HL Deb 22 April 1986 vol 473 cc1123-44

6.22 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)

My Lords, I beg to move that this Report be now received.

Moved, That the Report be now received.—(Lord Lucas of Chilworth.)

Lord Northfield rose to move, as an amendment to the Motion, That this Report be now received, to leave out all the words after ("be") and insert ("not received until after the expiration of the normal interval of 14 days from the end of the Committee stage").

The noble Lord said: My Lords, I beg to move the amendment which stands in my name on the Order Paper today. On several previous occasions on these matters I have declared an interest as an adviser to a drug manufacturing company and, as we shall be dealing with these matters at some length this evening, perhaps I should again put that on the record, although, as I say, it is already there. One of the joys of belonging to your Lordships' House—and I regret having to detain Members this evening to explore this procedural matter—particularly to those whose long apprenticeship was served in the more unruly Lower Chamber, is the high standards of courtesy, of consideration and of consultation that apply throughout your Lordships' House. This applies not just in the Chamber, where it is visible to everyone, but also in the dealings between the usual channels, as they are called, and in the dealings which the usual channels (which, in effect, means the Government Chief Whip's Office) have with individual Members of your Lordships' House.

There is a very high standard of courtesy and consultation in these matters and I regret to draw attention to ways in which those high standards, in my view, have not been maintained. They are important not just because of the reputation of this Chamber, but because we are a part-time Chamber, too, and many of us have other things to do and have to earn our living; and that is taken fully into account. I may say also that in a long history in both Chambers, a history now of more than 30 years, I have never before had to make such a complaint in either Chamber.

I want to detail briefly the departures from these normal courtesies which I think have occurred in the case of this Bill. The first one is perhaps not important but it is symptomatic and therefore I should at least mention it. As the noble Lord, Lord Lloyd, knows, we agreed in the course of the normal consultations that take place on these matters that the Committee stage of this Bill could conveniently be taken on 25th March. Because of some muddle in the Government Chief Whip's Office—about which I make no complaint, for we all get into muddles at one time or another—it was found that that date could not be adhered to because the Government had forgotten a Scottish order that had to be put through this Chamber before Easter.

But, as the Committee stage of this Bill had to be postponed, in all those circumstances the usual channels asked the noble Lord, Lord Lloyd, and myself which dates would be impossible for us after Easter. I gave 14th April as the only date which was impossible for me. Imagine our surprise when we returned after Easter to find that this Committee stage was set down for 14th April. The Government have a full right to do so but, in accordance with the traditions of this House, it should have been done at least with information provided and not just put on the Order Paper. Certainly, it was done without consultation, and I suspect that we would all agree that to have had consultation about it would have been the more courteous way to proceed. There was, therefore, an offence to me, not particularly important but, as I say, symptomatic.

I now come to the Committee stage itself. At the Committee stage, I raised a very important issue concerning the pharmaceutical industry. It is an issue which had been raised in 1977, in 1979, in 1982 with the Government and in 1984 with the Government. Promises, promises were made to do something about the issue, but now when a patents Bill comes before your Lordships' House, a Bill which could be extended to deal with it, we are told, no, it is impossible to do so.

At issue is a part of the present legislation which is putting in jeopardy something like £150 million or £200 million of sales of pharmaceuticals and at the moment is costing in legal costs in the courts something like at least £3 million a year. It depends on the fight between the companies and the "pirates"—the copiers of drugs; and some call them parasites—who get legality to copy drugs under a system called "licences of right".

When I raised this issue at Committee stage, the noble Lord. Lord Lucas, who throughout has been courteous to a degree which is in contrast to the other things that I am complaining about, immediately announced that the Government acceded to the request of the industry that this part of the parent Patents Act should be repealed. He said that the industry had proved its case on this matter and that the Government were convinced that they should repeal. He said, "As soon as possible, but not now". He could not see it being brought within the ambit of this Bill.

We went away from the Committee stage when I had said I must consider what the Government had said in the light of the debate and we naturally needed some time to consult the industry. That was what was at issue. This is a big industry and it is not easy to contact everybody in a few days and of course we also needed to consult the noble Lord, Lord Lucas, about this difficulty. This is the first time that we have been able to legislate about it for some years. There has not been a Patents Bill since 1977.

6.30 p.m.

What then happened was that, again without consultation and without information provided, the Government gave six days between Committee and Report stage. Anyone reading the proceedings at Committee stage would realise the need to consult the industry and the noble Lord the Minister. It would have been in the best traditions of this House to ask us whether we could consult within that compressed period of time. No such consultations were offered and no information was offered either.

I know that the reply of the usual channels on this issue is that the Companion to Standing Orders prescribes 14 days between Committee and Report stage in the case of reasonably long and controversial Bills. The answer will be that this is not a long and controversial Bill; but this is a long and controversial issue. This matter was fully explored and a concession was offered by the Government at Committee stage. There was need for time on that long and difficult issue alone to try to reach agreement with the Government about what to do at Report stage and whether we could persuade them that the amendment that the Minister had promised to repeal the provision could be incorporated in the Bill. The shortness of the Bill (I say this with frankness) does not absolve the usual channels from keeping to the custom to consult in this House about such matters. Anyone who relies simply on the Companion to Standing Orders is missing the point of my complaint. Courtesy is one thing; we do not always need the letter of Standing Orders or the Companion to tell us how to behave and to circumscribe us.

In the event, we managed to cobble together hurried meetings yesterday with the noble Lord, Lord Lucas. He was as courteous as he could possibly be. But as a result of that he has had to consider the matter in precipitate haste, I have had no opportunity to go back to the industry on the matter and we are now reaching Report stage with a totally unsatisfactory situation in which the industry is left at a disadvantage because there has not been time to consult it on a most important matter.

What can be the possible explanation for this chapter of unhappy events? I suggest there are three possible explanations, none of which is very attractive. The first is that the Government do not consider this industry important enough to merit these consultations. I hope that that is not true. I know the Government are making a lot of enemies at present, but they do not need me to suggest that they should not be going out of their way to make more enemies than necessary. I hope that we shall have an assurance that they regard this industry and this issue as important and regret that there was no time left for proper consultation.

I suppose that the second possible explanation for the way that this matter has been handled is that the Chief Whip was determined to railroad the Bill through, giving me as little time as possible for the consultations in order to choke me off and to prevent me from moving further amendments at Report stage. I hope again that I am wrong, because that would be a most discourteous way to behave.

The third possible explanation is that this represents a general hardening of attitude in the Chief Whip's Office and in the usual channels and that these things will not be as courteous, as informative and as subject to consultation as they have been in the past. That is probably the most likely reason of all. In the end I guess it is a mixture of all three.

I have to raise this issue tonight not because I feel particularly offended—although I do—but because it is important to place it on record that at least one Member of your Lordships' House believes that our high standards have not been maintained on this occasion, and in the hope that by raising it today I may receive assurances that it will not happen again, or at least every effort will be made to avoid it happening again. I beg to move.

Moved, as an amendment to the Motion, That this Report be now received, to leave out all the words after ("be") and insert ("not received until after the expiration of the normal interval of 14 days from the end of the Committee stage").—(Lord Northfield.)

Lord Bruce of Donington

My Lords, I listened to my noble friend with considerable interest and, I confess, in dismay to some degree. He has raised the question of the usual channels and the normal standards that he understands obtain in the conduct of business in your Lordships' House. That being the case, and he being also a Member in this House of the party to which I have the honour to belong, he could have made representations to the Opposition Chief Whip with a view to having the matter sorted out, if it were possible to sort it out, through the usual channels as he has indicated.

My noble friend, who has been good enough to disclose his interests in the matter, sought to raise in Committee what is not a complicated issue at all. It arises essentially from the legitimate discontent of a large section of the pharmaceutical industry, to which he referred, with the provisions of the 1977 Act, which permitted licences of right in certain circumstances for a period of four years out of the 20 years to which the rights were then extended. This was a transitional matter. The large pharmaceutical companies, which said that they were adversely affected by this, did not like this transitional measure relating to the four years and legitimately (I make no complaint about this) have objected to it actively ever since and are still objecting.

My noble friend suggests that the matter he raised is complicated. As I said, it is not complicated at all. It concerns a conflict of interests within an industry in which the originators of these magnificent discoveries do not wish to be lumbered with a four-year period during which their inventions and discoveries can be licensed to others under a compulsory licensing system; a licensing system which, incidentally, to some degree they have circumvented by the use of their subsidiaries to license some of their products for licence fees, which could then be used as a precedent in negotiations with these other generic medicine manufacturers. I have no particular interest in one or the other. I have nothing to say against the large pharmaceutical companies or against the smaller generic companies. These are issues which ought to be discussed within their proper framework.

The noble Lord, Lord Lucas of Chilworth, when he discussed this issue in the House before, indicated that he thought the Bill was not the proper vehicle for airing this matter. It was not a suitable measure in which the Government, if they wished, could have incorporated the relief for which the noble Lord, Lord Northfield, is asking. But at the same time he said that a comprehensive Bill was going to be brought forward in October and that a White Paper would be published concerning intellectual property and innovation, to which he referred.

We for our part on this side, including my noble friend for the moment, were quite content to leave it at that because the noble Lord indicated (if your Lordships will refer to the Official Report) that the matter ought to be considered in the light of the White Paper and that at some later stage—the noble Lord may not have said October specifically, but I gather that it was later on—a comprehensive measure would be brought in. For my purposes, I am prepared to leave it at that. I would much prefer, if the whole law is going to be amended, to have the particular amendment to which the noble Lord refers discussed within that context.

My noble friend raised a point of some interest when he referred to the minimum time intervals referred to in the Companion to the Standing Orders. It is quite true, as the noble Lord himself indicated, that there ought to be 14 days between the end of the Committee stage and the start of the Report stage in respect of all Bills of considerable length and complexity. I do not think this Bill is of considerable length and complexity, but I would not wish the Government to be able to take advantage of the quite obvious gap in the Companion to the Standing Orders and, following the course of action of the Government at this stage, unduly to shorten the period of time between Committee and Report stages to a period that is quite unacceptable, because there is no particular time or day limit laid down here in respect of Bills which are not of considerable length and complexity.

I sincerely hope that the noble Lord or his colleagues, when they come to introduce Bills of another kind, will not cite this particular instance as giving them licence in future to depart from what has come to be thought of as the norm. But, having said that, as I say, I do not think that a Bill of this type, which is a very short Bill, the amendments to which are quite uncomplicated in nature, really ought to have given rise to a formal complaint about discourtesy in this House or discourtesy to the House. Had it been a public Bill of some complexity, perhaps different observations might have been made, but I do not think this particular Bill ought to give rise to such an occasion.

6.45 p.m.

Lord Lucas of Chilworth

My Lords, I rise to respond on behalf of my noble friend the Chief Whip, who because of matters of state is not able to be in your Lordships' House. I do hope that no noble Lord will see in his absence any discourtesy whatsoever.

I do not know what the noble Lord, Lord Northfield, is in fact going to do this evening and I must assume that he is going to deal with the amendments in his name on the Marshalled List. I gather that is the case and so I will resist answering specifically some of the points which will undoubtedly emerge during the course of our debate on those amendments later this evening. But at the risk of being accused of being pedantic, I think I ought just to correct one or two things which have been said in the course of our discussions on this amendment.

The noble Lord, Lord Northfield, in quoting the Companion to the Standing Orders, referred to Bills of a long and controversial nature. Indeed, the noble Lord, Lord Bruce of Donington, read the passage. The Companion to the Standing Orders says: on all Bills of considerable length and complexity", whereas in fact this Bill is neither long nor really complex, although it is technical. The noble Lord, Lord Bruce of Donington, during the debate we had on the 14th April, said that the matter which the noble Lord, Lord Northfield, had raised then on the Question whether the Schedule should be agreed to introduced perhaps controversial elements. The noble Lord, Lord Bruce, said that he wanted to look at the matter.

That was on the understanding that a Bill of limited scope and without controversy should proceed in the manner in which this one has done. The arrangments are of course entirely for the managers of the House's business—that is, the Chief Whips of the principal parties. I suggest that it is not for my noble friend the Chief Whip, or indeed for any of my noble friends on the Front Bench to seek the views of Members on other Benches. It is for their own Chief Whips' officers to do that. At the end of the day it can only be the Chief Whips of the parties who agree to a certain procedure being adopted—one which, incidentally, the Standing Orders permit. That is what has happened in this case.

I have to say to the noble Lord, Lord Northfield, that I had no difficulty in giving consideration between yesterday and this evening to the one and only matter on which I gave an undertaking to consider. It was attached to but did not form the substance of his amendment; so I have felt able to deal with my part of that discussion. However, I should like to thank him very much for his kind remarks. I think I should quote, to make sure that nobody misunderstands what was said on the 14th April, from col. 484 of your Lordships' Hansard: Let me tell the Committee how we see the position at present. My right honourable friend the Secretary of State for Trade and Industry said last autumn to representatives of the industry that he would consider a repeal if they could demonstrate that there had been a significant erosion in the useful patent life since the existing legislation was passed in 1977. The Government are satisfied that the industry has demonstrated this. We are therefore prepared to introduce legislation having this effect. That is just a little different from what has been said. I did not say we would introduce legislation on the 1st October, if the noble Lord, Lord Bruce of Donington, will forgive me. What I said was this. I again quote from lower down the same column: We announced that we intend to implement the legislation providing for service marks registration on 1st October this year. That is contingent on the passage of this Bill. Undue delay could therefore prejudice that date being met. The only thing I said with regard to a comprehensive Bill was that there was to be on the 16th April the publication of a White Paper on intellectual property and innovation which would give rise to changes in patent law, and that when we introduced legislation to give effect to that White Paper we would then be in a position to undertake the wider legislation in regard to licences of right. I have repeated, and did on that occasion, that this is not the Bill to do it. This Bill is essentially concerned with trade marks, service marks and the computerisation of the Patent Office registers. It would be wrong in this Bill to anticipate any aspects of the more comprehensive Bill which we shall introduce as soon as parliamentary time permits.

Lord Northfield

My Lords, I am just a little puzzled. I want to understand what the noble Lord is saying. I am not criticising him. I am not sure of the point he is making. He said explicitly in column 485: The Government consider that this"— that is, the Bill to be introduced in the next Session or whenever it is— would be a suitable vehicle and are prepared to include in it provisions to repeal the provisions relating to licences of right for 1949 Act patents".—[Official Report, 14/4/85; col 485.] I am not sure whether he is departing from that, I shall be grateful if he will tell us.

Lord Lucas of Chilworth

My Lords, I am repeating the first thing that I said: that we would introduce legislation having that effect. Columns 484 and 485 must be read together. I do not think that there is any disagreement between any of us on that matter. We have given an undertaking to legislate on the licences of right issues at the earliest opportunity. We see that within the context of the forthcoming implementation by legislation of the White Paper. That should leave this Bill without the controversy, great length and complexity that the amendments in the name of the noble Lord, Lord Northfield, cause. I ask your Lordships to consider the Report of this Bill and reject the amendment to that Motion tabled by the noble Lord, Lord Northfield.

Lord Lloyd of Kilgerran

My Lords, my name was mentioned en passant, as it were, by the noble Lord, Lord Northfield. It was mentioned in the context of the absence of courtesy and high standards. I should like to say that I have put down many amendments to this Bill and at all stages I have had the greatest courtesy and help from all the officials with whom the noble Lord the Minister has been associated.

Of course difficulties arise in fixing dates. As a practitioner at the Bar for most of my adult life I have been used to being messed about with regard to the fixing of dates. I notice that the noble Lord, Lord Buxton, who probably has some experience of that is smiling sweetly at that observation. I am used to being pushed around as to dates. I do not like it, but if necessary I will make my protests.

However, I have some sympathy with the idea of postponing actions and dates and having as long a delay as reasonably possible. I should have liked to support the last part of the amendment proposed so excellently by the noble Lord, Lord Northfield—that there should have been another delay of 14 days from the end of the Committee stage to the start of the Report stage.

The issues involved in the amendments tabled by the noble Lord, Lord Northfield, are substantial. It is incumbent upon the Government to come to a decision publicly on the issues as soon as possible.

Lord Northfield

My Lords, I wish to reply briefly to three points. I shall then ask your Lordships' leave to withdraw my amendment, having aired my complaint. My noble friend on the Front Bench said that this is not a matter of complexity. I am afraid that it is, because the problem is not in the event of the repeal of the disliked subsection of the 1977 Act but in how the industry lives between now and then.

The Government have said that they want to get rid of that provision, but the industry must go on living with it for what might be a year or 18 months. Goodness knows whether that will be the finality. All the claims for licences of right will go on and substantial—I have mentioned the figure of £3 million—legal costs are likely to be incurred resisting that in the next 12 to 18 months.

The complexity of the matter arises from the transitional provisions—how we get from now until eventual repeal.

Lord Lloyd of Kilgerran

Yes, my Lords.

Lord Northfield

My Lords, I hear the noble Lord, Lord Lloyd, saying "yes". That is the complexity for which we wanted time to negotiate, discuss and refer back to the industry. That is a substantial sum and it is a substantial industry incurring it. In my view it would have been courteous to give us enough time, having heard the noble Lord's views on the matters, to go back to the industry and hear its views about what further representations might be made today. I have not had that opportunity.

That brings me to the second point made by the noble Lord, Lord Lucas, who said that he had no difficulty in seeing me yesterday. I am glad that he did not. I am grateful to him, but I have had no time to go back to the industry. I only received his decision half an hour ago. I have no answers. I have had no opportunity to seek the industry's views on what he has put to me in private and to return with that view checked with the industry that is making the representations about what is to happen in the next 18 months. That is what I am complaining about.

It is all very well for Ministers to say that they can do things. They might sometimes reflect on the difficulties outsiders have in doing things as quickly when a whole industry is at stake.

My final point is simple. It is that the noble Lord, Lord Lloyd, who was kind enough to support at least half of what I said, said that he was used to having dates knocked around. I am not complaining about that—not at all; nor am I complaining about the way that the Public Bill Office has helped him and me. We have marvellous service from our staff. What I am complaining about—and I repeat it—is the absence of the courtesy of at least informing us and consulting us about what was being done. That is what went adrift in the Chief Whip's office in this case. It is what I hope will not go adrift on future occasions.

We have no rights in these matters. We have only customary courtesy. As I said earlier, I believe that in this case that customary courtesy of informing us about the inconvenience that we might have to suffer because of dates, changes or whatever, was not forthcoming. I was not informed or consulted. I was left to find out and to go to protest.

I believe that the debate has served a worthwhile purpose. I think that it will lead to this not happening again. With my noble friend on the Front Bench I hope that it will at least have the effect of ensuring that attempts to railroad through business about which someone feels passionately and on which he has something to say and has to consult will not be made again. The Government should not have carte blanche to do that. Having aired the matter I am satisfied, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to: Report received.

7 p.m.

Lord Northfield moved Amendment No. 1:

After Clause 2, insert the following new clause:

(" Provision for medicinal products.

.—(1) In paragraph 4(2)(c) of Schedule 1 to the Patents Act 1977, there shall be inserted at the beginning the words "Except in relation to medicinal products".

(2) In section 130(1) (interpretation) of that Act there shall be inserted the words" "medicinal product" has the meaning assigned to it by section 130 of the Medicines Act 1968".

(3) This section shall come into force on such day as the Secretary of State may by order, made by statutory instrument, appoint and such order may contain such transitional provisions as may be specified in the order.").

The noble Lord said: My Lords, I understand that it is for convenience—and it certainly seems sensible—to discuss together new clause numbered 1, new clause numbered 2 and Amendment No. 12. So I beg to move Amendment No. 1 and I shall speak to the others. Inevitably, we have covered a little of the ground in the exchanges on my previous amendment, and I shall not go through the full case for the repeal of licences of right which I set out, however briefly, at Committee stage. Nevertheless, it is important just to get on the record the difficulty of the industry.

As I said at Committee stage, these licences of right are licences which cannot be resisted in the last four years of any patents filed between 1967 and 1978. It means that the copyists—I am afraid that the industry calls them parasites—are able to get a licence without any prospect of resistance from the owners of the patents for those four years. As I have explained, the companies involved feel particularly concerned about this for two further reasons. First, the 1977 Act removed the right of patent owners to apply for extension of patents on the grounds of inadequate remuneration. That would have been one way to help patent holders to live, to see returns on their patents and to finance all the research. But that right was removed by the 1977 Act. Previously too the licences of right were voluntary ones and were subject to negotiation. Now that they are mandatory—if I may use that word—no one can resist them. They are obligatory on the holder of the patent. So the holder is now in double jeopardy.

But there is a second reason why this is also very difficult, which I did not mention at Committee stage. The problem for the pharmaceutical industry is that its effective patent life is now down to about eight years. Parliament has legislated to make patents last for 16 years, but in the pharmaceutical industry—and it applies almost wholly to the pharmaceutical industry—once you have registered a new chemical entity for patent, you have many years of testing for safety in the interests of the public, about which the industry does not complain. But figures have proved, as the noble Lord, Lord Lucas, acknowledged at Committee stage, that patent life generally has now been eroded to an enormous extent. The estimate is that the effective patent life now for pharmaceuticals has been reduced from 16 to eight years.

Your Lordships will understand that if you then happen to have a patent which was registered between those magical dates of 1967 and 1978 it is a matter of concern when that effective life of eight years is reduced by four years of obligatory licences of right giving, in effect, only a four-year life for patent. That is the main concern of the industry at this stage in trying to get a return for the huge R & D expenditure that it has incurred. So those are the points about licences of right: the industry is in difficulty, the patent life is eroded and the voluntary nature of the licences of right and the other possibilities of remuneration have been removed.

Then, as I said at Committee stage, this issue was never debated or spelled out in either House when it was pushed through in 1977. I have here the pages from Hansard which show that these provisions slipped through without anybody spotting them. They were moved and agreed without anybody spotting their significance at the time. On top of that, they had the further disadvantage, which if we had all been alive to what was happening we would also have pointed out, there were no guidelines at all as to the remuneration to the patentee for those licences of right. We are now in a legal minefield—quagmire is a better word—because the comptroller-general of patents has nothing to guide him in issuing these licences of right and in providing for compensation to the patent holder. It was something which slipped through both Houses without our noticing and there were no proper guidelines to make it work effectively and with knowledge of the rules.

Lastly, as I pointed out then, this is not a system that applies in any other of our competitor countries. No other country has these licences of right. So we now reach the situation where this industry is at grave disadvantage and the 12 main drugs, which are now at risk as a result, amount to a value between £150 million and £200 million of sales which the copyists can effectively ask to be able to use.

The problem therefore arises of how we exist between now and the promised repeal—I am afraid I must stick to that; the noble Lord used the word "repeal" in col. 485 of Hansard—in what may be a year or even 18 months' time. Here we have something which the Government feel is wrong, something on which the noble Lord accepts the industry's case. However, we cannot, apparently, find in our discussions any way of relieving the industry from the burden—which will continue for a year or 18 months—of erosion of that patent life by these licences of right, and the burden of all the legal costs that are being incurred in order to try to find guidelines made through the courts in the absence of guidelines in the statute. The position is now that one drug has been referred—I suppose as a test case—to the European Court with the further costs that will be incurred there. We end up with patent protection in this country weaker than in any other country of Europe, and indeed of the free world, and it is time that we did something about it.

What can we do to try to ease the position in the next 18 months? This is why I wanted time—proper time, if I may say so bluntly—to consult the industry. There are three, or perhaps four, possibilities. The first is repeal which is in Amendment No. 1, and I do not accept that we could not adapt this Bill to implement that repeal now. This is always a matter that is being put off until tomorrow and one wonders when it will be actually reached. This is a Bill about patents and I see no problem. But I fully understand that the Government, having made up their minds, will use their majority here to defeat any outright repeal today, for reasons which the noble Lord, Lord Lucas, has spelt out.

I therefore come to my second new clause which I submit is an alternative. It might even carry the support of my noble friend Lord Bruce of Donington because it postpones the debate about this matter. It gives the Government the power to suspend such licences of right until the substantive legislation comes along to repeal them altogether. Every suspension would be subject to debate and annulment, on a prayer for annulment brought before the House. That is a second possibility which I advance as my alternative.

The third possibility is one which I have explored with the noble Lord, Lord Lucas. He has told me that he does not think it will work and therefore I shall deal with it only briefly. Section 123 of the 1977 Act gives the Secretary of State powers to give guidelines to the comptroller. The noble Lord says—and I accept his view; at least I shall not challenge it—that these are not the kind of guidelines for which that provision of the 1977 Act was framed and that to provide guidelines to nullify some of the effects of the legislation between now and final repeal is beyond the power of Section 123. I accept what he says. I know that there is legal advice the other way.

I come now to my fourth point. I hope that even today the noble Lord will be able to say something about this. There is one other way of helping the industry and I should have liked time between Committee and Report stage to explore that fully with it. I refer to the possibility that the Government can announce today that the repeal legislation will cover any patents endorsed for licences of right from today's date. Having given notice that they intend to repeal, the Government could say today, "And in that repeal, having given adequate notice, we shall cover any patents endorsed from today onwards for licences of right". I do not need to spell out the precedents for that. It is regularly done in legislation when governments have reached a decision but are not quite ready to put it into statutory form. But at least that final, fall-back position would give comfort to the industry, perhaps relieve some of the legal costs and stop some of the applications for licences of right until the repeal can take place.

It is with that framework of suggested alternatives that I move the first amendment today. I hope that I have at least made the case that there is a problem. My noble friend Lord Bruce did not think that this was complex. It is hideously complex and I hope that in the complexity of this situation the noble Lord. Lord Lucas, will be able to offer some comfort to this important industry. The noble Lord has acknowledged that privately to me. It exports one-third of its production. It is probably one of the best performers in exports. It has a high reputation in this country for its research and development and for investment in that research and development.

There is no need to make this industry into an enemy. I hope very much that the noble Lord can give me some comfort on the possible options, two on the Marshalled List and the third which I have raised with him, as an announcement that he might be able to make to cushion the effect of the delay between now and final repeal. I beg to move.

Lord Lloyd of Kilgerran

My Lords, it is in a spirit of humility and nostalgia that I rise to say a few words, particularly as I see the noble Lord, Lord Lyell, sitting on the Government Benches. I was concerned with him in the Patents Act 1977 for days and months—it seemed years—when he was on the Opposition Benches. I also make a confession. It is now more than a month since I put down an amendment in effect to abolish licences of right in relation to medicinal patents. It was not presented in such an elegant way as the noble Lord, Lord Northfield, has presented his amendments. The noble Lord has presented his case for the industry frankly and fairly. It is a serious matter and it is causing the industry a great deal of trouble.

7.15 p.m.

My confession is this. I initiated the action to put down an amendment to abolish licences of right when I met with some pharmaceutical product companies. I thought that it was a good point on which at least to raise a marker. I was prepared to make a speech (which I made when the Patents Act 1977 was being considered by your Lordships) to the effect that licences of right provisions would be damaging. I looked up that speech. It was supported by the noble Lord, Lord Lyell, by all the other Conservatives and by members of the Liberal Party such as the late Lord Byers, as showing a difficulty for the industry which would result in heavy costs, much litigation, the loss of jobs and, above all, discouragement to the industry in relation to research.

However, it was Easter-time and I could not discover the whereabouts of the noble Lord. The other channels put down this matter for discussion on a date when I could not come. They kindly altered the date for me and on that date I understood that the noble Lord, Lord Northfield, could not arrive. This is where I made an error for which I now apologise. I unilaterally withdrew the amendment without further discussion. But I had been told also by a colleague in the other place that licences of right were to be abolished by the Government, that discussions were going on with Ministers to that effect and that a Bill would be coming up fairly soon. In those circumstances I feel that I was right to save the time of the House by withdrawing the amendment.

But having said all that, I should like to say this in support of the noble Lord, Lord Northfield. He has extracted from the Government the assurance that they have now decided to abolish licences of right in regard to pharmaceutical patents. If I am wrong about that I shall be corrected. But if it is true that the Government have come to the conclusion that the licences of right clauses should be abolished, it is their public duty, if I may presume to say so, to bring in a Bill to that effect so that the whole matter can be adequately discussed in both Houses. It is true, as the noble Lord, Lord Northfield, pointed out so forcibly, that there is uncertainty at the present time as to whether the decision of the Government in private will be put forward, and if it is put forward whether it will be passed into legislation. I do not want to detain the House any longer at this late hour but I feel that the Government should bring forward legislation to embody the assurances we have been given that licences of right are to be abolished, so that that can be discussed in both Houses.

Lord Lucas of Chilworth

My Lords, I am grateful to the noble Lord, Lord Northfield, for the way in which he has put forward his points. Perhaps I may make it quite clear to your Lordships that we regard the pharmaceutical industry as one of our major industries. The noble Lord is quite correct. The industry exports about one-third of its manufactured products and earns for this country between £1.6 billion and £1.7 billion each year. It is not an industry that should be trifled with; nor would I wish to trifle with it over this matter because, broadly speaking, we agree with the noble Lord in his summary of the position.

The noble Lord said that I had agreed with him about the money issues that he raised. I may have misunderstood him; I certainly acknowledge the erosion of the useful patent life. I heard what he had to say about the amount of money that this was costing the industry. However, one must accept that there are two sides to be considered. Whatever anybody may think of what, if I may use my term, I call copyists rather than parasites, they have made preparations in good faith, and within the law, to seek licences and to exploit the inventions. I believe that it was the noble Lord, Lord Bruce of Donington, who said that here we have a conflict of interests and that those interests also must be given consideration.

I turn to one or two of the specific points that the noble Lord, Lord Northfield, raised. He spoke first of the 1977 Act. I remind the House that when the Bill was introduced into your Lordships' House, it did not contain provisions to extend the term of 1949 Act patents, which would therefore have continued to run for 16 years. In fact, it was during the Committee stage in another place that there was a lengthy debate on the subject of whether the patents ought to be extended. At the conclusion of that debate, there was agreement that patents with five or more years to run should have a 20-year term; the quid pro quo being that during the extra four years, the patent would be endorsed "licence of right".

It was therefore something of a compromise solution. It was part of a package that had been agreed with the Standing Advisory Committee on Patents. I remind your Lordships that a similar course obtained in 1919, when the patent life was increased from 14 years to 16 years.

The Government are in no doubt that the implications of the measure were fully understood at that time. It is only the run-out, if I may use that term, starting in 1983 that brought home to roost the effect of that which has set up the need for repeal, abolition or whatever one may call it. I again say that we have given an undertaking to do just that thing at the appropriate time—which we see as being done in the Bill that will deal with intellectual property rights as set out in the White Paper published on 16th April.

The noble Lord asked why, having accepted the case for a change, the Government will not take this opportunity to make it. I say to him that the present Bill does not provide the opportunity for a major and controversial change in patent law. The proper place for that is, as I have indicated, in the wider piece of legislation that we anticipate. The present Bill is short, it is narrow in scope, and, until this matter was raised, it was non-controversial.

Acceptance of either of the noble Lord's amendments would make the Bill controversial. It would lay the Bill open to the tabling of other contentious amendments, all of which would add to the time needed for debate and might possibly—I put it no higher—cause the Bill to sink without trace. In that event, the advantage that the industry wants for 1st October this year would be lost.

The noble Lord, Lord Northfield, asks why we cannot merely suspend the operation of provisions. The amendment is not without merit as a proposal. Indeed, at the appropriate time its flexibility might well commend it. The Government do not rule out the legislation they have undertaken to produce being along such lines, but I say again that it would cause this Bill to be controversial and give rise to the other difficulties that I have mentioned.

The noble Lord suggested also that the amendment is not controversial because it postpones any controversy until the statutory instruments are laid before Parliament. With respect to the noble Lord, that is a little disingenuous. I might call the amendment a foot-in-the-door approach; just as it would be supported by all those who favour a change in the law, it would be opposed by those who resist change. They would not defer opposition and wait for the statutory instruments. In other words, this amendment is as controversial as the other.

The noble Lord made a small point about Section 123 of the 1977 Act. He will know, because we have discussed this matter, but I believe he would like it on the record, that our view is that there is no power either under Section 123 of the 1977 Act or otherwise to make such rules as the noble Lord envisages. The rules authorised by Section 123 are those governing procedure; for example, the periods allowed for parties to a dispute to file arguments or produce evidence. For the rules to indicate how the comptroller is to make his decision would be an unlawful fetter on the exercise of his discretion.

The noble Lord, Lord Northfield, then raised his fourth point about announcing a date. He asked me to give a commitment that the legislation will be as from a certain, particular date. That would be wrong in principle. There are of course precedents for legislation to be retrospective to the date of announcement but most of the instances of which my officials have been able to advise me are measures that affected the relationship between the Government on the one hand and the public on the other. I suggest that it is a different matter where the change would alter the balance between two groups of private parties. Before we did that, we should have to consult. It will be necessary to do that, particularly on the question of the transitional arrangements, because any other announcement would prejudge that issue. We must decide what should be done about existing licences, about existing applications for licences and about patents already endorsed as licences of right. Any announcement that I might make today would, I believe, prejudge the answers. What I can say in that context is that we will set in hand at the earliest possible time within this year those consultative procedures, but they will not be dealt with in a short time, because there are a number of people who wish to give us their views.

Finally, I say to the noble Lord in that context that if I went further it would be unfair to applicants now, because any announcement of a patent becoming endorsed in the future would by its very nature leave the endorsement retrospectively removed. That would be unfair to those who have in good faith already applied for a licence and made preparations.

I believe that I have answered fairly fully every point that the noble Lord has mentioned. I am grateful to the noble Lord, Lord Lloyd of Kilgerran. I believe he had some little amusement at seeing here my noble friend Lord Lyell, who reminded me earlier that he had dealt with this matter all those years ago.

Let me say to the noble Lord that we have given an undertaking to deal with the matter that is the subject of his amendment. I reiterate that we will do so at the first available opportunity. With that explanation, I hope that the noble Lord will feel sufficiently agreeable to withdraw this block of amendments.

Lord Mottistone

My Lords, I intervene briefly to say that those who advise me—principally the Business Equipment Trade Association—are very keen that this Bill should go through unchanged as quickly as possible. My noble friend the Minister said that the amendments now before us would have the danger of perhaps turning the Bill into a contentious one. Not only would they not be in accord with what I have just advanced as the view of many people, but also they might endanger the Bill itself. That would be most unfortunate and I hope therefore that the noble Lord, Lord Northfield, will be convinced by my noble friend the Minister and will not wish to press the amendment.

7.30 p.m.

Lord Northfield

My Lords, I am grateful to the noble Lord, Lord Lucas, for the kind way he has dealt with the propositions I have put this evening. Frankly, I do not accept his point that the Bill would sink without trace if it were broadened. Governments have control of the other place. I do not know of any government Bill that has sunk in this way for lack of time. It is one of those arguments disingenuously (if I may return the compliment) trotted out by the noble Lord when it is convenient, and forgotten in between. All governments try this tactic of saying, "Do not rock the boat or you may lose the Bill." What a lot of nonsense that is!

I remember the occasion when I was putting through legislation on deer and trying to amend the Scottish legislation. All the time it was said, "Do not move amendments. You may lose the Bill." We moved amendments. We took no notice. The Bill became law in the ordinary way. This is tried by every government to railroad policies through, whatever they are. Therefore, I do not accept that. Equally, I realise that the Government could marshal their majority to enforce that if I press the matter.

I have only two other comments to make. I am grateful to the noble Lord for saying that my proposal for suspension in the new clause in Amendment No. 2 may be one way of going ahead. That was a bit of amateur drafting on my part, with the help of the Public Bill Office, but it seems to me that this is a fruitful proposal to consider and the debate has been worthwhile even if only to establish that. I am also grateful for what the noble Lord said about starting the consultations needed for a move towards repeal, or whatever it is that he actually promised.

As regards establishing a date, I do not accept what he said. I believe that it is morally wrong for a government to say, "We believe this industry is suffering an injustice. We must put it right but that may be some considerable time ahead and we have no means at our disposal to protect it meanwhile from the mischief in the original legislation." That is a pretty poor point to make to Parliament. Every government, having made up their mind about an issue, as the noble Lord, Lord Lloyd of Kilgerran, said, has a duty to protect those people they are trying to help as soon as possible rather than let them go on suffering injustice for what may be a very long time. It is a very poor reply and it will be noted by the industry.

Industry has not had a very happy relationship with this Government. It has been kicked pretty badly over the price regulation scheme, the blacklisting of pharmaceuticals, transfer pricing, parallel imports, and the many other things which have been imposed on industry in recent months. It will not be very happy that when something can be done expeditiously the Government say, "No. We are sorry, but you must go on being bled by these pirates for another 18 months or so until we can get the legislation through." As I have said, it is a poor reply.

I can only say that the only pleasurable part of the evening for me was when the noble Lords, Lord Lloyd and Lord Lyell, recalled the 1977 exchanges. That was fun, because I was in the lovely position at that time, as the noble Lord, Lord Lloyd, will remember, of moving the elimination of compulsory licensing against my own party and carrying it with the help of the then Conservative Opposition, now the Government. That was, in my view, constructive. We had a good day and we rejoiced at doing something for industry. I do not believe that the noble Lord, Lord Lucas, can go home today and say that he has had a good day for industry. I believe that he could have done much more; and industry will note that he could have done so.

I have no chance of pressing these matters successfully against the payroll vote and all the ranks that will be mustered against me. Therefore, I beg leave to withdraw Amendment No. 1 and I shall not move Amendment No. 2.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Clause 4 [Short title, extent and commencement]:

Lord Lucas of Chilworth moved Amendment No. 3: Page 3, line 10, leave out ("7 and 8") and insert ("and 7 to 9").

The noble Lord said: My Lords, this amendment is consequential on one effected during the Committee proceedings. Clause 4(4)(c) lists those paragraphs of Schedule 2 which concern trade marks or service marks and provides that they shall extend to the Isle of Man, with scope for modifications. A new paragraph, paragraph 9, was added in Committee and the present amendment includes that paragraph in the list to which I have just referred. I beg to move.

On Question, amendment agreed to.

Schedule 2 [Service marks etc.]:

Lord Lloyd of Kilgerran moved Amendment No. 4:

Page 10, line 9, at end insert— (" (m) in the Trade Marks Act 1938, section 38 and Schedule 2 (Sheffield marks);")

The noble Lord said: My Lords, with the leave of the House, I should like to speak also to Amendment No. 10. The object of both these amendments is to press upon the Government the desirability, in the interests of the economy associated with Sheffield trade marks, that the Sheffield mark shall be considered to be a service mark within the context of this Bill.

I tabled a similar amendment in Committee, but as a result of a misconception in regard to how amendments should be taken a misunderstanding occurred between myself and the Minister for which I was partly to blame. I had no knowledge until entering the Chamber as to how it was intended that the amendments should be linked together. The noble Lord the Minister was good enough, however, to deal with much of the substance of the reason that the Sheffield mark should not be considered to be a service mark.

The Minister was reading from a brief and therefore there is nothing offensive to him in what I am saying. The observations he made in Committee as to why Sheffield should not be a service mark leads me to say that there has been a total misunderstanding of the industrial position in relation to Sheffield marks and even a total misunderstanding of the very basic nature of service marks. I think it is fair to say that in this part of his brief the Minister was dealing with the basic issues of whether Sheffield should be a service mark. He said: This really does not make any sense at all, since the provisions refer to metal goods and to goods made of metal. The present position is, therefore, that no clear provision is made for Sheffield service marks. The provisions he was talking about are the registration of the word "Sheffield" in regard to a very wide collection of goods.

The Minister went on to say: Normally there are two ways in which one might deal with the matter. Either a form of wording could be found which created a service mark equivalent to Sheffield trade marks, or else these provisions could be specifically omitted from the 1938 Act in its application to service marks. The Government decided on the latter course for two reasons: firstly, it is our view that there is really no service mark analogy to a Sheffield mark, which is by its nature for goods; secondly, the Government have decided to implement the recommendation of the Mathys Report that the Sheffield Register should be discontinued".—[Official Report, 14/4/86; col. 491.]

I was informed only this morning by the patent and trade marks adviser to the Cutlers Company that there are large numbers of industrial areas where Sheffield would be justified in being registered as a service mark. I am told that the Sheffield mark is registered as a trade mark in Schedule 4 of the 1938 Act for a number of classes of goods, Classes 6, 7, 8 and 14, together with 20 and 21. One of those classes relates to silverplated goods. It is the practice to silverplate for cutlery and other purposes.

It would be possible for a firm, if Sheffield is not a service mark, to plate goods and refer to them as Sheffield. There is nothing to stop a firm using the word "Sheffield" for goods even if it is not adequately registered for a service arrangement. I am told, for instance, that the goods for which the Sheffield mark is registered cover cutters, scythes, guillotines and shears. It would, therefore, be possible in Sheffield and elsewhere for somebody to start a servicing agency for shears and say that it was a Sheffield company for sharpening these tools. There are many hand tools and cutting edges for which the Sheffield mark is registered, but if a company decided to start up a service agency to arrange for the servicing of hand tools and cutting edges, it would not be possible for the Cutlers Company, which owns the Sheffield trade mark, to stop that.

I was told this morning that it is quite common for companies to be set up for the purpose merely of refurbishing vices, vices used in the carpentry trade particularly. There is a company in Sheffield that has a trademark also registered as a service mark merely for dealing with that kind of equipment. Therefore, it is totally without reality for the Government to say that Sheffield should not qualify under this Bill as a service mark.

One of the reasons that the noble Lord gave for not acceding to an amendment before was, as I read it, that a report of some 10 years or so ago, the Mathys Committee, said that the Cutlers Company should be deprived of its age-long practice of dealing with applications for registration of Sheffield marks and that it should revert to the Patent Office. That was said by the Mathys Committee after it took evidence.

I disagree with the idea of depriving the Cutlers Company of this function, but, nevertheless, that is for the future. The change of the position of the Cutlers Company is for the future, and at the present time it would be a disaster, I am told, if Sheffield could not be registered as a service mark. It would lead to firms which are servicing goods and which are associated with goods for which the mark Sheffield is registered riding on the good will of the famous Sheffield mark, and it may lead to spurious imports, so I am advised. Firms in this country are running a servicing agency in relation to the goods for which Sheffield marks are registered. I beg to move.

7.45 p.m.

Lord Lucas of Chilworth

My Lords, I am quite sure that the House will be grateful to the noble Lord, Lord Lloyd of Kilgerran, for explaining his amendment so clearly. I fear that there may well be some misunderstanding between us, because it seems to me that there is a suggestion that the trade mark "Sheffield" itself is under threat, and this is just not so. This trade mark is not a Sheffield mark. It is an ordinary certification trade mark. It is quite unaffected by the Bill, or indeed, by the Government's intentions with regard to the Sheffield register.

It has been suggested also that repeal of the provisions relating to the Sheffield register will somehow inhibit action by the Cutlers Company to prevent misuse of the name "Sheffield". This is misconceived for a number of reasons. First, the name "Sheffield" will continue to be a registered trade mark, and it can indeed be registered as a service mark as the Bill stands. In that regard, therefore, the amendment is not needed.

Secondly, the present provisions do not allow the Cutlers Company to influence the decison as to whether a mark should be put on the register. Thirdly, the possibility of filing an application with the Cutlers Company is only an option. Lastly, I suggest to the noble Lord that a person carrying on business outside the Sheffield area who sought to register a mark, including a reference to Sheffield—and that I imagine is the kind of thing that the company would wish to prevent—would not even be eligible to file with the company.

I do not think the noble Lord's fears are well grounded. I hope that he will give careful consideration to what I have said. If we are not fully understanding each other, we shall have time between the end of this stage tonight and the next stage when, if necessary, we can have a longer and more detailed discussion. I feel that this would probably be the wish of your Lordships' House this evening.

Lord Lloyd of Kilgerran

My Lords, I am grateful to the noble Lord for his reply. I hope that he will forgive me if I say that most of his remarks are irrelevant, except for two passages, and I took down the exact words he said. He said "Sheffield can be registered as a service mark in spite of this Bill". I accept that. He then said that my fears are not well grounded; that a Sheffield mark cannot be used as a service mark in the context of this Bill. I shall read Hansard carefully tomorrow, but in the circumstances of his fair reply, I shall withdraw the amendment on the understanding that I may have to bring it up again at a later stage.

Amendment, by leave, withdrawn.

Lord Lucas of Chilworth moved Amendment No. 5:

Page 10, line 32, at end insert— ("2A. In subsection (1) of section 19 of the Trade Marks Act 1938 (registration) after the word "registered", in the second place where it occurs, there shall be inserted the words ", subject to section 39A(2) below,".").

The noble Lord said: My Lords, with the leave of your Lordships, I should like to speak also to Amendments Nos. 6, 7, 8, 9 and 11. May I draw your Lordships' attention to the fact that what appears on the Marshalled List as Amendment No. 11 is not quite correct? Will your Lordships please delete the words "column 3", so that Amendment No. 11 reads, "Page 5, line 18, at end insert"? Then the amendment is set down. This would make proper sense because this passage is a new line and is not attached to that which goes before.

In moving this series of amendments, I should remind the House that they have all been tabled in fulfilment of an undertaking which I gave to the noble Lord, Lord Lloyd of Kilgerran, during the Committee stage. At that time I said that if the amendment, which stood at No. 12 in the Marshalled List at the Committee stage, was withdrawn the Government would bring forward their own agreed amendment having the same intended effect.

I do not know whether your Lordships will feel that we have done better than that but if quantity is anything to go by we certainly have, because we have tabled six amendments which together have that effect. I think the noble Lord will agree that he was acquainted with these. I understand that he is content. I hope that he will so signify and I beg to move this amendment.

Lord Lloyd of Kilgerran

My Lords, I am very grateful to the noble Lord and to his advisers for bringing this matter to a conclusion. I hope that I am not being rather vulgar when I say that I can record another winner in this matter: my amendment was only in one line. But this is an important series of amendments because it relates to the difficulties which arise with the convention applicants as against the ordinary applicant in regard to damages for infringement. It is an important amendment and of great use to the industry. I am indebted to Mr. Ball, the president, and Mr. Tatham, the vice-president, of the Institute of Trade Mark Agents for drawing it to my attention. I accept these amendments as being, I hope, more or less as I indicated at the earlier stage and I wish them well.

Lord Lucas of Chilworth

My Lords, with the leave of the House, perhaps I may say that my noble friend beside me has reminded me that in giving an explanation as to why I wanted to change what was on the Marshalled List in relation to Amendment No. 11, I said "Page 5". Of course I should have said that the amendment should read: "Page 15, line 18 at end insert—".

On Question, amendment agreed to.

Lord Lucas of Chilworth moved Amendments Nos. 6 to 9:

Page 10, line 33, leave out ("the Trade Marks Act 1938") and insert ("that Act").

Page 10, line 44, after ("country") insert ("and that date shall be deemed for the purposes of this Act to be the date of registration").

Page 10, line 44, leave out ("but nothing") and insert— ("(2A) Nothing").

Page 10, line 46, leave out from ("the") to end of line 47 and insert ("date of the application for registration under this Act").

The noble Lord said: My Lords, I beg to move.

On Question, amendments agreed to.

[Amendment No. 10 not moved.]

Schedule 3 [Repeals]:

Lord Lucas of Chilworth moved Amendment No. 11:

Page 15, line 18, at end insert—

("1 & 2 Geo. 6. c. 22 Trade Marks Act 1938 In section 19(1), the proviso.").

The noble Lord said: My Lords, I beg to move.

On Question, amendment agreed to.

[Amendment No. 12 not moved.]