COMMONS AMENDMENT (Hansard, 18 February 1986)

§ Lord Gray of Contin
My Lords, I beg to move that this House do agree with the Commons in their amendment.
This amendment arises from legal doubts about the extent of the authority's present powers to exploit the results of its research. In carrying out research and development for the Government and other customers, the authority has naturally made a number of valuable discoveries and inventions, the rights to many of which belong to the authority. This intellectual property which the authority has acquired can be exploited, profitably, for example by licensing the technology.
509 The Government believe this desirable both because it brings revenue to the authority and encourages it in its research to look for ideas which can be commercially successful, and also because it aids the transfer of technology to private companies. The authority has for some years been successfully exploiting its discoveries and we would hope that this would continue under the trading fund. Following discussions with the authority, the Government have decided that there is a need for clarification of the authority's power to dispose of its intellectual property commercially and that this justifies introducing an amendment which puts it beyond doubt that the authority has and is deemed always to have had this power.
This amendment will ensure that the authority can exploit its discoveries profitably whether by selling, licensing the use of, or otherwise dealing with the intellectual property arising from those discoveries, including joining with others in a company to exploit them. It also ensures the authority is able to exploit commercially its intellectual property where this arises from research and development carried out for the authority in pursuit of its functions, by contractors, for example, or by a university research department. It also covers intellectual property which is at the disposal of the authority under exchange and collaboration arrangements.
At a time when we are encouraging a more commercial approach by the authority, it would be a nonsense to leave it in doubt about whether it could exploit the results of its research, which would otherwise have only limited application. However, I have to say that we are not altering the powers in a way which would extend the authority's functions beyond our previous understanding of the position. Thus the authority cannot undertake the serious manufacture of articles for sale in the non-nuclear field, and the amendment is written so as to leave that situation unaltered. The Government believe that such an extension of the authority's powers would be contrary to their general policy of reducing, not expanding, the public sector's role in the economy. I beg to move.

§ Lord Stoddart of Swindon
My Lords, I should like first of all to thank the noble Lord, Lord Gray of Contin, for his courtesy in writing to me about the Commons amendment and for explaining it so well. I should like to say on behalf of the Opposition that I believe the Commons amendment is very sensible. Indeed, we welcome it since it clarifies beyond all doubt the authority's position. I have to add that we should prefer the amendment to extend the authority's right to manufacture, but this is not the time to argue that point. The Official Opposition will not obstruct the Commons amendment.

§ Lord Lloyd of Kilgerran
My Lords, in welcoming the amendment I thank the noble Lord the Minister for explaining its scope. I cannot resist saying, from a personal point of view, how glad I am to note that the Government are attaching such importance to intellectual property, where so much wealth resides, 510 and that the Atomic Energy Authority will attempt to exploit a whole number of useful inventions.
In saying that, I wonder whether the Government have noted that the commercial activities of the authority are somewhat limited by the scope of the amendment. I have indicated on the telephone to the office of the noble Lord the Minister the points I have in mind. If the Atomic Energy Authority is to exploit commercially its own inventions it may want to purchase other inventions allied to its own research and development. That is a basic transaction common to commercial exploitation in industry; that is to say, the purchase of intellectual property belonging to people outside the authority. It does not seem to me that, so far, the powers of the authority are clear in relation to that one matter.
It is also possible that an employee of the authority has an invention which he owns. Difficult situations can arise with employee inventors and the scope of their ownership. I do not see that this amendment covers the position where the Atomic Energy Authority would wish to purchase the invention of an employee.
I should like to raise another point. Subsection (2) of the amendment seems to limit the powers of the authority because it defines intellectual property as including, patents, trademarks, copyrights, registered designs and any other scientific or technical information of commercial value". In my experience it is often difficult to decide what is the commercial value of particular know-how. In the usual jargon associated with intellectual property, intellectual property is usually said to cover know-how, whereas in this definition the Government have decided to replace know-how by, any other scientific or technical information of commercial value". If this were to be redrafted I should have thought that the words "of commercial value" should be left out to give the authority full power to deal with intellectual property other than property which is immediately of commercial value, or can be conceived to be of commercial value, because it is so difficult in the early stages of an invention to decide whether it has commercial value.

§ Lord Gray of Contin
My Lords, I first thank the noble Lord, Lord Stoddart of Swindon, for his acceptance of the Commons amendment and for the way in which he welcomed it. I am always slightly apprehensive when I hear that the noble Lord, Lord Lloyd of Kilgerran, has been in touch with my private office, particularly when it is on a subject, such as this, on which he is an acknowledged expert. I am appreciative of the fact that he took the trouble to advise me of the two points he wished to raise so that I might have the opportunity of having them examined and having an answer prepared for him.
To take the second point first, the words are not in any sense crucial but do not seem likely in practice to be a restraint on a power to exploit commercially. They apply only to the words, any … scientific or technical information". If that information is of no commercial value it seems improbable that the authority would be able to exploit it commercially; and, to the contrary, if it can so exploit it, then it has some commercial value.
511 On the first point the noble Lord raised, many of the inventions made by employees will already belong to the authority. Section 39 of the Patents Act 1977 provides that in fairly wide circumstances employees' inventions belong to the employer. Those circumstances are broadly that, first, the invention was within the employee's normal or specially assigned duties and might reasonably be expected to arise from those duties; or, secondly, the invention was made in the course of the employee's duties and at the time of making it he had a special obligation to further the interests of the employer's undertaking because of the nature of his duties and the responsibilities arising from the nature of the duties. All other inventions belong to the employee. The authority's staff handbook draws attention to these provisions.
It does not seem likely that there will be a significant number of inventions which do not belong to the authority already. Accordingly, there does not seem any need to make special provision for any other inventions in respect of which the authority would have the same power as in relation to any third party's inventions. Those powers will depend on the use to which the authority wish to put the invention. If they require it for the purposes of conducting research in the non-nuclear field, the necessary power to acquire is already conferred by Section 2(2)(b) of the Atomic Energy Authority Act 1954 as read with Section 4 of the Science and Technology Act 1965, since such research is to be treated, as if such research were research into matters connected with atomic energy". Clause 8 would allow the commercial exploitation of any intellectual property so acquired.
As my honourable friend said in another place, it is not intended that the clause should extend the functions of the authority beyond what they were believed to be. There is no intention to extend the powers of the authority to allow them to trade in intellectual property in the purely general sense. Therefore, such an extension of the power as proposed by the noble Lord, Lord Lloyd, seems unnecessary.
I am grateful to the noble Lord for raising these points. I am glad that we have had the opportunity to look at them again. I wonder whether, with that explanation, he would be prepared to agree to the amendment made in another place.

§ Lord Lloyd of Kilgerran
My Lords, I am very grateful to the noble Lord the Minister for his explanation on this matter. I again apologise for bringing it to his attention at such short notice. All I can do at this stage, having raised these matters, is to wish the authority every success in their commercial exploitation.