation and a draft directive on trade marks had recently been published by the European Commission. But, with respect to the noble Lord, it was a total misconception to seek to oppose the mood of this House, as expressed on that occasion, on those grounds.

First, why wait until four other member states had gone ahead and a fifth was to come? Secondly, how long do we need to wait anyway? Thirdly, while we wait our service industries suffer the disadvantage to which I have adverted. Fourthly, the intellectual argument of my noble friend the Minister is simply not understood. Fifthly, what about the matter that I am coming to swiftly in one moment—the case which arises quite apart from European Community considerations?

The case which arises, apart from Community considerations, is simply stated, and is really that those who operate these services should be enabled to have the like facilities as exist in the case of trade marks to protect their industrial property, so that an action would be based on registration and would avoid the complex procedures and evidential criteria necessitated by the more expensive common law action for "passing-off'. Furthermore, many businesses are simply not large enough to justify the expense of Community registration and others will not require such wide territorial scope, because they are essentially local in character—such as hotels and travel agencies. The existing system is wholly anomalous and there is a valid case for the introduction of national registration of service marks, which this Bill would secure, quite apart from Community registration.

In conclusion, I should like very briefly to explain, as is explained in the Explanatory Memorandum, the situation that arises under the Nice agreement. I have the documents here and they will be available for your Lordships to peruse in the Library, if so advised. It will be for the Department of Trade to prescribe the necessary rules, classifications, procedures and so on which are applicable to the registration of service marks. This is provided for by amendment of Section 40 of the Act of 1938. The Department of Trade will have power to make rules, so as to empower it to classify services in accordance with the Nice arrangement of 1957 concerning the international classification of goods and services to which the United Kingdom is a party.

There were 15 signatories to the Nice agreement and these included four of the six who had set up the Common Market, and the United States of America. This agreement was concluded in Nice in June, 1957; it was revised in Stockholm in 1967; it was revised again in Geneva in 1977, and this is the latest state of the international classification. Your Lordships will find Parts I and II of that classification in the Library. The third edition has over 1,250 services. This is the current 1981 edition. The classification is in English and French, both texts having equal authenticity. This will be modified and supplemented from time to time by the Committee of Experts; and the fourth edition is in course of preparation.

Part I of the classification has four columns—column 3, the English; column 4, the French; column 2 giving the serial numbers of the indications in English, and column I giving the key to Part II where the lists of services are arranged in class order, each class being arranged in alphabetical order. I hope that I have indicated to your Lordships sufficient of the nature of the situation. All that I have to mention is that the transposition of the Australian first draft, to get it into the form in which it is before your Lordships—in other words, the right way up—involved, first the correction slip which your Lordships have and also a formal amendment with an extra five lines of paragraph 10 to the end of the schedule. My Lords, I beg to move.

Moved, That the Bill be now read a second time.—(Lord Campbell of Alloway.)

1.55 p.m.

Lord Mishcon

My Lords, I think your Lordships will feel that this is a useful little Bill. It is one that is very suitable as a Private Member's Bill and it has been presented to us by the noble Lord, Lord Campbell of Alloway, with his usual clarity and persuasiveness and in the typical tones of Father Christmas. I shall try, as a non-specialist in this field, to use simple language in endeavouring to support the Bill, the object of which is very short and it is this. The Trade Marks Act 1938 covers goods which are used in trade and many people, such as those who are specialists in this field, the professions and other people engaged in services—which, as your Lordships have rightly been reminded, are so vital to our economy, both in regard to foreign currency earnings and to our own home market—have thought for a long time that these services should also be included by way of protection and control in trade marks legislation.

As your Lordships have been told, it is no new proposition. The Mathys Report was issued eight years ago and it made the recommendation in, I believe, paragraph 70 which was quoted by the noble Lord. Therefore, I do not intend to burden your Lordships with a re-quotation of that paragraph. Why is it that we move so slowly in regard to carrying out recommendations which have such universal support among those people who are affected? As I said, the report came out eight years ago and this Bill would be merited, even if there were no question of any draft EEC directive or regulation. Nothing has been done about it and, very regrettably, other countries are in advance of us. Why should they be in advance of us? Why should four other members of the EEC and 60-odd other industrial countries be in advance of us? Why should the United States and even the USSR be in advance of us? Why are we so slow in moving to legislate, even on simple matters like this?

As your Lordships have been told, there is a draft directive and a draft regulation. They have been tossed around and observations have been made, and our own Sub-Committee E of our EEC Committee has dealt with them. We know that the EEC directive and regulation will be laid in the not too distant future, and they will be to the effect that we shall have to legislate in order to deal with various matters relating to trade marks. One of those matters will be the inclusion of services for trade marks protection. Is it sensible to wait until the final EEC directive and regulation come before us?

In support of what the noble Lord, Lord Campbell of Alloway, has said, I suggest that it would be senseless and most disadvantageous to wait. The evidence was given clearly to Sub-Committee E. Perhaps I may read a short quotation from the evidence given to Sub-Committee E, who will be reporting very shortly. I am a member of that subcommittee and can tell your Lordships—I do not believe I am saying anything improper—that there will certainly be nothing in the recommendations to suggest that it is not a good idea for a Bill of this kind to be passed by your Lordships' House.

The evidence which was given to the sub-committee was very clear. It was given by the appropriate institutes which govern trade mark agents, the Chartered Institute being one of them. I quote from Question 167: We would like to see that legislation come in well before any EEC law for European trade marks, both so that the service marks are in the register as registrations that can be used in opposition, and so on, and also to give the United Kingdom some experience of administering and dealing with service marks generally, especially if the United Kingdom is going to be the home of the European Trade Mark Office". Those who know about these matters are pleading, even without the recommendation that was made eight years ago in the Mathys Committee and what has been said since, and even with regard to the EEC directive and regulation, that we should get a move on and legislate about this matter; that experience is needed of a national register of trade marks in relation to services; and, much more vital, that when EEC legislation is brought into effect, people want, as holders of registered trade marks, to be able to oppose trade marks relating to services which may exist elsewhere, because if they are not on the register they will be unable to do so. That is what the draft directive and regulation says. When I see the noble Lord, Lord Campbell of Alloway nodding his head in assent, I know that I have said something sensible.

In those circumstances, this is a good Bill to support. When the Government reply, I hope very much that we shall not be fobbed off yet again with a request to wait. I am reminded of the gracious voice—as it was—of the first Viscount Samuel, who sat with such eminence on the Front Bench of the Liberal Party. At a meeting I attended which honoured the centenary of the modern civil service I remember so well that on that occasion the speakers were somewhat lugubrious. Certainly they were very serious. In paying his tribute to the Civil Service for all that they had done to make his career so illustrious, the noble Viscount said that he would always remember them for one thing: that they have a problem for every solution. We can easily find a problem for this solution. The problem is the cost. The noble Lord, Lord Campbell of Alloway, dealt with that. I am not going to repeat what he said. It could easily be dealt with by charges and possibly would give a little extra employment at this time, as the noble Lord said.

It may be asked whether or not we should wait for the EEC directive and regulation to be finalised. I hope that question has been answered by what both the noble Lord, Lord Campbell of Alloway, and I have said. Instead, therefore, of delaying or vague words being spoken this afternoon on behalf of Her Majesty's Government, I very much hope that this Bill will be given a welcome by the Government and that they will see that it has a favourable wind in order to get it on to the Statute Book. It will be a valued addition to the Private Member's Bill history of this Parliament.

2.5 p.m.

Lord Lloyd of Kilgerran

My Lords, in warmly supporting the Bill, first may I congratulate the noble Lord, Lord Campbell of Alloway, upon his initiative in introducing it. I am sure that the noble Lord, Lord Cawley, who I am so pleased to see in his place, will join with me in saying how glad we are to welcome into this exotic field of trade mark law so many noble Lords on this, the last day before the Christmas Recess.

The noble Lord, Lord Mishcon, has indicated that this is simple Bill; but it is a very important one. I do not propose to go fully into these matters, in view of the speeches of the noble Lord, Lord Campbell of Alloway, and the noble Lord, Lord Mishcon. The Trade Marks Act 1938 has been a very important tool, and has been of great use to industry. It has its faults, but it has never been amended. That shows what a useful tool it has been. It has been with us for 44 years. But difficulty arose in 1945. It came as a great shock then to practitioners in the trade mark field and to industry when the Judicial Committee of the House of Lords refused to allow the registration of the word or mark "Rysta" because the company claiming registration only repaired stockings of other manufacturers and did not themselves offer, and did not intend to offer, any goods on the market. The decision turned on a very narrow interpretation of the words "use in the course of trade".

If I may mention a personal matter, my late uncle was then the Registrar of Trade Marks. It was his decision to allow the registration of "Rysta" for repairing stockings which was reversed by the House of Lords. He was very perplexed about that narrow decision. He had a dual interest, because he himself played a great part in drafting the 1938 Act. Since 1945, therefore, the wrongful use of a mark or word in association with services could only form the basis of an action for passing off, and actions for passing off are usually very expensive in view of the amount of evidence required to present the case.

From time to time suggestions were put forward to remedy this position. Service marks became the subject of statutory rights in many countries, as your Lordships have been told. We had the Mathys Report and, so far as industry is concerned, the importance of service marks has increased rapidly in the last decade. More and more people are employed in service industries. Many people have forsaken manufacturing industry for service industries, as must be well known to your Lordships. The Government have encouraged this development, particularly in the field of information technology, where the energetic action of the Minister for Industry and Information Technology, Mr. Kenneth Baker, and his deputy John Butcher have done such splendid work.

If any evidence is required of the importance of services in that field and of the fact that increasing employment is arising in the field of information technology, may I draw your Lordships' attention to the publication I hold in my hand, which is the first issue of a new journal on information technology and public policy published by the Parliamentary Information Technology Committee—affectionately known as PITCOM—of which I have the honour of being a founder member. This is the first publication issued by any all-party parliamentary committee on a regular basis, as I understand it, and it includes a number of articles based on speeches made to the committee during the last 18 months, which show how important service industries are now becoming. Therefore, it is increasingly important that service marks shall have statutory protection.

While this Bill in its present form is very useful, I should draw the attention of your Lordships to a matter to which the noble Lord, Lord Mishcon, referred and which may be relevant at Committee stage. It is very desirable to form an official register of trade mark agents. The EEC trade mark procedures will require a list of trade mark agents and therefore it is necessary to have a register of trade mark agents of this country. I am very familiar with the high standards of examinations which trade mark agents in this country have to pass. I would also like to see fully qualified trade mark agents allowed to participate before certain courts in the same way that chartered patent agents are now allowed to participate, arising from amendments inserted into the Patents Act 1977.

I will refer briefly to developments in the EEC. The noble Lord, Lord Mishcon, emphasised how vital it is to have statutory protection for service marks in the United Kingdom Act before the EEC trade marks Act is passed. Industry in this country is bound to suffer if the Government decide to postpone action implementing this Bill until the trade marks Act of the EEC comes forward. If that step is not taken by the Government, industry in this country will suffer because of loss of priority in regard to date. It would in those circumstances be quite possible for persons in countries of the EEC to register now some service marks well known in this country—for example, "Telecom"—and thus deprive British industry of the right to use such words, because of their prior registration. It is essential, in the harmonisation of trade marks law which the EEC's draft Act contemplates, that this country should give statutory protection to service marks.

Obviously, after 44 years, the Trade Marks Act 1938 requires certain other amendments in order to bring it up to date. I do not propose raising any further matters in regard to improvements to trade marks law at this stage. The noble Lord, Lord Campbell of Alloway, has indicated that there are other aspects which might be seen to later but not during consideration of this Bill.

2.14 p.m.

Lord Noel-Buxton

My Lords, I rise to support this Bill and to suggest some further amendments which could usefully be made to the Trade Marks Act 1938 at this stage. I might possibly differ very slightly from the noble Lord, Lord Lloyd of Kilgerran, in this respect, but I think he may agree with me that my proposed amendments are of a minor nature and could not and will not overload this Bill.

English statute law should indeed recognise that it is appropriate and desirable for trade marks to distinguish services as well as goods. I welcome a Bill which seeks to effect this in such a straightforward manner. It seems to me totally unreasonable, indeed absurd, that the protection afforded by the 1938 Act should extend only to marks applying to goods, and then only in the course of trade, as contrasted with business, and not also to service marks.

The number of undertakings offering services must be of the same order as the number of undertakings manufacturing goods. I do not have the figures, but I suspect that the number of service undertakings is far greater. I, too, find it totally unacceptable that so much of British industry is so disadvantaged—for substantially disadvantaged it is. At present, an undertaking using a name, device or other mark to distinguish its services from other services offered in the course of trade or business cannot register that mark. It is not open to the undertaking offering services to pursue an unauthorised user by way of trade mark infringement action; service undertakings can only rely on the common law action of passing off.

Anybody with only a passing acquaintance, even, will confirm the difference between a trade mark infringement action and a passing off action. The former is relatively straightforward, while the latter is onerous and complicated. I remember the noble Lord, Lord Mishcon, making a similar point so eloquently on the Second Reading of the Companies (No. 2) Bill. As the noble Lord confirmed, to create a valid action in passing off places a very heavy onus on the plaintiff, especially if he is in business in a small way.

Many of my foreign clients have expressed surprise when I have had to explain to them, counter to their expectation, that the law in this country does not in effect recognise service marks. The United Kingdom is out of line with other advanced legal systems in this regard. Many countries provide for direct registration of service marks on their trade mark registers. My noble friend Lord Campbell of Alloway gave us a very impressive list. The United Kingdom was—and it should be emphasised again, I think—a party to the 1957 Nice agreement, under which an international classification of goods and services was issued. It is high time that the law of this country recognised service marks and the need for them to be capable of registration essentially in the same way as trade marks relating to goods.

The Trade Marks Act 1938 provides that, subject to its provisions, a trade mark may be registered if used or proposed to be used in the course of trade, and a registered trade mark is infringed by unauthorised use in the course of trade. I see no good reason, however, why the protection afforded should be restricted to activities strictly in the course of trade, as contrasted with the wider concept of business generally. The noble Lord, Lord Lloyd of Kilgerran, gave us a splendid and an early example of the strict interpretation of the Trade Marks Act 1938.

The Explanatory Memorandum relating to the Bill before your Lordships, which follows the recommendation of the Mathys Committee, speaks of a series of amendments to the 1938 Act so as to ensure that the relevant provisions apply equally to service marks used in the course of trade or business. I hope that the addition of the words "or business" reflects the intention in this matter. My noble friend is nodding.

Marks, be they service marks or marks used to distinguish goods, should be the proper subject-matter of registration and infringement proceedings if used in the course of trade or business. I would illustrate my point by an example. I know of at least one well-known charity which seeks to use trade marks extensively in its fund-raising activities. It cannot be said to be conducting itself in the course of trade, but it is certainly conducting itself in the course of business. Are such charities and other undertakings conducting themselves not strictly in the course of trade to be denied the protection of trade mark registration effectively on a technicality? The position should be put beyond doubt by the insertion, where appropriate throughout the 1938 Act, of the words "or business" after the word "trade".

Two other amendments could usefully be made to the 1938 Act without overburdening it. They could be added to the schedule to this Bill. First, and again as recommended by the Mathys Committee, Section 68(1) of the 1938 Act should be amended to define "trade mark" in a much more satisfactory manner. "Trade mark" should be defined along the following lines—and these are the words of the Mathys Committee: A mark used in relation to goods or services so as to indicate a connection in the course of trade or business between the goods or services and some person having the right to use the mark". Secondly, the anomaly that the benefit of a trade mark application cannot be assigned should be put right. Section 22 of the 1938 Act should be amended by deleting subsection (7) and inserting a provision whereby an assignee may be substituted as the applicant for the original applicant.

I fully support the Bill in its principal purpose. I hope that with some further amendments and some fine tuning the Bill will reach the statute book. To this end I trust that the Government will in the event see their way open to lending such assistance and support as may be necessary.

2.22 p.m.

The Duke of Portland

My Lords, I wish to draw your Lordships' attention to the advantages which the purchaser of services will derive from the Bill. A service mark will provide an indication that the holder of the service mark is, presumably, reliable and anxious to give a high standard of service in order to maintain the prestige attached to his service mark. Thus, if someone wishes to have his car serviced, he will give preference to the holder of a service mark rather than to some garage of which he has had no experience and which might prove to be excessive in its charges and unreliable in its work.

There is another example. A person wishing to have a bath shower installed may entrust this task to a plumber bearing a service mark, and the work is done satisfactorily. Another person instructs a casual plumber to perform the task, with the result that the bath shower does not function satisfactorily and it is probably the manufacturer who gets the blame.

Fifty years ago services had not assumed the importance that they have today, when they are described on the BBC as a service industry. This, I believe, is largely due to the fact that machinery of all sorts has become more and more complicated. Fifty years ago I would have felt capable of carrying out minor repairs to my car. Today, the mechanism is so complicated that I can do no more than lift the bonnet. Your Lordships have heard of the advantages of this measure for the purveyor of services, but I submit that it will also help to safeguard the interests of the purchaser.

2.25 p.m.

Lord Davies of Leek

My Lords, I have listened to this debate with great interest. Indeed, I can cut out about 50 per cent. of what I had planned to say because it has already been said, and I would not like to see a repetition of some of the excellent speeches that have been made by knowledgeable noble Lords. However, I want to make a contribution based on the report and to mention that there are other types of services. Also, if we were playing molecular roulette in pharmaceuticals there would be another aspect and that is the need for co-operation with Europe, Japan and those parts of the world that are developing in that field. I would particularly have liked to see a small addition. Incidentally, I am glad to note that we have now got the correct pronunciation of the name "Mr. Mathys". I was rather worried about that.

On page 76 of the report there is the heading: Proposals for a Standing Advisory Committee on Trade Mark Law and practice"— and I would now add, and Services". It is worth getting this on the record. Page 76 continues: The Trade Mark Liaison Group should be re-formed as a Standing Advisory Committee on Trade Mark Law and Practice which would be available for consultation by the Government as required.". I think that the Government need consultation because of the multifarious services that have been developed and the movement in the electronic world as regards new patents and new ideas. Unless we pull up our socks—to use a colloquial expression—we shall be left behind by the Europeans, and also by other parts of the world. There is a need now to get into the lists, and, as has been recommended by the noble Lord who opened this debate, to develop our activities, so that we are there with knowledgeable information when new organisations are established in Europe.

I should like to mention one passing thought and then I shall sit down, because most of what I wanted to say has already been said. The passing thought is this: please let us have some idea how a man can protect himself, either with his service marks or with his trade marks, without colossal expense. If we believe in encouraging the small businessman, then this is an area that is of vital importance to the little man—and I use the phrase "little man" metaphorically. The little man, if he has to go to law as regards the protection of some of his little patents or something else, needs to do it successfully but within a range of finance that he can meet without being bankrupted. What more can I say that has not already been said?—nothing, so I will sit down.

2.28 p.m.

Earl De La Warr

My Lords, like the noble Lord, Lord Davies of Leek, I feel that all the arguments have been adduced, and adduced extremely powerfully, particularly by my noble friend Lord Campbell of Alloway, who I am glad to say has introduced this Bill. The reason that I have taken some interest in it is that for the best part of my life I have been engaged in working in service industries. I was employed for a long time by a very large conglomerate whose name some of your Lordships will know, and about 90 per cent. of whose companies were service companies stretching from passenger transport to entertainments, to Wembley Stadium, to plant hire, to laundries. One could almost say: you name the service, we have it. It is for that reason that I thought that I should take an interest in this Bill. Accordingly, in order to bring myself up to date, I went to discuss the matter with some of my old friends.

It might help your Lordships' consideration of this Bill if I give your Lordships one example from an associated company—namely, Initial Services, which is a textile rental company. The nature of their business is that they rent out towel cabinets and keep them serviced with clean towels every week; they rent out linen garments to girls in factories, which they design themselves, and take them back, wash them and trim them. They are involved in industrial overalls and, to a growing extent, they are in office cleaning. Thirty per cent. of their business is overseas, carried out through subsidiary companies all over Europe, in Australia and the Far East. They have been keenly aware of the need to protect themselves as a service company.

About a year ago they started to see what they could do about it, but, try as they would, they came to the answer that your Lordships will expect, and were told that there was no way that they could register their mark as a service mark, and that they would have to depend upon common law. So they did the only thing they could, which was to register the one piece of machinery which they have, which is the towel cabinet—from which your Lordships will have drawn lengths of towel in order to dry your hands—and thereby accepted that all that was available to them was the trade mark on goods.

However, they did not stop there because they were so anxious to protect themselves in these matters that they began to register service marks in the countries in which they had subsidiaries. They have already registered in France and I believe that it is their intention to register a service mark wherever they trade and wherever the service mark is available. I can only say that their reasoning is exactly the reasoning that we have heard from your Lordships this afternoon, but I thought your Lordships would like to know of a specific example of a company which feels that it needs protection and is worried about what will happen when the Community mark comes along.

We have heard that 64 countries have already done this. It is eight years since the Mathys Report was published. I find it extraordinary that successive Governments have succeeded in putting this important trading matter into their bottom drawers. There have been constant approaches and constant excuses as to why they cannot proceed and I daresay that the excuses have varied through the years. Probably the one that we shall get this time is the arrival of the Community mark; but my noble friend Lord Campbell has dealt very adequately with the inadequacies of that.

I should just like to say one more thing and, if I may be so impertinent, I should like to offer the Government a bit of advice and something of a warning. There are many trade associations which understand these affairs; there are a number of intelligent companies which understand them; but it is a fairly esoteric subject. It is not the sort of subject that comes up at board meetings once a month, and up to now a great many service companies have not been aware that there is legislation of this sort that could come on to the statute book to give them protection of this sort.

I want to warn the Government that, as a result of this debate, there will, I am certain, be a volume of pressure which is altogether greater than anything that they have known in the past. For the reasons that have been given, and also, if I may say so, for the reason of their own self-protection, I think that they would be very well advised to take this Bill seriously and not only see it through this House but make sure that it ends up on the statute book.

2.35 p.m.

Lord Cawley

My Lords, I rise to support my noble friend Lord Campbell of Alloway. This is an amending Bill. It amends the Trade Marks Act 1938. Therefore, I thought that it was a suitable moment to say one or two things about that Act. The noble Lord, Lord Lloyd of Kilgerran, has said some somewhat flattering things about that Act, but I think he has been looking at it through rose-tinted spectacles. It is an open scandal that it has not been amended.

When it was quite a young Act in 1940, on 9th May, the important section that deals with infringement came before the Court of Appeal. Lord Justice MacKinnon said this: In the course of three days' hearing of this case I have, I suppose, heard Section 4 of the Act of 1938 read, or have read it for myself, dozens if not hundreds of times. Despite this iteration, I must confess that, reading it through once again. I have very little notion of what the section is intended to convey and particularly the sentence of 253 words, as I made them, which constitutes subsection (1). I doubt if the entire Statute Book could be successfully searched for a sentence of equal length which is of more fuliginous obscurity". For the benefit of your Lordships who do not usually use the word "fuliginous", it means "sooty, or dusky".

The Master of the Rolls said this: Nor must the fact that the language used is crabbed and involved deter the Court from endeavouring to discover its meaning. Every Act of Parliament must be approached with the conviction that its language is capable of a reasonable construction when carefully examined". I make no apology when I tell your Lordships that this is the second time that I have read the learned Lord Justice's remarks in this House, but the first time was so long ago that I think that a majority of the noble Lords who heard them then are dead and a new generation has arisen, so I thought it apposite to mention them today.

The difficulties in interpreting this Act go further, because about 30 years ago I read a paper to the Chartered Institute of Patent Agents entitled "Trade Marks wrongly Remaining upon the Register". That dealt with the circumstances in which a trade mark, validly registered, could become invalid in the light of later events. The provisions in the Act are anything but clear, and my paper was full of my own views which might, or might not, agree with the future judicial construction of the Act.

Five years ago next month, I spoke on the Second Reading of the Patents Bill and remarked on the greater necessity for a new Trade Marks Bill since the earlier Patents Act was passed in 1947 whereas the Trade Marks Act had been passed in 1938. I think I may repeat what I said then because I think it is apposite again today. I said on 24th January 1977, at col. 289: In a country depending on industry any Bill to reform patent law after 27 years is certainly welcome … I should like to point out that though patents are vital to industry, so are trade marks, and the last Trade Marks Bill was in 1938, which is 39 years ago. Many industrialists think that trade marks are far more important than patents, and I hope that we can have the assurance that in the near future there will be a Trade Marks Bill. I say this not from any partisan standpoint because I think that this side of the House has been equally as remiss as the other side in not dealing with these matters, which are so important to industrialists". The Lord Chancellor of the time, the noble and learned Lord, Lord Elwyn-Jones, replied: The noble Lord, Lord Cawley, raised the point that it was important that there should be a Trade Marks Bill also. I agree that it is important, but I am afraid I can make no promise that such a Bill will be introduced, and I will tell the noble Lord why. Negotiations are now taking place for the establishment of a Community trade mark. I think the noble Lord will probably agree with me that it is important to get that right so that whatever changes we may make will harmonise with Community proposals". Five years later, I do not agree that further procrastination is acceptable. The Bill before the House today does harmonise with Community proposals. Let us make an important and, to some industrialists, a vital improvement to trade mark law now. Real damage is imminent for some industrialists unless we do this. Any statement that there will be a new comprehensive Trade Marks Bill within the foreseeable future would obviously be somewhat hollow, and, if the present timetable is adhered to, I shall be in my mid-90s when I rise in my place to congratulate a future Government on introducing such a Bill. I urge my noble friend not to withdraw the Bill at this stage.

2.42 p.m.

Lord Lyell

My Lords, I am sure your Lordships will agree that my noble friend Lord Campbell outlined with the traditional clarity of his calling and profession and with real passion and feeling the purpose of his Bill and his reasons for seeking an amendment to the present Trade Marks Act. I wish to stress at the outset that the Government recognise the vital importance of the service industries to the economy of this country and fully understand and appreciate the valid reasons that have led my noble friend to introduce his Bill. He pointed to the fact, as did many other speakers, that service marks cannot be registered in this country, unlike many other countries. However, I stress that, unlike many other countries, we have the benefits of our common law, and service marks are forcefully protected under the common law.

We would not dispute that it is more convenient for a company involved in trade mark litigation to proceed by way of an infringement action based on a registered mark rather than a passing-off action under common law. But if those industries were hampered by the absence of registration facilities, we should have taken action before now. As it is, we consider that action taken immediately would be premature, for reasons I shall elucidate.

My noble friend drew attention to the report of the Mathys Committee and, as noble Lords will be aware, they recommended, among other things, that provision should be made for the registration of service marks. We are of the opinion that the recommendations have been largely overtaken by Community proposals, which are certain to result in fundamental changes to our law, and that includes, of course, trade mark registration. These Community proposals are, as noble Lords will be aware, already contained in a draft regulation and directive. Under the regulation, a single application to the Community Trade Marks Office would result in a single Community trade mark covering the entire Community. The national systems would co-exist with the Community system, but in order to ensure that they are in step with the Community system, the directive provides that the criteria for registration and validity, as well as the rights conferred by registration, would all be aligned with the Community system.

I am sure that your Lordships will readily appreciate that these proposals inevitably raise serious questions about the future direction of United Kingdom trade mark practice. This particular point has been made in a report by the Select Committee on the European Communities, prepared under the chairmanship of the noble and learned Lord, Lord Scarman, and which, I am given to understand, your Lordships will have the opportunity to debate after the Christmas Recess. I would hope that my noble friend would agree that it would be undesirable to embark on legislation of the kind proposed by this Bill before we determine the future course of British trade mark law.

My noble friend stressed that our service industries would be placed at a disadvantage unless a service mark register was created before the Community system came into force. I am aware that in trade mark circles in this country some anxiety is felt because the draft Community regulation does not provide for opposition to be raised against a Community trade mark application on the basis of an unregistered service mark. Instead a trade mark owner would need to protect his rights by the more complex invalidity procedure provided for in the draft regulation.

However, I would suggest to your Lordships that this problem is not confined to service marks, nor indeed is it confined to the United Kingdom. The Government will not stand idly by and allow our service industries to be at a disadvantage—and I wish to stress that point very strongly this afternoon. The Government have made constructive proposals for meeting this particular problem, and our proposals are receiving a very large measure of support in the discussions which are, as your Lordships are aware, taking place in Brussels. There is now a strong possibility that the draft proposals will be changed to meet the problem faced by owners of unregistered rights. Therefore, at this stage we cannot say that registration facilities for service marks must be provided before there is a Community system, because the final form of that Community system is still unclear.

At the next stage we should consider the likely effect of the Bill that is before your Lordships on the trade marks registry itself. It is not simply a question of taking on a few more staff—perhaps 50, or a few more, or a few less—to deal with the extra work. Since the time of the Mathys Report the input has gone up from 17,000 to over 21,000 applications each year. We believe that the addition of service marks would add up to another 5,000 applications each year. I am sure that your Lordships would agree that that would place a very severe burden on the registry at a most crucial time.

Sir Derek Rayner has already made a comprehensive study of the trade marks registry, and he has made a number of recommendations for improving the efficiency of the organisation as it at present exists. Once the changes are implemented, the registry should be in a position to reduce its already considerable backlog of unexamined applications and, above all, should be able to provide existing users with a better service. We are of the opinion that any interference with the reorganisation at this stage could bring about a severe deterioration in the service that is available and, above all, would increase the backlog of work to an intolerable level for all industries.

I am sure that the House will appreciate that even if the number of staff in the registry were increased from the current level of about 200 to around 250 to take on this added workload, the presence of such a high proportion of inexperienced staff would in itself seriously jeopardise the efforts that are now being made. We are very strongly of the opinion that to add to the burdens of the registry just now would not be prudent.

I should like to attempt to cover one or two of the points that have been raised in the very interesting debate that we have had on my noble friend's Bill. My noble friend was kind enough to give me a fairly detailed indication of what he proposed to say. I think he has a fairly clear idea of what I have in mind and of the Government's view. I hope to make absolutely clear the Government's view that we have sympathy with his Bill, and we shall certainly make clear all our views.

I am afraid that we do not agree necessarily with the noble Lord, Lord Mishcon, either on the cost to the trade marks registry, for the reasons which I explained, or, necessarily, on the European Communities aspect of this Bill. But that is I hope not purely a matter of professional opinion; it is the Government's considered opinion that these two arguments are not strong enough to warrant out right support of this Bill.

The noble Lord, Lord Lloyd of Kilgerran, raised (I think he called it) the Rysta case. I shall not follow him down that avenue. It is fascinating, but I would say to the noble Lord that we would not be able to comment on the appearance before various courts of trade mark agents or patent agents or barristers or any others who might feel that their professional qualifications enable them to appear with relevance before these courts.

We are grateful for the comments from my noble friend Lord Noel-Buxton and from my noble friend the Duke of Portland, but the noble Lord, Lord Davies of Leek, certainly allied himself, I believe, to my noble friend Lord Cawley. My noble friend mentioned one measure which (I think he said) was both "sooty" and "dusty", and my noble friend went on to point out that much of the language in this field was (I think I quote him correctly) crabbed and involved.

But, my goodness! in the commendably brief, relevant and amusing speech of the noble Lord, Lord Davies of Leek, he mentioned some question of molecular roulette in pharmaceuticals. The noble Lord, with his experience of that industry, could well be right. Indeed, he would agree that it goes a long way to showing that one should not gamble with the relevant trade marks or with other aspects of the pharmaceutical industry as far as trade marks and descriptions are concerned.

My noble friend Lord Cawley raised considerable correspondence and considerable comments on the passage of the famed Patents Bill through your Lordships' House. I hesitate to correct and jerk my noble friend's memory, but it was, as I recall and as I am sure noble Lords recall, just under six years ago, at the end of January 1977, when we set out on that lengthy Bill, to which there were over 600 amendments.

I would stress to my noble friend that, even if trade marks legislation or legislation of the type before us this afternoon is advanced by the Government when my noble friend is at the age that he suggested that he might be, knowing my noble friend's record and the record of service to your Lordships' House of noble Lords all round the House who are of considerably advanced years, we shall look forward to my noble friend's contribution in his 95th year. But I hope that we will have some trade marks legislation before then.

I hope I have covered most of the points that were raised in debate. In conclusion, I would say to my noble friend that we have every sympathy with his proposals to improve the protection available for service marks. We have not found a pressing need on the part of industry; we believe there is no pressing need from the Community; and we believe there is every need to take a balanced view of our trade mark law in the light of Community proposals already before us and, above all, to get the trade marks registry right before we embark on any new course.

Lord Davies of Leek

My Lords, does that nice little speech mean that this valuable document which the committee worked hard to produce under the chairmanship of Mr. Mathys in May 1974—and then, of course, we had some legislation later on—is kept in mind? Do they still keep the valuable work in mind, and do they ever look at the report in relation to the position that we are in today?

Lord Lyell

My Lords, I am sure that the department keep this report before them. As my noble friend pointed out, today's Bill, which has been proposed so ably by my noble friend, covers paragraph 70 of the Mathys report. The Mathys report is not gathering soot or dust in the department. It is in my office, and I know that it is in several other Ministers' offices as well.

Lord Mishcon

My Lords, before the noble Lord sits down, may I ask him whether he is aware that paragraph 70 talks about a passing off action being unsatisfactory as compared with a registered service trade mark? Is he further aware that, while he is deeply loved by this House, his speech on behalf of the Government in protection of industry was one of the weakest and most calamitous that I have ever heard?

Lord Lyell

My Lords, I am always very grateful for the kindness shown by your Lordships. I hope that I put the Government's case with my customary clarity. My forth right views may not be totally in accordance with the wishes of your Lordships' House; but, nevertheless, those are the views of the Government. The noble Lord points out that what appears in paragraph 70 of the Mathys report expresses an opinion. I hope I did not say that the Government agreed with that particular paragraph, but merely that my noble friend had selected that paragraph for his Bill. I am grateful to the noble Lord, Lord Mishcon, and reciprocate his comments that we all enjoy hearing his views and clarity on matters of the law. Of course, he is, after all, a professional lawyer; I am not.

2.58 p.m.

Lord Campbell of Alloway

My Lords, I shall be brief. First of all, I wish to thank all noble Lords who have spoken in this debate, not only for their very important contributions—which, for all we know, may shape a new course, as some noble Lords thought might happen—but for the toil spent in the preparation of those important contributions.

As Christmas is coming, I also wish to compliment my noble friend Lord Lyell on his style. I cannot compliment him on much else because, like the noble Lord, Lord Mishcon, I was unable to understand what he was saying. But he was put in to bat at the behest of his captain, the noble Lord, Lord Cockfield. I hope that your Lordships will agree that he defended his wicket as best he could, with flair and tenacity, as a loyal stonewaller.

There is a matter which I am told I have to mention for the record: that the amendment to be carried, which is formal in Committee, is adding paragraph 10 to the schedule. Section 68(1) is amended by inserting in the definition of "trade mark" the words: "or services" after the word "goods" in both places where that word occurs.

But, returning to the matter of substance in this debate, as the views of your Lordships have shown, the whims and fantasies of a department of state are ever subservient to national economic advantage. Those who understand the need for such advantage, as your Lordships on all sides of this House do, as industry does but as her Majesty's Government do not, make it plain that there is massive support for this Bill; and it is the duty of anyone, irrespective of political allegiance, to continue to stand their ground, as I have been encouraged to do in view of the support I have received from your Lordships and the support I have received from industry. Saying that, I will always be a loyal Tory, but this is really a bit much, as the case against the Bill (as advanced by the noble Lord, Lord Lyell) is plainly unintelligible.

As to the two points of unintelligibility, I would say to the noble Lord, Lord Mishcon—and I say this with no disrespect to him, as any practising lawyer would know—that this common law argument about passing off, put into the mouth of my noble friend Lord Lyell, is totally risible; and I will detain your Lordships on some future occasion by explaining why, if your Lordships accept that I could so explain. Furthermore, I do not agree with the noble Lord s suggestions as to delay; nor do I accept that the Government, as he says, will not stand idly by when he advances five separate unjustifiable reasons as to why they shall.

In fairness to my noble friend, who is not a lawyer and who has been led into dealing with these matters, I would say that if, when he opened his brief, one detected a musty whiff of departmental condescension, that is not to be laid at his door. The noble Lord is ever courteous, but condescension affords no substitute for reason, especially where the Bill has support from all sides of the House; where industrialists demand this protection; where there are no serious inroads on parliamentary time involved; where there are no undue demands on the time of parliamentary counsel envisaged and where there are no serious financial implications. Also, the question of staff has been dealt with, I hope, by various of your Lordships, and the implementing machinery presents no problems which may not with ease be surmounted. In submission, it would be right and proper to invite any Government to carry this Bill, subject to minor amendment in due course, with reasonable despatch. I therefore beg to move that this Bill be now read a second time.

On Question, Bill read a second time and committed to a Committee of the Whole House.