Lords Sitting of 12 January 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.
The Earl of Albemarle—Sat first in Parliament after the death of his grandfather.

Basic Science Research: Funding
Lord Peston: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will provide additional funds for research in basic science.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, my right honourable friend the Secretary of State for Education and Science announced on 3rd November 1987, additional funds for research in basic science in 1988–89 and the two subsequent years. Funding for scientific research in 1989–90 to 1991–92 will be reviewed by the Government in this year's public expenditure survey.
Lord Peston: My Lords, I thank the noble Baroness for her Answer. May I remind her—
Noble Lords: Question!
Lord Peston: My Lords, does the Minister recall the debate we had in November, just following that statement, in which all sides of the House expressed strong support for basic science and suggested that it might be a good idea to review the expenditure statement of her right honourable friend the Secretary of State? Is there any likelihood of urgent action to meet the needs of science, which are so important for our country's future?
Baroness Hooper: My Lords, when studying the advisory board's report, the Government are considering any additional resources that may be required. They are well aware of the debate and the comments made by your Lordships during it.

Drink-Driving: Christmas Campaign
2.39 p.m.
Lord Dormand of Easington: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that their drink-driving campaign over the holiday period was successful.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, Yes. The media response to the launch of the Christmas campaign was excellent and the subject was given wide coverage throughout the holiday period. Surveys indicate that the campaign has made a considerable impact, although we must wait for definitive figures. There is welcome evidence of a hardening of attitudes against the drinking driver, but drinking and driving remains our most serious road safety problem. There will be no let-up in the Government's efforts to deal with it.
Lord Dormand of Easington: My Lords, I welcome the overall drop in the number of positive breath tests and accidents. Does the Minister agree that the reduction is small and that is some parts of the country the figures increased considerably? Is not the main lesson to be learnt—I think that the Minister has already said this—that there are no grounds for
complacency? Is the time not now appropriate to introduce random breath testing?
Lord Brabazon of Tara: My Lords, I agree that there are no grounds for complacency. One needs to take the figures for random breath tests which have so far been given with a certain amount of caution because we have not yet had the figures for the overall number of tests. They will not be available for a little while. We shall have to wait a little to obtain the percentage of positive breath tests.
With regard to random breath testing, the police already have wide powers under the legislation. They can stop at random. They can test if they have reasonable cause to suspect the presence of alcohol in a driver's body, if a moving traffic offence is committed or if an accident is involved.
Lord Inglewood: My Lords, has my noble friend any information relevant to these campaigns in neighbouring countries so that it can be compared with what has happened here?
Lord Brabazon of Tara: My Lords, we keep closely in touch with the United States, Canada and Australia. Despite some dramatic changes in those countries, they are no more successful overall in containing the problem than we are.
Lord Molloy: My Lords, would it be possible to increase the number of police officers and vehicles on the motorways? I am sure that all Members of the House and the Minister will agree that the very appearance of a police officer in his vehicle on a motorway or on a major road has a dramatic and worthwhile effect, irrespective of whether drivers are drunk.
Lord Brabazon of Tara: My Lords, enforcement is a matter for the police. Their efforts reflect society's demands. They take their responsibilities seriously every day, not just in the holiday season. Last year there were 120,000 convictions for drink-driving.
Lord Wigoder: My Lords, are the Government aware that on the Continent random testing is

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extensively carried out and meets with remarkably little resentment from sober drivers?
Lord Brabazon of Tara: My Lords, I am sure that the noble Lord is correct. The question is whether police resources are better spent in random breath testing or in using their already extensive powers.
Lord Underhill: My Lords, does the noble Lord appreciate that I agree with what he says about the success of the publicity campaign? He said that there were no definitive figures. When those figures are available, will adequate publicity be given to an analysis of them?
Lord Brabazon of Tara: My Lords, I am sure that when the figures are eventually available from the police forces a good deal of publicity will be given to them. We are encouraged by the amount of attention that the media are now giving to this subject, not through paid publicity but through editorial coverage. That is encouraging.
Lord De Freyne: My Lords, would the noble Lord answering on this subject today take into account the quality of vision; that is, the eye rather than the breath?
Lord Brabazon of Tara: My Lords, this Question is related to drink-driving and there is no doubt that the effect of drink on people's ability to drive, however well they may think they drive, is fairly dramatic.
Lord Dormand of Easington: My Lords, in view of the improvement brought about by this short campaign, will the Government now consider continuing the campaign against drink-driving?
Lord Brabazon of Tara: My Lords, our campaign nowadays is targeted to three phases throughout the year: July, October and December. We plan to continue that in the coming year.

Higher Education Funding
2.43 p.m.
Baroness David: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what studies have been made of the comparison of the funding of public sector higher education and of the University Grants Committee funding of universities since the Green Paper of 1985.
Baroness Hooper: My Lords, the Department of Education and Science published a paper entitled Higher Education: Funding Across Sectors to support the 1985 Green Paper published as Cmnd. 9524. The Government have undertaken no subsequent comparative studies. However, the needs of universities and of other higher education institutions are reviewed annually in the course of the Government's decisions on public expenditure.
Baroness David: My Lords, will the Minister accept that, even allowing for research costs and the existence in the university sector of expenses for faculties like medicine, there is still at today's prices a differential of something like £500 a year between the amount spent on a university student and on a public sector student?
Baroness Hooper: My Lords, I understand that the figures published in the department's December statistical bulletin 14/87 show an even higher differential than that quoted by the noble Baroness. However, the figures in the bulletin were derived simply by dividing relevant expenditure by the relevant student population. They are crude calculations which take no account of differences in the funding arrangements under which each sector operates, nor of the very different research efforts in the two types of institution.
Baroness David: My Lords, does the Minister think that is an acceptable situation? I should also like to ask whether attention is being paid to all the criticisms by HMI and by the validating bodies that the amount of money going into public sector higher education is simply not sufficient and that courses may well not be validated in the future unless the resources for equipment and so on are improved.
Baroness Hooper: My Lords, I find I cannot be in agreement with the noble Baroness on her last point. However, I would judge that the greater clarity in planning and accountability which are likely to be introduced with the new Universities Funding Council and the Polytechnics and Colleges Funding Council in the proposals in the Education Reform Bill will make comparisons of various kinds much more possible.
Lord Glenamara: My Lords, do not the figures, which the noble Baroness has not quoted, show that the country is getting first-rate higher education on the cheap from the polytechnics? This is seen throughout the country in building maintenance and replacement of equipment, where comparatively small items have now become major capital items. No amount of extra accountability will cure the situation. What the polytechnics need is a great deal more money.
Lord Hailsham of Saint Marylebone: My Lords, that is what we all need.
Baroness Hooper: Hear, hear, my Lords! The Government certainly recognise the excellent job which has been done in the polytechnics over the years. It is precisely because the polytechnics and colleges have been so successful in what they do best that the Government are offering them the new deal set out in the Education Reform Bill. Nevertheless, the two sectors are not the same.
Lord Annan: My Lords, does not the noble Baroness think that these questions are misjudged? Surely one of the things which has bedevilled the expansion of higher education in this country is parity of esteem between institutions in which it is

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thought necessary that every institution be paid exactly the same amount and every institution have exactly the same length of degree. Is it not necessary that there should be differentials between different instititions?
Baroness Hooper: Yes, indeed, my Lords. The situation is not as simple as some noble Lords may have suggested. We believe the two sectors do retain and will retain differences in important aspects of their provision. The universities, after all, have a considerable commitment to basic research, while the polytechnics and colleges are mainly teaching institutions. The Government will continue to address the funding of all higher education on the basis that the provision is different.
Baroness David: My Lords, granted all that, surely the need to have the courses sufficiently well endowed for them to be validated by CNAA and so on and to be thought adequate by HMI is extremely important. Whatever the noble Lord, Lord Annan, says, it seems to me that this is something which needs to be taken into consideration.
Baroness Hooper: My Lords, it is taken into consideration.
Lord Orr-Ewing: My Lords, is my noble friend aware that there are universities which manage to get in four terms a year rather than three? Thus they sometimes get the same amount with better results by courses lasting two years instead of three. If this were more widely adopted and we had this competition, it might well be possible to expand quality and standards, as well as the number of people in our universities and polytechnics. Could this not be considered most seriously in view of the results already being obtained at Buckingham?
Baroness Hooper: My Lords, yes, I am fully aware of the institution which conducts its arrangements in that way. All I can say is that in the debate and discussions which have been carried on in the light of the Education Reform Bill, all manner of new ideas and concepts were brought up. The whole question of our total education system is under continual review.
Lord Glenamara: My Lords, will the noble Baroness say what is the good of parity of esteem if the polytechnics cannot afford to paint the front door, repair a flat roof or replace the computer? They really are hard up and the position is building into an extremely serious situation. Will the noble Baroness recognise that these past five or six years of neglect of building repairs and maintenance and replacement of equipment have led to an appalling situation?
Baroness Hooper: My Lords, the Government's proposals in the Education Reform Bill are to give the polytechnics autonomy and to release them from the financial control of local education authorities. With the powers of financial delegation that they will now have they will be far better able to cope with the priorities of each individual institution.
Lord Monkswell: My Lords, what assurance can the Minister give that central government funding of polytechnics will be any better than local authority funding of polytechnics, given that it is the Government's restrictions on local authority funding which are causing the problems to start with?
Baroness Hooper: My Lords, I do not think that the noble Lord is aware of the true position which is outlined in the Bill. The funding of the polytechnics will be given to the PCFC—the new funding council that is to be set up—but each individual institution will have considerable control of its own financial arrangements.
Baroness David: My Lords, will the noble Baroness say who will be giving the money to the PCFC?
Baroness Hooper: My Lords, ultimately it is the taxpayer who gives the money to everybody.

Weather: Long-Range Forecasting
2.51 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they are taking to encourage international cooperation on improving long-range weather forecasting.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, the Meteorological Office is involved in a variety of studies and research programmes with both national and multi-national agencies, but sadly the success of long-range forecasting remains at best modest. I regret that I cannot forecast much improvement in that situation.
Lord Campbell of Croy: My Lords, I thank my noble friend for his full and frank reply. However, with the latest advances in technology, including the proposed British laser mechanism to operate from a satellite, before long can we expect more reliable and accurate forecasts of gales and blizzards?
Lord Trefgarne: My Lords, I think that I should counsel my noble friend to the effect that there is no magic solution just around the corner for this particular problem. The system to which he refers is one which will measure the wind speed and direction from the satellite. I have no doubt that this will be of great benefit to our forecasters, but even that system will be subject to some shortcomings: for example, it will not be able to measure wind speed through cloud cover.
Lord Irving of Dartford: My Lords, does the noble Lord agree that the recent storm and the resulting serious damage highlights the need for efficient weather forecasting services which are adequately funded? Is he aware of the European Parliament's call for co—operation in this field? Is he further aware

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that at the geographers' and geophysicists' conference in Vancouver it was forecast that with proper research, before too long it will be possible to forecast up to eight months fairly accurately? If the Government are not prepared to investigate these matters there can never be as efficient a service as would be possible if the proper support was given.
Lord Trefgarne: My Lords, if I may say so, I think that the idea that we shall be able to forecast accurately eight months ahead is somewhat fanciful. As the noble Lord pointed out, there was some difficulty over the storm which struck the southern part of the United Kingdom towards the end of last year. That was a problem of hours, not days or months.
Lord Grimond: My Lords, does the Minister accept that many of us would agree with him that if we could be sure that a forecast was right eight hours ahead, we should be in a greatly improved situation, at least in the part of the world where I live, which admittedly is rather subject to storms? Can the Minister say whether the improvement in long-term forecasting will improve short-term forecasting, because that is what most people such as fishermen are interested in? I wholly agree with the Minister that the idea that one can have accurate forecasts with all the expertise at the Meteorological Office and people's prickling of thumbs and Norwegian fishermen who are always broadcasting their views is totally mistaken. The public should not be encouraged to think that any forecasts are more than an intelligent guess.
Lord Trefgarne: My Lords, I do not think that it is fair to say that short-term forecasting is an intelligent guess. Indeed, drawing on my own experience in the aviation world, the very short-term forecasting provided for that service, for example, is extremely good. I should like to pay tribute to the Meteorological Office in that way. However, the noble Lord is right that the longer-term forecasting is a much more difficult science and there is certainly no easy solution just around the corner.
Lord Hailsham of Saint Marylebone: My Lords, despite what might have been inferred from some of the supplementary questions, is it not a fact that the services provided by the Meteorological Office of this country are highly regarded throughout the world and even operate at a profit to Her Majesty's Government?
Lord Trefgarne: My Lords, I am afraid that they do not operate at a profit. The total cost of the Meteorological Office is some £80 million a year and it earns about £20 million in fees from various sources. However, my noble and learned friend is quite right; its services are highly valued around the world. For example, there has recently been a programme of research in connection with rainfall in central Africa to which the Meteorological Office has contributed most effectively and, I understand, to the considerable satisfaction of those who live in those parts.
Lord Cledwyn of Penrhos: My Lords, following the recent storm is it not the case that the Minister's right honourable friend commissioned two distinguished scientists to look into the meteorological services in this country? Will the Minister say how long this study will take and when he expects a report?
Lord Trefgarne: My Lords, the noble Lord is quite right. After the recent catastrophic storm my right honourable friend did ask the Meteorological Office itself to study what had gone wrong and at the same time asked two distinguished experts to look at the study which the Meteorological Office prepared. I understand that both those reports are likely to be with Ministers very shortly and certainly both will be published.
Lord Campbell of Croy: My Lords, will my noble friend arrange for the Meteorological Office to be put in touch with the sources to which the noble Lord, Lord Irving of Dartford, referred? Will he also perhaps arrange for them to be put in touch with those who arrange the cricket programme in the United Kingdom?
Lord Trefgarne: My Lords, the Meteorological Office services are of course available to anybody who wants them. As for the conference to which I think the noble Lord, Lord Irving of Dartford, referred, I imagine that the Meteorological Office was represented at that conference. Perhaps I may inquire further into that.
Lord Irving of Dartford: My Lords, will the noble Lord accept that proper tribute has been paid to the effectiveness of short-range forecasting at the moment? Will he bear in mind that it is not many years ago since that looked like crystal-gazing too? Therefore the proper resources applied to the very people who have created an effective short-term service will eventually create a better long-term service, but they need the support and they need the resources.
Lord Trefgarne: My Lords, the noble Lord referred to resources. I have already mentioned in reply to my noble and learned friend the cost of the Meteorological Office, which is around £80 million a year, about £8 million of which is already deployed for research purposes.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Copyright, Designs and Patents Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Farm Land and Rural Development Bill will be further considered on Report.

DTI: Future Role
2.59 p.m.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, with the leave of the House, I shall make a statement about major changes in the role of the DTI and its policies.
We have been engaged in a major review of the main activities and organisation of the DTI. Our decisions are set out in the White Paper entitled DTI—the Department for Enterprise which will be laid before the House later today. We conducted this review building on the new objectives for the DTI which we published on 13th October last year. In our opinion, considerable changes in the Government's support to industry will be required to face the challenges of 1992 and to succeed against ever-increasing international competition.
In an economy with a GDP of some £400 billion the main role of the DTI with its budget of £1 billion must be, in conjunction with other departments, to influence attitudes and to encourage open markets in order to promote enterprise and prosperity.
We shall start by helping young people to learn about business and enterprise. We shall work with employers with the aim of giving one teacher in 10 each year some personal experience of the world of business. We shall further aim to ensure that every young person will have at least two weeks' work experience before leaving school as part of his or her preparation for employment. We shall help young people to become more knowledgeable about new technology. We shall increase our support for computer aided design and other advanced technologies in schools, further education and teacher training colleges. We shall work in partnership with commerce and industry to improve management education and development and spread awareness of best practices in new technologies. Those are essential to the competitiveness of British industry and commerce.
We shall help small and medium-sized firms to improve their performance in marketing, design, quality and advanced manufacturing methods. We are putting in hand forthwith a major new initiative to encourage firms with fewer than 500 employees to take expert consultancy advice in those key management functions. We shall extend the programmes in April to cover business planning and financial and information systems. We shall provide more than £50 million in the next financial year and some £250 million in total in the three years to 1991 to encourage firms to take advantage of this initiative.
In 1992 the single European market will be completed, ending most barriers to trade within the European Community. The opening of the Channel Tunnel in 1993 will make us physically a part of this much bigger market for all our goods and services. We shall therefore make it a priority to help business prepare for, and benefit from, this great extension of the market within which we must compete.
The need to open up competitive markets is an essential strand in DTI's policies. Competition policy is the key element in that process. As a result of the
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review which was announced in another place in June 1986, we propose a fundamental overhaul of the Restrictive Trade Practices Act. It has been proved increasingly ineffective in controlling damaging illegal cartels. The new legislation which we are considering would prohibit agreements with anti-competitive effects. It will be backed by stronger investigative powers and effective penalties. A detailed Green Paper on that matter will be issued shortly.
The review also covered mergers. The main but not exclusive consideration in mergers policy will continue to be the need to maintain competitive market conditions. We are proposing two principal changes to speed up the decisions on whether individual mergers can go ahead. The first would be a new formal but voluntary procedure for giving advance notice of prospective mergers. That would give automatic clearance for simple cases within four weeks. The second proposal would give more flexibility in dealing with possible competition problems; the Director General of the Office of Fair Trading would have the power to obtain legally binding undertakings from the parties to a merger over such issues as agreed divestment as an alternative to a reference to the MMC.
We are particularly concerned to encourage enterprise in the less prosperous areas of the country and in the inner cities. We shall therefore be increasing and strengthening the DTI's regional office network and expanding their role. The new consultancy initiatives which I have just announced will offer higher levels of grant both in the assisted areas and in urban programme areas outside the assisted areas. Consultancy projects will receive support of two-thirds of the cost in those areas compared with 50 per cent. in the rest of the country.
New incentives will be introduced from April this year to encourage the growth and development of small firms in development areas. Their growth will help the full revival of regional economies which is the aim of our policy. Firms with fewer than 25 employees will he able to apply for investment grants of 15 per cent. towards the cost of fixed assets and innovation grants of 50 per cent. for product and process development. We shall be targeting our help on those firms at a critical stage of their development—those which may not yet have developed the key management skills needed to survive and compete. Our policies are designed to encourage self-generated business development in the regions, both in manufacturing and services, so that there is a broader, lasting base for economic growth.
Regional selective assistance will remain available in the development and intermediate areas. Unlike RDG, regional selective assistance requires companies to show that they genuinely need public money in order to proceed and that their projects are viable and will produce identifiable and significant benefits. Internationally mobile projects will therefore be able to benefit from regional selective assistance as before.
We have concluded that this approach to business development will do more to strengthen regional economies than an automatic subsidy to all capital

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investment. A Bill will therefore be introduced in another place today to end the RDG scheme. No new applications for grant will be accepted after 31st March this year. The Bill will provide for transitional arrangements. Those changes will apply in Scotland and Wales as well as in England. Regional policy will remain based on the existing regional map. Let me make it clear that we are not proposing any reduction in the Government's total regional spend. But we believe that existing resources can be spent more effectively.
Inner cities will benefit from the higher level of grant for the consultancy initiatives. The Government will be publishing a review of their policies for the inner cities and will be taking steps to encourage more private sector involvement in urban regeneration.
We have also reviewed our department's policy on civil research and development. In future, we shall concentrate our help on collaborative research projects and the transfer of technology which would otherwise not take place. The White Paper announces our support for new collaborative programmes in both information technology and superconductivity. Research and development, which is at the stage of commercial exploitation, should be the responsibility of the private sector. The general schemes of single company support for innovation are therefore being ended today. We believe that our spending on research and development will be more effectively used in collaborative research bringing different companies and the academic world much closer together.
DTI will be a catalyst for enterprise, innovation and change. But enterprising attitudes will only develop in open markets. We shall therefore continue our efforts to cut red tape so that business can concentrate on its primary task of creating the wealth on which society depends. The proposed changes in policies which I have announced will result in an increase in spending by DTI over the provision that was planned for last year. Our proposed expenditure on regional programmes in Great Britain represents an increase over earlier plans. We shall also increase previously planned expenditure and support for collaborative research, technology transfer and small business innovation.
The White Paper also announces changes in the organisation of DTI which will enable it to be more effective in the delivery of its services. The Enterprise Initiative will be marketed clearly and strongly so that business is aware of the potential for action through self-help. And the expansion of our regional network will enable us to get closer to our customers where they live and work. Furthermore, industry divisions in the DTI, which up to now have been seen as sponsoring specific industries, will be replaced by market divisions which focus on the markets for a range of goods and services rather than specific supplier industries. Emphasis will be given to issues which span all industry and commerce, especially in technology.
The changes which are announced in the White Paper reflect the objectives which we set for the DTI last year. Real change, to give Britain a lasting basis
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for prosperity, requires individuals to alter the way in which they manage their businesses and approach their work. The best way to accomplish that is to influence people's attitudes, to help them acquire the skills and information which they need to compete effectively and to give them the scope and opportunity in open markets to compete. The White Paper policies which I have outlined today represent a consistent and co-ordinated strategy for enterprise. The DTI—the department for enterprise—will now carry that enterprise strategy forward.
My Lords, that concludes the Statement.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord the Secretary of State for making this important Statement. We clearly have to wait for a careful reading of the White Paper before giving a considered response. I hope that the noble Lord will accept that any remarks and questions that I may make or put are of a preliminary nature. No doubt in the course of time we shall have an opportunity to debate these matters as they deserve to be debated, because as he rightly says these are major changes in the role of the DTI and its policies.
We welcome any measure or statement of intention that will raise morale in the Civil Service. The Civil Service has in our view taken a lot of stick and has had difficulties over the past few years. In the DTI particularly, before the noble Lord became Secretary of State, morale undoubtedly suffered. Any measures that the noble Lord may introduce to improve that morale will be supported from this side.
Furthermore, clearly we must accept the noble Lord's remarks in the Statement about helping young people to learn about business and trying to marry our education system with the real world in the sense of the industrial and service economy. Whether or not it is the right way to proceed, I shall postpone comment until I have read the White Paper. I think the noble Lord and I see relatively eye to eye on these matters, but when we come down to the details of the Statement we have a certain number of reservations.
Is it the case that in competition policy we shall have a Green Paper on mergers and monopolies policy to accompany the Green Paper which the noble Lord announced on restrictive trade practices? He will recall that in 1978 and 1979 there were two Green Papers: one on mergers and monopolies and the other on restrictive trade practices. We very much hope that the Government will repeat that precedent and produce the evidence for their changes in competition policy, such as they are.
We welcome generally the proposed overhaul of the Restrictive Trade Practices Act. For a long time we have believed that outlawing restrictive trade practices was the right way to go. Indeed, the Director General of Fair Trading said that in very clear terms and we are glad that the Government have finally adopted that line.
Also on competition and merger policy, we shall support the prenotification principle because that was something that we recommended on the lines of the Hart-Scott-Rodino legislation in the United States. We should have liked to make it compulsory

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but we understand that there may be reasons under present UK practice where a voluntary practice, which is effectively compulsory, is right.
We also support with some qualification the ability of the Director General of Fair Trading to secure legally binding undertakings from parties to a merger. The qualification I would make is that I am not entirely certain—indeed, I am uncertain—that the Director General of Fair Trading has an office that is adequately staffed to carry the burden being laid on him at the moment and the increased burden that would be placed on him as a result of the White Paper.
On the general question of competition policy, I note the noble Lord's statement that mergers policy will continue to be based on the need to maintain competitive market conditions. I am not entirely certain what that means and therefore I have to wait to see what the White Paper says in spelling it out. However, I hope he recognises that a major concern of noble Lords on all sides of the House is that the public interest should be properly defined in competition policy. The public interest is defined in different manners in different pieces of legislation. The Monopolies and Mergers Commission has to be guided by what constitutes the public interest in the case of the Airports Act, which is one definition; the public interest in the case of industrial mergers and the Fair Trading Act, which is another definition; and the public interest as regards British Telecom and the telecom Act, which is another definition.
We were hoping very much that the competition policy review would clear these matters up once and for all. I hope the noble Lord will be able to assure me that there will be a Green Paper or at least some document which will set out the reasoning behind the Government's view that he has put forward in the Statement.
So far as concerns research and development. I wonder whether the noble Lord has really taken into account the low base from which we start. Again, we have to see whether the cessation of general schemes of single-company support for innovation would diminish our civil research and development. I have no doubt that the noble Lord, Lord Sherfield, who chaired your Lordships' committee on this subject. will have his word to say on that. For the moment we shall have to examine the implications.
It is when we come to regional policy that I think the distance between the two sides of this House is probably greatest. Why, in the Statement, does the noble Lord say that there is no reduction in the amount of money to be spent on regional policy? Is this another way of saying that there will be no increase in the amount of money to be spent on regional policy? Why is there no mention of the disadvantages of selective assistance as against RDGs? Selective assistance is unpredictable; the need has to be proved. Selective assistance is a subsidy to the profit and loss account rather than to capital. It therefore works straight through to the profit on the bottom line as opposed to reducing the cost of capital, and it is impossible for companies to budget because they simply do not know under the present
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system whether or not they will get such a discretionary allowance. If the noble Lord could help us on that it would be extremely useful.
Are the grants that are proposed in the Statement for smaller companies automatic? In other words, do they follow the principle of RDGs for companies with fewer than the number of employees the Minister specified? Are they automatic, because the automaticity of grants is something which industry, rightly or wrongly, has believed to be very valuable? Why are RDGs not good value for money? If the noble Lord had had time to attend our debate on regional policy before Christmas he would have heard a number of speakers from all sides of the House saying that the automaticity of these grants, which allowed industry to plan on that basis, was valued and that the RDG system was a valuable job creator.
What consultation have the Government had with industry over the abolition of regional development grants, and what reply have the Government made to Mr. John Banham, the Director General of the CBI, who is reported as saying at the annual dinner of the Welsh CBI that he believed it was extremely unwise to change a situation which was apparently working so well?
We shall look carefully at the White Paper. We are glad that the Government have come forward with it because anything which can improve the direction of the Department of Trade and Industry and give heart to the officials who work in the department will be welcomed. As for the effects, and our final view on this matter, the jury is still out.
Lord Taylor of Gryfe: My Lords, I too should like to express appreciation to the Secretary of State for his review this afternoon of his department's activities as contained in his Statement. I should also like to congratulate him on the incisiveness and enthusiasm with which he has tackled very serious problems in his department. From these Benches we welcome the approach of the Secretary of State in bringing the academic studies closer to the requirement of industry. We hope that that will be successful.
In addition, we very much welcome the Statement of the Secretary of State in relation to mergers policy. Anyone who has been engaged in mergers recently will recognise that long arguments and delays in decision making by the Monopolies and Mergers Commission can have an upsetting effect on industry in general, as well as creating uncertainties in the stock market.
I very much welcome the Minister's conversion to the importance of securing adequate competition. This does not quite coincide with the current policy of the Government in the creation of private monopolies. It would be interesting to hear from the Secretary of State how his enthusiasm for competition can be applied to the situation of the private monopolies of British Telecom, the forthcoming British Electricity, and other nationalised industries that are to be converted into private monopolies.
I welcome the desire to strengthen the Office of Fair Trading to ensure adequate competition rules. I

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would subscribe to the plea of the noble Lord, Lord Williams, that there should be a clearer definition of the public interest in judging mergers and changes in the structure of industry.That is a very uncertain area and leads to all kinds of difficulties—lobbying by private interests, lobbying of regional interests, and so on. I am sure that it would be helpful to the authorities concerned if there were a clearer definition in that rather difficult area. I am sure that the strengthening of the Office of Fair Trading will be welcomed. I am sure that Sir Gordon Borrie has earned the respect of industry and the country in general for the way that he has discharged his responsibilities. I suspect that the additional powers that he will have under the new arrangements will be very much welcomed and will be very sensibly exercised.
I turn now to a matter of deep concern to me personally, living as I do in the regions. That is the change in the regional policy The House will recall that the new regional policy—which was proposed to make some impact on the North-South divide—was introduced as late as November 1984. Three and half years is not a very long time to see the full implications of a new regional policy. Companies have to make decisions with regard to investment based on a regional policy that has some assumptions of continuity. Here we are, within three and a half years, having a new regional policy and the abolition of the regional development grants as they presently stand.
There is an assurance in the Statement that the amount of money to be dispensed in the regions will not be cut. We should keep in mind that the amount was £700 million in 1986–87, and was cut to £500 million in 1987–88. Scotland received a 50 per cent. cut in that period of the total regional allocation. We are therefore talking about maintaining what is at present a small. inadequate base. Like the noble Lord, Lord Williams of Elvel, perhaps I may simply state that while the Statement we have heard today was widely leaked at the weekend, we are not in a position to give the kind of detailed analysis that is important to those radical changes.
I should like to commend to the Minister a study that was made I believe by his department. That indicated that in the period 1960 to 1981, 784,000 new jobs were created by positive regional policy. Of these, 600,000 remained. I agree that one cannot create jobs by simply throwing money at people. But it would be sensible if we made a quiet and careful assessment of the implications of the existing regional strategy before we rejected it in favour of a policy which has not so far been justified.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, for his comments. Of course I am very much aware of the importance of morale in the Civil Service. The noble Lord may possibly recall that I spent five and a half years as a sort of civil servant immediately before entering Cabinet. I am convinced above all else about the need not only to have high morale in the Civil Service but to show the appreciation for the very real work that the Civil Service does in order to discharge the obligations of government.
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However, the noble Lord then raised some matters about competition policy. It is true that we shall have a Green Paper on restrictive trade practices. In that Green Paper I suspect that we shall be moving more towards European law which looks at the effects of agreements rather more than the legalism at the moment which considers wording of agreements only. We have pondered long on the merger proposals. We do not propose to have a Green Paper on the merger proposals. The noble Lord will in a few minutes' time be able to look at the White Paper. I am sure that through the usual channels he will take the opportunity of raising the matter so that we can discuss the White Paper in more detail. I accept the difficulty of relying solely upon my Statement at this moment. I hope that the Director-General of OFT will be adequately staffed for the increased activities he will be undertaking.
The noble Lord, Lord Williams, is on less secure ground when he talks about R&D. It appears from the figures that Government spending on civil R&D as a percentage of GDP is greater than the United States and Japan. Where we do not shine is in the amount of money which the private sector spends on R&D.
The main thrust of the change in programmes which the White Paper will outline is towards persuading companies to undertake steps which do not come naturally to them. It is, alas, not natural yet for companies to work with institutions—with universities and polytechnics. We shall be assisting that process. It is not natural yet for two companies to work together on collaborative research. For example, could an electronics company work with a textile company in finding new ways of producing computer-controlled textile machinery? We shall encourage that kind of venture. I believe that it is a sensible use of taxpayers' money to encourage research collaboration between British companies and French, German, Dutch or any of our European partners.
On regional spend, I wonder whether the noble Lord is correct in saying that industry values the automaticity of regional development grants so very highly. I suspect that we need to leave this issue in abeyance for a little while in order to see what industry has to say about it. My information is that industry did not say that its behaviour was moderated by regional development grant; it was quite happy to accept money that was offered by government. But if industry looks towards areas that could be improved it would be looking at those elements of non-price competitiveness. If this country went wrong in its manufacturing industries in the 1970s I suspect that it went wrong because it concentrated on price competitiveness to the exclusion of other factors, whereas countries such as Japan and others concentrated very heavily on non-price competitive items such as delivery, quality, after-sales service and design. Those are the areas where I believe that British industry could well be improved. I have been told by many large companies that an improvement in the quality of their component suppliers would be the best step forward to help them. That I believe is the way in which the new programmes of my department will go.

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I am grateful to the noble Lord, Lord Taylor of Gryfe, for the welcome he gave to the thrust of my Statement, if not my White Paper, on the way in which we shall be working together with institutions and the recognition of the strengthening of the position of the Director General of Fair Trading in merger control. If noble Lords read the White Paper I hope they will be satisfied with the changes we are proposing, which go further than my Statement.
The noble Lord, alas, does not welcome my attitude towards monopolies. He referred to BT. I should much rather be judged on the future than on the past. Let him see how the privatisation of electricity is structured and perhaps then he will see that I still have a belief in competition.
There is much to be questioned. The noble Lord is right to question regional policy. But there are many who say—I do not disagree with them—that the effect of the policy for the regions of all governments over some decades has been to establish a branch economy in many of them. What I hope the main change of our policies will achieve is to produce in the regions an industrial profile and structure that is similar around the country.
I had the great pleasure of going to Consett not many weeks ago. I had last been at Consett in 1981 shortly after the steel plant closed. When one employer went 3,500 jobs were lost. I went there just before Christmas and over 100 new employers and 3,500 new jobs have come into being in a great variety of different activities. The thrust of my department's policies is to ensure that existing businesses in the regions grow and multiply, that employment increases and that we see the establishment not of a branch economy but of a prosperous economy in all our regions.
3.30 p.m.
Lord Thorneycroft: My Lords, does the noble Lord appreciate the welcome that will come from many quarters for such a positive, constructive and undogmatic statement of strategy in relation to the co-operation and intervention of government in the affairs of industry and the hope that it may help to set the pattern for what clearly will be a market-led economy for many years to come?
Lord Young of Graffham: My Lords, I am very grateful indeed for the welcome given by my noble friend to the Statement.
Lord Glenamara: My Lords, is the noble Lord aware that to me, and I imagine to many other people throughout the country, his Statement consists of a great many platitudes, a great deal of packing and a catalogue of things which are being done at present, all wrapping up the central, stark fact that regional development grants are being abolished—regional development grants which have brought tens of thousands of jobs to the regions of Britain? I am appalled and dismayed. It is a further demolition by the Government of the mechanism which has operated under successive governments to iron out the inequalities among the regions of this country. I am shocked at the Government.
Lord Young of Graffham: My Lords, I suspect that the noble Lord would be calmed if he read the White Paper or indeed a copy of my Statement. It consists of a great many matters other than regional policy. It is concerned with the growth of the economy of this country, for without the prosperity that a growing economy brings we cannot have the caring society which we should all like to have. I hope the noble Lord will recover from his shock when he reads the White Paper.
Lord Boyd-Carpenter: My Lords, in view of the immense importance and almost equal complexity of the Statement, will my noble friend arrange for an early debate in your Lordships' House upon it, it being particularly a matter on which so many noble Lords have valuable views and information to contribute? My noble friend is hesitating to give an answer, so I invite his attention to the convenient adjacency to him of the Leader of the House.
Lord Young of Gratfham: My Lords, I shall use whatever influence I still have with the Leader of the House to ensure that we have an early debate. It will of course be dealt with through the usual channels.
Lord Cledwyn of Penrhos: My Lords, notwithstanding what the noble Lord has said, is he aware that we are bound to feel very apprehensive about the effect of his policy on the regions and particularly upon Wales and Scotland? Will he say, for example, what is the future of the Welsh Development Agency and the Welsh Rural Development Board, which have played a major role in the Principality in easing the serious unemployment problem which has existed there for several years? Secondly, can he tell us at this stage about the transitional arrangements? For example, can he confirm that applications for schemes which are presently before his department will be treated under the existing rules? Will people be given an adequate moratorium to make their applications? Otherwise it will be extremely unfair.
Lord Young of Graffham: Yes, my Lords. I assure all noble Lords that the Bill which is being introduced in another place today will allow applications for regional development grant to be made up to and including 31st March this year so that plans may proceed. However, the payment out for that may be some years ahead, but applications may go in until 31st March this year, which should give adequate notice to all those contemplating investment under the old system.
The noble Lord will recognise that Wales has led the field in the reduction of unemployment over the last 17 or 18 months. I do not anticipate that there will be any reduction in the role of the Welsh Development Agency or the other agencies.
We are not reducing the amount we spend, but seeing whether we can spend it better, something which I am sure all in your Lordships' House will welcome. I believe that there is a case for the Government to determine to spend the money better before they go to the taxpayer to ask for more. What we are endeavouring to do is to improve the quality

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of our spend and the results of what we get for the money. That is what I believe my White Paper will do.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that it will be necessary for us to read his White Paper before we can have a deep knowledge of what is likely to flow from it? Can he assure me that the legislation and the regulations which will follow will conform with the Treaty of Rome, or is it likely that some of his good ideas, which are the logical next step from what has been done so far, may be sabotaged by the Treaty of Rome; for example, the regional grant? is the movement away from that because it is considered right in the future development of this country's economy, or is it because in some way it is not acceptable under the terms of the treaty? I ask these questions because so many matters in the interests of this country—even the announcement yesterday to do with furnishings—somehow or other so often later appear to cut across a treaty which gives power of final decision to people outside this country?
Lord Young of Graffham: My Lords, the White Paper is based upon our assessment of what is required in the interests of the economy of the United Kingdom. Nevertheless we have taken steps to ensure that it does not conflict with the Treaty of Rome.
Lord Mason of Barnsley: My Lords, will the noble Lord explain to the House how he sees the regional policy changes effecting a quicker reduction in male unemployment levels in Yorkshire and the northern regions? Secondly, how does he answer the charge from large British companies that his regional policy is enabling foreign companies to come into this country aided by government grant, that British companies are unfairly in competition with them and that that will deter investment in the northern regions where it is required most? How does he answer that?
Lord Young of Graffham: My Lords, the noble Lord cannot possibly have it both ways. He cannot ask me how my policies will reduce male unemployment in the North and at the same time complain bitterly that regional selective assistance is allowing firms such as Nissan to come into the North-East to compete with other British manufacturers but at the same time giving jobs to male employees in the North.
What we need is a sense of balance. We alone cannot give up regional selective assistance. We alone cannot stand by and see these internationally mobile opportunities go to France, Holland, Belgium or Italy. My job is to ensure that we have fair competition, that we equal, no more, what other countries will do and that many of the new manufacturers who come into this country to bring welcome jobs do so on terms which are fair to the rest of British industry yet are attractive enough to bring them here and not overseas. I shall never win. We shall never satisfy all people. The moment we satisfy incoming new manufacturers, we upset our existing manufacturers. It is a difficult path but one that we shall try to accomplish.
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On the issue whether our policies will reduce unemployment in Yorkshire and the North, I am well aware of the enormous change in the pattern of industry that has occurred over the last decade. It is no good regretting it. We shall never again have a steel industry and a coal industry that supports as many jobs as they supported 25 years ago.
I take great comfort from the Consetts of this world that show that the sense of enterprise, drive and determination continues to exist in the northern region and in Yorkshire, as soon as other oportunities arise. We must make sure that they have these other opportunities.
Lord Mackie of Benshie: My Lords, following the question asked by the noble Lord, Lord Cledwyn of Penrhos, about regional agencies, it appears to me that the DTI will do many of the things which have been done for many years by the Highlands and Islands Development Board and the Scottish Development Agency. They will still assist and educate firms; they will assist them with marketing. I trust and hope that the noble Lord will be able to give us an assurance that the SDA and the HIDB will continue to use their expertise and put the new policies into effect in their area, instead of it being done by a centralised body, because they have been extremely successful in reducing the appalling conditions of unemployment in various areas of Scotland.
Lord Young of Graffham: My Lords, I always thought that the SDA was itself a centralised body in Scotland. I think that I have a certain degree of bravery but I am not brave enough to take on the combined lobby of the SDA and the HI DB. I confirm to the noble Lords opposite that those agencies will of course continue.
These consultancy programmes will be delivered by the private sector. We shall not have the spectacle of civil servants telling employers or businessmen and women how to run their businesses. We shall act as a facilitator to spread best practices, to ensure the best of design, marketing and exporting. One element that my Statement perhaps did not cover is that we shall be launching a consultancy initiative designed to help people get into exporting at home before they think of going overseas. I recall all too vividly how very much at sea I was in the middle 1960s when I first started to export and come across terms like bills of lading. I hope that we can provide that sort of information to potential exporters all over the country. This will not take away from the agencies which are so beloved in the regions. I hope that it will greatly strengthen and make more prosperous business throughout the country.
Lord Gladwyn: My Lords—
Lord Taylor of Blackburn: My Lords, I have been trying to speak; I do not want to interrupt Prayers tomorrow. This is not the time and the place to go into detail this afternoon because many things require a lot of consideration. However, I welcome the comment in the Statement about work opportunities for young people. This of course is not

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new. It went on years ago in Lancashire, but I am glad that the Secretary of State is looking at this again and giving young people an opportunity to gain some job experience while they are still at school. I think that this will be a great help to many young people.
When the Secretary of State is looking at this in more detail, will he discuss with his right honourable friend the Secretary of State for Education and Science the role of the careers master and mistress in schools in advising young people? I think that this is important. Again, when the Secretary of State refers to schools is he referring to all schools or is he just referring to the maintained schools sector?
Lord Young of Graffham: My Lords, I am very grateful to the noble Lord, Lord Taylor, for his unqualified undertaking not to interrupt Prayers tomorrow. I also happily agree with him that I follow Lancashire in everything except cricket. We shall work out these programmes to ensure that they apply as widely as possible within the school sector. I have had preliminary discussions with my right honourable friend the Secretary of State for Education and Science, and we shall be working out the details of this. Of course it follows a long period, starting with the TVEI programme and other programmes which are designed to give young people more experience and a taste for the world of work. We shall be looking at those young people who are not caught by TVEI, who do not have present work experience, and who are not covered. It may well be that this programme will be offered outside Lancashire, but I am sure no-one in Lancashire will object.
Lord Gladwyn: My Lords, referring to the intervention of the noble Lord, Lord Harmar-Nicholls, is it not a fact that industrial development in the regions of this country is often materially assisted by substantial grants from the European Commission acting under the general authority of the Treaty of Rome?
Lord Young of Graffham: My Lords, not only does industry and commerce in the regions benefit from grants from the European Community, but we have assured your Lordships' House today that regional spend will not be reduced. I hope that all noble Lords take fully into account that at the end of this decade regional businesses will benefit by some £700 million per annum as a result of the unified business rate.
Lord Sefton of Garston: My Lords, may I ask the Secretary of State whether the remaining part of the regional policy of the Government still contains the assurance that part of the policy will be to move jobs from the more affluent areas to the less affluent areas, as has so often been stated by the government Benches? I take it from that that it will still remain the policy of the Government. What consideration have the Government given to the situation where the congestion and high costs in the South of England lead to a loss of competitiveness in the private sector? Will the Secretary of State give some really serious consideration to moving out of the South-East and so
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reduce the exorbitant costs of our civil service and move them to a less affluent area?
Lord Young of Graffham: My Lords, I am fully aware of what the noble Lord says. I was of course responsible for the Manpower Services Commission when it moved all its head office functions out of London towards Sheffield. Indeed, my White Paper today announces the moving of people from Victoria Street more towards the regions. The rules under which regional selective assistance is being administered have not changed since 1984. They take into account not only movement of jobs but also saving of jobs. That will not change. I believe we are seeing a welcome return of confidence in the regions as the South-East becomes so congested and so expensive that we are beginning to see many companies going further and further north in an effort to achieve better conditions. This is not the time for a full debate on this subject, which will go on very much longer.
Lord Sefton of Garston: My Lords—
The Lord Privy Seal (Lord Belstead): My Lords, we have been asked for a debate. The Secretary of State has said that he will use his influence through the usual channels to see whether we can have a debate. May we just take the supplementary question from the noble Lord, Lord Sefton, and perhaps call it a day?
Lord Sefton of Garston: My Lords, it is a simple supplementary. If we can transfer some of the government departments—not a few civil servants but whole government departments—to the north of this country, there may well be no need for regional aid.
Lord Young of Graffham: My Lords, I am not averse in the slightest to government departments or indeed your Lordships' House being transferred to the north of England; but I am also concerned that productive industry and commerce should be in the north of England as well.

Copyright, Designs and Patents Bill [H.L.]
3.50 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair].
Clause 192 [Design right]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 281VA:
Page 84, line 6, leave out subsection (1).
The noble Lord said: I hope that the Secretary of State will heed my plea that if the House of Lords is

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moved from London it should be moved to Edinburgh and not to the North of England.
I am sure that the Minister will be aware that in tabling this amendment I do not wish to remove subsection (1) from the Bill. I wish to give the Minister the opportunity of defining, for the benefit of the Committee, what it is that the Government mean by the word "design" and what, in other parts of the Bill, they mean by the word "designer". The words "design" and "designer" are now in vogue in the popular and quality press. However, those words cover a wide range of activity and I should like the Government to say which part of that wide range of activity is referred to in this part of the Bill. At an award ceremony at the Royal Society of Arts in November a noted broadcaster said:
"Design, said an eminent divine, turns chaos into order. Design, said a connoisseur, turns life into art. Design, said a man with a spanner, turns metal-hashing into engineering. That is the difficulty with design; it means different things to different people".
I agree with that speaker, although I should have put the matter in a different way. The word "design" has a wider meaning than is often thought in the popular press. There is design in the construction, architectural and engineering world. There is design in the area of industry, in the designing of products and in the area of decorative art. I am fairly sure that this part of the Bill does not refer to the whole of those areas. I am hoping that, before the end of the debate on the Bill, we shall have defined with precision which parts of those areas the Bill refers to.
According to the Bill, the design to which it refers deals with the shape or configuration of an artifact of some kind. The Bill goes on to exclude a number of areas of design from that definition. One can see what is excluded but one cannot yet see what is included. We are asked that design should not be that of a method of construction. That appears to be clear, unless one asks the question: would a bridge by the Swiss builder, Robert Maillart, be included? The concept of a bridge by Maillart is total and depends wholly on the shape and configuration of the bridge. Although Maillart was an engineer in prestressed concrete, the essence of the design was not prestressed concrete, which is a method, but the concept of the bridge as a whole. I am fairly sure that the Bill is not intended to include such a bridge. However, it is not clear to me that the Bill excludes such a structure.
How would Gothic architecture feature under the Bill? For example, this canopy in the Chamber is clearly a piece of design and decorative work and it is a piece of construction of some kind. It is a whole. The shape and configuration of the canopy are part and parcel of the design but the structure is a lesser part. The decorative features, which are not on the surface but are integral with the structure of the canopy, are also part and parcel of the design. How does that canopy fare under the Bill? I suspect that the Government do not intend to include such items as the canopy in the Bill, but it is not clear to me that they are excluded.
The same is true of these stained glass windows. One knows that in the nature of things a stained glass window is a decorative artifact. One can see that the decoration in the painted parts is applied to the
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surface of the artifact and would be excluded from the Bill. The stained glass is stained through and through, and the staining is part and parcel of the structure. Is the design and manufacture of stained glass included in the Bill?
There is a wide range of such items which raise questions such as those I have asked, and I do not wish to list them in any detail. It is my belief that, in talking of "design", the Government mean either industrial or product design. If that is the Government's intention, I believe that that should be made clear in the Bill. It will be a simple matter for the Minister to make that clear during the course of the debate, but one would be on firmer ground if it were made clear in the Bill.
It would be a grave disservice to the language and to design if the Bill were left loose, as I believe it to be, so that it actually applies to only a part of design while apparently applying to the whole of design. If it applies only to part, that part should be defined in the Bill and should be made clear. I beg to move.
Lord Denning: While I do not support the amendment to its fullest state, it gives an opportunity for the Committee to look at the objectives of this part of the Bill. It introduces into our law for the first time a design right similar to a copyright. The matter arises from the important British Leyland case which was heard in the House of Lords, sitting judicially. All the Law Lords appealed to Parliament to intervene to correct what was already shown to he wrong in our law.
British Leyland produce many motor cars. In the course of time some of the parts wore out and spare parts had to be made. They were made by the Armstrong company, which made spare parts only to replace those which had worn out. The business in spare parts was so large that it covered £800 million a year. British Leyland brought an action in the courts stating that the spare parts manufacturers were infringing the copyright in the drawings of British Leyland from which they made their motor cars.
In fact, Armstrong's did not possess any of the drawings and had not copied them. The company had, for example, possession of an exhaust pipe from a British Leyland motor car and it copied that. The important point is that the House of Lords felt that it was forced to hold that that was an infringement of British Leyland's copyright in the original drawing although Armstrong's had not seen those drawings at all. It simply copied the exhaust pipe or whatever it may be. That would mean, if carried to its full extent, that there would be copyright for 50 years or more in an exhaust pipe. The drawing had not been seen by Armstrong's; it had only seen the exhaust pipe. However, as a result of the House of Lords decision, there was copyright for British Leyland, in effect, in the exhaust pipe for 50 years or more. The only exception made to that was that spare parts are a feature by themselves, although anything else might be an infringement of copyright. This was most important to the people who bought the cars; a spare parts manufacturer could go on doing it regardless.
That was the House of Lords' decision and all noble Lords appealed to Parliament to put it right. That is

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why, instead of copyright in the drawings being the important factor, instead of copyright in the spare part or the exhaust pipe, there should be a design right in the shape or configuration. That is what we now have to deal with in the shape of the configuration of some article, whatever it is. There is to be a design right, but that design right is not to last for 50 years or more like copyright but for 15 years. The White Paper said it should last for only 10 years. The design right is not to last, like copyright, for 50 years but for only 10 years and then for people who wish to make the spare parts there is to be compulsory licensing after five years.
That is the outline of the problem. There has been great controversy about it in industry. The Government are tackling it by bringing in this "design right", which is a property right which subsists in accordance with this part in an original design. Subsection (2) states:
"'Design' means the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article".
I have said that in order to show how important it is, as my noble friend Lord Howie said, that we should have our minds clear. We are dealing with a new subject matter altogether. We are dealing with "design right" in this Bill for the first time in our law and therefore we should make it clear what a design is under our law in the future.
4 p.m.
Lord Campbell of Alloway: I am grateful to the noble Lord, Lord Howie of Troon, for introducing this amendment. It affords a most important opportunity for discussion of a serious apparent deficiency in the drafting of Clauses 192 to 242 of the Bill. It affects Amendment No. 289B, which stands in my name. The apparent deficiency in the drafting is concerned exclusively with the design right, as the noble and learned Lord, Lord Denning, just said. The new right is that there is not, and perhaps cannot be, any definition or yardstick which deals with how similar a design has to be in order to infringe. Such a provision as to similarity is, one would have thought, a fundamental requirement when one creates a new right such as this.
The problem, as I see it—and I may be wrong about it—is that the set of clauses as they stand are likely to be interpreted by the courts as creating a test of infringement which is far wider than the current test which the courts apply to infringement of copyright in engineering drawings.
Clause 192 defines the nature of the design right and Clause 205—and it is difficult to discuss one without the other because they interact—confers the exclusive right to apply the design. As the set of legislation stands on these two clauses, this could lead to the conclusion that the shape of the part or parts concerned must be substantially identical for there to be an infringement. Although reproduction may involve the making of a new design—this is under Clause 205—that opens the door wide as regards almost any degree of similarity in the overall shape of an article or in the general shape of any part or parts for the purpose of the infringement.
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In the result, if this analysis is correct or anywhere near correct—and I do not know whether it is—I should be interested to know not only what the Committee thinks about this but also what the Minister has to say.
Lord Williams of Elvel: As the noble and learned Lord, Lord Denning, the noble Lord, Lord Campbell of Alloway, and my noble friend Lord Howie said, we are embarking on a new part of the Bill. The amendment moved by my noble friend gives us an opportunity to discuss exactly what "design right" means. Both the noble and learned Lord and the noble Lord cast some doubt on whether the definitions of "design right" and what it entails were entirely clear in the minds of the Committee or, indeed, in the mind of the Government.
It is certain that until 1968, as I understand it, artistic copyright was assumed to have no role in industrial design—except in so far as the copyright of drawings was concerned. The Registered Designs Act 1949 gave the monopoly protection to designs if they were registered and if they were novel. However, in 1968 Parliament passed the Design Copyright Act 1968, which introduced the notion of copyright protection for a short term of 15 years to industrial products, but industrial products with aesthetic properties. The intention then was to cover jewellery, toys and other articles of that nature. Nevertheless, amending the Copyright Act 1956 gave protection for designs with what is known as "eye appeal". These designs now have protection either through registration under the Registered Designs Act 1949 or through design copyright. Protection for designs without eye appeal seems to be causing many problems and caused a lot of problems in the case recounted by the noble and learned Lord. Lord Denning; namely, Leyland v. Armstrong. The decision which was arrived at, as the noble and learned Lord quite rightly said, amounted to an appeal to Parliament to intervene to clarify what Parliament had intended by this succession of legislation which to their Lordships in Judicial Committee appeared to have a good deal of doubt attached to it.
The whole concept of design right developed from that case and the problem that we have with this is that the Government have taken a particular case and gone on from there to make a general rule about design right. When one extends the right, which may be appropriate in the case of car spare parts, to other spare parts or other articles, at that point one finds problems.
It was the noble and learned Lord, Lord Hailsham, at an earlier stage of the Committee, who said that it was very much a matter of policy whether spare parts should be protected. In general terms we take the view that spare parts should be protected in some form or other. It is a question of protecting employment. We are impressed by the arguments which have been put forward by manufacturers and we are particularly impressed by the arguments which have been put forward by Westland Helicopters. We are not convinced that it is wholly in the interests of the consumer that there should be a completely free market, because safety plays a great role in automobile spare parts.

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It will be elaborated as we go through the amendments, but we generally take the view that there should be some form of protection. Nevertheless we are doubtful about the creation of a new right such as this, even if the drafting were clear and even if the questions put by the noble Lord, Lord Campbell of Alloway, are satisfactorily answered by the Government. We are not entirely convinced that such a new right is necessary.
We wonder whether it would not be appropriate simply to extend the provisions of the Design Copyright Act 1968 and to align them with the provisions of the Registered Designs Act. In other words by this mechanism we should achieve copyright protection for those designs with or without eye appeal, either through registration under the Registered Designs Act or through the Design Copyright Act. We argue that if the Government took that route the period of protection, which is 15 years' maximum protection, offered by the Registered Designs Act should apply to design copyright. We have quite a simple arrangement whereby there are registered and unregistered designs, but the general law of copyright as expressed in Part I of this Bill would apply to the unregistered designs. That would have the advantage of giving those unregistered designs international protection, which I believe is not given under the design right in Part III of this Bill.
It may be that our thinking is wholly incorrect. It may be that we have got hold of the wrong end of the stick. I am looking to the Minister to explain exactly what is the Government's thinking. I join with other noble Lords in thanking the noble Lord, Lord Howie, for moving this amendment, because it has given us a chance to argue the essential nature of this Part of the Bill.
Lord Mottistone: As you know, I have been discussing this matter with the CBI for some time and now that I am able to look at it closely I wonder whether the Government are right to go ahead with Parts Ill and IV. I agree with much of what the noble Lord, Lord Williams, has been saying. I wonder whether they should be reconsidered not within this Bill at all but as separate legislation which could take the form of using the existing legislation on the lines that the noble Lord, Lord Williams, has suggested.
The fact is that, whereas the department gave the CBI and other interested parties ample time to discuss the copyright part of this Bill, when it was raised in relation to Clauses 51, 52 and 53 and it was thought necessary for them also to discuss the design right part of the Bill, the interested parties were told that it was not quite ready but certainly discussions would take place before the Bill was presented to Parliament. In fact that never happened, so there have never been preliminary discussions with industrial representatives on this part of the Bill.
Furthermore, it seems to those who understand these issues that this part of the Bill has been written almost exclusively to deal with the question of motor manufacturers' spare parts as described to us by the noble and learned Lord, Lord Denning. So far as the report of the Monopolies and Mergers Commission on the Ford body panels investigation is concerned,
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that is another aspect and it does not take into account other types of industrial design.
I shall be mentioning examples in connection with another amendment of my own which will come later. I really support those who ask whether it is wise to go ahead with this part of the Bill now when it has not been properly discussed. The experts all feel that it is biased to one particular example which happens to have come before the courts during the past few years. Would it not be wiser to leave this out and to legislate on the matter later?
Alternatively, because it has not been properly discussed, another possibility might be to have amendments at the next stage of the Bill which would turn a great deal of this into enabling legislation. The details can then be put into secondary legislation at a later date. That is another possibility. As it stands at the moment it is most unsatisfactory.
4.15 p.m.
Lord Hailsham of Saint Marylebone: As the noble Lord, Lord Williams of Elvel, said, I raised this issue at an earlier stage of the discussion and therefore I will not take the Committee back to what I said then.
There is obviously a problem of policy to be decided. Speaking simply to the point upon which my noble friend has just spoken, I think the Government are right to go ahead with the general principles and without prejudice to any other amendments which may be discussed in this Committee.
My reason is as follows. The Leyland case to which my noble and learned friend Lord Denning referred, proceeded on a very artificial basis. The case depended upon whether copying a peculiar exhaust system which could be applied to a Leyland vehicle was a breach of copyright. As a statement of opinion which I express humbly because I am not an expert, I suggest that this is a very artificial way in which to approach the reproduction of a three-dimensional object. The breach of copyright depended upon the necessity to copy engineers' drawings on which the three-dimensional object was made and which the copier had never seen.
The idea that one can base a sensible future for this kind of problem on an artificial approach necessitated by the way in which copyright legislation has developed is false. Perhaps owing to an omission in his speech, my noble and learned friend may have created a false impression about the outcome of the case. It is true that the House of Lords decided that, on the existing legislation, the three-dimensional object which the spare parts manufacturer had produced was a breach of the copyright in the engineering drawings because they were a work of art. My noble and learned friend explained that very lucidly. However, the House of Lords decided as a matter of policy that the right of the car owner to get cheaply spare parts of perfectly ordinary manufactured objects—for example, an exhaust— overrode the breach of copyright.
This is a very roundabout way in which to reach a perfectly proper result. I do not myself see how the Government could have tackled the problem without doing something of the kind that they have sought to do in Part III. I am not at this stage trying to argue

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whether subsequent amendments proposed to Part III may or may not be improvements. I do not wish to beg that question at all. I should be sorry if it were the view of this Committee that the Government could not go ahead with Part III by creating, first of all, the design right as a new right superseding the old and artificial method of approaching this matter— that is, by way of copyright. Secondly, whatever discussions had taken place between industry and the Government, which is not a matter with which I am acquainted. I should have thought that subsections (3) and (4) of Clause 192 provide, at any rate prima facie, adequate protection for the car owner. If I am wrong about that, perhaps the Government have gone further than they should in protecting the owner of the design right. No doubt that will emerge in the debates which we shall hold subsequently upon this part of the Bill. In the meantime, my conclusion is that the Government have set about a very difficult problem in a workmanlike way. I should be sorry if this approach were abandoned.
Lord Lucas of Chilworth: I hope that the Government will resist the invitation offered to them by my noble friend Lord Mottistone to take this part of the Bill away. The Leyland v. Armstrong case and also the European Commission case against the Ford Motor Company have highlighted the difficulty in which some people find themselves. The fact that the debate this afternoon has concentrated on motor car parts underlines exactly what I have said. If there is an over-emphasis on the components parts element in this part of the Bill—although I do not believe that is so—that could be dealt with as we go along. Indeed, there are amendments down so to do. I should much prefer to proceed along the lines that are set down in the Bill as we have it, to make amendments to the Government's current proposals in the Bill, and to see where we go from there.
Lord Campbell of Alloway: The question is, as the noble and learned Lord, Lord Hailsham, expressed it. whether the Government have gone too far in protecting the design right. That is the core of the subsequent amendment which stands in my name, Amendment No. 289B. I should have thought it wholly correct that the new right should be created, because the artificiality of the route by which this was dealt with by your Lordships' Appellate Committee cannot be satisfactory on any showing.
If the Government have gone too far in protecting the design right, that could have a very damaging effect on British industry, as tending to create a monopoly, even of ideas. Therefore my hope would be that we may amend the Bill in Committee or at subsequent stages so as to ensure that there is no hint of overprotection.
Lord Monkswell: I was not going to contribute to this section of the debate, but I have been forced to my feet because earlier speakers have suggested that design right protection is too strong rather than the other way round. It is my contention that the design right protection is in fact too weak for the original manufacturer. Be that as it may, we shall obviously come to that sort of detail in the discussion of
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subsequent amendments. It seems to me that intellectual property rights form the thread running through this Bill as a whole and that one of the key problems with this section is that it departs too far from the basic premise of the Bill and gets too bogged down in what one might describe as the pragmatic government response to particular legal situations which have occurred over the last few years. In our deliberations on subsequent amendments in this section I hope we shall try to bear in mind the basic philosophical object of the Bill—that is, to provide some protection for the intellectual property rights of the thinkers and intellects of our nation.
Lord Beaverbrook: First of all, I think I should say to my noble friend Lord Mottistone that I am not going to offer to withdraw this part of the Bill, because I believe there are very good reasons for retaining it.
The justification for having design right is in essence very simple. Expense, labour and skill are needed to produce designs, even where the design does not merit a patent, and we believe that some protection should be given to encourage investment in design effort. However, it is important to strike the right balance: on the one hand the protection must be sufficient to act as an incentive to innovation but on the other hand it must not act to stifle competition or prevent the wider use of technology.
It has been of concern to many that part of the Copyright Act 1956 has strayed from its traditional function of protecting literary and artistic works into the area of industrial articles. Surely, no one could disagree that protection for industrial designs lasting for the life of the designer plus 50 years is excessive when those designs which have truly inventive qualities can be protected for a maximum of 20 years under the patent system.
I would not wish to anticipate the debates that will take place on later parts of this clause and, indeed, on the subsequent clauses, but what I will say is that we believe this new regime for designs—"design right"—will provide a level of protection for those who invest in design which is in proportion to that provided for other forms of intellectual property. At the same time, however, we have been very careful to ensure that competition is not unduly restricted.
I have no illusions that there will he universal agreement on this issue. There certainly never has been over the last 10 years. Nevertheless, we have to strike the balance between the need to protect designers and the need to ensure that competition is not stifled. I have no doubt that some will say we are not offering enough protection; others will say we are offering too much. I would venture to say that perhaps on that basis we are beginning to strike a reasonable balance.
I am grateful to the noble Lord, Lord Howie of Troon, for introducing this first debate on this section of the Bill. The noble Lord has asked who is the designer. He is the person who contributes skill and effort to the creation of the design. This will be well understood by the courts since the concepts correspond to those involved when considering authorship in copyright. I have already written to the noble Lord, Lord Howie, on this, following the

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earlier debates on copyright. I have placed a copy of that letter in the Library. I do not think I can add any more than that. I do not think that the Bill should attempt a definition of the word "designer" any more than it should define the word "author" any further.
As to the question of what is a design, this is defined in subsection (2) of Clause 192. It is the design of any aspect of the shape or configuration of any article. It is a very broad concept in one respect—that is, it applies to any article. In other respects it is quite narrow. It does not include mere decoration or methods of construction. I should have thought that this was quite clear, but we will consider the noble Lord's remarks so far as they relate to large fixed structures such as a bridge that he mentioned.
It is certainly not the Government's intention to be unduly limitative in protecting designs. We will therefore consider the matter from that perspective.
Turning to the first intervention made by my noble friend Lord Campbell of Alloway, I say to him with great respect that perhaps this is not the point at which we should debate infringement. We are considering the definition of a design. I shall have much more to say about infringement when we come to consider my noble friend's Amendment No. 289B, and I wonder whether we could leave detailed discussion until that point.
I note the comments made by the noble Lord, Lord Williams of Elvel, that certain spare parts deserve protection. This is something to which I shall return when we discuss the exceptions to design right. As to his suggestion that the correct course would be to align design copyright with registered design right, we see difficulties with this. One is that design copyright depends on there being a copyright work such as a drawing in the first place. Many designs originate as prototypes and would not therefore attract design copyright.
The noble Lord suggested that the design copyright route would lead to protection overseas for United Kingdom designs, but I do not think that this would be the case. The position overseas is dependent on the relevant national law, and in general most copyright laws overseas do not protect the kind of designs with which we are concerned here.
Turning to the comments of my noble friend Lord Mottistone, he suggested that there had been insufficient consultation on design right. The basic proposal was, however, made by the Government in April 1986, and the modifications that have been made since are the result of extensive discussions and consultations with many sectors of industry.
I hope that I have managed to answer the points made in this interesting short debate at the beginning of our discussions today, and I hope that the noble Lord, Lord Howie of Troon, is satisfied with this. He has already said that he does not intend to pursue the amendment itself, but I hope I have managed to set out the Government's view at this early stage.
4.30 p.m.
Lord Howie of Troon: It is true that the Minister wrote to me after our debates earlier on the Bill. I hope that he does not assume from the fact that I have not yet written to him in reply that I found his
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letter satisfactory, for I did not any more than I found his reply today wholly satisfactory.
I should say first in respect of my noble friend's comments that it is no part of my case that the design right is too strong. I do not intend to argue that in any way. I merely wish to know to whom and to what it applies. I am still not certain of that. The nearest I got to a reply to my questions was that the courts would sort this out in some way later on. That is a reply we have had several times in our earlier debates and hear fairly often in this Chamber. It is a reply which I do not always find satisfactory. If it were wholly satisfactory and the courts were able to do that sort of thing properly, there would be no need for courts of appeal or for Law Lords to vote three to two on their final decision. I am not wholly sure that leaving things to the courts is the best way of going about our affairs.
Subsection (1) in the clause merely refers to "an original design", which as I tried to show in my opening remarks could be almost anything, although subsection (2) refers to "an article", and "an article" might limit the definition rather more than I was arguing. I instanced three separate examples of objects which are designed: a specific kind of bridge; an artefact similar to that canopy there over the Throne; or a stained glass window similar to those above our heads. They covered a wide range of possible designs.
However, it seemed clear from the Minister's remarks and from the manner in which the Bill was interpreted by other noble Lords that it was really aiming at such things as motor car spare parts and other such production items. That seemed to me to be a reasonable interpretation of Part III of the Bill. It would therefore be perfectly sensible to say that in Part Ill of the Bill, not merely that it referred to "an original design" but—and I make no attempt to draft the words—that it referred to an original design in the area in which it is intended to refer; that is, industrial artefacts, products which are made such as motor car spare parts and I dare say torches and torch batteries and other things of that sort. I imagine that is what the Government have in mind.
I do not want to pursue this matter further. I was greatly tempted by the remarks of my noble friend Lord Williams and the noble Lord, Lord Mottistone, because they struck a chord which has been in my mind from the beginning of our debates on this Bill; namely, that it is a compendium of several Bills, and Part III could easily be a separate Bill.
I do not want to press this amendment now. My noble friend and the noble Lord opposite suggested that it should be taken out of the Bill and pursued elsewhere. I hope that these thoughts will be taken into account by the Government. In the light of that hope, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Monkswell Lord Monkswell moved Amendment No. 281W:
Page 84, line 8, leave out from first ("the") to end of line 10 and insert ("description of an article or part of an article which enables that article or part thereof to be made.")
The noble Lord said: This amendment seeks to provide a clear definition of "design". In the context

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of the Bill "design" should surely be the description of an article which enables that article to be made. In fact the Government have already conceded this in Clause 205 where the phrase,
"by making articles to that design",
appears.
One of the problems we are faced with in this part of the Bill—and it has been alluded to already—is its all-encompassing nature. My noble friend Lord Howie of Troon mentioned three particular examples but they were all fixed structures. I suggest that there is another range from, for instance, haute couture, the design of high fashion articles of clothing, to the design of sophisticated aero engines. They could he described as movable items.
As an engineer I am concerned that Parliament may enshrine in law the dangerous concept that design is just a matter of shape or form. While I concede that for many articles the shape or configuration is the most important aspect, we must be aware that most of the best of modern British design uses the latest technology to its limits. Such designs may require sophisticated materials, methods of manufacture and surface treatments as well as shape and configuration to enable the article to he made.
We must always have an overriding concern for public safety. If the Committee will permit me I should like to give one example. Modern agricultural rotary mowers use blades attached to a rotating disc to cut grass and hay. As the discs rotate, the cutting blades attain very high speeds. If a blade were to break it would fly off with the energy of a rifle bullet. To digress, when these machines were being developed and the implications of blade failure were realised I wondered whether we could sell the idea to the Ministry of Defence, but the trouble is that it is a rather hit or miss operation as to when the blade is going to fail, and it would not be terribly effective.
During development work on these machines tests were conducted to determine the best design of blade. If I say that the test rig was surrounded by bales of straw, those bales of straw were then surrounded by steel planks, the whole apparatus was enclosed in a brick built building and then the test was conducted by remote control with nobody allowed in the building, the Committee will have some idea of the inherently dangerous nature of these machines.
It is sad to report that some years ago a learner driver undergoing instruction on a country road was killed outright by one of these blades, which parted company with a machine working in a nearby field. I can assure the Committee that if blades of the correct design are used these machines do not pose a threat to the public. However, all the design characteristics need to be met. I am informed by one manufacturer that a component supplier was found to be supplying good blades to it but was supplying blades to the after market on which it had omitted to complete a vital heat treatment operation, rendering them very liable to failure. The original manufacturer took immediate steps to ensure that the practice ceased forthwith. However, I am not so sure that if the Bill were passed
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unamended such protection could be afforded to the public in future.
The aspect of design that is merely shape or configuration is rather like the synopsis or outline of a literary work. In some cases that may be the best aspect. However, while we would not restrict copyright to the synopsis of an author's work, we should not restrict design rights just to shape but include other essential aspects of design. I beg to move.
Lord Denning: This amendment is far too wide in going merely on the description. I much prefer the original definition, with this qualification. We do not have the definition of an "article". It does not include a bridge and does not include a house. I would look upon "article" as chattels at the moment; not real property such as bridges and houses. If you get to chattels, it does not include a chair and does not include a clock, a watch or whatever it may be. The word "article" is not defined. That is another reason for rejecting the amendment but also a reason for saying that we must look carefully at each part of the Bill as it goes through.
Lord Morton of Shuna: In spite of what the noble and learned Lord, Lord Denning, has said, I hope that the Government will consider the amendment with some care. To confine the definition to the shape or configuration appears to leave out matters which, as a totally non-technical person, I should have thought were important in the design; matters such as the hardness of the metal to be used, heat treatment or various other matters of consistency which might well be crucial parts of the design. If we are dealing here with industrial articles in a general sense, somebody who has produced something that involves a special form of making is entitled to that design right even if it does not make any difference in the shape but, for example, there is a difference in the consistency.
4.45 p.m.
Lord Hailsham of Saint Marylebone: I share the view of my noble and learned friend on the Cross-Benches that the amendment is not an improvement on the draft in the Bill. The underlying fallacy in the case of the noble Lord, Lord Monkswell, is that an element of consumer protection can be introduced in a clause that is designed to protect intellectual property. The sharp blades in a rotary mower are dangerous and there are various provisions both in the law of tort and in the criminal law which protect people or ought to protect people or are designed intentionally to protect people from the dangerous construction or design of materials. But you cannot use a property right in the designer as a means of achieving that object.
I agree with the noble Lord, Lord Morton of Shuna, that it is difficult to make a comprehensive definition of the word "design". It must cover quite a variety of different things but it is after all a dictionary word. One starts off, I hope, with the belief that the courts can interpret dictionary English. If they cannot they should not be in business at all. In so far as the draft Bill attempts the job, at the moment

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I am not persuaded that it is not doing as well as it is possible for the English language to do. Simply to refer, as does the first amendment of the noble Lord, Lord Monkswell, to the description of an article or part of an article is totally inept to describe what the word in the dictionary would actually mean. Design is far different from the description of an article or part of an article. It is something other than the mere description. Therefore I should have thought that the amendment was not apt to produce the result for which it was intended.
Lord Howie of Troon: I would go a considerable part of the way with the noble and learned Lord, Lord Hailsham, in his reference to the dictionary and so on. I am not sure that he is right in his reference to description. I am quite sure that what my noble friend had in mind was something in the nature of a specification. A specification is a detailed and technical description. It is not a mere outline reference to the appearance of the article. The specification is, if not the whole design, at any rate a part of it. For that reason I think there is more to my noble friend's amendment than some Members of the Committee seem to think.
Lord Beaverbrook: The point here essentially is what should design right protect. As drafted, the Bill covers shape and configuration and in this respect it is an archetypal design right. It protects the way things look and not what they are made of or how they work.
The amendment on the other hand would extend the coverage of design right to include any characteristics of an article. Indeed, we have found it extremely difficult to think of anything that the amendment would not cover. The only limitation is that an article must be described in such a way that it can be made; and here there are echoes of patent law. Section 14(3) of the 1977 Patents Act states that:
"The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art".
There is a considerable overlap between this and the noble Lord's amendment. In a very real sense the amendment would produce a second patent system. It would certainly not be a design right in the accepted sense. It would result in practically every aspect of every manufactured article being protected. I believe that that goes too far. It is one thing to protect the appearance of a product 'and quite another to protect every feature, every idea, every conceivable aspect of a product. Indeed, as we shall shortly he discussing, we think it is right to limit the extent of the design right provided by the Bill in cases where there are design constraints. As my noble friend the Secretary of State said at Second Reading:
"Those with ideas deserve a fair reward for their labours but they cannot expect to be completely sheltered from the real world. This would stifle rather than stimulate creativity".—[official Report, 12/11/87; col. 1476.]
I agree with my noble and learned friend Lord Hailsham that safety standards are a matter for consumer protection legislation and not for intellectual property legislation. We think that the amendment would be over-protective and would stifle rather than stimulate creativity.
Lord Howie of Troon: The Minister seems to underline the fears of my noble friend Lord Monkswell in suggesting that the design right applies only to the shape or configuration of an item or article. Indeed, that is right in the context of the Bill. The fear of my noble friend is that, by considering design solely in the context of the Bill, we may be saying something about design or designers as a whole. He would argue, as I would, that the design of an engineering article contains a great deal more than its configuration or shape. It contains the means of application of engineering science and mathematics to determine the dimension and size of the material itself. While these in turn determine the shape, I suppose, they are not aesthetic matters but engineering matters. My noble friend's fear, which I share, is that if one designs in this way one limits the notion of the designer to a narrow group of persons, whereas designs proper embrace a wide range of persons, some of whom come from the art schools and some from the engineering colleges and universities. That is the blurring of design that both I and, I think, my noble friend see in the Bill. I think that it needs more thought and definition than the Government have given it. There is no reason why the Government should not limit the provisions of the Bill to a narrow area of design, but they should make clear that it is no more than a narrow area of design that is referred to in the Bill.
Lord Monkswell: I welcome the support given to the amendment by my noble friends.
I thank the noble Lord, Lord Howie of Troon, for his interpretation of what I think, which is of great assistance! I should point out that he was almost 100 per cent. correct in what he said.
I wish to touch on what the noble and learned Lord, Lord Hailsham, said, about there being other ways of protecting the consumer. I gave one example of a case in which consumers' rights were severely curtailed. I can think of numerous others where the laws of consumer protection render effectively no protection to the person at the receiving end. As a society we need to be aware that there are ways in which the consumer, the public, can be damaged. It is not enough to say that a whole range of consumer and public protection laws exists. One must look at how the laws operate. Where there is a need, as I feel that there is in this instance, to take action in other ways to protect the consumer and public as suggested in the amendment, we should take advantage of them.
The Minister suggested that my projected definition of design was too wide-ranging. We come back to the original question: what do we mean by design right protection and what sort of articles do we seek to protect against copying? Here I return to the comment of the noble and learned Lord, Lord Hailsham. He said that it is easy to obtain a definition of design from a dictionary. As it happens, I do not have it written in front of me, but any dictionary will provide a definition. It should be borne in mind that, in the context of the Bill, we are discussing not the substance of design but the copying of articles made to a design, which may be slightly different.

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Having noted the Minister's response, I reserve my position on the amendment. I hope that the Government will consider further what has been said in the debate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Nugent of Guildford): If Amendment No. 281X is agreed to, I shall not be able to call Amendment No. 282.
Lord Monkswell Lord Monkswell moved Amendment No. 281X:
Page 84, line 11, leave out subsection (3).
The noble Lord said: Subsection (3) of Clause 192 restricts design right in four ways. Those aspects of design that define method of manufacture, fit, form or surface finish on the face of the Bill could not be held to be part of a design right. These are some of the most essential elements in design and to exempt them from protection renders the concept of design right almost meaningless.
Although I do not wish to digress into a Second Reading speech perhaps I may say this. Britain as a manufacturing nation is at the crossroads. Already we import approximately half our requirement for manufactured items. We are faced with two choices. Either we can succumb to more imports and thus subsequently give assistance to companies that can make a fast buck from supplying spare parts to imported goods; or we can decide to give some measure of protection to the intellectual property rights of British original designers and manufacturers. It is my contention that we should support those designers who by their intellectual efforts will provide for our future prosperity.
Paragraph (a) deals with the method of manufacture. We have discussed the question of heat treatment in the example that I quoted earlier so I shall not elaborate on that. Paragraph (b) refers to the fit of one article with another. I had some initial doubts about deleting subsection (3) as it appears to limit the fitting of accessories as well as spurious spare parts. However, given the sophistication of modern designers, I think that it would be right to delete it.
Let us take the example of an earthmoving machine, an excavator. The owner may wish to fit some special attachment to convert it to a machine that is capable of handling bales of hay, which can weigh over one tonne. However, the conversion may overload the machine and give rise to failure and to safety problems not only for the operator but for bystanders. The machine designer, who has calculated all the stresses and strains on the structure and determined the reliability and strength of different components, should surely have some control over how the machine that he has designed will be modified. Design right protection would be a good mechanism for that. Paragraph (c) would exempt form or shape for appearance from protection. This is obviously geared to give the parasitical car body panel makers unrestricted license. The difficult word here is "appearance". We shall see conflict here because what may be "appearance" to one person may be structural
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integrity to another. If I say, for example, that the wing of a Mini is part of the structure of the chassis one can understand the implication. There was a case where plastic wings for Minis that were available some 10, 15 or 20 years ago had to be taken off the market because they were deemed to be unsafe in terms of structural integrity.
Not only do modern manufacturers liaise closely with the motor insurance industry to ensure relatively easy and cheap replacement of body panels, but sophisticated materials, methods of manufacturing and construction are also used to reduce weight while maintaining structural integrity. The investment committed by original equipment manufacturers surely deserves some reward. Design right protection will be useful to protect the consumer.
I turn to paragraph (d). That relates to decoration applied to the surface. Again, we are in a dilemma because one person's decorative finish may be the designer's functional necessity. I can think of at least one machine with five different types of surface finish, all of which might be construed by a lay person to be decorative, when from the designer's point of view none of them is. Each has a distinct and discrete functional use. Extensive development, testing and capital outlay will be involved to provide those functions. I see no reason for including that as a restriction to design right.
I should like to say a few words about manufacturing industry in this country. There are suppliers of complete articles—the original equipment manufacturers—who depend on suppliers in the trade. Some of those suppliers will make items that the original equipment manufacturer has designed while others will supply items that they have designed. All of those organisations' activities are essential to the industry. Some component manufacturers, and all of the original equipment manufacturers, invest in design. That is an expensive activity which includes the necessary development and testing facilities. Design is essential because of the changing world in which we live.
New materials, new manufacturing techniques, new pressures by society, and the product of our own legislative activities, all create the need for new designs. It is surely right that this essentially intellectual activity should be accorded a degree of protection.
When researching the subject, I found that there was no statutory obligation on manufacturers to supply spare parts. This is an appalling state of affairs from the consumer's point of view until one realises that all reputable manufacturers supply spare parts. That involves them in warehousing, distribution systems and the associated costs. Those costs must be met by the consumer. There is no benefit to the consumer if the original equipment manufacturer has to drive up the price of his original product and his slow-moving spare parts because he has lost the market for the fast-moving parts to suppliers who will not have the design and development, testing, production, warehousing and distribution costs of the whole product and the slow-moving parts. They are effectively acting as parasites in the market.
One of the things we must do is to encourage the exports of manufacturing goods. One of the features of successful world marketers of manufactured goods is that they have worldwide distribution systems. Those systems handle not only the whole products but the servicing and the parts supply. A feature of the operation of those companies, taken as a whole over a period of time, is that there may be periods when they depend upon income from spare parts to keep business going and other times when they will depend upon the income from their whole goods supply to keep them going.
Another aspect of the good practice of those established companies which take a long-term view of their activities is the improvement in quality and reliability and the reduction in the price of the components. The consumer benefits from those improvements. Those factors all benefit us as a manufacturing nation and as consumers.
Finally, the designer's intellectual endeavours are as important as those of the authors of literary works. On that basis, we should not limit their intellectual property rights in a way we should not attempt to do with authors. I beg to move.
Lord Mottistone: Amendments Nos. 282 and 290 are grouped with the amendment moved by the noble Lord, Lord Monkswell. Amendment No. 289BZ is included in the group although I am not sure that he mentioned the latter amendment. I shall speak to Amendments Nos. 282 and 290. I have a slightly different solution to the problem from that of the noble Lord, although, in general, what I have to say is not dissimilar.
Amendment No. 282 seeks to remove paragraphs (b). (c) and (d) from subsection (3) of Clause 192. I shall briefly mention why those particular paragraphs are not suitable for this Bill. Paragraph (b) excludes what can be described as the "must fit features" of design from design right protection; that is, a design right does not grant protection for those features of a design which are dictated by the shape of another article with which it is intended to co-operate.
I do not argue against the provision of a defence against infringement based on the need for an article to work with another article. However, I am advised by the CBI that it is of the opinion that it is better not to exclude such features from protection but rather to provide a defence against infringement. Accordingly, I have tabled Amendment No. 290 in order to deal with that problem.
Paragraph (c) excludes from protection by design right aspects of design which are necessary in order that one article should match the design features of another. I shall deal with some of those points on Amendment No. 297. The effect of these exceptions is that many common articles which are designed for matters different from those for which the clause is intended will be denied protection. For example, let us take a tea-pot lid. It is obvious that the lid must fit and match the tea pot and that the tea pot must fit the lid. Therefore, both are to be denied protection. That will lead to counterfeiters of chinaware being able to sell their goods as spare parts for Wedgwood and Crown Derby. A two-piece dress is another example
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from a different trade. Both parts have the features of shape or configuration dependent upon the appearance of that of which the article was intended to form part, so neither part, nor whole, will have any design protection.
The designers of children's construction kits, such as Meccano and Lego, will be affected. There is a whole range of articles from creative British industry—from furniture and home decorating to agricultural machinery, which the noble Lord mentioned—which will be denied the protection that they currently have.
The competitiveness of British industry as a whole depends upon its design skills and the assurance of a firm home base. Although all is not well with the current law, it is easy to abuse it in some sectors. The drafting of Part III as it stands will cause more harm than any other part of the Bill.
One of the by-products of this which we fear is that the interest which has been generated in good design for industrial items will be discouraged and indeed perhaps not pursued further. It is a battle which has been fought for many years and I am delighted to see the noble Lord, Lord Reilly, in his place, because it is some 15 years since I dealt with him when he was the director of the Design Centre and I was director of an industrial training board. He was seeking to try and persuade me to give him grants to encourage training in industrial design. I was not very encouraging to the noble Lord at that stage but industrial design is important. Indeed, if I listened carefully enough to my noble friend the Secretary of State for Trade and Industry when he made his Statement this afternoon, I believe that he rather made a point of the fact that British goods must go for good design and for making themselves superior in the marketplace. It would seem to me that this subsection which I am seeking to amend will have the effect of discouraging rather than encouraging good design. I hope therefore that my noble friend will give due regard to that amendment.
Perhaps I may turn briefly to Amendment No. 290. This is in two sections. The first reintroduces the "must fit" argument or detail which I have sought to delete from Clause 192 subsection (3)(b). The second subsection of my Amendment No. 290 attempts to make clear that design right protection can apply to spare parts with the intention of superseding the British Leyland v. Armstrong decision. So in effect in this amendment one is seeking to reintroduce in a different form the deletion of subsection (3)(b) in dealing with the infringement.
Finally, I turn to subsection (3)(d). This provision appears to have been included in order to prevent duality of protection as between design rights and copyright. It is hard to see how any benefit can derive from such an exclusion. It will therefore only have the ability to cause mischief. I think one must remember that there is mischief; that there are pirates who seek to copy good British designs wherever they can get their oar in. It is this sort of mischief which one seeks to discourage and not to allow to develop.
I hope that my amendments might appeal to my noble friend, perhaps not in exactly the form in which they are put forward, but in some form so as to

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provide a greater protection for industrial design in the wider industrial market.
5.15 p.m.
Lord Howie of Troon: I wish to refer briefly to two of the four parts of subsection (3)—paragraphs (a) and (d). Paragraph (a) specifically excludes methods or principles of construction. That would be part of design, as I would use the word and indeed as any respectable dictionary would use the word. I can see that, from the point of view of the Government, it is quite sensible to exclude that since it underlines the narrow range over which this part of the Bill is intended to apply.
The same can be said of paragraph (d) to which the noble Lord, Lord Mottistone, referred a moment or two ago. The decoration applied to the surface of an article is surely another area of design, as any ordinary man would use the word or indeed as any respectable dictionary would use the word. It is excluded and here again this underlines the narrowness of the Bill.
This would not matter too much if these two elements of design were protected elsewhere in the Bill. I think it would be quite sensible to protect decoration on the surface under the copyright parts of the Bill. I am not sure that the Bill actually does that. However, I am sure that the copyright part of the Bill does not exclude the method or principle of construction. Noble Lords will remember that we had conversations in the very early part of the Bill, when I moved to include building structures as well as buildings under the copyright part of the Bill. This merely reinforces the arguments which I used then and to which I hope the Minister is paying close and continued attention. Indeed, I hope he has by now made up his mind.
If these two elements of design are to be excluded from design right here they must in all fairness be protected under some other part of the Bill.
Lord Denning:I hope that noble Lords will not accept these amendments. It seems to me that the word "design" must be elucidated and not carried too far. That is done by subsection (3), excluding all those matters from design right. As my noble friend Lord Howie has said, it is a great help to show the extent of design right and it is helpful to the courts in that way.
On the other point about fitting in with something else, it seems to me that it is quite right to exclude the mere shape of fitting in, whether it is the teapot lid with the teapot or the cup and saucer, or whatever it may be. If each of those is to be protected as a design right, it is each individually. But the particular shape which brings them together need not be protected. In other words, I would suggest that the Bill is all right as it stands and that we need not accept any amendments.
Lord Hailsham of Saint Marylebone: Perhaps I may reinforce what the noble and learned Lord on the Cross-Benches has just said. I do not know what effect the extremely learned speeches of my noble
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friend Lord Mottistone and the mover of this amendment have had on others, but they had on me precisely the effect of the preaching of St. Paul before the Governor Felix in the Acts of the Apostles. They have allowed their wide knowledge of the subject and of the intricacies which it involves to obscure the simplicity of what we really ought to be discussing. We are discussing the protection of intellectual property. This is an extremely difficult and intricate subject.
I am far from saying that this will be the last word on the subject, and I do not believe that this Bill will be the last word on the subject. On the contrary, it is a developing area of law which can probably only be dealt with by legislation and not by case law. Having said that, we have a variety of ways available to us of protecting intellectual property. There is the law of copyright which we have dealt with earlier in the Bill. There is the law of patents; there is the law of trademarks, the law of registered design, the law of passing-off, which can be dealt with up to a point by case law.
The important point is that one must not try to use one of these methods of protecting intellectual property so as to overlie hopelessly with the other. The question of policy which we have to decide in these and other cognate matters is how to reconcile the legitimate rights of the owner of intellectual property who has put work, intelligence and originality into the creation of a new product with the right of the consumer to the enjoyment of that new product without being constantly badgered by litigation.
It seems to me that the basic fallacy, if they will permit me saying so, underlying both the mover of this amendment and my noble friend Lord Mottistone is that they are trying to use this new and extremely original new right which is proposed in Part III of the Bill to achieve some of the objects which could be achieved only by one of the others if they were to be achieved at all. I have already crossed swords with the noble Lord, Lord Monkswell, for trying to use that as a method of consumer protection against dangerous products. Again I feel that the Government have on the whole been quite right in making this new design right a fairly limited thing. It does not and is not intended to cover the gold figures on the canopy in the House of Lords. That would be covered, if at all, by copyright as a work of art. It is not designed to protect the users of a rotary mower from the blades flying off and hitting the consumer or a third party in the legs. It is designed simply for the protection of design so as to prevent duality of protection with the copyright law which has hitherto been the only avenue of approach.
I feel that by trying to omit either parts, as my noble friend Lord Mottistone would do, or the whole of subsection (3) which excludes from the protection of the design right various aspects of the appearance of articles like decoration, they are trying to go much too far in the wrong direction.
As I listened to the noble Lord, Lord Monkswell, speaking, I was reminded of the development during my lifetime of razor blades and safety razors. Originally there were three holes in a Gillette into

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which one fitted three prongs but then other people made safety razors and eventually there was a battle between the producers of blades who tried to produce a kind of Yale lock or master key which would fit any kind of safety razor and those who were constantly inventing new types of razor which could only be accommodated by blades of their own particular design. We do not want to get into that kind of muddle in discussing this part of the Bill. I personally would prefer to keep subsection (3) in its present form.
Lord Lucas of Chilworth: I should like to support those who have spoken, particularly my noble and learned friend Lord Hailsham of Saint Marylebone, who object to the whole series of amendments that we are now discussing. I take a rather narrower view than my noble and learned friend because I look at the pragmatic situation which has arisen and which leads us to be considering these amendments. It is purely and simply the "must fit must match" exception, particularly as applied to motorcars, agricultural vehicles and articles of that kind.
If one looks at the amendment of the noble Lord, Lord Mottistone, coupled with Amendment No. 290 one sees that he proposes that Clause 192(3)(b) should be deleted and Clause 205 should be extended by adding new subsections (5) and (6). In that way he proposes that the "must fit" features of a design should be protected by the design right but that it will be a defence in any action for infringement of the design right to show that the features copied were "must fit" features. That measure seems to me quite unnecessary and quite undesirable. The noble Lord then proposes in Amendment No. 282 that Clause 192(3)(c) should be omitted. He said that this clause amounted to a pirate's charter. He went on to suggest that good design will be discouraged and that industrial design will he affected. I suggest to him that that is a long way from the truth.
The intention of the subsection as written in the Bill is to prevent manufacturers of the consumer durables which I have described from using the design right to prevent all competition in the supply of spare parts. Those spare parts must be used to replace worn, corroded or damaged parts and they must restore also the visual appearance of an article. That is what the subsection does and that is wholly proper and reasonable. When the noble Lord, Lord Monkswell, complained that only the original maker should have the right to supply spare parts, although he accepts that there is no statutory duty upon him so to do, I draw to the attention of the Committee the situation that applies with original equipment manufacturers who indulge in what is called a cross-products programme. Unipart, for example, will make spare parts, water pumps, distributors or silencers, that not only fit cars from their stable but cars right across the board, as do FoMoCo, the Ford people, and as do General Motors through its AC Delco offshoot.
Therefore one finds that the very manufacturers of the original product—whether it is a tractor, a digger, a motor car or a lorry—who make spare parts are quite happy to manufacture spare parts for other makes but deny the opportunity to the component
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manufacturer and independent to do the same. That is fundamentally wrong. The example given by my noble friend Lord Mottistone of a teapot is not really a very good one.
Lord Mottistone: Why not?
Lord Lucas of Chilworth: It is not a good example because if the design of a teapot is novel it can be protected as a registered design. Clause 246(1) and new Section 7(2) and (3) prevent the manufacture and sale of separate items intended for use as a kit assembled into a complete article.
The noble Lord, Lord Monkswell, spoke about British industry. If one accepted this series of amendments, they would frustrate the intention of the Bill which is to provide a spur for innovation and not to protect industry from competition. We cannot hope to thrive if we surround ourselves with protective barriers which are not available in any of the other major industrial countries of the world in which we trade, for example, Japan, USA, France, West Germany, Canada, Italy and others all of whom permit the manufacture of parts which are the subject of those parts of the Bill which we have been discussing. If the amendments were passed they would prevent our manufacturers from expanding their activities and from selling into markets where no such restrictions exist. That would be a lost opportunity to British industry.
One really must look at the current position where a British manufacturer of these consumer durables is in fact importing the very parts from overseas countries which the amendments would prevent being manufactured in this country and using them either in the supply of spare parts or as original equipment under the terms of the Bill. Again that cannot be fair and it cannot be right. Nor can it be helpful to British industry. For those reasons, and for a number of others, I hope that the Government resist the block of amendments.
5.30 p.m.
Lord Morton of Shuna: I shall speak in favour of the amendments. As was indicated by my noble friend Lord Williams of Elvel, the issue here is one of policy. I remind the Committee that in the White Paper there was a promise, contained in paragraph 3.21, that:
"the Government has concluded that some protection should he available to give the manufacturer who has spent money on design the opportunity to benefit from his investment, thus providing an incentive to further investment. It has also concluded this protection should extend to spare parts".
Of course the Government can change their policy and their minds. That is a policy decision. However, it appears to us on this side of the Committee that what has been done has perhaps been illustrated by the noble Lord, Lord Lucas of Chilworth. The policy has gone from the motor industry into all other aspects of industry. In our view, it would have been much better to have looked at the matter first from the general view of industry and then to have seen how it could be approached. As many Members of the Committee will know, there has been considerable pressure from other industries, from

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Westland and from the Association of Manufacturers of Domestic Electrical Appliances. They are in different positions and they have different problems from those of motor manufacturers.
If one is manufacturing and designing objects which may be sold for several million pounds each but of which only about 10 may be sold and the parts wear out after a certain number of hours of use, one has different problems from those of manufacturers who manufacture thousands of motor cars which will require four or five exhausts during a lifetime. If we are saying that as a matter of policy spare parts should have no design protection, we immediately get into the question of what a spare part is. A battery may be a spare part when used in a car and yet he an article in its own right in another situation.
The matter does not appear to us to have been thought out. The Government do not appear to have considered the difficulties that will affect employment or the effect on the cost of the initial article when the research and development costs will have to go into the initial cost instead of (as is presently the case in items of high capital cost) into spare part replacement costs.
For those reasons, we consider that it is appropriate to go back to the position of the White Paper and to give protection to spare parts.
Lord Beaverbrook: For the convenience of the Committee, I shall also speak to Amendments Nos. 281X, 282, 289BZ and 290, all of which essentially concern the exceptions to design right contained in Clause 192(3). The best known of those provisions appears in Clause 192(3)(b) and (c) and are perhaps more often referred to as the "must-fit" and "must-match" exceptions to design right. The reason they appear in the Bill is probably well known to the Committee. It is to prevent design right conferring a monopoly. The problem is that where one article has to fit another, it must of necessity be a copy of the design of that other article to some extent. That is of particular but by no means exclusive application to spare parts used to repair equipment of all kinds. Because of the need to fit (and hence the need to copy) design right without these provisions could completely shut competitors out. I have to say very firmly that this is not what we want. Accordingly, the exceptions allow copying where that is compelled by design constraints.
The effect of both exceptions will of course vary depending on the circumstances. For example, for a pump for an aircraft, the design is mainly free standing but it has to be connected to the aircraft. The Bill as drafted would allow the connecting features to be copied so that others could compete with their own pump designs. But it would not allow the free-standing parts of the pump to be copied. As a result, there would in general be protection for parts. Where, however, the design is entirely dependent on the design of the equipment to which the article is to be fitted, then the Bill would allow the entire article to be copied.
The best known example of that situation is a car body panel, and in that connection I have heard a
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good deal about the Bill being a pirates' charter. Again I have to say very firmly that we do not accept that. The plain fact of the matter is that in this kind of case competitors have absolutely no choice but to copy the entire article. Where the circumstances compel copying, we believe that the need for competition in the aftermarket must prevail. It therefore follows that I must resist Amendments Nos. 281X and 282 in so far as they concern Clause 192(3)(b) and (c).
So far as concerns Amendment No. 281X and Clause 192(3)(a), again I have to resist. We have already discussed the scope of design right in connection with Lord Monkswell's, Amendment No. 281W. It is our view that design right should be confined to the form of articles. Clause 192(3)(a) is no more than a reflection of that view, to avoid any doubt.
To turn to Clause 192(3)(d), the question is whether there should be an exclusion from design right in respect of decoration applied to the surface of an article. In our view, decoration is a matter for copyright and indeed registered designs law. The issue therefore is whether any additional protection provided by design right would cause any difficulty. In our view it would. It would confuse the nature of design right, which is intended to apply to the overall form of an article and not to decoration applied to a surface. I do not accept that the presence of the exclusion could be exploited unfairly with a view to denying protection to certain designs. It is, I think, a simple and a necessary provision.
Perhaps I may say to the noble Lord, Lord Howie of Troon (who is not present at the moment) that methods and principles of construction are not matters for copyright law or indeed anywhere in the Bill. They can be protected under patent law and we consider that that is sufficient. As I have already said. decorative features are protected in the Bill under copyright or registered designs law.
Turning to Amendment No. 289BZ, we find a different recipe for dealing with the monopoly effects of design right in the absence of must-fit and must-match exceptions. I have already indicated that we believe that the must-fit and must-match exceptions are necessary. They are also sufficient because they prevent any monopolies arising in the first place. It follows that we do not need the amendment.
Regarding Amendment No. 290, there are four distinct points. First, should the exceptions appear in Clause 192 or in Clause 205? Conceptually the right place is in Clause 192. The aim is to allow copying where that is necessary; it makes much more sense and is a clearer indication of the importance of the provisions to place them in Clause 192 so that design right does not arise at all in the design features concerned. To place them in Clause 205 would give the impression that they are an afterthought—a small concession—and could lead to narrow interpretations. Those provisions are fundamental, and placing them in Clause 192 will leave no room for doubt in that respect. Placing them in Clause 205, on the other hand, will give room for doubt.
Secondly, should we have a must-match exception at all? I think it will be fairly clear already that my

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answer to this is yes. However, we can see that in the case of Clause 192(3)(c)—the must-match exception—it may be that we have drafted the exception a little too broadly. For example, it may be that the exception should be cast only in terms of parts which are an integral part of the whole. This would avoid the exception applying to sets of cutlery, soup tureens or kettles, ladles and lids. We shall therefore be looking at this particular aspect of the question again in the light of what has been said here today with a view to bringing forward an amendment at Report stage.
Thirdly, should we restrict the must-fit exception to cases where the copying is essential, as the first paragraph of Amendment No. 290 would have us do? In our view that is too narrow. It would place an intolerable burden on competitors who would have to analyse every one of their designs minutely to decide whether any copied feature was really essential. Again it would convey the impression of a minor and limited exception restricted in application to cases of absolute necessity. The Bill as drafted is more flexible. It will allow competitors to operate fairly without forever looking over their shoulders and it will protect designers against unfair copying of the free-standing aspects of their original designs.
Finally, do we need an express provision overriding the judgment in the British Leyland v. Armstrong case and providing that design right cannot be denied on the sole ground that we are dealing with a replacement part? In our view the clear answer is: no. Design right expressly goes to the designs of articles; it contains express and prominent provisions for exceptions which, as I have said, will avoid monopolies; and it includes provisions for dealing with abuses. The present copyright law has none of these attributes and it was, I think, for that reason that the Judicial Committee of this House decided as it did in British Leyland v. Armstrong. Design right is a self-contained, balanced package just like the patent and registered designs statutes to which the British Leyland v. Armstrong spare parts exception was expressly not applied. We indicated in the White Paper that British Leyland v. Armstrong would not apply. Indeed, there is no room for the British Leyland v. Armstrong judgment to apply because the Bill as drafted deals with the monopoly problem in a different way. Consequently there is no need to deal with the question.
In this and all the other respects I have mentioned, we believe that the Bill has it right, subject as I have said to the further thought we shall be giving to the precise wording of Clause 192(3)(c). Therefore I have to say that I cannot accept the noble Lord's amendment.
Lord Mottistone: I thank my noble friend very much for his extremely clear and lengthy exposition of the Government's position. I shall of course need to read it to see whether anything needs to be brought forward for the next stage, but I am extremely grateful to him for having undertaken to modify Clause 192 (3)(c), in ways that I should like. I shall not be moving my amendment.
Lord Monkswell: I thank the noble Lord, Lord Mottistone, for chipping in on this debate. It obviously saves time when we are discussing broadly similar things to discuss several amendments together. I thank the noble Lord, Lord Howie, for his support in objecting to subsections (3)(a) and (3)(d). I note the wish of the noble and learned Lord, Lord Hailsham, to reconcile the rights of designers with the rights of consumers. The argument is that he thinks that the Bill achieves that aim while I believe that the Bill as written does not. No doubt we shall carry on this argument to the end of our days.
We are faced with a very deep philosophical divide, in the sense that, as the noble Lord, Lord Morton, quite rightly stated, we are dealing with a reflection of government policy, and the Minister has reinforced that view. The Government have taken the line that they are interested solely in dealing with what they describe as monopoly practices rather than considering the rights of the designer.
Unfortunately, we are faced with this Bill. The problem is that I do not think that they have thought through the position. They say that they are opposed to monopoly practices, which may be all very well. The theory is that if one is against monopoly one is in favour of the consumer. However, in practice, what will be the result of this Bill in terms of the design, manufacture, service and parts supply of motor cars? That is just one aspect that seems to obtrude into all our deliberations.
However, as the noble Lord, Lord Morton, has suggested, we are dealing with a whole range of other products other than motor cars. Even if we just condsider the motor car, the fact that the Minister has stated that it will be quite legitimate for anybody to copy fast-moving spare parts for motor cars, effectively means that that source of revenue will be denied to the original manufacturer. If one allows competition and the competitor does not have the cost of production, development tests, distribution and warehousing costs, etc, almost by definition the copiers, the pirate producers and pirate suppliers will be able to provide the components more cheaply. With this Bill the Government are in effect saying to the public: "This is the way you get things more cheaply and the way you prosper—by going to the marketplace and buying cheap spare parts for your motor car". That is the implication of what the Government are saying.
Unfortunately, the long-term result will be that the consumer will not get his motor car any more cheaply; he will not get his spare parts more cheaply. If we take into account the whole life cycle costs from the initial purchase of the motor car through its service and spare parts requirements to the end of its lifetime, the consumer will almost inevitably pay more. I hope that the Government will think about this matter; I hope that they will listen to the representations of some other major industries and think again on this subject. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 282 not moved.]
[Amendment No. 283 had been withdrawn from the Marshalled List.]
Clause 192 agreed to.
Clause 193 agreed to.
5.45 p.m.
Clause 194 [Ownership of design right]:
The Deputy Chairman of Committees: It has been suggested that Amendment No. 283A should be grouped with Amendments Nos. 284, 285, 286, 298C, 299, 302HA and 302HB. If that is convenient to the Committee, as the noble Lord, Lord Lloyd of Kilgerran, is not here, perhaps the noble Lord, Lord Tordoff, will say so.
Lord Tordoff: I have only one slight reservation about what the noble Lord the Deputy Chairman has just said. In view of the fact that my noble friend has had to leave the Committee for a period—I hope that he will be back later—and that his amendment covers the whole clause and he would rather see what is said about the various parts of the subsection before going any further, I have been advised that he would wish this amendment not to be moved.
[Amendment No. 283A not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 284:
Page 95, line 4, after ("worth") insert ("in the absence of an express contractual term").
The noble Lord said: Taking advice from the Chair, perhaps I may also speak to Amendment No. 299, as the two go together, and also to Amendments Nos. 285 and 286 together, because in effect they are one amendment.
The object of Amendments Nos. 284 and 299 is to make it possible for the designer to have a contract with the commissioner of the design, if that is thought to be reasonable at the time by the two people concerned.
It is not essential that there should be such a contract but the amendment makes provision for it. It seems to me and to my advisers that that is fair.
Amendments Nos. 285 and 286 are on the same lines, although rather different. They seek to bring Clause 194(3) into line with Clause 11(2), which relates to the same issue in respect of copyright. I suggest to the noble Lord that there can be no good reason to treat design rights and copyright differently in this respect. If it is the intention to do so, the difference in wording between Clause 11(2) and Clause 194(3) should be eliminated. I hope that those amendments—perhaps pedestrian compared with the larger ones that we have been considering—will appeal to my noble friend on the Front Bench. I beg to move.
Lord Morton of Shuna: I am not entirely sure which group of amendments we are now supposed to be discussing. However, on the understanding that the grouping is that which the Deputy Chairman read out, apart from Amendment No. 283A, I speak to Amendments Nos. 298C, 302HA, and 302HB. These are in the name of my noble friend Lord Williams of Elvel and myself. This group of amendments relates
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principally to the position of a person who creates a design because he is commissioned to do do, because he is employed to do so or because he happens to do so when he is employed. The designer should have the basic statutory right to the intellectual property in the design, leaving it to the contract—either the commission contract or the contract of employment—to transfer that right to the commissioner or the employer if that was suitable.
It seems to us that the commissioner or the employer is normally in a position where he can dictate the terms of the contract more readily than the designer, whether he is a self-employed person or an employee. It would therefore be easier to have the burden of setting out the contract on the commissioner or on the employer.
Members of the Committee will be aware that the Patents Act 1977 includes employee rights to inventions in Sections 39 to 43. When dealing with employee rights, as we are in discussing these new design rights and the registered designs, it is appropriate that the approach should be broadly similar. That is the provision we seek with the amendment.
Lord Beaverbrook: For the convenience of the Committee I shall speak to Amendments Nos. 284. 285, 286, 289C, 299, 302HA and 302HB. I shall occasionally perhaps allude to Amendment No. 283A in the name of the noble Lord, Lord Lloyd. These amendments concern ownership of the rights in designs. We devoted some time to the provisions of Clause 11 of the Bill when we discussed employed and commissioned authors. I indicated that we place considerable reliance on the ability of the parties to override the provisions on first ownership of copyright by assignment. The same is true of both design right and registered design rights. It is for this reason that the provisions of Clauses 194 and 245 on the ownership of the rights in commissioned and employee designs can both be overridden by assignment. I should, however, say a few words about the differences in the treatment of copyright and design rights in the Bill.
One difference is that for commissioned designs it is the commissioner rather than the designer or author who is entitled to the right. The different treatment here comes about because the background is different. Indeed, many Members of the Committee will probably know that the basic regime set out in Clauses 194 and 245 of the Bill is essentially the same as that which has operated in registered designs for a very long time now without any difficulty; and it is of course important that the ownership provisions of design right and registered designs should be the same because both rights can apply to the same design.
Perhaps I may deal first with Amendments Nos. 298C, 302HA and 302HB. The effect of these would of course be subject to assignment and in that respect I think that they are right. However, the provisions would also reverse the original ownership of commissioned and employee designs by giving first ownership to the designer rather than to the commissioner or employer. I should also point out in passing that Amendment No. 302HB seeks to amend

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only Schedule 4, which is merely a statement of the Registered Designs Act as amended. To make this amendment effective a similar substantive amendment to Clause 245 would also be necessary. In any event, I have to say that we are very reluctant to overturn the long-established provisions in the Registered Designs Act. It is our understanding that the existing provisions have worked well. In contrast to the position under copyright, we are certainly not aware of any great desire for change. I would therefore wish to resist the noble Lord's amendments.
Turning now to Amendments Nos. 284, 286 and 299 of my noble friend Lord Mottistone, these highlight the second difference between the copyright and designs provisions. In Clause 11 of the Bill the provision on the ownership of employee works is subject to agreement to the contrary. The registered designs clauses on the other hand contain no equivalent provision. However, the same effect can be achieved by an assignment under Section 2(2) of the 1949 Act. Similarly the design right provisions in Clause 194 are subject to assignment under Clause 202. Under that clause assignments have to be in writing, signed by the commissioner or employer. The result is that the only real difference between the Bill as drafted and my noble friend's amendments, and indeed the copyright provision, is that the amendments would allow the basic position to be overridden by any agreement, including an oral agreement. The copyright provisions permit the use of less formal agreements, because copyright works often arise more casually than designs. However, in the case of designs we think that we should stick with the established registered designs regime and I would therefore resist these amendments.
I would, however, add that my noble friend's Amendment No. 286 also highlights a minor drafting difference between copyright and designs. This is the use in Clause 11 of the expression "the first owner" and in Clause 194 of the different expression "is entitled to". We do not think that in practice this will make any difference but there are obvious advantages in adopting a consistent approach. We shall therefore he looking into this in time for the Report stage.
Finally, in his Amendment No. 285 my noble friend has also pointed out a second drafting inconsistency between Clauses 11 and 194. I am grateful to him for doing this, because it seems to us that on this occasion there is no good reason for the difference. However, our preliminary view is that it is Clause 11 which should be changed and that the word "person" rather than "employee" should be used in both places. Nevertheless, if my noble friend would like to withdraw his amendment, I shall return to it at Report stage.
6 p.m.
Lord Mottistone: I am extremely grateful to the Minister for his comments on my amendments. I shall read with great care the explanation my noble friend gave that the Bill already gives effect to my first Amendment No. 284. I also greatly appreciate what he said about Amendments Nos. 285 and 286 and that he will be considering those. I therefore beg leave to withdraw Amendment No. 284.
Amendment, by leave, withdrawn.
[Amendments Nos. 285 and 286 not moved.]
Clause 194 agreed to.
Clause 195 [Duration of design right]:
[Amendments Nos. 287 and 288 not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 289:
Leave out clause 195 and insert the following new clause:
("Duration of design right.
195. Design right expires twenty years from the end of the calendar year in which the design was first recorded in a design document or an article was first made to the design, whichever first occurred.").
The noble Lord said: This amendment relates to the length of time for which a design right lasts. It is really a matter of opinion as to what a reasonable length of time might be. It is the view of industry generally that a 10 to 15-year term is insufficient to enable research and development costs to be recovered. A 20-year term is seen as a better compromise. It should be recognised that product lifetimes, especially in the mechanical engineering industry, can be long and it is current practice to recover substantial parts of the development costs of heavy machinery over the lifetime of spare parts for that machinery. At present, a utilitarian design, such as a turbine blade, will he denied practical protection while cheap jewellery is capable of protection for 25 years.
The suggestion of 10 years seems to us to be an arbitrary figure and it is not supported by, or thought to be needed in, the experience of other countries or needed for the purposes of European member state reciprocity. Other periods of protection in excess of 10 years are available in other member states where there is protection under other laws such as unfair competition laws.
The existing definition of the term design right is unduly complex in that it defines the term as the lesser period of 10 years from the end of the calendar year from which the article was first marketed or 15 years from the date on which the design was first recorded. The former period depends on the definition of "first marketed" as defined in Clause 241(2). That excludes,
"marketing which is merely colourable and not intended to satisfy the reasonable requirements of the public."
This will cause grave difficulty in determining the actual duration of a design right with any degree of precision.
Provision for licences of right in the last years should be removed as wholly misconceived and wrong for business, just as they have been removed from the pharmaceutical industry. Finally, consumer interests can be adequately protected through the compulsory licence provisions set out in Clause 218.
Basically the lengths of time for design rights are not good enough for an important and large part of industry if it is to recover its costs. It is not particularly fair that this very short period of 15 or 10 years, depending on which part of the clause one is dealing with, should be applied in its place. I hope that my noble friend will be able to come some way towards agreeing with my amendment. I beg to move.
Lord Denning: I hope that the Committee will not accept the amendment. Design right is a very special right. We do not want it to be too long. It should be nothing like 50 years as in the Copyright Act. Let it be a short time. Any person who designs can make much of his profit within that time which may be five or 10 years as the case may be. Do not let him have a monopoly in it for 25 years. In other words, for the sake of competition reduce it to the time already in the Bill.
Lord Fanshawe of Richmond: I should like to support my noble friend Lord Mottistone in his Amendment No. 289. I am afraid that I cannot go along with the remarks made by the noble and learned Lord. I must declare an interest, first of all, as a director of the Westland Group since the reconstruction of the group in 1985.
It seems to me that the attitude of Her Majesty's Government to research policy does not tie up with the drafting of the Bill. The Government's research policy is covered in the Government's response to the First Report of the House of Lords Select Committee on Science and Technology in the 1986–87 Session. In that it is stated that:
"Public investment in science and technology will not achieve its full economic benefit unless industry undertakes the applied research and development to capitalise on this investment. The Government recognise the importance of increasing civil R&D as a share of public R&D, and are taking action accordingly by restraining the real level of defence R&D. The primary problem, however, is the low level of industry's investment in R&D. The Select Committee state that the main responsibility for funding 'D' rests with industry. The Government agree. They have created a climate within which investment in R&D by industry is able to flourish".
But what will happen if the Bill is unamended in the way suggested by my noble friend Lord Mottistone? It will remove the rights of industry involved in longterm high technology projects to a just return on capital investment in research and development. The Government's policy appears to be to reduce the contribution from the defence budget and to expect industry to fund research and development. Furthermore, in the effort to shift emphasis to the civil field, industry is also asked to fund research in the non-military area. This was underlined this afternoon by the Statement made by my noble friend the Secretary of State for Trade and Industry in this House.
But the policy in the Bill provides little incentive for industry to invest in research and development when the return would be so uncertain. It does not answer and is detrimental to the needs of defence, aerospace and other capital equipment companies whose products have a long gestation period between first design and entry into service. This is particularly the case where research and development costs are amortised over spare and replacement parts because recovery on the front end price would render the product unattractive or non-competitive.
Certain of the design right provisions will be a disincentive for companies to invest in the design and development of high technology products, particularly if little or no protection against copying will be available by the time of entry into service. At present as set down in Clause 195, design right will expire, as mentioned by my noble friend Lord
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Mottistone, 10 years from the end of the calendar year in which articles made to the design were first put on the market by or with the consent of the owner of the right, subject to an overall limit of 15 years from the end of the year in which the design was first recorded in a design document or an article was first made to the design, whichever first occurred. It should be recognised by noble Lords that the lifetime of products produced by companies in the aerospace industry, such as Westland, including helicopters, hovercraft, aircraft life support and environmental control systems and similar products produced by other companies, is long. It is current practice to recover substantial parts of development costs over the lifetime of spare parts for such products. The term presently proposed in the Bill is considered by industry as a whole to be insufficient. This amendment of my noble friend has been put down to extend the term to 20 years from the end of the calendar year in which the design was first recorded in a design document or an article was first made to the design, whichever first occurred.
Aerospace companies would prefer the term to be 25 years. There was at an earlier stage an amendment on the Marshalled List recommending 25 years; it has now been withdrawn. If that cannot be had, most aerospace companies would be content with 20 years, as suggested by my noble friend Lord Mottistone. This would allow for products having long periods of development and requiring difficult and prolonged contractual negotiations in advance of a confirmed order to meet the deadline. I hope that my noble friend will look at this very carefully and perhaps give it further consideration at Report stage if he cannot give us a firm answer this evening.
Lord Morton of Shuna: Without wishing to enter into an argument about 10, 15, 20 or 25 years, it appears slightly illogical that the registered design period is apparently in the legislation to remain at 25 years and the unregistered design, the new design right, is 15 years. There does not appear to be any reason why this should have a different period. Perhaps when dealing with these amendments the Minister will explain why it is thought that, when the only distinction appears to be their aesthetic elements, there is supposed to be this difference in the period of time for protection.
Lord Hailsham of Saint Marylebone: I am not qualified to deal with particular periods and therefore I shall listen to my noble friend on the Front Bench when he comes to reply with very great attention and without a strong desire to differ from him whatever version he chooses to maintain. I should like to say a word in support of my noble and learned friend on the Cross-Benches. I am against monopolies. I am also in favour of protecting intellectual property. It has been said more than once in the course of this evening that we are dealing with a very wide range of products indeed. My noble friend behind me will, I am sure, be relieved to know that I do not own a helicopter; but I have used the products of the motor industry over a very large number of years. I thought as I listened to my noble friend Lord Mottistone, the noble Lord, Lord Monkswell, and now my noble friend behind me that the supporters of an exclusive

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right in this context have rather underestimated the extent to which they will continue to enjoy a very large market for their spare parts, whatever period of exclusive monopoly they may be given. The original manufacturer of a complicated design undoubtedly starts with an immense advantage, even without a legal protection.
I always buy spare parts from the manufacturer of my Maestro car, notwithstanding the result of the House of Lords' decision in British Leyland v. Armstrong & Company. I shall continue to do so. It starts with know-how, it has experience of the product and it is only if a spare parts manufacturer in competition with it ultimately does a good enough job to take part of its market that it will lose anything at all. I doubt whether even then it will lose the whole lot. I think that manufacturers protest rather a lot. We are starting off with a new and hitherto unrecognised right for their advantage and I think perhaps they are over-egging the omelette when they ask for a longer period than they have been offered. However, if my noble friend is disposed to give way to them, I shall not in any way try to stop him. I only feel that we must remember that the rights of the consumer are in the main against monopoly as such.
6.15 p.m.
Lord Campbell of Alloway: The problem perhaps arises because the new right covers so many different types of article. There are certain articles to which my noble friend spoke where there are substantial research and development costs which in a sense might be treated as discoverable and disclosable in a special form of register, which would give a longer period of protection and which would not give rise to reasonable objections on the grounds of monopoly. On the other hand I agree without qualification with everything my noble and learned friend Lord Hailsham said about monopoly. There are certain other types of article where the costs of design are minimal and there is no research and development at all.
I wonder whether my noble friend the Minister could give some consideration to the very real disparity between perhaps millions of pounds spent on research and development over a long period of time in one place to produce a design and nothing or £10 spent in the other and regard the new right not as giving rise always to exactly the same measure of protection.
Lord Monkswell: I think it would make sense if I spoke to my amendment, which is the next one, to give the Minister an opportunity to reply to both matters at once. Amendment No. 289AZ seeks to provide a simplified definition of the period of design protection and give a reasonable period of protection. I must admit straight away that I cribbed the words from the noble Lord, Lord Mottistone, in his amendment.
When we debated Clause 52, which gives protection against copying to an artistic work reproduced by industrial means, the problem with making the distinction between artistic and non-artistic works was raised. I thank the noble and
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learned Lord, Lord Hailsham, for the support that he would give me if the Minister would accept my amendment. If my amendment were agreed to this problem of whether a thing is artistic or not artistic would disappear because the periods would effectively be the same.
Since the subject of turbine blades has come up, I should like to point out that they are in fact incredibly artistic artefacts. If you stand an individual turbine blade on its own on a desk, it is a pure work of modern art.
This is an important aspect of the Bill. When we consider any aspect of legislation we should try to understand how it will be interpreted by the courts. We are all agreed, I am sure, that the Bill will give rise to litigation. There are enormously powerful commercial reasons why that should be so. One of the changes that has occurred over the last 20 or 30 years is the recognition of design as art. We engineers have long recognised that. We see artistic merit in the articles that we design every day. It is now becoming commonplace for artists and art critics to recognise artistic merit in what would normally be desribed as industrial objects. Unless we do get some commonality in the time period between Clause 52 and Clause 195 we are going to see litigation with one side trying to prove that the object under discussion is an artistic work and the other trying to prove that it is a work to which design right applies, and vice versa. One can almost imagine the BBC taking the rights and creating a soap opera about it. The main reason for tabling the amendment is to confer a proper degree of protection for design rights.
One must recognise that many people consider to be invidious the fact that there should be a distinction between the timescale for the copyright for authors—which extends for 50 years after the author's death—and the timescale for the design right protection for designers. The designs of the Spitfire, the Hurricane and the Rolls-Royce Merlin engines will live for ever in the annals of this country's history. Who is to say that they are any less important than the work of a long-forgotten author who may still be alive.
I could continue for a long time about great British designs and designers. I shall not do that because it would be too boring for most Members of the Committee, although I dare say that there are some with an engineering background who would take delight in some of the names that I would care to mention.
We must recognise that today we have talented young designers who are the equal—who to say "better"?—of Sydney Cam, who gave us the Hurricane; of Frank Whittle who gave us the jet engine; of Colin Chapman who gave us the incredibly beautiful Lotus sports cars; and Alec Issigonis who gave us the Mini. One has the big problem of giving our industrialists the incentive to employ talented young designers and to invest in modern plant and machinery in order to enable their designs to he made cheaply enough for world markets.
We live in a throw-away age and while that grieves us we must be realistic. We know that designs must change and that some manufactured articles do not

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last. However, we must also recognise the fact that a good design will last. I should like to look at one example: the Mini. It was introduced in 1959 and 29 years later it is still going strong. I am sure that many hundreds of the Minis which were built during the first year are still running. Few people realise that the engine in the Mini was designed in the 1930s. With some minor modifications that engine is going strong 50 years later.
A few moments ago I spoke of the investment in designs and in the plant and equipment to manufacture them. We must consider the cost of such development and tests. Is it realistic for companies such as Rolls-Royce to invest hundreds of millions of pounds over 10, 15 and 20 year-periods in new aerospace engines and features for those engines and then, after five years in production, to have those new designs lifted by the competition? It is totally unrealistic. As the Bill is drafted, the best course for the directors of Rolls-Royce would be to sell out to Sir Owen Green of BTR. He could turn Rolls-Royce into the cheap supplier of spare turbine blades for the world. In order to do that he would have to stop spending money on research and development and throw on to the dole thousands of highly qualified engineers, scientists and skilled men and women.
One of the problems of this day and age is that all the pressures are on companies to make a quick profit; to operate only in the short-term; to do no long-term planning and to have no long-term investment. The customer is imbued with that attitude. The classic example of that was when British Leyland changed from its world-beating suspension system to a similar design of suspension system as that used by its competitors. Its hydrolastic suspension system was slighty more expensive to install as original equipment but it was more comfortable and reliable and, over the life-time of a motor car, cheaper to run. However, it did not make a profit on spare parts because there were none; one does not have spare parts for a hydrolastic suspension system. However, if one has a suspension system of springs and shock absorbers, such as Ford, General Motors and Honda, one has a nice little earner from the spares parts supply. Therefore British Leyland changed from a good design to a less good design but the customer paid more for it in the end: the customer lost out. That illustrates the kind of pressure that this Bill will place on the British manufacturing industry.
Whether it be batteries, exhaust systems or shock absorbers, good quality parts should last for many years and the original equipment supplied with a motor car will do so. However, what about spurious spares? The chances are that they will be fitted to second-hand cars. As the noble and learned Lord, Lord Hailsham, said, he is the proud owner of a Maestro motor car which he no doubt bought new. He is within an income bracket that enables him to afford to have his car serviced and supplied with spares by the original supplier. However, that luxury is not usually available to the second-hand motorist who must look around for the cheapest source of parts. The marketplace says, "Yes, we have a free market in spare parts and you can go to wherever to
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buy your exhaust system, battery or shock absorber". The chances are that it will be of a lower quality than the original equipment and instead of lasting for five or six years it may last for only 18 months or two years. The owner of the car who bought the spare parts will probably have sold it after 18 months or two years to a third or fourth owner. That new owner must then replace the reduced-quality spare parts thinking that they are original—
Lord Hailsham of Saint Marylebone: If the noble Lord will give way, I should like to know where his argument is leading. Is he saying that the new owner, who is allegedly a poorer man than I (although I very much doubt that) should not be allowed to buy the lower-priced product if he wishes to?
Lord Monkswell: The argument that I am trying to put forward is that if we give the original manufacturer the design right protection for 25 years, not only shall we save the problems of litigation, which I mentioned earlier, but we shall also create an environment where the manufacturer will seek to provide to the customer a high-quality product that will last for a long period of time. At the moment all the pressures in the market place are to operate on a short timescale to produce cheap and shoddy goods which will not last a long time, and if we pass the Bill unamended that will continue. They may last for a year or 18 months which will be sufficient to cover the warranty period of 12 months—
Lord Hailsham of Saint Marylebone: I am sorry to interrupt the noble Lord again but he has already spoken about the Mini which has lasted for donkey's years and has remained effectively the monopoly of British Leyland, with no design right at all.
6.30 p.m.
Lord Monkswell: My understanding is that until the British Leyland v. Armstrong case, most manufacturers and spurious spare parts suppliers, unless they were operating right in the margin, assumed that copyright would protect them, and that since that judgment the marketplace has been thrown wide open and nobody knows where they stand.
We have, effectively, an unregulated market for which, quite rightly, the Government are seeking to form some regulations. I believe that they are right to do that. My contention is that the direction of the legislation is wrong and I hope to change it by making it more progressive to suit British manufacturing industry.
Lord Beaverbrook: For the convenience of the Committee, I should like to speak to Amendments Nos. 289 and 289AZ, both of which deal with the term of design right protection. Any period selected for an intellectual property right is necessarily somewhat arbitrary. Nevertheless, there are a number of factors which lead us to the view that 10 years in the market, subject to an upper limit of 15 years from the creation of a design, strikes the right balance.
First, we must consider how the period fits in with what applies to other kinds of intellectual property.

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Copyright and registered designs would, under the Bill, last for 25 years but they will not protect functional designs. Functional designs are chosen for the job they do and are of central importance to the functioning of industry. It is therefore important that they are not locked away for long periods. In this respect, patent protection is limited to 20 years from the date of application and the application will of course always precede marketing, often by a considerable period. Even so, in the context of functional articles the resulting period of protection is quite long. But patents protect inventions and it is the spark of invention which justifies this period. In our view, the invention inherent in a patent deserves a longer period of protection than a non-patentable design, which is what we are concerned with here.
We therefore settled on an upper limit of 15 years from creation of the design so as to pitch the duration of design right somewhat lower than the patent term. Nevertheless, even at this level it could be longer than the period during which a patent can be exploited. This could happen in cases where the time between the making of the application for a patent and the marketing of the product is more than five years. We therefore settled on a period of 10 years in the market within the upper limit of 15 years from creation.
In doing this, we also had to consider international developments. Although there is no international convention in respect of functional designs, proposals to establish a treaty covering designs of semiconductor integrated circuits are currently under discussion internationally. It is suggested that the protection should last for 10 years in the market, consistent with the term adopted in American and Japanese laws on this topic. This term was arrived at on the basis of similar considerations to our own and it is not surprising that the result is so similar.
It follows from what I have said that the amendment of my noble friend Lord Mottistone, Amendment No. 289, and the amendment of the noble Lord, Lord Monkswell, Amendment No. 289AZ, provide too long a period. There is a balance to be struck here and in our view the periods set out in the Bill strike the right balance. I therefore cannot accept the amendments.
Amendments Nos. 289 and 289AZ, however, also raise the question of the event from which the period should be measured. As drafted, the Bill relies on marketing for the basic 10-year term, and on creation of the design for the upper 15-year limit. In many cases this will in practice mean that it is marketing which counts. And, from the point of view of the competitor, marketing is an essentially public event. In the vast majority of cases, competitors will first become aware of a design when products are put on the market. They will therefore know with certainty the latest point at which the 10-year clock could have been started. The fact that the period is counted from the end of the year in which the product was first put on the market will help. As a practical matter, we believe that marketing is a sufficiently clear and public event on which to base the period of protection. If a competitor suspects that a product is made to an old design and the 15-year cut off period has expired, then he can apply for discovery to get the facts.
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Having said that, I do nevertheless think there may be a point here in cases of unsuccessful marketing or offers to sell which are made early during development and before an actual design has crystallised. There may well be something that we should do here to prevent this kind of marketing from starting the clock. We shall of course need to look at this carefully and I will return to it at a later stage.
My noble friend Lord Campbell of Alloway pointed out that design right would give the same length of protection to designs irrespective of the investment put into them. In this respect, intellectual property laws throughout the world invariably give a fixed term and will therefore have that effect. It would be very difficult to define in the statute what levels of investment would lead to particular periods of protection. However, licences of right will be available under Clause 217 and the royalties payable will reflect the investment in the design. I shall, of course, have more to say about that later.
In conclusion, we believe that we have this balance about right and therefore I resist Amendments Nos. 289 and 289AZ.
Lord Mottistone: I thank my noble friend for his careful exposition of the case and I thank those noble Lords who have supported me. I also thank my noble friend for undertaking to have a look at the precise definition of what sort of marketing should trigger off the periods in the clause as it stands.
I shall read with great care what has been said and hope that I shall remain convinced, but I reserve the right to come back at the next stage if the arguments are not so strong as they seem to be at first sight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 289AZ not moved.]
Clause 195 agreed to.
Lord Monkswell Lord Monkswell moved Amendment No. 289BZ:
After Clause 195, insert the following new clause:
("Duty associated with design right.
—(1) It shall be the duty of the owner of a design right, where articles made to that design have been marketed, to maintain the supply to the market of such articles as are required as spare parts.
(2) Failure to comply with this duty shall render the design liable to be made available for public inspection and no design right or copyright shall thereafter apply in respect of that design.")
The noble Lord said: This amendment introduces a duty for design right holders to market—
Lord Campbell of Alloway: I have crossed this amendment from my Marshalled List as it has been spoken to, I believe.
The Deputy Chairman of Committees (Lord Strabolgi): If I may say a word, it has been spoken to but it is up to the noble Lord whether or not he moves it.
Lord Monkswell: With the leave of the Committee, I think it will be useful if I move it because the thread of the argument flows through. I hope that I shall not take too long. This is a much shorter speech than my earlier ones.

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This amendment seeks to bring forward a duty for design right holders to market spare parts where necessary,with an associated penalty of loss of design right if spares are not available. When speaking to Amendment No. 281X, I advised that there was no statutory duty on the part of manufacturers to supply spare parts. While in fact there may be a common law duty under the terms of contract and design, there exist no statutory requirements.
I tabled this amendment as a quid pro quo to the rendering of adequate design right protection. In this respect, the four amendments which I tabled—namely, Amendments Nos. 281W, 281X, 281AZ and this one—are in my view to be taken together as a package.
Again, I stress that I am trying to enshrine in law good industry practice that benefits the consumer. I am advised by one major manufacturer that not only do they export over 75 per cent. of their products all over the world but they also ensure that supplies of spare parts are available worldwide for between 10 and 20 years after the last model has gone out of production. In some cases, after this time and where they may not continue to have a source of supply to themselves, they make a copy of the design drawing available to the customer. That is the type of good practice that we should encourage and those manufacturers who fail to adhere to good practice should be penalised by losing their design rights. I beg to move.
Lord Beaverbrook: I have already responded to the noble Lord's Amendment No. 289BZ. I repeat myself by saying that we find here a different recipe for dealing with the monopoly effects of design right in the absence of "must fit" and "must match" exceptions. I have already indicated that we believe the "must fit" and "must match" exceptions are necessary. Therefore I resist this amendment.
Lord Monkswell: I thank the Minister for his reply and I also apologise for not picking up the thread of the debate and the response which he gave earlier. I think it is useful for me to advise the Committee of the continuity of the thread of my amendment and the reasons for it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 196 [Qualifying individuals and qualifying persons]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 289ZA:
Page 85, line 39, after ("country') insert ("which has ratified or acceded to the International Convention revising the Paris Convention for the Protection of Industrial Property of 20th March 1883, or which is").
The noble Lord said: I hope to be fairly brief with this amendment. It deals with Clause 196, which concerns qualifying individuals and qualifying countries.
At Second Reading the Secretary of State, if my memory is right, or it may have been the Minister,
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dealt with the approach to this and to Amendment No. 296ZA, which I believe I should be speaking to at the same time. There is a similar amendment in the registered design provisions. They depend upon reciprocity and not upon the international convention. I dealt with this at an earlier sitting of the Committee in relation to performing rights and a different convention.
Here we are dealing with the Paris Convention, which covers both design right and registered design right. The amendment I seek is to extend the protection to countries which have adhered to the convention as well as to those which provide reciprocal protection. It seems appropriate that there should be this adherence to international conventions such as the copyright convention and this convention rather than depending only on reciprocity. At the moment this country seems to be eager to persuade developing and other countries to join international conventions and it seems the wrong time not to abide by international conventions. That is the purpose of the amendment. I beg to move.
Lord Campbell of Alloway: I oppose this amendment because I prefer the concept of reciprocity. That is a state of fact which can be judged by the Secretary of State. It is preferable to the mere ratification of the convention, which does not necessarily mean that it is implemented. It marries with the concept of Amendment No. 302JZA and to Clause 250—albeit in another context—which relies very heavily upon the concept of reciprocity. As a matter of consistency, and as Amendment No. 302JZA is in my name, I oppose this amendment.
Lord Beaverbrook: With the leave of the Committee I shall speak to Amendments Nos. 289ZA and 296ZA also. The Paris Convention provides for the protection of various categories of intellectual property, including aesthetic but not functional designs. It requires each contracting state to give the same protection to nationals and residents of the other contracting states as it gives to its own. It will therefore be necessary for the United Kingdom to give design right protection to aesthetic designs created by nationals and residents of other contracting states. This obligation will arise regardless of whether another contracting state provides equivalent protection for designs.
The proposed amendments, however, would have the effect that designs created by nationals and residents of the Paris Convention states would qualify for design right protection under the combined effect of Clauses 196 and 236. These provisions are intended to extend design right protection in circumstances where another state provides reciprocal protection for British designs and, as I have mentioned, the United Kingdom's obligation under the Paris Convention arises regardless of any reciprocal protection.
It is our view, therefore, that it is inappropriate to deal with the protection of designs of nationals and residents of the Paris contracting states in Clauses 196 and 236. The correct place to deal with this is in Clause 200, which already contains a power to extend the design right qualification provisions to enable the

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United Kingdom to comply with its obligations under the Paris Convention. It of course goes without saying that the United Kingdom will honour these obligations and our intention would be to make orders under Clause 200 to that end. I hope that on that basis the noble Lord will accept that his amendment is unnecessary.
6.45 p.m.
Lord Morton of Shuna: Perhaps I misheard the Minister. I understood him to say that the Paris Convention does not apply to functional design. Perhaps he can make that clear and advise me whether I misheard him.
Lord Beaverbrook: I repeat that the Paris Convention provides for the protection of various categories of intellectual property including aesthetic but not functional designs.
Lord Morton of Shuna: Perhaps the Minister will consider the wording of Article I subsection (2):
"The protection of industrial property has as its objects patents, utility models, industrial designs, trademarks, service marks, trade names".
and so on. Then subsection (3) includes:
"industrial property shall be understood in its broadest sense".
It appears that there is a basic disagreement between those advising the Minister and the information which I have, which is an English translation of the convention. I do not wish to become involved in an argument at this stage which is quite unproductive. It will be better if I now withdraw the amendment and perhaps the Minister will take a look at it.
Lord Beaverbrook: That is a very reasonable course of action. On that basis we shall consider whether we are actually standing on the same playing field let alone deciding where the goalposts are.
Lord Morton of Shuna: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 196 agreed to.
Clauses 197 to 201 agreed to.
Clause 202 [Prospective ownership of design right]:
On Question, Whether Clause 202 shall stand part of the Bill?
Lord Williams of Elvel: Clause 202 deals with the prospective ownership of design right and I read this as a total layman and not a lawyer. I have problems with one or two expressions in the clause. The "prospective owner" of the design right is defined but what is not defined is the passage in subsection (2) which refers to,
"the occurrence of a future event".
The subsection as drafted defines a "future design right" which means a,
"design right which will or may come into existence in respect of a future design or class of designs or on the occurrence of a future event".
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I am quite unclear as to what this really means. I should be most grateful if the noble Lord could help me.
Lord Beaverbrook: Clause 202(1) merely provides for the assignment of right in a design which has not yet been created or in a design for which rights do not yet exist. The latter case covers those designs which will qualify for protection under the terms of Clause 199 which have not yet been put on the market. The assignment of future rights has an important part to play in the context of the ownership of the rights in an employee or commissioned design as we have discussed.
For an assignment of future right to be effective it must be in writing and signed by or on behalf of the prospective owner of the right. The result will be that as soon as a right comes into existence it will automatically vest in the assignee without anything further needing to be done. This has advantages when, for example, a number of different designs are created because it avoids having to make a corresponding number of separate assignments for each design. It is also possible for the prospective owner of design right to grant a licence in advance of the right coming into existence, and subsection (3) of this clause simply applies the principle laid down in the previous clause, namely, that the licence is binding on those subsequently acquiring the right, subject to an exception where a purchaser buys the rights without notice of the licence.
In essence, therefore, this clause is about procedures, and provides a convenient method of dealing with future rights. In view of this, I hope it can be accepted that this clause is necessary.
Finally, "the occurrence of a future event" refers to a first marketing under Clause 199 which will result in design right coming into existence.
Lord Williams of Elvel: I am most grateful to the noble Lord, but why does it not say so?
Lord Beaverbrook: I have just said so. I am not quite clear what the noble Lord is getting at.
Lord Tordoff: With respect, the Bill as it stands does not say so.
Lord Beaverbrook: I misheard the noble Lord. I thought he asked why I did not say so.
Lord Williams of Elvel: I beg the noble Lord's pardon. I did say "Why does it not say so?" "It" referred to the Bill, and I did not mean any discourtesy to the noble Lord at all.
Lord Beaverbrook: Having cleared up that slight misunderstanding, I think that the noble Lord has a point. We will look at it and take note of what he has said.
Clause 202 agreed to.
Clauses 203 and 204 agreed to.
Clause 205 [Primary infringement of design right]:
[Amendment No. 289A had been withdrawn from the Marshalled List.]
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 289B:
Page 88, line 40, leave out paragraph (b) and insert—
("(b) the reproduced design must be the same as or not substantially different from, the design in which design right subsists;
(c) the reproduction must involve the taking of a substantial amount of the original skill and effort expended in the creation of the design in which design right subsists as distinct from ideas embodied in such design.").
The noble Lord said: This is a probing amendment to which I have already spoken on Amendment No. 281VA, and my noble friend the Minister kindly suggested that we should defer further discussion on it until now.
The origins of this amendment are the intellectual property sub-committee of the Society of Conservative Lawyers. The concern which they feel, and which I am respectfully putting before this Committee, is that the protection afforded for this new design right is too wide, to put it in plain terms. Because it is too wide it may have a damaging effect on the interests of British industry because of the monopolistic attributes.
My noble friend the Minister has accepted, in the context of Clause 192(3), that the exceptions drafted were too wide and he said that he would be looking at them. This is another aspect of the same problem if one looks at it through the other end of the telescope. In other words, the amendment which stands in my name is, in effect, a narrowing provision of limitation, and the effect of the proposed paragraph (b) is to import into the unregistered design right the "not substantially different" test already applicable to registered designs.
As the design right under Clause 192(2) subsists in parts of articles, the "substantial part" test used in the copyright law would not be appropriate.
The effect of paragraph (c) as proposed in the amendment is designed to ensure that the protection afforded under copyright law applies to unregistered design right, and to exclude ideas. The drafting is largely my own and inevitably inadequate. It is only a vehicle to advance the principle for the consideration of the Committee and my noble friend the Minister. The problem arises out of the width of the drafting of Clause 205(3)(b) which this amendment seeks to replace, which states:
"reproduction may involve the making of a new design, and it is immaterial that design right may subsist in that design".
It is those provisions which are thought to be far too wide and it is felt that the courts would tend to apply them very widely indeed. As regards protecting this new right, the respectful suggestion is that my noble friend the Minister might consider this further and take advice upon it. As I say, this is advanced only as a probing amendment.
Lord Beaverbrook: The amendment of my noble friend Lord Campbell would delete subsection (3)(b) of Clause 205 which provides that reproduction is
1132
still reproduction even if it involves the creation of a new design. This provision is included simply to preserve the rights of someone whose design has been copied by another in the process of producing a derivative design; for example, if someone designs a doll and another produces a toothbrush-holder based on the doll. The toothbrush-holder could give rise to its own rights, and in such a case both parties would have rights in the derivative design, which is clearly fair. It is equally fair that the owner of design right in the doll should be able to sue the designer of the toothbrush-holder for infringement. All this is achieved by subsection (3) (b) as drafted.
The new paragraph (b), which this amendment would insert, would provide that:
"the reproduced design must he the same as or not substantially different from, the design in which design right subsists."
This definition of "reproduction" is similar to that which the courts have used in the context of copyright. In our view the courts would attribute the same meaning to "reproduction" in the sphere of design right as they have in relation to copyright and therefore this new provision is unnecessary. Indeed, as I have said on a number of occasions already, it is positively undesirable to attempt to tic the courts down to specific definitions of this sort and lose the flexibility of a simple, general expression.
The new paragraph (c) in this amendment seeks to ensure that design right will protect only the design and not the ideas embodied in the design. We are sympathetic to this aim but are of the view that the insertion of the new paragraph is unnecessary. The point is already covered under the Bill as drafted. First, Clause 192(3)(a) expressly provides that design right does not subsist in a method or principle of construction. Secondly, case law has established that copyright protects the expression of an idea rather than the idea itself, and there can be no doubt that the Courts would apply the same principle in relation to design right.
I hope that what I have said is helpful to my noble friend. Perhaps he would like to consider what I have said.
Lord Campbell of Alloway: I am very much obliged for the reply which my noble friend the Minister has given. I am a little confused about this because, on the one hand, he says as regards paragraph (b) that the courts would apply it anyway, so what is the object of putting it in? Would the courts apply it anyway? How does he know? You are creating a totally new right, and if you are creating a totally new right and you really do not know what test the courts will apply, why not put it in the Bill? If my noble friend the Minister says that it is the test they would apply, and says that there is nothing wrong about the test, why not in substance put it in the Bill? On the other hand, it is said that one must not tie the hands of the courts. Which is it? It cannot be both in logic. You are either going to not tie the hands of the courts and assume that they will apply any test, or you are going to assume, on a ministerial asssumption which has no legal effect, that the courts will apply a certain test.
Of course I shall withdraw the amendment, but I hope that my noble friend the Minister can give further consideration to this matter as regards

1133
paragraph (b). Regarding paragraph (c), the drafting is adrift but the principle is sound, and I would ask my noble friend to give some consideration to it.
7 p.m.
Lord Williams of Elvel: Before the noble Lord decides what to do with his amendment, perhaps I may support his reasoning. I found the Minister's reply to the introduction of this amendment very odd. It started off by saying, "Well, this is really not right". Then he goes on to say, "This is not necessary". Either it is not necessary, and we can abandon the argument altogether, or it is not right—in other words, it is wrong—and the toothbrush and the doll have got to be separate questions, in which case we have to have a clear definition. The Government cannot have it both ways.
Finally, the Government cannot say that we shall leave it to the courts, and we do not want to fetter the courts. If the Government are taking that view, then why are we discussing the detail of the Bill in the first place? As the noble Lord, Lord Campbell, rightly points out, we are dealing with a new right, and there is absolutely no underlying assumption that the courts are going to deal with this right in exactly the same way that they would deal with copyright or any other right of intellectual property which may subsist.
I listened carefully to what the noble Lord, Lord Campbell, had to say before intervening because I did not wish to interrupt the argument and discussion between himself and his noble friend. But listening to the noble Lord's reply, it seems to me that the toothbrush and the doll in fact raise exactly the sort of issue that the noble Lord is getting at, and we have to clarify this matter. I accept that the noble Lord is putting this forward as a probing amendment, but on reading the noble Lord's amendment I am clear what it means and I find now, after hearing the Minister, that I am not entirely clear what the Bill means.
Lord Campbell of Alloway: May I add that it is worth stressing that this is not really my amendment? It is an amendment proposed by the Intellectual Property Committee of the Society of Conservative Lawyers because, using the words of the noble Lord, Lord Williams of Elvel, they took the view that the Bill was too wide and warranted clarification. The amendment has a perfectly respectable origin, although I moved it myself.
Lord Beaverbrook: I do not want to enter the argument as to whose amendment this is. I do not accept that there should be any difficulty with our argument that the courts are familiar with the term "reproduction" in the sphere of design right. It has been applied in other intellectual property for many years. I would say to my noble friend Lord Campbell that the new right uses concepts which already exist in intellectual property law, and reproduction is one of them. My point was that the courts will apply this concept with no difficulty.
However, we need a provision making clear that a design can he reproduced in the course of making a substantially different new design. I shall look
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carefully at what my noble friend has said, and also at what the noble Lord, Lord Williams of Elvel, has said in these discussions, and see whether perhaps this can be clarified somewhat.
Lord Campbell of Alloway: I am extremely grateful not only to my noble friend the Minister but for the help that I have had from the Benches opposite from the noble Lord, Lord Williams of Elvel. This is really a non-political problem trying to get a reasonable and sensible solution and definition as to the limitations of the new right. I am grateful to the Benches opposite and I thank the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 290 not moved.]
[Amendment No. 291 had been withdrawn from the Marshalled List.]
Clause 205 agreed to.
Clause 206 agreed to.
Clause 207 [Meaning of "infringing article"]:
[Amendment No: 291A had been withdrawn from the Marshalled List.]
[Amendment No. 292 not moved.]
Clause 207 agreed to.
Clauses 208 and 209 agreed to.
Clause 210 [Right to seize infringing copies, etc]:
On Question, Whether Clause 210 shall stand part of the Bill?
Lord Tordoff: My noble friend asked me simply to say—and I am sure that the noble Lord, Lord Campbell of Alloway, will say more than I can say— that he has already spoken to this under Clauses 89 and 177 on the matter of the methods of seizure, about which he is extremely worried. He has subsequently received a letter from the noble Lord the Minister saying that the Government intend to look at the seizure provisions both in this clause and in Parts I and II. Therefore, he would not wish to press the matter any further, and he is grateful to the Minister for having written to him. I dare say that the noble Lord, Lord Campbell of Alloway, wishes to say more.
Lord Campbell of Alloway: I oppose the Question that Clause 210 shall stand part of the Bill. I have had a word with the noble Lord, Lord Lloyd of Kilgerran, and we are entirely in agreement upon this and I shall not carry my speech in opposition beyond just a word or two. This clause is concerned with rights of seizure of infringing copies of design rights. These rights of seizure in relation to infringing copies of copyright were considered under a previous clause. My noble friend the Minister gave an undertaking that he would consider this position. Exactly the same position arose on illicit recordings under Clause 177, and again my noble friend the Minister undertook to consider the position.
The consideration was against the criticisms of this do-it-yourself right of seizure. They were that it was not requisite having regard to the present state of

1135
existing law; it was not desirable, having regard to the potentialities for abuse; it was not reasonable, there being no provision for compensating third parties who suffer losses through unjustified seizures; and it was not acceptable, there being no adequate, but essential, safeguards.
I have not had a letter from my noble friend the Minister, but there is no reason why he should have sent me one because I did not send him one. If he has sent a letter to the noble Lord, Lord Lloyd of Kilgerran, renewing his undertaking, I would in advance seek to withdraw my opposition to the clause standing part of the Bill.
Clause 210 agreed to.
Clause 211 [Supplementary provisions with respect to forfeiture orders]:
[Amendment No. 293 not moved.]
Clause 211 agreed to.
Clause 212 agreed to.
Clause 213 [Rights and remedies of exclusive licensee]:
[Amendment No. 294 not moved.]
Clause 213 agreed to.
Clause 214 [Provisions with respect to concurrent rights of action]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 294A:
Page 92, line 24, leave out (", and any right of action exercisable, by") and insert ("or available to").
The noble Lord said: This amendment corrects a minor technical defect in the drafting and is identical to the amendment, agreed to by the Committee, to the equivalent copyright provision in Clause 92 of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 214, as amended, agreed to.
Clause 215 [Infringement of copyright]:
On Question, Whether Clause 215 shall stand part of the Bill?
Lord Mottistone: Clause 215 has the effect of preventing an action for design right infringement where it would be possible to take an action for infringement of copyright. Since the design right is a lesser right, this provision is unnecessary. Furthermore, it may have the effect of denying protection to features of design which are of value. I should be grateful if my noble friend could comment on that because it seems to me that there is no need for Clause 215 and it would seem to be wrong to put it into the Bill if that is the case.
Lord Beaverbrook: The overlap between copyright and design right occurs in cases where a design is first recorded in a copyright work such as a design drawing. The Committee will recall that in Part I of the Bill Clause 51 cuts back copyright in this area by
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providing that it is not an infringement of copyright to do certain things relating to articles which are themselves not artistic works; for example, car exhaust systems. The borderlines of copyright are therefore clearly drawn.
However, where the article concerned is an artistic work—as for example would be the case with design drawings for a sculpture—under Clause 192 design right as well as copyright would be applicable to the making of the sculpture. The result is that design right overlaps into an area which is properly a matter for copyright. This clause cuts back the effect of design right by providing that anything done which infringes copyright does not infringe design right.
The result is that copyright and design right are mutually exclusive, each operating in the appropriate field. While this may not be of significance where the copyright and the design right are owned by the same person, it certainly is significant where the ownership of the two rights lies in different hands. This clause will ensure that the two different owners each get the benefit of appropriate rights and is necessary for this purpose. However, I readily admit that this purpose is not at all apparent on the face of the clause. Accordingly, we shall be looking at the clause again with a view to bringing forward an amendment at Report stage to make its effect clear. With that assurance, I hope that my noble friend and the noble Lord, Lord Monkswell, may be able to withdraw their opposition to the clause.
7.15 p.m.
Lord Monkswell: Before the noble Lord sits down, if that is the right phrase, I wish to make one point. My concern is slightly separate from that of the noble Lord, Lord Mottistone. It seems to me that the clause would give a reverse way of reducing copyright. I am thinking of the example of a pop-up book, a book in which parts of the page come up to form a three-dimensional article. It could be construed that an action could be taken in regard to that by saying that the book which would normally be considered copyright was an article to which design right applied. That would seem to be a mechanism by which something which we would accept as copyright would lose copyright and have a lower right attached to it. The clause needs to be looked at and I am glad that the Minister has agreed to do so.
Lord Williams of Elvel: I was not going to intervene on the clause stand part debate because I could not understand what Clause 215 actually meant. Now that the Minister has explained what it is intended to mean I think it would be extremely useful if we could have this in reasonably plain English. Even the Notes on Clauses do not explain exactly what the Minister has just said. I am not sure whether the clause really says what the Minister has just said because I simply do not understand it.
It is a vitally important clause because the whole relationship between design right and copyright is one that has given a great deal of trouble to some of our advisers. They do not quite understand where design right ends and copyright begins. The noble Lord would do very well to take it back and ask his advisers and officials to have a look at it again.
Lord Beaverbrook: Having heard what the noble Lords, Lord Monkswell and Lord Williams, have said, I emphasise that it is the intention that copyright should prevail where there is an overlap, so there would be no question of a back-door reduction of copyright. That is the intention. However, we are fully aware that there may be some valid criticism of the wording of the clause.
Clause 215 agreed to.
Clause 216 [Effect of patent application]:
On Question, Whether Clause 216 shall stand part of the Bill?
Lord Mottistone: The effect of Clause 216 is to deny design right protection to material which is included in the specification of a patent application. It operates from the date of publication of that material, thereby denying a proprietor of a patent application protection in the period between the publication and the grant of a patent. During this period he is therefore not in a position to seek legal redress for infringement of design right since he cannot enforce the patent during this period. Furthermore, if the patent application is rejected or subsequently lapsed he would have lost the ability to enforce the design right. The effect of this clause will be to discourage small inventors from using the patent system to protect innovation. This in its turn can have an adverse effect on the protection of United Kingdom innovation overseas.
To give the Committee an idea of the times that might be involved where the protection is missing, a patent application takes 18 months to be published and it is three and a half to 10 years before the patent is granted. The design right is lost on publication. The designer cannot enforce the patent until it is granted. Therefore there may be a gap of between three and a half and 10 years during which there is no protection. It seems to us that this clause creates that situation. I hope that my noble friend will find a way either of explaining it very well or even of rewording it.
Lord Beaverbrook: This clause provides an exception to design right in cases where an application for a patent covering a design is made by or with the consent of the design right owner. The essence of a patent is that it is a monopoly granted in return for the disclosure of an invention. It is inherent in the bargain struck between the inventor and the state that subject only to the patent monopoly everyone should be free to use and learn from the disclosure of the invention. We therefore decided that a provision is necessary to ensure that any design right cannot be used to prevent the patent being fully and freely worked; for example, where the patent monopoly lapses.
We thought that the public should not be prevented from stepping in because of design right considerations where a patent monopoly has lapsed or indeed where a patent was never granted. If we allowed this to happen it would make a nonsense of the original bargain between the inventor and the state. Of course if someone were to apply for a patent covering a design without the design right owner's
1138
permission, it would be wrong to detract from the design right. In this case the owner would keep his right and the patent would rightly be defective in the sense that it could not be used without regard to design right.
That said, we recognise that there are two sides to this. We were particularly anxious to hear the views of members of the Committee. One side is the public interest in having access to a patent. That is the side represented in the clause as drafted. This was quite deliberate because the public voice is often not heard. The other side has been ably put by my noble friend Lord Mottistone.
I am also conscious of the fact that it would usually be possible to work an invention without reproducing the features of shape or configuration of the particular embodiment of the invention illustrated in a patent application; in other words, the design right will not necessarily obstruct the working of the patent.
I should like to ask for time in which to reflect upon what my noble friend has said. If he will agree that the clause shall stand part for the time being, I shall return to the matter at a later stage.
Lord Mottistone: I thank my noble friend for those remarks, which seem wholly satisfactory.
Clause 216 agreed to.
Clause 217 [Licences available in last five years of design right]:
On Question, Whether Clause 217 shall stand part of the Bill?
Lord Mottistone: In speaking to this I shall speak also to the notification which I have given of my intention to advise leaving out Clauses 226, 227 and 234, all of which are consequential upon Clause 217.
In this case licences of right are opposed as they wholly negate the protection term during that part of the term in which they are available. The pharmaceutical industry has convinced the Government that licences of right should not be available during the protected term, and the same should apply to all industry. The effect of granting an automatic licence of right on design right is to reduce the effective term by five years. It is an unnecessary complication to provide for such a clause. To the extent that consumers may be at risk from abuse of design right the compulsory licensing provision in Clause 218 should give adequate protection, especially if this is modelled on the compulsory provisions of the Patents Act 1977. I therefore think that Clause 217 is obstructive to industry and had better not be in the Bill.
Lord Beaverbrook: Clause 217 concerns licences of right and is one of the more significant provisions on design right. In this respect the approach of my noble friend Lord Mottistone is very straightforward. He has said that licences of right effectively reduce the term of design right and should not be included. While it is of course true to say that licences of right reduce the strength of the protection, it is, if I may say so, too extreme to say that they reduce the term. Even

1139
under licences of right the design right owner has rights. In particular he has what amounts to a right to remuneration.
In any event I prefer to look at it from the other direction. The licence of right provisions extend the basic five years of exclusive rights. My noble friend the Secretary of State referred to this on Second Reading, when he said:
"We do not wish to keep competition out of the market for as long as 10 years".
I accept of course that the competition provided under a licence of right will involve copying, but in our view that is fair because a licence will have to he paid for. The design right owner will have five years' exclusivity in the market, which we think is long enough.
There is however another aspect to this. My noble friend Lord Mottistone indicated that he could accept that a provision to deal with abuses of design right may be necessary, and he suggested compulsory licensing provisions modelled on those contained in the Patents Act. However, the licence of right provisions are not intended to deal with abuses. They give a degree of flexibility to what would otherwise he a fixed term of protection applying across the board in all areas of design.
We gave much thought to the extent of the right given by design right and we concluded that it would be correct to take steps to ensure that the rewards flowing from design right should reflect the investment put into the design. This is achieved by giving all original designs five years' exclusive rights and a further five years of licensing, where we anticipated that the royalties will reflect the costs that have gone into the design. Subsection (4) of Clause 226 contains a provision requiring the comptroller to take account of factors specified in a statutory instrument when he settles the terms of a licence in default of agreement.
Although we have not yet come to a final view on the factors that should be included, they will be essentially economic—for example, the financial investment that the design right owner put into the design or into establishing a market for the design. Since economic factors may change, we felt it best to keep the provisions flexible by using secondary rather than primary legislation. However, we recognise that the question is important and that we should hear the view of Parliament before taking a decision as to what factors to include. Subsection (5) of Clause 226 therefore provides that the statutory instrument requires the positive approval of Parliament.
We believe that Clause 217 is a vital part of the Bill and that, other things being equal, licences of right should in general apply. However, I should say a few words about subsection (3). Subsection (3) contains provisions for disapplying licences of right in relation to specified categories of design or of article. That is provided to deal with such things as the EC Council directive on the legal protection of designs of the internal layout of semiconductor integrated circuits, the similar American law and the proposed treaty on the same subject. All these require that the 10-year duration of protection is undiluted by the automatic
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availability of licences of right. In the case of the United States it appears that United Kingdom chip designs will not be protected if licences of right are available for United States chip designs in this country. For semiconductor chip designs we take the view that the investment necessary to design an integrated circuit chip is such as to justify having no licences of right. That is why we agreed to the Council directive.
While this is a special case, it may not he the only one. It is therefore necessary to deal with the possibility that further international developments may require the exclusion of automatic licences of right in relation to other categories of design or designs of other categories of article. I must however emphasise that in our view the disapplication of licences of right is appropriate only in exceptional circumstances. The normal rule will be that licences are available. The circumstances in which subsection (3) can be activated are of course limited to cases of international agreement of one kind or another. Nevertheless, because the circumstances will be exceptional, we thought that it would be right to bring the question before Parliament. That is why subsection (4) provides that the licence of right provisions can be disapplied only by statutory instrument that has obtained the positive approval of Parliament.
I apologise for speaking at some length on the point. It is an important issue and I thought that I should explain why we believe that Clause 217 is a vital and necessary part of the Bill.
Lord Monkswell: I did not intervene earlier because I thought that the Minister would take up the point made by the noble Lord, Lord Mottistone, that licences of right currently available in the pharmaceutical industry will no longer be available. One reason for that, I believe, is the intense aggravation between the parties that is generated by the matter of licences of right. It is feared that acrimony, had business practice and bad law will be injected into manufacturing industry in an area that is already fairly difficult as between original equipment manufacturers and component manufacturers. To force parties who are already not on the best of terms into a contract is a recipe for conflict. I hope that the Minister can respond in some way to these concerns.
Lord Beaverbrook: I have explained why we believe that Clause 217 is necessary, especially in regard to the possible necessity to exclude certain aspects. However, I cannot agree with the noble Lord that licences of right per se are a bad thing, bad law or bad business practice. Licences of right are a common feature of business life. They occur frequently and regularly. The mechanism for agreeing remuneration seems to work fairly well. Once the comptroller has come to the conclusion, then it is accepted by all concerned. I should say to the noble Lord, Lord Monkswell, that we have the repeal of the patent licences of right provision because of the erosion of patent term for pharmaceuticals and not for the reasons given by him.

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I hope I have answered the noble Lord's point. We have a basic disagreement about the existence of licences of right. They are in the best interest of all concerned, and Clause 217 is an important part of the Bill.
Lord Mottistone: I am grateful to my noble friend for what he said. This is a complicated matter. We shall have to read what has been said with great care. I am not sure that the clause as it stands says entirely what my noble friend has just told us. He might like to look again at it. We shall look carefully at what he has said to the Committee.
Clause 217 agreed to.
The Earl of Dundee: Your Lordships' Committee may feel that we have reached a suitable moment at which to break in order to return to the matter in one hour's time at 8.30 p.m. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Farm land and Rural Development Bill [H.L.]
7.33 p.m.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Baroness Trumpington.)
On Question, Motion agreed to.
Clause 2 [Grants in respect of faun woodlands]:
Baroness Nicol Baroness Nicol moved Amendment No. 3:
Page 3, line 41, leave out ("and").
The noble Baroness said: My Lords, it may be for the convenience of the House if I speak to Amendments Nos. 3, 4 and 5. Amendment No. 3 is a small drafting amendment to facilitate the arrival of Amendments Nos. 4 and 5.
The purpose of Amendment No. 4 is to ensure that tree planting under the farm woodland scheme will not take place on upland areas which are of conservation value. Farmers in less favoured areas should be able to enter the scheme provided that it contains adequate safeguards against damaging certain habitats and against the planting of inappropriate tree species.
Upland farmers who have only a small amount of improved land which they need for livestock purposes should be able to enter the unimproved land into the scheme, but land with wildlife habitat ought to be protected. Proposals to plant in less favoured areas should therefore be subject to environmental scrutiny.
The Royal Society for the Protection of Birds supports the amendment, as does the World Wildlife Fund. The RSPB suggests that it is important for the
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Government to make clear what types of unimproved land they will consider as being eligible for grant aid. It goes on to suggest:
"In particular, Ministers should specify what vegetation types will be considered, and give details of the criteria which they will apply in judging whether applications for planting on unimproved land should be accepted".
It points out the benefits to wildlife of woods dominated by birch and oak on upland areas of Wales, England and Northern Ireland and of Scots pine and willow in Scotland. The purpose of the amendment is to ascertain the Government's views about offering that kind of guidance to farmers.
I come to Amendment No. 5. Improved grassland which has been improved in the past but is now reverting to rough grasses and rushes can provide important breeding habitats for wild birds, notably the curlew and the lapwing. We are concerned that aid should not be granted for the improvement of grassland which is of importance to wildlife.
I remind the Minister of the balancing duty under Section 17 of the Agriculture Act 1986 and ask for assurances that the requirements of that section will be observed in evaluating applications for grant aid for grassland regeneration. The RSBP again points out that there is a worry that farmers could apply for grant aid under the agricultural improvement scheme for grassland regeneration and reseeding thus destroying valuable habitats, and then apply for grants under the farm woodland scheme. We wonder what steps the Government intend to take to prevent such developments. I beg to move.
Baroness Trumpington: My Lords, taken together, as the noble Baroness suggested, these amendments provide that any scheme made under Clause 2 may provide for certain areas of land or certain types of agricultural land to be excluded from it. Ministers already have powers under the clause as presently drafted to make such exclusions and will be doing so. We propose to exclude national nature reserves from the scheme altogether.
Outside the less favoured areas, which we tend to refer to by their technical names of disadvantaged area and severely disadvantaged area, unimproved land will not be eligible for grant at all. If we wanted to make further exclusions at some future date we could do so by amending the subordinate legislation that we hope to bring forward later this year.
The noble Baroness asked me about Section 17. My reply to her is, yes. If I understand her line of argument, she has in mind some of the ideas presented before the adjournment of the Report stage by the noble Baroness, Lady White, who unfortunately cannot be here tonight; that is, they would like to exclude marginal land from our proposed scheme in order to have a more comprehensive and different woodland scheme in the uplands. That is not what we are planning at present, although the enabling legislation would allow us to make different arrangements for woodland in the uplands if we wished to do so at some future date. However, our existing agricultural policies already take into account the need to provide appropriate support to meet the special needs of the hills and uplands. Farming UK, which was issued last year,

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reiterated our commitment to that policy. In any event, I am not persuaded that it would be right to exclude hill land from the farm woodland scheme completely.
There is proportionately less improved land in hill areas—this applies especially in Scotland and Wales—and therefore we are setting aside 3,000 hectares over three years for unimproved land planted under the scheme in the DA or SDA. I am sure the noble Baroness is worrying about my references to the noble Baroness, Lady White.
Baroness Nicol: My Lords, the idea of the amendments I tabled is not to exclude all marginal land. If a piece of marginal land had notable habitat interests we would wish it to be excluded. We wanted an assurance that it would be taken into consideration.
Baroness Trumpington: My Lords, I think I can very simply say "Yes" and leave it at that. I received a letter from the noble Baroness, Lady White and did not want her to feel disregarded in this whole argument, but I think my answer is, "Yes, yes". I am extremely glad to hear what the noble Baroness, Lady Nicol, says, particularly since at Second Reading the noble Lord, Lord John-Mackie, said that he certainly wanted upland land in Scotland included.
Lord Mackie of Benshie: My Lords, will the noble Baroness give us an assurance that the habitat for humans will be the first consideration and not the habitat for some species of denizen of the rushes? The most important point is surely the inhabiting of the highlands and uplands by the human denizens thereof and not some obscure corncrake.
Baroness Trumpington: My Lords, quite honestly I am not sure what the noble Lord has in mind. I should have thought that the needs of the curlew were slightly different from the needs of humans. Having been responsible with another noble Baroness, for preserving the curlew in the Wildlife and Countryside Act 1981, I am at a loss to know how the noble Lord equates their needs with those of humans. However, humans can speak for themselves and curlews cannot.
Lord John-Mackie: My Lords, perhaps I may intervene for one moment. I am very intrigued by these amendments. That is why I supported them from the point of view of the RSPB, which is always worried about changes in habitat. In these areas where farmers have improved their land the habitat has changed but the birds and so on have accustomed themselves to it. Now people want to preserve what they were against in the first place. I think we should agree to that.
The second point which my noble friend made is that farmers should not be allowed to improve land and then in three or four years' time apply for an extra grant to plant. I think he is quite right. I know it is covered anyway, as the noble Baroness said, but I think we should be very happy if it were pinpointed somewhere. That was the reason for the
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amendments, which are probing for an assurance that these matters will be more clearly pinpointed than is the case here. The words,
"make different provision for different cases",
do not seem to be quite enough.
Baroness Trumpington: My Lords, I hope I have given the noble Baroness the reassurances which she required and I hope that she will withdraw her amendments one by one.
Baroness Nicol: My Lords, I am grateful to the noble Baroness. Her words are very comforting and I shall read them with great care. Perhaps I may reply to the noble Lord, Lord Mackie of Benshie. I do not think the needs of curlews, lapwings and humans are mutually exclusive. I hope we can all live in harmony with them. Certainly it would not be my wish to exclude humans so that the curlews and lapwings could flourish. I beg leave to withdraw Amendment No. 3.
Amendment, by leave, withdrawn.
[Amendments Nos. 4 and 5 not moved.]
7.45 p.m.
Lord Moran Lord Moran moved Amendment No. 6:
Page 3, line 42, at end insert—
("( ) Without prejudice to the generality of the preceding provisions of this section, the Minister may—

(a) provide for the training of such persons as may be so specified or determined;

(b) provide for the giving of advice by such persons as may be so specified or determined to persons who are in receipt of grant under a scheme under this section:").

The noble Lord said: My Lords, the noble Baroness said at Second Reading that the Government, while anxious to keep costs down, would be allocating some additional manpower to deal with the farm woodland scheme, both in the Forestry Commission and in ADAS. This seemed to me good news and her remarks on this were welcome. If the scheme is to work, there will need to be a high standard of such professional advice on woodland design, management and marketing. Hence the present amendment standing in my name and that of the noble Baroness, Lady Nicol.
I believe that experience so far on projects such as Coed Cymru, the Culm Measures Study and small woodland schemes has shown the importance of really good advisory services if farmers are to be encouraged to plant and manage woodland with a broad set of objectives in view.
However, I wonder whether the Forestry Commission and the agricultural advisory services now have the necessary staff resources to cope if a good many farmers apply to join this scheme. I should like to ask the noble Baroness whether she can tell us the number of staff who will be responsible for providing advice under the scheme and what training they will receive in the proper management of woodlands for conservation and amenity. Perhaps I may ask her too who will be the first point of contact for farmers wishing to enter this scheme. Will it be ADAS or the Forestry Commission? I suggest that the agricultural advisory services may be best placed

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to take on primary responsibility for managing the scheme. I beg to move.
Baroness Trumpington: My Lords, I have listened with interest to the noble Lord, Lord Moran, and would agree wholeheartedly about the importance of adequate training facilities and advisory resources being available to those who wish to join a farm woodlands scheme. However, the position is that Ministers do not need to take new powers in order to make such provision.
With regard to the first point of contact for training, ADAS will be a first point of contact for the farmer, but the kind of training he needs will depend on his particular requirements. If he wants specialist forestry training, a Forestry Commission course may be appropriate. If a general course on farm woodlands is needed, the Agricultural Training Board course may be recommended.
Perhaps I may say that in the last few weeks I have been to see the people at Stoneleigh and I was mightily impressed by the work they do. We cannot assess the number we shall need until we know how successful the scheme is. However, we are allocating extra manpower to the scheme. This will be adequate according to the numbers when we get the figures. If the noble Lord, Lord Moran, wishes for more detail, I can certainly provide it.
Finally, I should just say that at the moment both the Forestry Training Council and the Agricultural Training Boards have asked to be closely associated with the provision of training services to farmers when the scheme comes into effect. This is most welcome and we hope that farmers will not be slow to take advantage of this training. I hope that the noble Lord, Lord Moran, is more reassured about the powers which already exist and will he aware of our plans for the future. I hope the noble Lord will withdraw his amendment.
Lord Moran: My Lords, I am very grateful to the noble Baroness for what she has said and glad that the Government emphasise the great importance of proper advice if this scheme is to work well. I am sorry that the noble Baroness cannot give us an estimate of the numbers who will be required for this scheme but I have noted her remark that the numbers will be adequate. Of course I accept that assurance. I am also glad that she confirms that ADAS will be the first point of contact for farmers wanting to come into the scheme.
I do not want to ask the noble Baroness now to give me the additional details which she said she had, but perhaps she would like to write to me later with those. Having said that, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
The Earl of Radnor The Earl of Radnor moved Amendment No. 7:
Page 3, line 42, at end insert—
("(2A) The appropriate authority shall review the rates of any grants which may be provided for by a scheme under subsection I above after not more than three years have elapsed from the time the scheme became available to the persons to whom the grants are payable and shall review the rates of grants at intervals of not more than five years thereafter and shall publish the results of such review.").
The noble Earl said: My Lords, this amendment would oblige the authority, the Minister, to review the rate of grant at the end of the third year and thereafter every fifth year and to publish the results of such review. Specifically, it does not oblige the Minister to do anything about the review. The hope is, however, that having had his attention drawn to the matter the Minister would look at any grants in the light of the rate of inflation or whatever increase or decrease over the previous three or five years applied at the time. The Minister should also make the result of that review known, whether or not anything was done.
The only other point that I wish to bring out (although I possibly have not got the wording right as I am not an expert at drafting these things) is the word "published". I looked up that word in the Library of your Lordships' House. The primary definition of that word is "to make generally known". That is really what we are after in this case. If, as has happened once or twice in the past, these primary grants which after all in this case must run for 30 years for coniferous woods and 40 years for broadleaved woods are never reviewed they could become quite ridiculous towards the end of the day. It seems a reasonable exercise to look at the grants at the kinds of interval that I have suggested. I beg to move.
Lord Carter: My Lords, from this side of the House we welcome and support this amendment. We have accepted reluctantly but without being convinced by the reasons that the Government have given us why they could not accept the indexing of woodland grants as we suggested in Committee. But the noble Lord, Lord Hesketh, did commit the Government in Committee to regular reviews of these grants. It is hoped that this amendment seeks to stiffen the Government's resolution in this matter.
We all want the woodlands scheme to succeed, but it will only succeed if farmers can be satisfied that the rates of grant under the scheme will be regularly reviewed. As the amendment merely seeks to set out in the Bill what the Government are committed to do anyway, we feel sure that the noble Baroness will be able to accept it.
Lord Mackie of Benshie: My Lords, I too should like to support the amendment, with little hope that the Government will support it.
Baroness Trumpington: My Lords, ho, ho ho! I have listened with great interest to what my noble friend Lord Radnor and other noble Lords have said. Strictly speaking, we feel that this amendment is unnecessary because the Bill as drafted does not prevent Ministers from undertaking the reviews in question and we have publicly stated our intention of undertaking them. However, we have obviously taken account of the weight of feeling on this issue that was expressed in Committee. We are therefore prepared to accept the principle that periodic reviews should be provided for in the Bill as this amendment seeks to ensure. However, my noble friend will not be surprised to hear that we wish to redraft his actual words in order to clarify the

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position regarding the communication of the conclusion of such reviews. If my noble friend is prepared to withdraw his amendment, I shall take the matter away with a view to bringing forward an appropriate amendment on Third Reading.
The Earl of Radnor: My Lords, I am most grateful for the remarks of my noble friend. She has of course put her finger on a very important part of the amendment which is concerned with communicating the result of any review which takes place. I am quite happy to withdraw the amendment on the basis that we can perhaps have a word about that and bring something to the next stage of this Bill which is satisfactory to everyone. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Moran Lord Moran moved Amendment No. 8:
Page 3, line 42, at end insert—
("( ) Grants provided for by a scheme under this section will be paid only to persons whose plan of operations includes a minimum broadleaf component of two-thirds of planted stock.").
The noble Lord said: My Lords, on Second Reading the noble Baroness told us that the Government were:
"anxious to give encouragement to mixed woodland containing a high percentage of broadleaves".
She also said that the Government:
"remain committed to the aim of achieving at least one third broadleaves under this scheme, and … actual planting … will be closely monitored so that action can be taken if broadleaf proportions fall short of what we expect."—[Official Report, 5.11.87; col. 1092.]
In my own speech on Second Reading I expressed concern about the possibility of more extensive planting of conifers, about the proposed 95 per cent. of conifers in the uplands, with risks of increasing the growing and serious problem of acidification, and 65 per cent. of conifers in the lowlands. I said that I should prefer to see two thirds broadleaves not one third; hence this amendment.
It seems to me that the unambitious ratios of broadleaves to conifers proposed by the Government merely reflect the existing pattern of planting. Most of us have seen how unsatisfactory that is. I think that we should set our sights higher and aim for a much greater proportion of our native broadleaved trees. After all, one of the four aims of this scheme as set out in last year's consultation paper is:
"to enhance the landscape, to create new wildlife habitats, to encourage recreational use including sport, and to expand tourist interest".
That aim will simply not be achieved without a very substantial upward revision of the minimum levels of broadleaves. There is much concern in the country about the onward march of conifers and strong support for much wider planting of broadleaves. Therefore there is every reason to amend the Bill along the lines I have suggested. I beg to move.
Lord John-Mackie: My Lords, I am afraid that we cannot support this amendment. There is no question that broadleaves, as the noble Lord has said, are attractive from the point of view of amenity; but I
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cannot understand this antipathy to conifers. It is particularly difficult to understand when one thinks of the places that people go to in America, in Bavaria, in Sweden and in Norway to admire the conifers. Some people at long last have discovered that conifers in this country can also be beautiful. If one goes to the Great Glen one can see some of the most beautiful Norway spruce that one could possibly wish for. I do not know whether the noble Lord has been to Grisedale in Cumbria, but he would see some of the most beautiful conifer forests there that he could wish for.
I do not understand people who ignore the fact that 24 million visits are made to the conifer forests of the Forestry Commission and that the Forestry Commission spends 15 per cent. of its budget on recreation and amenities. To try to curtail the planting of conifers is ludicrous as apart from anything else they give a quicker return than any broadleaves. It is not the fault of broadleaved trees that they take anything up to 100 and in many cases 150 to 200 years to mature. Conifers give a quick return and we need that quick return in this country. Now we are buying over £5,000 million worth of soft wood from abroad for all kinds of purposes.
The unemployment situation in the north-west of Scotland where propaganda is being circulated on this subject at the moment is 15 per cent. To in any way inhibit conifer planting would be entirely wrong. The Forestry Commission applies certain conditions to the planting and the landscaping of conifers.
When I first read the noble Lord's amendment I thought that he was talking about a mixed plantation for broadleaved trees. I hope that his amendment would not have an effect on that because one can plant a mix of up to 50 per cent. of broadleaves and conifers. Anyone who wants to plant broadleaved trees would be well recommended to do so. Within three or four years one will have some Christmas trees and in 10 or 11 yeas there will be thinnings for posts. However, those would have to be removed as soon as they began to shade the broadleaved trees. They give a return which cannot be had from broadleaved trees alone for many years to come.
8 p.m.
Earl Waldegrave: My Lords, perhaps I may add a word on the unpopular conifer. We must not exaggerate their unpopularity by saying that they are all foreign Christmas trees. The Scots pine has its origin in this country. A mature Scots pine is one of the most beautiful trees that grows.
Lord Mackie of Benshie: My Lords, I support the comments made by my noble kinsman with regard to mixed plantations. I have planted a number of those on my downland farm. I have always recommended planting rather more than 50 per cent. of conifers to encourage the broadleaved trees to come up when the thinnings are taken out. I therefore cannot support the amendment.
Lord Kilbracken: I spoke on a related subject at the Committee stage and I should like to intervene briefly to support the two noble kinsmen, who sit on either side of me, in their opposition to the amendment.

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I know that conifer plantations can be extremely beautiful when planted properly. A great deal of prejudice is wrongly directed against them. The question is whether we are talking about a mixed plantation or one plantation of broadleaves and one of conifers. I dispute what my noble friend Lord John-Mackie has said about having to cut out all the softwoods in order to give broadleaved trees more space to grow. If they are planted as a nurse crop, I think it is often possible to leave a few Scots, Norway or Sitka pine trees to grow on for 60 or 80 years before it is necessary to cut them out. Then the broadleaved trees, which they have helped to grow, will still thrive for another 100 years before they have to be cut.
I yield to no one in my love and admiration for broadleaved trees. I love to walk through a beech or an oak plantation. However, we must consider the profitability of the planting. My noble friend Lord John-Mackie mentioned that softwood trees give a much quicker return. That is true because they are quite often cleared in 35 or 40 years and one has a good return from Christmas trees and the poles coming out in 17 or 20 years. However, I dispute whether, in many cases, a broadleaved plantation is profitable at all. When one takes into consideration the effect of having to wait an enormously long time for a return, I believe that in a majority of cases a broadleaved plantation is not profitable. Another factor which has been mentioned is that softwood is in great demand. The recent hurricane-force winds have turned the timber market completely upside down. However, in general there is an insatiable demand for softwood and there is no such demand for hardwood.
A further point which must be considered is that a great deal of the land which we hope will be planted is completely unsuitable for growing hardwoods. The nature of the terrain must be considered in putting in softwoods, hardwoods or a mixed plantation. Hardwoods need better land and much more attention.
If this amendment were to be approved and two-thirds of all the trees, to qualify for a grant, had to be broadleaved or hardwood trees, that would mean that a great deal of land would not be planted simply because it is unsuitable for the planting of hardwood trees. Two-thirds of the trees planted could not be hardwoods because they would not grow on such land.
I am pleased to find myself in agreement with my Front Bench on this matter, rather than opposed to it as I was on the previous amendment, and I hope that the noble Lord will not press his amendment.
Baroness Elliot of Harwood: My Lords, I should like to support very strongly what has been said by the noble Lords, Lord John-Mackie and Lord Mackie of Benshie. I live in the middle of the biggest forest in the United Kingdom or in Europe. The Forestry Commission is clear-felling in plantation areas which it planted 50 or 60 years ago. It is clear-felling trees for which there is an enormous demand and it is replanting partly with broadleaves but also with an enormous number of conifers. The reason, as
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the noble Lord has just said, is that it is an area where conifers should be grown and are grown successfully and very much faster than broadleaved trees can be grown.
On the other hand, it is very nice to have some broadleaved trees along the edges of roads and so on. That is being done now by the Forestry Commission and I strongly recommend the current policy of the Forestry Commission and the Ministry of Agriculture. I think that it would be a great mistake to interfere with that by laying down any suggestions for control. They know best and I should like to support them.
Baroness Trumpington: My Lords, I certainly welcome the words of my noble friend Baroness Elliot in her sturdy defence. Your Lordships will be aware that we are seeking to maintain desirable proportions of broadleaves by means of incentives and advice. We have extended the period of payment to 30 years for mixed woodland containing more than 50 per cent. broadleaves, which usually become broadleaved woodland when the conifers are felled, and to 40 years for pure oak and beech woodland.
This amendment, on the other hand, would write into the Bill a wholly inflexible limit which could not be changed except by primary legislation. It assumes that all broadleaves are good and all conifers bad. May I say again how grateful I am to my noble friend Lord Waldegrave for his defence, and for that of the noble Lord, Lord John-Mackie, of the noble Scots pine. The amendment could lead, particularly in Scotland, to the planting of species at least as alien to the habitat as the kind of planting which conservationists sometime bewail, assuming that farmers were willing to plant trees at all under such a rigid scheme.
Perhaps even more important to the noble Lord, Lord Moran, the existing powers in the Bill will be sufficient to allow us to lay down minimum proportions of broadleaves by secondary legislation if, in the event, this Government or some future government decided that that was necessary. However, we are not willing to see such a provision on the face of the Bill and in the circumstances I hope that the noble Lord will withdraw the amendment.
Lord Moran: My Lords, I am sorry to find that I am a minority of one in supporting the broadleaves against the conifer. In listening to some of the remarks made by noble Lords, I feel that it is worth emphasising that we are talking about farm woodlands and not about great forests. I am in favour of mixed planting, as was mentioned by the noble Lord, Lord John-Mackie. It is obviously good practice to plant a nurse crop of larch when planting in many parts of the country. I think that that is a sensible practice which everyone will support.
I also fully agree with the noble Earl, Lord Waldegrave, concerning the splendours of the Scots pine. My only anxiety is that there are many parts of the country which have been adversely affected by badly planted ranks of conifers of uniform age. That has been a great pity. After all, we are speaking of Britain and not of Nevada.

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Having said that, I am a bit surprised to hear some of the remarks made by noble Lords in accepting the Government's aim of having one-third broadleaves. It sounds as though many of them would not like that provision. I think that that is important and I am sorry that the proportion is not higher. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord John-Mackie Lord John-Mackie moved Amendment No. 9:
Page 3, line 46, at end insert—
("( ) Where grants have been made under this section, the Minister shall keep under review the effect on the countryside of those grants and of the requirements to be complied with by persons to whom they are paid, and shall publish annually such information as he considers appropriate about those effects.").
The noble Lord said: My Lords, this is a simple amendment. Many people feel that when we are spending a great deal of money we should know the results of the expenditure, keep under review the areas which have been paid for and allow for annual publishing of information which is considered appropriate. I am sure that the Government would like to do this because it keeps everything in the public eye and keeps the public in the picture on how their money is being spent and whether it is having an effect environmentally, financially or in terms of surplus.
Baroness Trumpington: My Lords, I have just agreed, as a result of the advocacy of my noble friend Lord Radnor, to bring forward a government amendment providing for regular reviews of the rates of grant. However, Amendment No. 9 would involve a much greater commitment and one which we do not think it would be right to include on the face of the Bill.
Certainly I do not wish to imply that we shall not be keeping the environmental effects of the farm woodland scheme under review. Indeed we shall. We shall be monitoring the scheme from the outset and we shall be reviewing it fully after year three in consultation with interested parties. I am sure that the statutory conservation agencies and other bodies will be able to help us in evaluating the environmental aspects of the scheme in that review. But of course there are other important aspects to be covered as well, notably patterns of uptake, CAP savings, farm income and employment and timber growing aspects.
Although we shall be keeping an eye on the scheme as it progresses we believe that an on-going review with results published annually would simply generate unnecessary uncertainty about the future of the scheme. As a result we might use up as many trees in the form of paper for the exercise as we planted under the scheme.
Moreover, we are legislating for the long term. Assuming the experimental scheme is a success and we bring forward a more definitive scheme, less intensive review arrangements could be appropriate. The Bill as it stands leaves us with the powers we need to make whatever arrangements seem appropriate.
I hope that my explanation will satisfy the noble Lord, Lord John-Mackie, and that he will withdraw his amendment.
Lord John-Mackie: My Lords, I think that the noble Baroness is probably right that three years is sufficient. I hope that at the end of that time the review will satisfy the noble Lord, Lord Moran, that a lot of deciduous trees have been planted. I look forward to the review and hope that I shall survive until it comes along. With that observation I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Trumpington Baroness Trumpington moved Amendment No. 10:
Page 4, line 1, leave out subsection (4)
The noble Baroness said: My Lords, if I may, I intend to speak to Amendments Nos. 10 and 11 together. I very much hope that your Lordships will warmly welcome these amendments. Noble Lords will recall that in Committee the noble Lord, Lord Carter, proposed an amendment to Clause 1 which applied directly the provisions of Section 17 of the Agriculture Act 1986. I said then that I accepted the principle of the amendment and would bring forward a government amendment on Report. This I have now done. The amendment introduces a new subsection in Clause 4 applying Section 17 of the 1986 Act to those functions conferred on Ministers by both Clauses 1 and 2. Clause 2(4) thereby becomes redundant.
I consider Section 17 to be a very important provision in that it places a duty on Ministers to balance a number of interests when exercising any functions connected with agriculture. I should perhaps point out that Section 17 of the Agriculture Act 1986 was introduced to give statutory backing to what has been our policy for some time. Our commitment to securing a balance of countryside interests in the development of policy could be seen before 1986. The successful broads grazing marshes conservation scheme was launched in 1985.
Since that time we have given a vivid example of our commitment to the environment by introducing no less than 12 environmentally sensitive areas in England and Wales and more elsewhere. These are specifically aimed at encouraging farming practices which are designed to maintain or enhance the environmental interest of the areas. We are also helping the rural economy through financial assistance for tourism and craft industries to help maintain the viability of farmers in the less favoured areas.
All this clearly shows that we are taking our responsibilities towards rural areas very seriously indeed. I beg to move.
Lord Carter: My Lords, we are very pleased that the Minister has felt able to accept the arguments that we advanced at Committee stage and reflected them in the amendments. As she says, they now make it completely clear that in all the activities covered by the Bill both under the diversification scheme and the farm woodland scheme the Minister has a duty to balance all the interests involved—farming interests, the countryside and environmental matters. We welcome and support these amendments.
On Question, amendment agreed to.
Clause 4 [Short title and extent]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 11:
Page 4, line 25, at end insert—
("(1A) It is hereby declared that any function conferred on a Minister of the Crown by or under section 1 or 2 of this Act is to be treated as a function connected with agriculture for the purposes of section 17 of the Agriculture Act 1986 (duty to balance interests when exercising functions connected with agriculture).")
On Question, amendment agreed to.
Lord Hesketh: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.16 to 8.30 p.m.]

Copyright, Designs and Patents Bill [H.L.]
House again in Committee.
Clause 218 [Powers exercisable for protection of public interest]:
On Question, Whether Clause 218 shall stand part of the Bill?
Lord Williams of Elvel: Before we pass Clause 218 there are two questions that I should like to put to the noble Lord. The first is a simple question of English. In Clause 218(1)(a)(ii) the expression in the Bill as drafted is,
"that facts found by the Commission in. pursuance of their investigations under section 49 of that Act operate or may be expected to operate against the public interest".
I simply ask whether facts can "operate". It seems to me to be a very odd expression. It is not an expression that I recognise in the English language. Perhaps the drafting can be cleaned up.
The second question is of greater substance. The clause deals with reports made by the Monopolies and Mergers Commission under various sections of the Fair Trading Act or the Competition Act. As the Committee will know, the Monopolies and Mergers Commission has been charged under Acts other than the Fair Trading and Competition Acts to conduct investigations into certain aspects of certain matters.
Perhaps I may give an example which I cited earlier today in response to the Statement of the Secretary of State on the future role of the Department of Trade and Industry. The Airports Act contains a provision that the Monopolies and Mergers Commission may be required to make a report. As I recollect, I believe that the Banking Act and the Building Societies Act also have a provision to that effect. There are certainly other Acts. I suspect that the British Telecommunications Act and the Gas Act have some such provision. I speak from memory at the moment but I believe that almost every privatisation Bill that has come before the Chamber has a provision somewhere that as a last resort operation the Monopolies and Mergers Commission may be required to report.
It is perfectly conceivable that in a report under any of those other Acts which are not specified in this
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Bill the Monopolies and Mergers Commission might find that a monopolies situation exists in relation to design rights. I am not saying that it will happen but that it is conceivable. I suspect that Clause 218 is rather narrowly drafted. I should certainly like to see the Monopolies and Mergers Commission given the brief that, if it finds any transgression or infringement in any of its reports under any statute, the licence of right or the enforced licence which the Secretary of State can impose should come into play.
If one accepts that view, the subsidiary problem is that the public interest as defined in these other Acts—other than the Fair Trading and Competition Acts—is, as I mentioned in my reply to the Secretary of State, rather different from the public interest as defined in the Fair Trading Act and the Competition Act. We return therefore to the position to which I referred earlier this afternoon where it is unclear what the "public interest" is. It is differently defined in different statutes. I say no more than that. However, I believe that this is a matter that the Government may wish to consider. I do not think that the Monopolies and Mergers Commission or the Secretary of State should be restricted to the Acts that are mentioned in the Bill.
Lord Beaverbrook: I am grateful to the noble Lord, Lord Williams of Elvel. On the point that he raised about the use of the word "facts" and whether facts can operate, I would point out that in Clause 218(1)(a)(ii) the wording is that used in the Fair Trading Act. That is precisely why we have used it here.
On the noble Lord's second point, I think that we should look further at whether there are powers under other Acts which should be taken account of in this Bill. The noble Lord very kindly gave me notice a short time ago that he was going to raise this point. It is an important one and we shall look at this further. I cannot give him any commitment, but we shall look very carefully at what he has said.
Lord Williams of Elvel: I am most grateful to the noble Lord. I hope that in looking at this matter he will also consider the definitions of "public interest" in the different statutes because there may well be conflicting definitions of public interest which could impinge on the powers of the Secretary of State under Clause 218 as it stands.
Lord Beaverbrook: The use of the term "public interest" is very much based on Section 51 of the Patents Act 1977. However, I take the point that there is other legislation that impinges on this matter. We shall carefully consider that issue.
Clause 218 agreed to.
Clause 219 [Undertaking to take licence of right in infringement proceedings]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 295:
Page 95, line 22, at end insert—
("(3) A defendant who denies infringement or challenges the validity of the design registration shall be entitled to give an undertaking to take a licence in case his defence fails; such undertaking shall be effective for the purpose of subsection (1); and

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if the defence fails the licence shall come into effect as from the date upon which the undertaking was tendered or application for a licence was made, whichever is the earlier.").
The noble Lord said: I beg to move Amendment No. 295 in my name on the Marshalled List. Clause 219 deals with undertakings to take a licence of right in infringement proceedings. My amendment is basically to limit the area of damages. As the wording of the Bill currently stands, in proceedings for infringement of design right and registered design—since Clause 244 of the Bill applies to this clause and to the same concept—the defendant would be obliged to choose between defending the proceedings or accepting a compulsory licence, if such were available. The defendant therefore must elect whether to take a licence or to defend the proceedings. If he believes that he has a good defence he will be faced with a somewhat difficult dilemma knowing that he will not have the option to take a licence if he is proved wrong. This puts the plaintiff at an unfair advantage in proceedings.
Surely it would be fairer if the defendant were to have the opportunity to continue the proceedings, but had to give an undertaking that in the event of his defence not succeeding he would take a compulsory licence. This could be backdated to the date of the undertaking. My amendment would allow that possibility. It would improve the position of a defendant who genuinely believed that he had a good defence, while not prejudicing the position of the plaintiff, who would ultimately be recompensed by the payment of the licence fee if he, the plaintiff, were successful in the proceedings. Nothing would be lost to him since the licence would be backdated to the commencement of the proceedings. I beg to move.
Lord Morton of Shuna: It is no doubt my fault. We have been on this Bill for some time and I get slightly bemused. The amendment talks about a "design registration". I thought that in this part of the Bill we were discussing an unregistered design. I fail to see that registration has to do with, or makes any sense in connection with, this part of the Bill. Perhaps the noble Lord, Lord Lucas of Chilworth, will explain that.
It also appears to me—and it may be my fault for not understanding it—to give an opportunity to apply for a licence of right to anyone who chooses to challenge somebody who had the design right at any time rather than at the restricted last five years of the existence of the design right. I may be totally misunderstanding the position, in which case I apologise to the Committee. But I fail to understand what the amendment is designed to do.
Lord Monkswell: I have interpreted the amendment slightly differently, in the sense that I presumed that we had a misprint in the second line and that "design registration" should read "design right". It seems to me that if the clause were agreed to there would be no incentive for a parasitical parts manufacturer to approach the original manufacturer for a licence of right because he could gaily carry on producing the goods. It would then be up to the original manufacturer to challenge him in the courts;
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at which time the pirate could say, "I shall apply for a licence of right", and get off scot-free. It would seem to me to nullify the Government's intention to get the two parties together during the period when the licences of right were available.
The other factor I have to stress concerns the safety implications. That is probably secondary to the implications of the clause in terms of the way it would operate vis-à-vis the licence of right provisions that we have already agreed.
Lord Lucas of Chilworth: Perhaps it would be right for me to answer those two questions. On the point raised by the noble Lord, Lord Morton, it does not matter whether the design right is registered or not. All I am saying is that an infringer may well suffer—
Lord Morton of Shuna: It does not matter a great deal if we are dealing with designs which have no registration. I do not understand how they will register anything. That is what baffles me about this reference to registration. At this stage we are dealing with the unregistered design right.
Lord Lucas of Chilworth: The noble Lord may be right and it is possible that I have not set down the amendment as clearly as I ought to have done. I am concerned particularly with the infringement of a design right. It seems to me that two penalties might accrue. All I seek to do in the amendment is to ensure that an infringer suffers one penalty only. It is as simple as that.
On the matter raised by the noble Lord, Lord Monkswell, nobody is suggesting—I should be the last to do so—that anybody should get off scot-free. All I am attempting to do is, as I said at the outset, to limit the area of damage an infringer may suffer.
8.45 p.m.
Lord Beaverbrook: I am grateful to my noble friend Lord Lucas for raising this matter. There are some problems with the drafting in his amendment, but I probably understood the thrust of it correctly. I am sure he will tell me if I have not.
The Government have no intention of forcing defendants to choose between contesting an action for infringement and giving an undertaking to take out a licence, thereby limiting the relief that can be awarded against them. If a defendant believes that he has not infringed a design right and is prepared to argue the case, he should be free to do so. Equally, if an infringement was committed at a time when licences were available and the defendant is willing to give an undertaking to take out a licence, he should be able to take advantage of Clause 219. I can see no reason why that should not apply where the defendant is defending the action because he believes he has not infringed. Indeed, in this case I can see every reason why it should.
In this connection it was our view that Clause 219 as drafted would allow that. Nevertheless, since my noble friend and I both seem to agree what the effect of the clause would be, it would be appropriate for me to consider the detailed drafting in the light of our

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debate. Therefore, if my noble friend will withdraw I shall do that and return to the matter at a later stage.
Lord Lucas of Chilworth: I am delighted that my noble friend the Minister knew what I was getting at, even if others perhaps did not. There is no collusion here, I can promise the Committee. I am glad that my noble friend will consider this matter and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 219 agreed to.
Clause 220 [Crown use of designs]:
On Question, Whether Clause 220 shall stand part of the Bill?
Lord Mottistone: Clauses 220,221 and 222 provide for Crown use of design right. We shall come to Clause 223 in a moment. Design right should not confer absolute monopoly on the proprietor of the design right and therefore there is no need for provision to be made for Crown use of designs, any more than there is in the case of copyright. However it is recognised that there may be a need for Crown use in an emergency and it is therefore suggested that Clause 223 should be retained. That clause will, however, have to be amended to enable it to stand alone.
It should be noted that Clause 222 extends the right of the Crown beyond the benefit derived by the proprietor of the design right, since the Crown has the power to set aside provisions in licences, contracts and so on relating to the use of any model, document or other information relating to design right.
The power which the Crown is seeking to give itself is a new power. It has been described somewhat vulgarly as licensed burglary. It has applied in the past for patents and registered designs, but not for copyright or the equivalent in design right, which merely protect against copying and do not give an absolute monopoly. If I may sum it up, a design right does not give rise to a monopoly right in the way that a patent gives a monopoly in an invention. There is always another way of designing an article. Under the clauses the Government are giving themselves powers to take the best of British design and have it second-sourced by some overseas manufacturer who will be only too pleased to be legitimately copying, tooling up at the behest of the United Kingdom Government and then supplying the rest of the world. There should be no need for the Government to have such a right.
If the Government want to buy Jaguar cars for their Ministers or pens for their clerks, they should not be able to take Jaguar or Parker design effort and pass it on to a third party without so much as a by your leave. To ask for that right is a monstrous proposition. I exaggerate the situation deliberately because of course Ministers will say on behalf of the Crown, "We should never dream of doing anything nasty like that"; but, as phrased, Clauses 220 to 222 give them that sort of power. It seems to me, particularly as it is a new power which they have never had before, that it is totally unreasonable even to want to claim it, let alone to put it in an Act of
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Parliament. I do hope that my noble friend will recognise that it is a monstrous thing that he is requiring and that he will be able at least to water down the clauses that I am objecting to, if not follow the suggestion that I make—that is, to take out Clauses 220 to 222 and give the Crown emergency powers under Clause 223, which would have to be beefed up to take care of the entire situation.
Lord Tordoff: My noble friend would certainly wish to support Lord Mottistone in what he has just said. It used the word "draconian" to me when describing these three clauses. I think the noble Lord, Lord Mottistone, has put the case very well. Why on earth do the Government want to put themselves in the position where they are seeking to take powers under this Bill which they will undoubtedly pretend that they do not want to use and indeed probably do not want to use? There has to be provision, one understands, in emergencies or in the case of war, but that is a totally different situation. The Government under these clauses are seeking to take powers far wider than they should. It is the job of Parliament and particularly this part of Parliament to challenge the Government when they seek to take such powers. Speaking from these Benches generally and in particular on behalf of my noble friend, we certainly support everything that the noble Lord, Lord Mottistone, has just said.
Lord Monkswell: I too should like to be associated with the sentiments that have been expressed. If the Government in an emergency situation needed to take the sort of action in question, I am sure that there would be no hesitation in granting them that power. In that respect I think there are amendments already down for Clause 223 which will confer that capability in a free-standing fashion.
I should like to make two other points. I hope the Minister will not take exception to some of the words that I may use, because I think that one of the problems we are faced with is that sometimes we in this Chamber can understand, although we may not like it, the Government's feelings, the Government's thrust and so on. However, there are other people in this country who will misconstrue what the Government seek to attempt here. We shall be open to the charge that the Government are setting themselves up with all the paraphernalia of a military dictatorship. I made the point that I hoped the Minister would not be upset by the words that I am using because they are not my words; they are a reflection of the state of mind and the attitudes that will be adopted by quite a number of people in the community outside.
The other aspect that I must touch upon is to say that this provision is quite uncharacteristic of the present Government. They believe in the free market ethic and continually preach it. The Minister himself is held to be an arch priest of the free market economy, yet the Government bring forward such a provision. I am sure, and I hope that the Government will take this on board, that all sides of the House will feel that there is a very large question mark over these three clauses, though none at all over Clause 223, which, suitably amended, we would all support.
Lord Beaverbrook: The noble Lord, Lord Monkswell, was quite right when he surmised that I should not necessarily go along with some of the terminology that was used; nevertheless, I assure him that I certainly do not take offence at the words "military dictatorship" even though he may have noted some surprise in my expression when he did use them.
However, Clauses 220 to 223 closely follow the corresponding sections of the 1977 Patents Act and concern what is known as Crown use. The first of these, Clause 220, is the basic provision giving government departments, for persons they authorise, the right to do certain things for the service of the Crown without infringing design right. There is nothing to stop government departments from agreeing terms of use on a voluntary basis, and they would normally expect to do so. But these provisions ensure that the Crown ultimately cannot be prevented from doing anything for the service of the Crown by exercise of design right. Crown use is of course subject to proper remuneration and other detailed provision in clauses which we shall come to later.
I hope that I made it plain in our earlier debates that design right is not a monopoly right but rather a protection against copying and, where there is no choice but to copy if a competing part is to be produced, then there is no protection at all. In spite of this, however, I still believe there are special reasons for including these Crown user provisions.
Take, for example, the needs of our armed forces. If there should arise an urgent need for a particular piece of equipment and the usual supplier be unable to meet this sudden increase in demand, should the armed forces be prevented from approaching another manufacturer to produce the equipment in question? I think not.
While of course it is true that the other manufacturer would be able to design his own piece of equipment as an alternative to that design by the original supplier, it could be totally unrealistic, possibly even dangerous, for the forces to have to wait for an alternative design to be created. I say that it would be dangerous because there will be parts which the man in the field needs to be able to recognise immediately, especially in very difficult conditions. In such circumstances an alternative design may not be readily recognisable as such. By the time a soldier has worked out that the particular part does the same thing as the part it is to replace, it may well be too late.
I should like to stress that this situation where the soldier in the field needs to be able to recognise parts of equipment with which he must be totally familiar arises not only in periods of declared emergency which would be covered by Clause 223. It arises in many situations where our forces are required to operate, and indeed it arises in training. It is of course the duty of the Ministry of Defence to secure the defence of the realm as effectively and as expeditiously as possible, and I firmly believe that these provisions should be included in the Bill to safeguard the public interest.
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These provisions do not in any way represent a licence to steal. They are vitally important for the reasons I have given. As I have said, Crown use of the rights is properly remunerated.
Lord Monkswell: I must pick up the Minister on one point. He says that if there should be an urgent need for extra supplies of a particular component, the Government may have to go elsewhere. Surely that need should be able to be foreseen and written into the original contracts for the supply of the components? It would seem to me very strange if the Ministry of Defence negotiates a contract on the basis of a limited supply without any provision in that contract for increasing the supply. I must admit that if that is the case I am utterly appalled because, if we did get into an emergency situation, how would we ensure that we increased the production of the components that were required in an emergency?
9 p.m.
Lord Beaverbrook: I must say that I believe the noble Lord has reached an amazing conclusion. No doubt the Ministry of Defence anticipates the demand for particular components and spare parts, and no doubt they are covered in contracts. I am speaking of the exceptional case over and above the normal requirements for spare parts or extra components and not cases where a particular supply requirement has been omitted. That conclusion should not be drawn at all.
Lord Williams of Elvel: This is all very well and I accept the view of the noble Lord that anything which concerns supply to the armed forces and defence should be exempt from design rights. I have no particular difficulty with that view. I begin to join with the noble Lords, Lord Tordoff and Lord Mottistone, in discussing Clause 221(1) (a) and (b). The Bill as drafted is perfectly clear; to do anything for the purpose of supplying articles for the services of the Crown. It is not simply for the purposes of defence and I believe that all members of the Committee will agree that defence is a major consideration. We should not wish to do anything which prejudices the defence capability of the United Kingdom. This issue goes much wider than that. The clause provides that a typewriter, which may be supplied to the Department of the Environment, or whoever, should not infringe the design right. The Department of the Environment, the Property Services Agency, or whoever, can sell the typewriter without any infringement of the design right. Therefore the issue is much wider than defence. I hope the noble Lord will do the Committee a favour by moving away from the defence side of the matter (with which we all agree) and looking at the wider situation by asking whether there is the possibility that we may cover defence in the Bill, even outside of an emergency. However, to give a blanket authority to all government departments for whatever reason seems to me to be somewhat excessive.
Lord Tordoff: I should like to reinforce the noble Lord's comments. The Minister has put forward a convincing case in relation to specific circumstances

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and none of us has disagreed with that. If the specific circumstances might exist, nobody will resist that provision being written into the Bill by the Government at a later stage. However, as the noble Lord, Lord Williams of Elvel, says, the Bill as drafted is too all-encompassing. It covers the whole range of government activity and it is the duty of Parliament to resist the Executive when it tries to take such powers unto itself.
Lord Beaverbrook: I am grateful to the noble Lords, Lord Williams of Elvel and Lord Tordoff, for accepting the argument that I put forward regarding the armed forces. Without commitment, I am prepared to see whether the clause as drafted is too wide on this point. I take notice of the example given by the noble Lord, Lord Williams, of a department that has nothing to do with, or is unlikely to have anything to do with, the argument that I have put forward concerning the armed forces. It is on that basis that we shall look at the matter again without commitment. If something can be put forward by the Government we shall return to the matter at a later date.
Lord Mottistone: I deliberately did not refer to defence in introducing my objection to Clauses 220, 221 and 222 for two reasons. First, the provision enables the current practice of the Ministry of Defence of commandeering designs and much later deciding on the non-market price to pay for them, to be extended to an area to which this practice does not at the moment extend. Therefore it has the kind of powers about which my noble friend was talking in a wide range of such matters. It is questionable whether it needs to be extended in this area in any event. I am not altogether sure that the ministry wants that, but one cannot talk about that publicly. I believe that the argument about defence therefore should be forgotten.
My noble friend has said that he will look at the matter without commitment. That is fair enough because we are speaking of old clauses. Perhaps the argument could be centred on non-defence areas, and on areas where an argument for defence has been extended more widely. Having done that, perhaps the Government may wonder whether defence requires the extra power and they may find that it does not need that either. I hope that there will be a serious look at this matter, more than time would normally permit, because it is a fundamental issue.
Lord Beaverbrook: I should like to make clear to my noble friend the fact that I do not intend to look at the matter in respect of defence or the armed forces. I believe that that argument has been accepted by the Committee, and I can make no suggestion to my noble friend that I shall look at the matter in respect of the armed forces.
Clause 220 agreed to.
Clauses 221 and 222 agreed to.
Clause 223 [Special provision for Crown use during emergency]:
Lord Tordoff Lord Tordoff had given notice of his intention to move Amendment No. 295A:
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Page 98, line 23, leave out ("the powers exercisable in relation to a design by virtue of section 220 (Crown use) include power to") and insert ("a Government Department or a person authorised in writing by a Government Department may without licence of the design right owner").
The noble Lord said: It had not been my intention to move the next two amendments in the name of my noble friend Lord Lloyd of Kilgerran. However, in the light of comments made by the noble Lords, Lord Mottistone and Lord Monkswell, I wonder whether they wish me to move them formally in case they had points that they wished to make. If that is not the case, I shall not move the amendments.
[Amendment No. 295 A not moved.]
[Amendment No. 29 5 B not moved.]
Clause 223 agreed to.
Clauses 224 to 232 agreed to.
Clause 233 [Remedy for groundless threats of infringement proceedings]:
Lord Mottistone Lord Mottistone moved Amendment No. 296:
Page 102, line 42, at end insert—
("( ) Proceedings may not be brought under this section for a threat to bring proceedings for an infringement alleged to consist of making or importing a product for disposal.").
The noble Lord said: This new subsection is taken from the Patents Act 1977 and is intended to bring the threat provisions contained in the Copyright, Designs and Patents Bill into line with the Patents Act 1977 rather than the Registered Designs Act 1949. The purpose of this amendment is to make it easier for proprietors to notify potential infringers that they intend to take legal action against them without incurring the risk of a threats action against themselves.
It should be noted that the real damage caused by unjustified threats occurs when they are issued to a manufacturer's customer rather than to the manufacturer itself. The proposed amendment still leaves such behaviour as actionable. I beg to move.
Lord Beaverbrook: My noble friend has raised a good point. It is true that Clause 233 is based on the provisions of the 1977 Patents Act. It is also true that his amendment would include a provision which is to be found in the 1977 Act but not in Clause 233 of the Bill. I must say that at first sight I have some sympathy with his view.
There is, however, a delicate balance to be drawn here which we will need to consider carefully in the light of what has been said. If my noble friend will be kind enough to withdraw his amendment, I undertake to return with our considered view at a later stage.
Lord Mottistone: I am grateful for my noble friend's undertaking and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 233 agreed to.
Clauses 234 and 235 agreed to.
Clause 236 [Countries enjoying reciprocal protection]:
[Amendment No. 296ZA not moved.]
Clause 236 agreed to.
Clauses 237 to 242 agreed to.
Clause 243 [Registrable designs]:
Lord Beaverbrook Lord Beaverbrook had given notice of his intention to move Amendment No. 296A:
Page 107, line 15, leave out from ("registered") to ("features") in line 18 and insert ("if it—

(a) consists of a method or principle of construction, or

(b) includes").

The noble Lord said: Perhaps I may say a few words about this amendment, which I shall not in fact move. I should just like to explain why.
It was intended to correct a drafting defect in what would be subsection (3) of Section 1 of the Registered Designs Act. The present wording of the Bill implies that a part of a design may be registered in a way which leads to problems. In particular, it could mean that the whole of a design is tested for novelty but only part of the design is registered. The consequence could be that the novelty lies entirely in the part which is not registered. This would of course make nonsense of the novelty requirement in the Bill.
However, here I have to confess that on reflection the approach adopted in the amendment is not ideal. It would prevent the Designs Registry registering any application which includes any excluded features. It would therefore result in unnecessary complication and bureaucracy in the registration process because the registry would have to check every application for excluded features.
We will therefore be looking at this again and will come forward at Report with a new amendment. In the circumstances I do not intend to move the amendment and apologise to the Committee for putting it down.
Lord Williams of Elvel: As the debate is about the Government seeking not to move an amendment, even with the leave of the Committee, perhaps I may be permitted to make a comment. It is wholly out of order and I should not be speaking at all. Nevertheless, as the noble Lord has spoken, I make a point and it is a serious point. I will move the amendment. I beg to move Amendment No. 296A. The noble Lord has sought not to move the amendment but I propose to move the amendment and speak to it.
The Deputy Chairman of Committees (Viscount Simon): Amendment proposed, page 107, line 15, leave out from ("registered") to ("features") in line 18 and insert the words on the Marshalled List.
Lord Williams of Elvel: I am grateful to the noble Viscount the Deputy Chairman of Committees. I just make one very simple point. In your Lordships' Committee we have had considerable debate on a great number of issues and the Government have taken many things back to look at and perhaps
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reformulate. They have come forward with an amendment which they now say was mistaken; that they need to consider it again and then to come forward with something else.
This is going to burden the Report stage of the Bill to an almost unacceptable extent. Already we have in almost every part and chapter of the Bill government amendments with the Government reviewing measures and reformulations. What worries me is that when your Lordships' House reaches the Report stage it will be so burdened with government amendments and government redrafting that we shall not have a chance to discuss the issues which this House really wishes to discuss. I beg leave to withdraw the amendment.
9.15 p.m.
Lord Mottistone: I do not agree at all with the noble Lord. The problem with the Bill is that it is terribly comprehensive and there are far too many people interested in it. It is not just a question of people but different factions. It is bound to be like this and I think my noble friend on the Front Bench has done a jolly good job in taking back many aspects. I do not think it is fair to criticise him. If this means that we have to spend a great deal of time on Report then so be it. I see to my pleasure that the noble Lord the Leader of the House is here and perhaps he will note that we might need many Report days.
For this sort of Bill, which is not political and which despite its best intentions the other place will not be able to handle efficiently, it is quite right that we should spend all the time that we can spare in getting this right. It is very important for industry and all other interested people. It is important that it should be right. I do not think it is fair to criticise my noble friend. I believe that he should return time and again with his own amendments even when he has not promised them. The Committee should have its own amendments and it should do a really good job on this.
Lord Williams of Elvel: Before deciding what to do with my amendment I wish to say that I did not make my intervention without regard to the fact that the Leader of the House is present. I am merely saying that in this Committee we should all bear in mind that the Report stage of the Bill will in a sense be as important and perhaps as long as the Committee stage. I bear in mind everything which the noble Lord said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mottistone Lord Mottistone moved Amendment No. 297:
Page 107, line 20, leave out from ("perform") to end of line 22.
The noble Lord said: In addition to speaking to Amendment No. 297 I wish to speak to my Amendment No. 300 and also I believe that my noble friend Lord Lucas is concerned with Amendments Nos. 297A and 301, which are grouped with these amendments.
As regards my two amendments, Amendment No. 297 seeks to delete paragraph (b)(ii), which introduces a must-match exception. The Committee

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may remember that we talked about this when we were discussing Amendment No. 282. At that stage I endeavoured to show that the must-match exceptions amount to a pirates' charter. That is what it will be in this case and so the Bill will be the better for not having paragraph (b)(ii).
As to my Amendment No. 300, following the decision of the House of Lords in British Leyland v Armstrong & Company it is uncertain the degree to which spare parts or replacement parts can enjoy protection by intellectual property rights. This amendment is intended to clarify the situation by making it clear that it is not sufficient merely to argue that an article is a replacement part in order to avoid infringement of a registered design. I beg to move.
Lord Lucas of Chilworth: Perhaps I may give an explanation to the Committee. I do not propose to move or to speak to Amendments Nos. 297A or 301.
Lord Beaverbrook: For the convenience of the Committee I was going to speak to Amendments Nos. 297, 297A, 300 and 301, which is what I believe my noble friend Lord Mottistone has already done.
All of these amendments concern exceptions from registered design rights or indeed the lack of such exceptions. The first of these exceptions is what we have come to know as the must-match exception. This is intended to avoid monopoly effects by preventing rights from arising in circumstances where competitors have no choice but to copy. I have already spoken at some length about this in connection with Clause 192 of the Bill. The arguments are exactly the same here, so I shall not waste the Committee's time by repeating them.
However, the issue is, if anything, of more significance here. The amendment of my noble friend Lord Mottistone, Amendment No. 297, would delete the must-match exclusion from this clause. This would allow must-match designs to be registered and thus acquire a much longer and stronger protection than that given by design right. Since we do not believe that must-match designs should qualify even for design right, it follows that I cannot accept the amendment.
I agree that the exclusion of must-match designs will make our registered designs law rather less restrictive than many equivalent laws in other countries. In answer to that, I would say that we have reviewed the law from first principles and have concluded that what we are proposing is right, for the reasons I have given today and in our earlier debates. In any event, the relationship between registered design laws and spare parts in the European Community is currently being considered by the European Court, so we cannot be certain of the effect of these laws in the future. We remain of the opinion that a must-match exception is necessary, but I have already agreed to look again at the details of the must-match wording in Clause 192. That undertaking applies equally here in Clause 243.
We have gone to some lengths to get the balance right in the designs provisions of the Bill. Subject to further thoughts on the precise scope of the must-match exception, which applies both in Clause 192
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and in Clause 243, we think that we have got it right. I therefore hope that my noble friend will feel able to withdraw his amendment.
Lord Monkswell: I rise again on the subject of safety of the consumer and the public at large, and I put this forward in all sincerity. Today it has come through very clearly from the Government Benches that the whole thrust of their line in this Bill is to give the opportunity for supply of spare parts from any source. It has not come through clearly from reading the Bill that that is the Government's implication, and I wonder whether it has been clear to the various bodies which should and would be interested in safety.
Along with all the other undertakings that the Government have given today and in previous days, I wonder whether they would undertake to approach those bodies which are responsible for and have an interest in safety matters—I am thinking particularly of the Health and Safety Executive and the Royal Society for the Prevention of Accidents, and there are probably a number of other organisations—with a view to getting their considered response to these aspects of the Bill. Effectively the import of this Bill is to change the marketplace from a marketplace where the main line of spare parts supply was from the manufacturers of the original equipment to one where there will be a free market, to use a hallowed phrase.
I believe that there are grave safety implications in that. I may be proved wrong, and I hope that I am, but if the Government would undertake to approach the Health and Safety Executive, in particular, to get their response to the implications of this Bill, that would ease my mind.
Lord Lucas of Chilworth: I feel obliged to intervene here because the noble Lord, Lord Monkswell, has referred to safety aspects on a number of occasions, and there are two points which I should like to make in this connection. The first is to reiterate that which my noble and learned friend Lord Hailsham had to say about the area that his legislation covers and the safety legislation which already exists.
The noble Lord, Lord Monkswell, has made one or two remarks about the component industry, and most particularly in relation to motor vehicles, and here I include tractors, diggers, lorries and motor cars. Earlier this evening he used the expression "spurious". I have to repudiate that description. I have been associated with the industry for many years, and spurious parts went out of fashion a long time ago. The noble Lord must recognise that many of the manufacturers of replacement parts under their own brand name manufacture for original equipment people.
I believe that the noble Lord is being obsessive about the safety factor. If one looks, for example, at the Motor Panel Manufacturers and Distributors Association's products—because much of the matter we are discussing surrounds motor body panels—to my knowledge there has not been one single complaint on the grounds of safety in the last 10 years.

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When the office of the Monopolies and Mergers Commission considered this matter, and there was also a report from the Office of Fair Trading—I cannot remember the dates offhand, but it was quite recently—the aspect of safety which was brought up was repudiated by those bodies. I do not believe that the Government are under any obligation in this Bill to consider those aspects. I do not believe that the noble Lord opposite has made any case to suggest that the products of patent parts manufacturers, whether they be water pumps, clutches, brakes or panels, have any safety record that gives cause for concern.
Lord Monkswell: I must respond to that. The first response is unequivocally that the vast majority of parts manufacturers in this country do a magnificent job, and they produce quality components. I think here particularly of the proprietary manufacturers. I shall not list the names but we all know them. They are the people who have a proprietary product which they supply to original equipment manufacturers and also through retail outlets.
The noble Lord mentioned the association—I do not know its terminology—and I am sure that it produces good quality components. However we are not just talking about the prestigious component manufacturers which are household names in this country. We are talking about literally any engineering firm which can do a bit of metal bashing and which can produce an article that looks vaguely like the one that was fitted before.
The noble Lord shakes his head, but some of the components used in British industry, as I stressed earlier this afternoon, need highly sophisticated technology. Quite honestly, given the pressures on modern manufacturing design, that technology is sometimes right at the limit of its capacity. It needs high quality manufacturing. The design characteristics are sometimes almost indistinguishable between one part and another, but they can be significant. One of the problems with which we are faced is that the whole thrust of the debate is in terms of fast-moving motor components, but in fact in this Bill we are opening up a whole field, and it is not just clutch plates, exhausts, shock absorbers and car wings. It goes far wider than that. I honestly think that there is a case—I put it no stronger than that—for the Health and Safety Executive to be approached for its response.
9.30 p.m.
Lord Beaverbrook: The noble Lord has made his point. The whole Committee would agree that we are here to consider intellectual property. I understand what the noble Lord has to say about consumer safety. Nothing is more important than consumer safety. We already have a considerable body of legislation on consumer safety and the terms of the new Bill when it becomes an Act will in no way detract from the rigorous standards that are already embodied in our law.
I cannot go further than that. We cannot carry on and on discussing consumer safety. We have to get on with our discussions of the Bill in question. I assure
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the noble Lord that the Government are fully apprised of the safety aspects and do everything they can to make sure that the public are protected. The Bill seeks to protect intellectual property and I ask the Committee to carry on its discussions on that basis.
Lord Mottistone: I return to Amendment No. 297, which I moved some time ago. I am afraid that I have forgotten what my noble friend said, but I am sure that it was as helpful as it possibly could be. I shall have pleasure in reading what he had to say. When one's amendment is hijacked for another subject which is not the subject of debate I find that that is pressing the rules of the Committee a little far. I hope that the noble Lord will think carefully before he carries out another hijack, if he feels inclined to do that. I thank my noble friend for what he said. I do not believe it was very helpful but I shall read his reply with care. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mottistone Lord Mottistone moved Amendment No. 298:
Page 107, leave out lines 23 to 28.
The noble Lord said: I seek here to delete subsection (4) because there is no good reason why a specialist part which has no necessary aesthetic quality should not receive protection as a registered design. It may be important to the customer that the part has a particular shape even though the shape has no special appeal to the eye. For example, over the weekend I was ordering new telephones. The telephones were primarily bought for function, but appearance did affect the purchaser. I should like to say that perhaps it affected my wife more than it did me. The question of colour was a factor though it is strictly a practical instrument.
This argument could also apply to scientific instruments. On the face of it, to those of us who are not scientists, that might seem to be a matter of no importance at all; but a scientific friend of mine tells me that it is important. He would like to consider the appearance of an instrument if he had that option. Another example is farm tractors. If a farmer has to choose between two tractors of identical performance and one happens to look nicer he might well buy the nicer looking one.
Subsection (4) operates against the philosophy of the Design Centre, to which I referred earlier in relation to another amendment, of which the leading light in my day was Lord Reilly. I would not expect him to be here now but I wish he was. Subsection (4) is impossibly subjective. It could be used to exclude from protection ideas which should not be so excluded. It is not reasonable and I hope that my noble friend will agree with the amendment. I beg to move.
Lord Morton of Shuna: I should like briefly to state my support for the noble Lord's amendment. It is very difficult to get a clear meaning from subsection (4). As to whether aesthetic considerations are taken into account to a material extent, the question of what is "a material extent" seems to me unanswerable. I suggest this is unnecessary,

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confusing and irrelevant and that it should be deleted.
Lord Beaverbrook: I regret that I cannot agree either with my noble friend or with the noble Lord, Lord Morton of Shuna.
The design right provisions in Clauses 192 to 242 were carefully constructed in order to ensure that functional designs get a balanced form of protection. The reason for this is that functional designs are used so widely that we must ensure that the protection given does not stifle competition. Where designs are chosen for functional reasons, for the job they do, it is important that they are not locked away for long periods. A vital part of this is to ensure that functional designs do not qualify for the longer and stronger protection given under the Registered Designs Act. This greater protection is appropriate only for articles chosen because of their aesthetic appearance, and in our view this Act was always intended to apply only to aesthetic designs of this kind. The wording of Section 1 of the 1949 Act is, however, open to a wider interpretation and it is essential that we close the back door, as it were, and prevent the designs of essentially functional articles qualifying for registration.
I hear the argument that it will be difficult to define whether certain designs have an aesthetic aspect but I do not think that this should cause a problem in practice. We shall study carefully what has been said on that small point and see whether we can tighten it up in some way. On the broader point of the amendment, our argument stands.
Lord Mottistone: I am grateful to my noble friend for agreeing to study what has been said. I hope that that may introduce a chink in the armour of the resistance he has expressed. I believe that we have a point and I hope that it will be taken up. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees: If Amendment No. 298A is agreed to, I shall not call Amendment No. 298AA.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 298A:
Page 107, leave out lines 31 to 39 and insert ("it is the same as a design—

(a) registered in respect of the same or any other article in pursuance of a prior application, or

(b) published in the United Kingdom in respect of the same or any other article before the date of the application,

or if it differs from such a design only in immaterial details or in features which are variants commonly used in the trade.").
The noble Lord said: With the leave of the Committee, I should like to speak to Amendments Nos. 298A and 298AA. The first of these is an amendment that I have tabled in order to correct a drafting error in the Bill. It concerns what would be the new subsection (5)(a) of Section 1 of the Registered Designs Act. Under the Registered Designs Act as amended by this clause, only "new" designs may be registered. The intention was and is that "new" should mean that something is different from what is already publicly known. However, as
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originally drafted, previous applications for registration would have been taken into account, whether or not they had been registered. This would include applications that are withdrawn and that are not made public. The amendment therefore limits the prior applications that are relevant to those which result in a design being registered and as a result automatically laid open to inspection. Of course any design applications which are not registered but where the design is in any event published will be caught by the second limb—paragraph (b)—which in substance is unchanged from the original draft.
If I may now turn to Amendment No. 298AA, that would mean that designs would still be regarded as "new" even if they differed from what is publicly known only in respect of features which are common variants used in the trade. The trade concerned is of course that in which the design in question would be used. So for example under the Bill, a piece of furniture which differed from a known piece of furniture only in that it had legs of a kind which were widely used in the furniture trade would not be novel. This test has been in day-to-day use since the 1949 Act came into force and has worked perfectly well. It seems to me to be quite right. Why should anyone have a monopoly simply by replacing a few features of a known design with variations commonly used in the trade? The Designs Registry has acquired considerable experience in applying this test and in our view it should remain. I beg to move.
On Question, amendment agreed to.
[Amendment No. 298AA not moved.]
Clause 243, as amended, agreed to.
Clause 244 [Provisions with respect to certain designs registered before commencement]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 298AB:
Page 108, line 5, leave out subsection (1).
The noble Lord said: This is a probing amendment, the purpose of which is to ask why it is thought necessary to have what is, in effect, retrospective legislation. We are here applying a time limit, which does not come into force, to a design that is registered in accordance with the law which is in force. It would therefore cut down the time allowed by the new Bill. Retrospective legislation is always questionable. The purpose of the amendment is to ask why the Government consider that this provision is appropriate rather than to have the Bill apply to designs registered after the Bill comes into effect. I beg to move.
Lord Beaverbrook: I shall speak to Amendment No. 298AB in the names of the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Morton of Shuna, and to Amendment No. 298B which stands in my name. Both amendments concern transitional provisions for the Registered Designs Act. Clause 243 would exclude from registration two categories of designs which have hitherto been registerable.
Given that certain categories of designs will in future be excluded from registration, it seems to us

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that it would be inappropriate to allow existing registrations of this kind to run on unchecked for up to 15 years after commencement. We must recognise that we cannot merely remove all the acquired rights of such registrations, but we feel that it is important to provide some form of transition. That is why the clause is in the Bill and why I would resist Amendment No. 298AB.
With regard to the details, our original intention was that such existing registrations would have continued to benefit from the monopoly protection provided by the registration for 10 years from commencement, subject to the earlier expiry of the 15-year term and to the design right licence provisions for the past five years of the 10-year period. In other words, these registrations would be protected in much the same way as if they were subject to the design right provisions in Part III of the Bill. However, the clause as drafted gave 10 years' protection from commencement even if the existing registration would have expired earlier. My Amendment No. 298B corrects this defect. Furthermore, the original draft did not apply the design right licence of right provisions in Clause 218 and did apply those in Clause 227—in both cases in error. The amendment also corrects these defects.
However, apart from that, Amendment No. 298B will impose the design right licence of right provisions from commencement rather than just in the second five years of the transitional period. Having reflected, we think that this is necessary to avoid giving continued monopoly protection to those existing registrations which would not in future be entitled to any protection. The licence of right provisions will give competitors immediate access, but the existing acquired rights will be recognised in that the licences will be subject to payment. I emphasise that these transitionals will only apply to existing registrations which would not be registrable in the future under this Bill. All other existing registrations will continue for the remainder of their term in the normal way.
In answer to the specific point made by the noble Lord, Lord Morton of Shuna, that this provision is a retrospective one, I say that I do not agree with that. It only affects acts done after the commencement of the new law. Admittedly, it represents a reduction in acquired rights; but this is always the case in transitional provisions of this kind. For those reasons, I would have to resist the amendment standing in the name of the noble Lord.
Lord Morton of Shuna: There is no point in dividing the House at this stage and I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.45 p.m.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 298B:
Page 108, line 10, leave out subsections (2) to (5) and insert—
("(2) The right in the registered design expires ten years after the commencement of this Part, if it does not expire earlier in accordance with the 1949 Act.
(3) After the commencement of this Part the following provisions of Part III (design right) apply to the right in the registered design as in relation to design right—

(a) sections 217 to 219 (availability of licences of right), and

(b) section 226 (application to comptroller to settle terms of licence of right);

and in section 217 as it applies by virtue of this section for the reference in subsection (1) to the last five years of the design right term there shall be substituted a reference to the whole of the period between the commencement of this Part and the expiry of the right.
(4) Where a licence of right is available by virtue of this section, a person to whom a licence was granted before the commencement of this Part may apply to the comptroller for an order adjusting the terms of that licence.
(5) The provisions of sections 228 to 231 (procedure and appeals) apply in relation to proceedings brought under or by virtue of this section as to proceedings under Part III.").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 244, as amended, agreed to.
Clause 245 [Authorship and first ownership of designs]:
[Amendments Nos. 298C and 299 not moved.]
Clause 245 agreed to.
Clause 246 [Right given by registration of design]:
[Amendment No. 300 not moved.]
Clause 246 agreed to.
[Amendment No. 301 not moved.]
Clause 247 [Duration of right in registered design]:
[Amendments Nos. 301A and 302 not moved.]
Clause 247 agreed to.
Clauses 248 and 249 agreed to.
Schedule 3 [Registered designs: minor and consequential amendments of 1949 Act]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 302A:
Page 140, line 8, after ("by") insert ("the person claiming to be").
The noble Lord said: This amendment corrects a drafting defect. As drafted the Bill states that:
"An application for the registration of a design in which design right subsists shall not be entertained unless made by the design right owner"
What this means is that if someone other than the design right owner applied for a registration the registration would be void. The result would be that the design right owner would not subsequently be able to obtain rectification of the register in his favour. This is clearly wrong and the amendment ensures that in these circumstances the registration will survive and can be claimed by the rightful owner. I beg to move.
On Question, amendment agreed to.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 302B:
Page 145, line 16 at end insert—
(Section 32: power of registrar to refuse to deal with certain agents
. Section 32 of the Registered Designs Act 1949 (power of registrar to refuse to deal with certain agents) is replealed.").
The noble Lord said: This amendment corrects an inconsistency in the drafting of the Bill. It will insert a new paragraph in Schedule 3 providing for the repeal of Section 32 of the Registered Designs Act. All the other repeals of provisions in the Registered Designs Act are provided for both in Schedule 3 and Schedule 7. The one exception is the repeal of Section 32, which is provided for only in Schedule 7. This amendment will achieve drafting consistency and make it easier for a person reading the Bill to establish which parts of the Registered Designs Act have been changed. I beg to move.
On Question, amendment agreed to.
Lord Beaverbrook Lord Beaverbrook moved Amendments Nos. 302C to 302F:
Page 145, line 28, leave out ("this Part") and insert ("Part IV").
Page 145, line 39, leave out ("this Part") and insert ("Part IV").
Page 146, line 8, leave out ("this Part") and insert ("Part IV").
Page 146, line 21, leave out ("this Part") and insert ("Part Iv").
The noble Lord said: For the convenience of the Committee I shall move Amendments Nos. 302C, 302D, 302E and 302F en bloc. These amendments are all the same and are intended to avoid any possibility of confusion by replacing the expression "this Part" with "Part IV" throughout Schedule 3. I beg to move.
On Question, amendments agreed to.
Schedule 3, as amended, agreed to.
Schedule 4 [The Registered Designs Act 1949 as amended]:
Lord Beaverbrook Lord Beaverbrook moved Amendments Nos. 302G and 302H:
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Page 149, line 13, leave out from ("registered") to ("features") in line 15 and insert ("if it—

(a) consists of a method or principle of construction, or

(b) includes").

Page 149, leave out lines 27 to 34 and insert ("it is the same as a design—

(a) registered in respect of the same or any other article in pursuance of a prior application, or

(b) published in the United Kingdom in respect of the same or any other article before the date of the application.

or if it differs from such a design only in immaterial details or in features which are variants commonly used in the trade.").
The noble Lord said: For the convenience of the Committee I shall move Amendments Nos. 302G and 302H and speak to Amendment No. 302J. As the Committee will know, Schedule 4 to the Bill sets out the text of the Registered Designs Act following the amendments made by the Bill. These amendments simply incorporate the text of amendments which I have tabled and which the Committee has already accepted. I beg to move.
On Question, amendments agreed to.
[Amendments Nos. 302HA and 302HB not moved.]
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 302J:
Page 150, line 23, after ("by") insert ("the person claiming to be").
On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Clause 250 [Persons permitted to carry on business of a patent agent]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 302JZA:
Page 111, line 4, leave out ("individual, partnership or body corporate") and insert ("registered patent agent in the United Kingdom, or solicitor holding a practising certificate in the United Kingdom, subject to any extension of such limitation as may be made by order of the Secretary of State in favour of any state which affords reciprocity of treatment").
The noble Lord said: At the request of the noble Lord, Lord Campbell of Alloway, I beg leave to move the amendment standing in his name on the Marshalled List. This amendment is supported by the Chartered Institute of Patent Agents. It is an amendment which is designed to leave out the words,
"individual, partnership or body corporate",
who may carry on the business of acting as a patent agent. Broady speaking, the words of the amendment are that the person should be a registered patent agent or a solicitor or:
"subject to any extension of such limitation as may be made by order of the Secretary of State in favour of any state which affords reciprocity".
The position of this Bill as this clause stands at the moment is that anybody, even somebody who has no knowledge or experience whatever, can apparently practise as a patent agent. Opening up the practice of patent agencies to anybody is, I submit, wrong for two reasons. First, it is wrong because the protection of inventions is a highly skilled and difficult

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operation. Also for the protection of the general public or the consumer of the patent system unqualified people should not be allowed to conduct this type of business. The Government have recognised the necessity to restrict conveyancing to qualified people and also to restrict the practice of giving financial advice.
It is difficult to understand how the liberty to give advice or to act for people in patent applications should be completely free. Also it appears unreasonable that nationals of other Community countries should be allowed to act as patent agents in the United Kingdom where reciprocal rights are not afforded to British nationals in other Community countries.
That is the basis of the amendment, and I beg to move.
The Earl of Dundee: The amendment goes to the heart of the Government's policy of opening up patent services to greater competition. In his report on patent agents published in 1986 the Director General of Fair Trading recommended the ending of the exclusive right which patent agents, together with solicitors, have to represent inventors. He concluded that the monopoly was having detrimental effects on the cost of the services of patent agents and many smaller firms and private inventors particularly were being deterred from seeking professional advice. The Government accepted the recommendation and Clause 250 is designed to allow any person, whether qualified or not, to carry on the business of acting for patent applicants.
Before taking that decision we considered carefully the arguments on both sides and the points put to us by the Chartered Institute of Patent Agents. We are aware that the drafting of patent applications is a complex business, calling for considerable skills, and that a badly drafted application can lead to the loss of valuable rights. But it is for that reason that we are anxious to improve the availability of services to small inventors who are most in need of professional advice. Increased competition should encourage less expensive, better services, and we would expect qualified patent agents to continue to play a major part in those.
It is because we recognised the need to preserve the distinct identity and international reputation of the qualified profession that we are retaining the register of patent agents and the prohibition on those not on the register from using the title "patent agent". That means that any client will know with whom he is dealing.
There has also been concern, as the noble Lord, Lord Morton, pointed out, that foreign patent agents would enter the market without reciprocal access for United Kingdom patent agents, leading to a loss of business for the UK profession. The advantages of competition can be expected to outweigh any such losses. But in practice we expect UK patent agents to be able to hold their own against such competition. That has already been seen in work on European patents, on which they are already in competition with patent attorneys from other members of the
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European Patents Convention and from which are estimated to come two-thirds of foreign earnings of £30 million a year.
Lord Morton of Shuna: I have listened to the reply which has been read out by the noble Earl and I must say that I found it wholly unconvincing. It seems to me that if anything needs skilled advice it is a patent application. The idea of any Tom, Dick or Harry coming in and holding himself out as someone who is able to give advice and presumably charge a fee for a patent application seems entirely daft. However, as the amendment is in the name of the noble Lord, Lord Campbell of Alloway, I shall leave it to him to read what has been said and perhaps take the opportunity to come back to the matter later if he so desires. I therefore ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 250 agreed to.
10 p.m.
Clause 251 [The register of patent agents]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 302JA:
Page 111, leave out lines 28 and 29 and insert ("and such rules shall not be made unless a draft of them has been laid before Parliament and approved by resolution of each House.").
The noble Lord said: This is an oft repeated amendment which keeps coming before your Lordships' Committee. It merely suggests that the rules under this particular section relating to a register of those who act as agents for others in applying for or obtaining patents should be subject to positive approval by each House and not subject to negative resolution. I beg to move.
The Earl of Dundee: With the leave of the Committee I shall also speak to Amendments Nos. 302YA, 302EEA and 302JJA as they also concern the procedure to be followed when rules are made under the Bill.
The amendments seek to alter the provisions in the Bill for making rules concerned with the regulation and practice of patent agents and trade mark agents. They would change the rule-making procedure from negative resolution to one of affirmative resolution of each House of Parliament, as the noble Lord, Lord Morton of Shuna, has just explained.
This Bill contains a lot of provisions conferring order and rule-making powers. In most cases the negative resolution procedure is provided for. The only exceptions to this are where major issues are likely to arise. One example is Clause 217, which permits the making of an order which would exclude certain designs or designs applied to certain articles from licences of right under Part II of the Bill. The amendments that we are considering do not, however, involve rule-making of this character.
Perhaps I may refer first to Amendments Nos. 302JA and 302EEA, which concern the registers of patent agents and trade mark agents. The rules would require the keeping of the registers and contain provisions regulating the registration of persons and

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the suspension and erasure of registrations. The keeping of the register and other regulatory matters may be subdelegated.
Although the register of trade mark agents will be new, the register of patent agents has existed for many years and rules relating to the register are currently subject to the negative resolution procedure. It may be that some Members of the Committee are rather uneasy about the power to subdelegate to any person. In fact at present the keeping of the patent agents' register is delegated to the Chartered Institute of Patent Agents and we see no reason why that should not continue, with a similar arrangement for the register of trade mark agents, responsibility for which could be delegated to their institute, which is the Institute of Trade Mark Agents.
However, we feel it would be undesirable for the statute to identify specifically to whom the keeping of the register may be delegated as this would be too restrictive. I trust that the Committee will be content to leave it to the Secretary of State to use his powers wisely in nominating the registration authority, but in any case it its always open to either House to debate the rules once they are laid, and, if necessary, reject them.
I shall now refer briefly to Amendments Nos. 302YA and 302JJA, which apply to Clauses 254 and 260. These clauses permit the making of rules governing mixed practices involving registered patent agents and trade mark agents and others.
Mixed practices involving patent agents are not permitted at present so there are no existing equivalent rules. Even so, we do not believe that there is any reason why the negative resolution procedure should not be the one to be adopted. It is made clear in the Bill what matters the rules may deal with; they are to prescribe the conditions which must be satisfied before a mixed partnership or body corporate is entitled to use the title "patent agent" or "trade mark agent", as the case may be.
There is no need to compel the spending of valuable parliamentary time on the details of the day-to-day running of patent agents' and trade mark agents' businesses. The statutory framework laid down in these clauses gives only limited leeway within which the rules may be drafted. As I have already said, there is the possibility, if it is felt necessary, for either House of Parliament to debate the rules when they are laid. For those reasons perhaps the noble Lord will agree to withdraw the amendment.
Lord Tordoff: Perhaps I may interject a word at this stage. The assurance that these matters can be debated on either a negative or an affirmative resolution has very little meaning for Members of this Chamber. We are constantly told from the Government Front Bench that when secondary legislation is introduced it can be debated by Parliament. The truth is that with a large government majority in the other place, and with the inability of this Chamber either to amend or to vote against an instrument—whether it be affirmative or negative—those words are totally meaningless. Some of us are becoming very tired of the Government hiding behind secondary legislation in this way.
Lord Morton of Shuna: That was a very interesting and apposite comment from the noble Lord, Lord Tordoff. But this is perhaps not the time, the place or the occasion on which to have a lengthy discussion on whether we should or should not be able to amend secondary legislation.
I should apologise to the Members of the Committee for not having mentioned Amendments Nos. 302YA, 302EEA and 302JA. I accept that they were in the grouping. I apologise for not having mentioned them. On the understanding that we may return to this matter at a later stage, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 251 agreed to.
Clause 252 [Persons entitled to describe themselves as patent agents]:
Lord Tordoff Lord Tordoff moved Amendment No. 302K:
Page Ill, line 33, leave out ("or "patent attorney" ").
The noble Lord said: I believe that it would be for the convenience of the Committee if with Amendment No. 302K we took Amendments Nos. 302M, 302P, 302R, 302T and 302EE. I understand from my noble friend Lord Lloyd of Kilgerran that a number of solicitors dealing with intellectual property matters have advised him that the use of the word "attorney" to describe patent agents is confusing, in particular to foreign lawyers and to industrialists. It gives the impression that chartered patents agents can deal with all questions of law whereas patent agents are limited by charter to deal with specialised aspects of patenting jurisprudence.
I have to hand a letter from a firm called Bristows, Cooke and Carpmael, who are perfectly willing that it should be quoted in the Chamber. A Mr. Simon Cooke writes:
"On several occasions I have had clients in my office who were annoyed because they had been led to believe that they had been advised by lawyers when in fact they had been advised by Patent Agents. The difficulty arises out of the difference in language between the United States and the United Kingdom. In the United States 'attorney' essentially means a lawyer and a qualified one at that".
The amendment is therefore designed to leave out "or 'patent attorney'" to clarify this matter for those people who are confused. I beg to move.
The Earl of Dundee: With the leave of the Committee, I too shall address myself to Amendments Nos. 302M, 302P, 302R, 302T and 302EE. We do not think that these amendments are necessary and, indeed, they would not have the effect that I believe the noble Lord intends.
Clause 252 is structured in such a way that persons who are not on the register of patent agents must not use the titles "patent agent" or "patent attorney". It is deliberately not framed as a positive permission for registered persons to use those titles, and it does not therefore override any other restrictions, for example on the use of the title "attorney". In other words, if a person is not otherwise entitled to use the title "attorney", Clause 252 would not give him the right to the title "patent attorney".

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Furthermore, the proposed amendments would not in any case prevent any extra categories of people from using the title "patent attorney". On the contrary, the amendments would mean that use of the title by any person, whether registered or not, would not contravene the clause. That is a subtle point I know; but I assure the Committee that it is not our intention to alter any existing rights to, or restrictions on, the use of the word "attorney".
This brings me to a point about the title "European Patent Attorney". The noble Lord appears to be seeking, by means of amendment to Clause 258, to remove the right to this title, which has belonged to those qualified to appear before the European Patent Office since it opened its doors nearly 10 years ago. The title has been in general use by members of the European patent profession for all of that time and it would, in my view, be totally wrong to change that now. The title was agreed originally in order that United Kingdom based practitioners could compete on equal terms with their Continental counterparts who are free to use the title. The same argument still holds good today. Indeed, the argument is made stronger by the reputation and good will that have been built up by the profession and which are intimately associated with the use of the title.
Lord Lloyd of Kilgerran: I am glad to agree with the Minister, in so far as he is directing his attention to Clause 258 and my Amendment No. 302EE. I do not quite understand his argument in relation to the other general amendments in my name arising out of the confusion that has been expressed by eminent patent solicitors from the use of the word "attorney" in relation to patent agents. Before I put down these amendments, I informed the president of the Chartered Institute of Patent Agents that I was doing so. When I spoke to him personally he did not raise any very serious objection, in so far as the word "attorney" should not be used other than in the term "European patent attorney". I may be wrong about all this, but that is the present position.
I wonder therefore, having regard to the further amendments put down by the Government which seem to interlace with my amendments, whether this is not a matter that the Government might reconsider.
The Deputy Chairman of Committees (Lord Renton): Does the noble Lord wish to withdraw the amendment?
Lord Tordoff: I was hoping that the Minister would respond to my noble friend.
The Earl of Dundee: The position in relation to the noble Lord's first set of amendments is that if the reference to the patent attorney is there then Clause 252 can be contravened. If it is not there then it cannot be contravened.
Lord Tordoff: I suspect that the Minister has as clear an understanding of this matter as I have myself. We both have our advisers to whom we shall refer. Perhaps we shall return to this matter at the
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next stage of the Bill. It seems to me, very much as a layman on this subject, that clearly a number of people are becoming embarrassed by the fact that people from overseas, especially those from the Americas, have a totally different understanding of the meaning of these words. If that is the case perhaps we should be wise to reconsider the problem. However, if the Government are not prepared to do so perhaps we should read what has been said and come back at a later stage.
The noble and learned Lord the Lord Chancellor was raising his eyebrows once or twice during the debate, but perhaps that is a standard condition! While the noble Earl takes further instruction on this matter, before I withdraw the amendment I should perhaps ask him whether he has anything more to say.
The Earl of Dundee: I have been able to reconsider the position since the noble Lord was speaking. I should say that I always had sympathy with the noble Lord's point about the confusion which the term "attorney" gives rise to, not least in the United States and certainly in Europe. I am happy to give the matter further consideration.
Lord Tordoff: I am most grateful to the noble Earl. I think that is the most that we can possibly ask on this occasion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.15 p.m.
The Earl of Dundee The Earl of Dundee moved Amendment No. 302L:
Page 111, line 34, leave out paragraph (b) and insert—
("(b) in the course of a business otherwise describe himself, or permit himself to be described, as a "patent agent" or "patent attorney"."
The noble Earl said: With the leave of the Committee, I shall speak also to Amendments Nos. 302N and 302Q. Those amendments are intended to have identical effects in the three subsections of Clause 252 that deal respectively with individuals, partnerships, and bodies corporate.
Clause 252 deals with the use of the titles "patent agent" and "patent attorney". It is the Government's intention that even though practice as a patent agent will be open to all, the use of these titles will be reserved to those on the register established under Clause 251. People wishing to offer patent agency services who are not registered patent agents will need to use some other descriptive term such as "patent adviser" or "consultant".
The reason for this decision is that the profession has been regulated for many years and the term "patent agent", although in one sense purely descriptive, has come to be strongly associated with qualified practitioners. In the absence of any specific provision to protect the title, unqualified practitioners would undoubtedly use it with resulting confusion to the public.
Special provisions also need to be made for partnerships and companies practising as patent agents. Until now partnerships and companies have only been allowed to practise as patent agents if they

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were 100 per cent. controlled by qualified patent agents. However, under the provisions of Clause 252, mixed partnerships and companies in which not all the partners or directors are patent agents will be allowed to describe themselves as "patent agents" provided that they meet the conditions prescribed in rules made under Clause 254. In this way, firms may be formed which can offer under one roof the full range of services required by inventors.
The existing wording of subsections (1)(b), (2)(b) and (3)(b) is of somewhat broad scope. It would arguably make any unauthorised use of the reserved titles a criminal offence, for example a young man pretending to be a patent agent in order to impress a young woman at a party. That is certainly not the Government's intention. The amendments will ensure that only unauthorised use of the titles in the course of business will be prohibited.
The amendments also deal with a separate point on which the scope of the clause as drafted is not clear. It is arguable that the form of words used in each paragraph goes further than just prohibiting the unauthorised use of the title. "Holding oneself out as a patent agent" could be interpreted as including anything done which conveys to the public the fact that the person concerned offers patent drafting and other services. If the unqualified were prohibited from doing any such thing the whole philosophy of abolishing the patent agents' exclusive right of representation would then be defeated. The amendments, by removal of the words, "holds [himself] out", by specific mention of each reserved title, and by the use of quotation marks, make it clear that it is only the use of the words as such that is to be restricted. I beg to move.
Lord Lloyd of Kilgerran: I support what the Minister said in regard to the amendment when he referred to the use of the words:
"in the course of a business otherwise describe himself, or permit himself to be described, as a 'patent agent' ".
Having regard to the discussion in respect of previous amendments tabled in my name, I do not accept that the words "patent attorney" would be suitable in circumstances except those in the European field. Therefore, as the Minister has been kind enough to say that he will reconsider the position arising from my amendment, which proposes the omission of the words "patent attorney", perhaps he would like to reconsider both these amendments in relation to those words.
I did not understand his reference to the fact that there may be some lady who may be impressed by the use of the name "patent attorney". However, if he wishes to elaborate on that useful support to his argument I will gladly give way. I agree with the amendments, but I do not agree with the inclusion of the words "patent attorney", in view of the arguments that were put to him in relation to the amendments tabled in my name.
The Earl of Dundee: I take note of what the noble Lord has said. In regard to his reference to the use of the words "patent attorney" in this context, I should like to point out that if a qualified patent agent is also practising in Europe he can describe himself as a
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patent attorney. The word "attorney" also gives rise to confusion and I have already indicated that I will be happy to look at that matter—
Lord Lloyd of Kilgerran: I am sorry to intervene, but the title is "European patent attorney" and not "patent attorney" per se. The term "European patent attorney" has been accepted by the solicitors but not the words "patent attorney" by themselves.
The Earl of Dundee: I take the noble Lord's point on the distinction between the words "European patent attorney" and "patent attorney" and I shall look at the matter again.
On Question, amendment agreed to.
[Amendment No. 302M not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 302N:
Page 111, line 39, leave out paragraph (b) and insert—
("(b) in the course of a business otherwise describe itself, or permit itself to be described as, a firm of "patent agents" or "patent attornies",").
On Question, amendment agreed to.
[Amendment No. 302P not moved.]
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 302Q:
Page 112, line 5, leave out paragraph (b) and insert—
("(b) in the course of a business otherwise describe itself, or permit itself to be described as, a "patent agent" or "patent attorney",").
On Question, amendment agreed to.
[Amendment No. 302R not moved.]
The Deputy Chairman (Lord Renton): In calling Amendment No. 302S I should like to point out that if this amendment is agreed to I cannot call Amendment No. 302T.
The Earl of Dundee The Earl of Dundee moved Amendment No. 302S:
Page 112, line 17, leave out from ("in") to end of line 23 and insert ("the circumstances specified in section (Persons entitled to describe themselves as European patent attornies).").
The noble Earl said: With the leave of the Committee I shall speak also to Amendments Nos. 302U, 302V, 302X, 302Y, 302AA, 302BB and 302DD, as well as to the Question, That Clause 253 stand part of the Bill. The new clause to be inserted is intended to replace the existing Clause 253, and the amendments to Clauses 252, 254, 255 and 256 are merely consequential on that change.
I shall begin by saying a few words about what Clause 253 was intended to achieve and I shall then go on to discuss the proposed new clause. Practice as a European patent attorney is governed by the provisions of the European Patent Convention. This provides that only qualified persons (that is to say, persons on the so-called European list) may be heard on behalf of applicants to the European Patent Office. Nothing that is being done in this Bill in respect of United Kingdom patent agents can affect that basic provision.
At present UK law, by virtue of Section 84 of the Patents Act 1977, lays down criminal penalties for unauthorised practice as a European Patent Attorney

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and use of the title. These correspond to the penalties under the current law for unauthorised practice as a "patent agent" and use of the title. As I have said, the European Patent Convention prevents unqualified persons from practising as European patent attorneys. There is therefore no need to provide in UK law for such practice to be an offence and we are proposing to repeal Section 84 of the 1977 Act.
However, for the protection of the public, we thought it appropriate to restrict the use of the titles "European Patent Attorney" and "European Patent Agent" and this is what Clause 253 was designed to do. The clause sought to create new protected titles "European Patent Attorney" and "European Patent Agent", the use of which would be restricted to those qualified to act before the European Patent Office.
We now appreciate, however, that Clause 253, in its present form, is defective. Other provisions of this Bill will permit the formation of "mixed practices" of patent agents and non-patent agents and it is in relation to these that the problem arises. The problem is this. If a partnership includes one or more European Patent Attorneys as well as other partners who are not qualified as such, although the qualified person or people will be perfectly able to practise as individuals before the European Patent Office, the effect of Clause 253 would be that the partnership would not be able to describe itself as "European Patent Attorneys" or even hold itself out as able to take on European Patent work.
This would totally frustrate the objective of encouraging mixed practices. European work is of increasing importance to patent agents, and a firm would be unlikely to sacrifice the right to advertise its ability to handle this work for the sake of allowing non-patent practitioners to join it.
The approach adopted in the new clause which is to replace Clause 253 is simpler. Instead of creating a specific offence of mis-use of a reserved title, it is structured as a derogation from the prohibition in Clause 252 of unauthorised use of the terms "patent agent" and "patent attorney". The new clause provides that Clause 252 is not contravened by the use of the terms "European Patent Attorney" and "European Patent Agent" by individuals on the European list and partnerships or companies including not less than a certain number or proportion of partners or directors on the European list. The number or proportion is to be prescribed in rules made under Clause 254.
Lord Lloyd of Kilgerran: I understand the Minister is saying that after further consideration the Government have considered that Clause 253 of this Bill titled,
"Persons entitled to describe themselves as European patent attornies",
is defective and therefore they have produced Amendment No. 302U to replace Clause 253. I understand that quite clearly and I am instructed by patent solicitors that they agreed some years ago that the phrase "European Patent Attorney" would not be objected to. However, if I may presume to refer again to Clause 252, it is headed:
"Persons entitled to describe themselves as patent agents".
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Therefore, what I say—and I hope I do not repeat myself—is that the only use of the word "attorney" should be in relation to the words "European Patent Attorney" under the new Clause 253. Otherwise, I accept the new Clause 253 in Amendment No. 302U.
I did not quite understand, and it is entirely my fault, what the Minister said when he referred to the fact that a certain section of the Patents Act 1977 was somehow going to be eliminated. Will he be good enough to let me know the number of that section, because I missed it? Was he referring to Section 123? What was the section of the Patents Act 1977 that he had eliminated? I was not aware of it and it is entirely my fault.
The Earl of Dundee: I think I can help the noble Lord by referring him to Section 84 of the 1977 Act, which it is our intention to repeal.
Lord Lloyd of Kilgerran: I am very much obliged. Thank you very much.
On Question, amendment agreed to.
[Amendment No. 302T not moved.]
Clause 252, as amended, agreed to.
10.30 p.m.
The Earl of Dundee The Earl of Dundee moved Amendment No. 302U:
After Clause 252, insert the following new clause:
("Persons entitled to describe themselves as European patent attornies, &c.
.—(1) The term "European patent attorney" or "European patent agent" may be used in the following cases without any contravention of section 252.
(2) An individual who is on the European list may—

(a) carry on a business under a name or other description which contains the words "European patent attorney" or "European patent agent"; or

(b) in the course of a business otherwise describe himself, or permit himself to be described, as a "European patent attorney" or "European patent agent".

(3) A partnership of which not less than the prescribed number or proportion of partners is on the European list may—

(a) carry on a business under a name or other description which contains the words "European patent attornies" or "European patent agents"; or

(b) in the course of a business otherwise describe itself, or permit itself to be described, as a firm which carries on the business of a "European patent attorney" or "European patent agent".

(4) A body corporate of which not less than the prescribed number or proportion of directors is on the European list may—

(a) carry on a business under a name or other description which contains the words "European patent attorney" or "European patent agent"; or

(b) in the course of a business otherwise describe itself, or permit itself to be described, as a company which carries on the business of a "European patent attorney" or "European patent agent".").

On Question, amendment agreed to.
Clause 253 negatived.
Clause 254 [Power to prescribe conditions, &c. for mixed partnerships and bodies corporate]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 302V:
Page 113, line 12, leave out ("or 253") and insert ("(persons entitled to describe themselves as patent agents)").
The noble Earl said: I have already spoken to this amendment and I beg to move.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 302W, 302X and 302Y:
Page 113, line 18, leave out ("impose") and insert ("prescribe").
Page 113, line 31, at end insert—
("(3A) The Secretary of State may make rules prescribing for the purposes of section (Persons entitled to describe themselves as European patent attornies) the number or proportion of partners of a partnership or directors of a body corporate who must be qualified persons in order for the partnership or body to take advantage of that section.").
Page 113, line 32, leave out from first ("person") to end of line 33 and insert—

("(a) in subsections (1) and (2), means a person who is a registered patent agent, and

(b) in subsection (3A), means a person who is on the European list.").

On Question, amendments agreed to.
[Amendment No. 302YA not moved.]
Clause 254, as amended, agreed to.
Clause 255 [Privilege for communications with patent agents]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 302Z:
Page 113, line 37, leave out ("to which this section applies") and insert ("with respect to any matter relating to the protection of inventions, designs or technical information, or the protection of trade marks or service marks,").
The noble Earl said: With the leave of the Committee, I should like to speak to Amendments Nos. 302Z and 302CC together. As will be apparent, they are very much interconnected.
Clause 255 relates to privilege for communications with registered patent agents. It extends the privilege, which presently covers patent proceedings only, to other matters in which patent agents have expertise. These matters are currently listed in subsection (3) of the clause.
There is, however, a lacuna in the list of topics covered. This can best be explained by an example. Suppose a client goes to a patent agent. He may think he has made an invention, but the important thing is that he has technical information which he wishes to protect. The agent may quite legitimately advise that applying for a patent is not the best way of protecting the client's interests and that he should rely rather on the law of confidentiality—in other words "trade secrets" or "know-how".
Depending on the circumstances, such advice may not be included in the scope of the existing wording of Clause 255(3), which would lead to the result that it would not be clear in advance what communications were going to be privileged. That may well be unavoidable in some situations where the initial problem on which advice is sought is on the edge of the patent agent's field of expertise, but it is obviously undesirable in the context of something so fundamental to a patent agent's work as the protection of an invention. The amendment therefore substitutes for patents in the list of topics covered by privilege the protection of inventions and it adds technical information. The latter has been introduced to make sure that information which falls short of the standard of inventiveness necessary to support a patent application is still included. This is important because a client may well not appreciate that
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commercially valuable technical information does not amount to an invention until he has consulted a patent agent.
The moving of the list of topics covered from subsection (3) to subsection (1) and other changes to the wording used is primarily to improve the presentation of the clause and is not intended to have any effect on the scope.
One obvious change is that the word "copyright" no longer appears in the list. I should like to emphasise, however, that this does not mean that we have changed our minds about the degree to which patent agents are qualified to advise on copyright matters. Patent agents must have a considerable depth of knowledge about certain aspects of the subject, primarily arising from their work in advising on the protection of inventions, designs and trade and service marks.
One clear example would be that of a client trying to defend his interests against a competitor who is passing off his goods as those of the client. It would be essential for the advice given to cover all the possible courses of action. This may well include action for breach of copyright in packaging or labels as well as straightforward trade mark, design or patent infringement. Another example would be in the interaction between copyright, designs and patent laws as they relate to functional and aesthetic articles. Significant changes are being made to this area in this very Bill.
So we clearly accept that patent agents can and do give competent advice on certain aspects of copyright. However, the wording adopted no longer makes it necessary for copyright to be specifically mentioned. The examples I have just mentioned would all fall within the definition of,
"any matter relating to the protection of inventions, designs, technical information and trade or service marks".
Questions of pure copyright would not, of course, be covered but such matters are generally acknowledged as falling outside the normal range of expertise of patent agents. I beg to move.
Lord Lloyd of Kilgerran: I welcome any attempt that has been made to grant privilege to the patent agents who have to deal with intellectual property matters wider than pure patents.
Amendment No. 302Z, in addition to technical innovation, designs and protection of inventions, deals specifically with the protection of trade marks. The Minister did not emphasise that trade marks were included. In fact when he was referring to this amendment he left out the words "trade marks", although later he did bring in those words.
In view of the desire of the Government to introduce an amendment involving trade marks, with the leave of the Committee I must presume to refer to my proposed amendment in the Title of the Bill, No. 317, and also perhaps refer to Amendment No. 315A. Trade marks are referred to in a number of clauses of this Bill. Clause 259 refers to trade marks; Clause 260 refers to trade marks and the trade marks register. Clause 264 and also Clause 270(4) refer to intellectual property, which includes trade marks.

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I have to declare an interest at this stage. I am an honorary associate of the Institute of Trade Mark Agents. Therefore I feel that the Title of the Bill should include the words "trade marks". So often trade marks are overlooked, even by great industrialists in this country, and are wrongly equated with patents. I am glad to see the noble Lord, Lord Williams of Elvel, nodding his head in support. At this stage I should just like to bring to the notice of the Committee the fact that I have asked for a modification of the Title of this Bill to include the words "trade marks".
I shall not waste the time of the Committee on Amendment No. 315A, because that is an attempt to get rid of a provision of the Trade Marks Act of 1938, Section 28(6), which deals with the trafficking in trade marks. I am sure that the noble and learned Lord the Lord Chancellor will forgive me if I quote the words of the noble and learned Lord, Lord Bridges, in a recent case reported in 1984, Volume 1, All England Law Reports, page 428, which is the case of Holly Hobbie. In America character merchandising is well known and successful, but a great deal of the 1938 Act was drafted by a late uncle of my wife, Mr. Cox, and he told me about introducing this cautious Section 28(6) to avoid trafficking in trade marks.
The noble and learned Lord, Lord Bridges, said about this section:
"This section has become a complete anachronism, and the sooner it is repealed the better".
In view of those recent words of the noble and learned Lord, I felt that I ought to include such an amendment in this Bill. I realise that there has been correspondence about this matter with the Secretary of State for Trade and Industry and he takes the view that it is not appropriate to make this kind of amendment in the Bill because of the wider implication perhaps of trade marks which might arise. But I felt it my duty, as the noble and learned Lord, Lord Bridges, says that this is now a complete anachronism and the sooner it is repealed the better, to bring the amendment forward.
Character merchandising is an important matter for competition in this country. It is very successful in the United States, and by leaving this subsection of Section 28 of the Trade Marks Act in we are just giving rise to more litigation without helping competition, as this Government wish.
The Earl of Dundee: I am grateful to the noble Lord. If he will allow us to do so, I think perhaps the best thing to do is to consider Amendments Nos. 315A and 317 in Schedule 7 and the Title when we get there in a moment or two.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 302AA, 302BB and 302CC:
Page 113, line 40, at end insert ("or as a firm carrying on the business of a European patent attorney").
Page 113, line 42, at end insert ("as a company carrying on the business of a").
Page 114, line 6, leave out subsection (3).
The noble Earl said: I beg to move Amendments Nos. 302AA, 302BB and 302CC en bloc.
On Question, amendments agreed to.
Clause 255, as amended, agreed to.
Clause 256 [Power of comptroller to refuse to deal with certain agents]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 302DD:
Page 114, line 21, leave out ("or 253").
On Question, amendment agreed to.
Clause 256, as amended, agreed to.
Clause 257 agreed to.
Clause 258 [Effect of enactments relating to preparation of documents, &c.]:
[Amendment No. 302EE not moved.]
Clause 258 agreed to.
Clause 259 [The register of trade mark agents]:
[Amendment No. 302EEA not moved.]
Clause 259 agreed to.
Clause 260 [Unregistered persons not to be described as registered trade mark agents]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 302FF:
Page 116, line 13, after ("(b)") insert ("in the course of a business").
The noble Earl said: With the leave of the Committee I should like to address Amendments Nos. 302FF, 302GG and 302HH. Clause 260 creates offences of falsely claiming to be a registered trade mark agent and the three amendments in question relate to the three subsections dealing respectively with individuals, partnerships and bodies corporate.
Paragraphs (a) of each of subsections (1), (2) and (3) relate to the use of the actual words "registered trade mark agent" in the carrying on of a business. Paragraph (b) of each of the subsections relates to any other form of description which is suggestive of being a registered trade mark agent. In these cases, however, there is no limitation to use in the course of business. We now recognise that this is too broad. For example, and as I explained a moment ago in the context of the previous amendment, it would catch a totally inconsequential remark made by a person in a social context. These amendments are equivalent to those which the Committee earlier agreed to make to Clause 252 in respect of patent agents.
The amendments proposed will make each paragraph (b) consistent with paragraph (a) by limiting the scope of the offence to descriptions made in the course of business. I beg to move.
10.45 p.m.
Lord Lloyd of Kilgerran: The only matter I have been asked to raise is the position of an individual trade mark agent. Sometimes an individual acts as a trade mark agent. Would that be considered to be an operation in the course of a business? I wanted to

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raise that matter in order to get it clarified. I refer to the position of an individual acting as a trade mark agent.
The Earl of Dundee: Yes, the noble Lord is correct.
Lord Lloyd of Kilgerran: Thank you.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 302GG and 302HH:
Page 116, line 18, after ("(b)") insert ("in the course of a business").
Page 116, line 27, after ("(b)") insert ("in the course of a business").
On Question, amendments agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 302JJ:
Page 116, line 36, leave out ("impose requirements") and insert ("prescribe conditions").
On Question, amendment agreed to.
[Amendment No. 302 JJA not moved.]
Clause 260, as amended, agreed to.
Clause 261 agreed to.
Clause 262 [Offences committed by partnerships and bodies corporate]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 302JJ B:
Page 117, line 36, leave out (", secretary or other similar officer") and insert ("or secretary").
The noble Lord said: In moving this amendment, with the leave of the Committee, I shall also speak to Amendments Nos. 302JJC and 312F.
Lord Mottistone: I am proposing to take Amendments Nos. 312A to 312N together but quite separately. Therefore, let us forget Amendment No. 312F in this category.
Lord Williams of Elvel: I shall happily forget Amendment No. 312F.
We are dealing here with offences committed by a body corporate. I have problems with the wording of subsection (5). The amendments address themselves to this problem. The first amendment seeks to delete "other similar officer" of the body. I have no idea what that could possibly mean. I can understand what a director of a company is. I can understand what a secretary of a company is. Those are formal positions. However, I do not know what "other similar officer" means. If the noble Earl can give me a satisfactory reply, I shall be happy to withdraw the amendment. I do not understand what it means. Does it mean a finance manager or a bottle washer? What is a similar officer?
Amendment No. 302JJC is somewhat more important. It is more substantial. It seeks to delete the expression,
"or any person purporting to act in such a capacity".
I do not know how a person can purport to act in the capacity of a director or secretary if he is not a director or secretary. I do not see why a body corporate should be guilty of an offence if the person purporting to act, quite falsely presumably because that is the meaning of the word purporting, commits
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an offence. I do not think that the wording of the clause is quite as the Government would wish. I beg to move.
Lord Mottistone: I have been persuaded to speak to Amendment No. 312F at this stage. I do not have much to say about the amendment. It is designed to avoid a loophole by means of which a defendant may seek to evade liability on the grounds that he is a manager and not a director. This would bring subsection (4) into line with similar provisions in existing statutes—for example, Section 20(1) of the Trade Descriptions Act.
The Earl of Dundee: I am grateful to my noble friend Lord Mottistone and to the noble Lord, Lord Williams of Elvel. The amendments deserve an explanation. With the leave of the Committee I shall speak to Amendments Nos. 302JJB, 302JJC and 312F together, as they all relate to virtually identical provisions to be found in Clauses 262 and 272.
The effect of these provisions is that, where a body corporate has committed an offence, certain individuals connected with the body who have consented to, or connived at, the offence are also guilty of it. Equivalent provisions occur in numerous statutes and serve a useful purpose in discouraging those running companies from procuring them to commit certain criminal offences. However, such provisions usually provide for the liability of "any director, manager, secretary or other similar officer", while the provisions in the Bill omit any specific reference to "managers".
The term "manager" is a relic from earlier years when the organisational structure of companies tended to be different from what it is today. It was once common for the board of directors of a company to delegate the running of the business of the company to a "manager", who would not himself have a seat on the board. However, in most modern companies the person or persons responsible for running the business of the company are likely to have been appointed to the board of directors. As a result, in most cases a person who falls within the term "manager" will anyway fall within a provision of the type under discussion by virtue of being a director.
It was, therefore, our initial view that the term "manager" should be omitted from the provisions in the Bill on the ground that it was otiose. However, on reflection, we feel that in the unusual situation where a company has an old-style manager who has not been appointed to the board it is appropriate that he should fall within the ambit of these provisions. We will therefore be making the appropriate amendments to Clause 262 and to Clauses 101, 182 and paragraph 23 of Schedule 3, which contain equivalent provisions. My noble friend Lord Cullen of Ashbourne has already tabled the necessary amendment to Clause 272 and I hope that when we arrive at Amendment No. 312F he will move it so that we can accept it.
I should now like to turn specifically to the amendments tabled by the noble Lords, Lord Williams of Elvel and Lord Morton of Shuna.

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Amendment No. 302JJB would have the effect of deleting the words "or other similar officer" from Clause 262(5). In the case of a company incorporated under the Companies Act, we do not think that the amendment would have any effect. The Companies Act 1985 provides that every company must have at least one director and a secretary and that the term "director" includes,
"any person occupying the position of director by whatever name called".
Thus, those responsible for running such a company will almost inevitably be covered by the terms "director" or "secretary". Bearing in mind the principle that a provision in a statute which imposes a penalty must be construed strictly, it is unlikely that anyone would fall within the words "or other similar officer".
However, Clause 262(5) covers not only companies incorporated under the Companies Acts but "bodies corporate" in general. This term covers a wide range of bodies, including statutory corporations, companies incorporated by charter and industrial and provident societies. Such bodies may be run by persons with titles other than "director" or "secretary" and the words "or other similar officer" are intended to ensure that they fall within the provisions of Clause 262.
Amendment No. 302JJC would delete from subsection (5) the words,
"or a person purporting to act in any such capacity".
This is standard wording for provisions of the type under discussion, and we believe that it was originally drafted in response to a case in which a defendant, who had been acting as a director, had escaped liability by establishing that his appointment as such was invalid. We think that it is right that such a person should fall within the ambit of Clause 262.
Lord Williams of Elvel: I am most grateful to the noble Earl for his response. I think I start to understand why "or other similar officer" is included in the clause. It is clear that there are bodies corporate that are not incorporated under the Companies Act. As the noble Earl said, although this would have limited effect under the Companies Act, it may be that friendly societies or provident societies have officers who are similar to director or secretary.
However, I find the wording a little odd. It took the Minister's response to convince me, as a layman, that there is some sense in it. I am always troubled when, as a layman, I cannot immediately understand the wording of a Bill. But, nevertheless, I accept what the noble Earl has said, and it is now on the record.
I am more worried about the problem of,
"a person purporting to act in any such capacity".
I am sure that the noble Earl will understand that a body corporate, however incorporated, should not be responsible for offences committed by someone who, for no reason, pretends to be a director, secretary or a senior officer. For instance, if the noble Earl were to pretend, or purport, to be a director of
XYZ plc—I am sure everyone would take his assertion on his own word—and he were to commit an offence under this clause, it appears from a
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layman's reading of the clause that the body corporate would be caught as well as the noble Earl. I find that rather extraordinary.
I understand what the noble Earl is saying. The wording occurs in other statutes. It is accepted, and it is designed to catch people who are, or might be, directors who seek to avoid being convicted by resigning or in some way vacating their office. Nevertheless, I still have a problem with the wording which I hope the noble Earl understands.
The Earl of Dundee: I should be the first to admit that at first sight the phrase that we are discussing appears rather woolly. But, as I say, there is the precedent of liability having been escaped. If we do not use this wording there is a loophole. Clause 262(5) does not impose liability upon a corporation; it merely provides that if a corporation is in any way guilty of an offence then certain of its officers will also he guilty.
Lord Williams of Elvel: Or people purporting to be officers. But I do not think there is much merit in pursuing this discussion at this point in time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 302JJC not moved.]
Clause 262 agreed to.
Clause 263 agreed to.
11 p.m.
Clause 264 [Patents county courts to exercise special jurisdiction]:
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 302KK:
Page 119, line 16, leave out from ("designs") to ("and") in line 18.
The noble Lord said: In moving this amendment I should like to make a few introductory remarks to the effect that we are now entering on to Part VI of the Bill. This section is headed "Patents" and "Patents county court". To me this is a very important section indeed because it is making an attempt to cheapen litigation. A matter with which I have been personally concerned for many, many years is how one can cheapen litigation so that smaller firms in particular can have justice in relation to their intellectual property.
My welcome for this part of the Bill is supported by the patent solicitors, for instance, who have told me that they would welcome my support for the Government's proposals in paragraphs 264 and 265:
"as they are seen as a means of cheapening patent litigation for the smaller dispute while retaining the jurisdiction within the Civil Courts system".
But that support is qualified as regards Clause 264 by my amendment.
This clause deals with patents courts. It is entitled in the margin,
"Patents county courts to exercise special jurisdiction",
and the new section is entitled,
"Proceedings as to patents, designs &c."

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New Section 31A(2)(a) states that a patents court:
"(a) shall exercise such jurisdiction (its 'special jurisdiction') as to such proceedings relating to patents and designs".
Why does it not stop there? Why should it include:
"or other intellectual property and related matters as may be prescribed in the order"?
I have in my hand a letter which was written to me when I was at a trade mark conference in Budapest by Mr. Richard Price of Woodham Smith, solicitors. He says:
"I am surprised that the special jurisdiction of the patents county court is planned to be so wide.
The provision was meant to reduce the costs and delay of patent litigation. The jurisdiction should therefore be so limited with the words 'or other intellectual property and related matters as may be prescribed in the order'".
Therefore I beg to move that there should be deleted from Clause 264 the proposal that a new section should be inserted after Section 31 of the County Courts Act 1984, Section 31A(2)(a). This would delete and limit the scope of the patents county court proposed by the elimination of the words,
"or other intellectual property and related matters as may be prescribed in the order".
In other words I move that the jurisdiction of a patents county court should be limited to proceedings related to patents and designs and not to other intellectual property. I beg to move.
The Lord Chancellor: I am very grateful to the noble Lord for welcoming these clauses, which are designed to render certain litigation less expensive. I am glad to know that after such a long time devoted to that object he is now able to join with us in supporting our proposals in general terms.
As regards the particular point that he has raised, I should point out that to delete all that he seeks to delete would have the effect that the patents county court would have jurisdiction in proceedings relating to patents and designs. It is necessary to specify which proceedings relating to patents and designs the court shall have jurisdiction in. The idea is that they should be towards the lower end of that litigation. So the last part of this provision is necessary in any event.
The noble Lord's amendment probably deletes more perhaps than he originally intended, because the word "such" in front of "proceedings" has to have some other words to qualify it; otherwise the provision does not make sense. But the proposal that the Government have in mind is on the lines of the report which has been produced by the Permanent Secretary in the Lord Chancellor's Department and his colleagues.
Members of the Committee will recollect, I hope, that the view the majority of that committee took was that this court should be able to deal with the Patents Act's actions including the Community Patent Convention and the Registered Designs Act and that it should also be able to deal with cases concerning the unregistered design right proposed in the White Paper. These are all connected because they have an engineering element in common and common to patents and designs.
The words used in the provision are:
"patents and designs or other intellectual property".
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So I think the generality of the word "other" would be controlled by the phrase "patents and designs". However, in view of what the noble Lord has said and his doubt about this provision, notwithstanding his support for the general provisions, I shall certainly look at this again. But I cannot accept the amendment in full for the reason that I explained at the outset. I hope that the noble Lord in the light of that explanation may feel able to withdraw this amendment.
Lord Lloyd of Kilgerran: I am very much obliged to the noble and learned Lord for what he has said. I forgot to say in my opening remarks that the patents solicitors and my friends at the Patent Bar would like to congratulate Sir Derek Oulton personally on the great work that he has done in this matter and the secretary of that committee, who has worked so hard and who recently sent me a copy of the final report.
Having regard to what the noble and learned Lord has said, I beg leave to withdraw my amendment, but it may be necessary to raise the matter again on Report.
Amendment, by leave, withdrawn.
On Question, Whether Clause 264 shall stand part of the Bill?
Lord Morton of Shuna: On the question that this clause shall stand part of the Bill I wish to raise the matter of what is in the report of Sir Derek Oulton's committee. I do so in the way not of criticising the intention behind Clause 264 but perhaps of making some suggestions that what is mentioned in the report does not go quite far enough to be effective.
It appears that the suggestion that there should be a county court judge in charge of an innovative patent county court raises certain practical difficulties as I would not persuade anybody with experience of the Patent Bar, and fairly good experience at that, to take that office rather than either continue in practice at the Patent Bar or hope for appointment to the High Court Bench. Perhaps the answer is to use somebody who is a patent judge in the High Court and delegate him to deal with the county court as well.
It also appears that there is a difficulty if the county court procedure is to be effective—we hope it would be so—in that the right to choose should be restricted to the plaintiff. It could well be that the plaintiff was the person who had the money and would therefore wish to force the matter into the more expensive court. I suggest that there should be power in the court to decide, on the application of either the plaintiff or the defendant, as to the appropriate court.
The same considerations should apply on the question of rights of appeal. If one has a right of appeal from the county court to the High Court, the Court of Appeal and the House of Lords, one is not doing much to reduce the expense of litigation. In fact, it is possible that the expense will be increased. Those comments are made with all the diffidence that a Scot who has no experience of English procedure feels. However, having had the advantage of having seen the report prepared by the judge, Lord Jauncey, who, I am delighted to say, is to join the House as a

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Member of the Judicial Committee, and who will presumably be here at later stages of the Bill to add far more weighty advice on the matter, perhaps a slightly more robust view than that put forward by the report may be considered.
Lord Lloyd of Kilgerran: In view of the opening remarks of the noble Lord who has just sat down when he said that Sir Derek Oulton's report had not gone far enough, I am tempted to agree with him. As a practising member of the Patent Bar for many years, it seemed to me that one of the difficulties about costs in patent cases was that the Court of Appeal, in a difficult case, did not have a member of the Patent Bar or a person with experience in the field.
There has been much talk with predecessors of the noble and learned Lord the Lord Chancellor over a period of at least 20 years, concerning the suggestion that there should be somebody with some knowledge of patent matters called to the Court of Appeal occasionally. I have had the experience of winning a case hands down in the court of first instance with a patent judge. That judge would be dealing with experiments. He, with his scientific knowledge, would know that many of the experiments, which are very costly, should not he treated at great length.
When such a case went to the Court of Appeal subsequently, the Court of Appeal quite rightly said: "We do not know what the judge was talking about. What were the experiments?". Therefore, a great deal of time was taken in instructing the judges in the Court of Appeal on what the experiments were about. I do not want to cite the names of particular cases which I have in mind and of which I have had experience as a member of the Bar. However, if there had been a member of that court with experience of patent cases and the way in which experiments are called for on both sides, which is sometimes intended to delay matters—perhaps I exaggerate the position; some people may think that it was proper to produce the experiments—such cases would not have been as lengthy as they were. I therefore agree with the noble Lord who has just sat down that perhaps—
A noble Lord: Lord Morton of Shuna.
Lord Lloyd of Kilgerran: Thank you very much. I am fully aware of his name; surely it is sufficient for me to call him "the noble Lord who has just sat down"! I know the name of Lord Morton of Shuna very well. I am sure that he does not mind. I feel that there are certain aspects which practising members of the Bar could suggest in any subsequent consideration of how to reduce expenditures in patent cases. One would be that, if a case is to go to the Court of Appeal, somebody should be there who has some experience of patent practices.
11.15 p.m.
The Lord Chancellor: I am grateful for the constructive approach taken to these clauses by the noble Lord, Lord Morton of Shuna—I shall refer to him in that way—and the noble Lord, Lord Lloyd of Kilgerran—and I shall not refer to him in the alternative way.
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I agree that the problem of making inexpensive patent litigation is a difficult one. The fact that the noble Lord, Lord Lloyd of Kilgerran, has devoted a considerable part of his experience to that problem, and to date has not been particularly successful, shows how difficult it is. However, we are very grateful for the suggestions that have been made and shall certainly look at them carefully.
It occurs to me that in order to take up the suggestion made by the noble Lord, Lord Morton of Shuna, it may be necessary to put some criteria into the Bill determining whether or not a particular type of action shall go to the county court or the High Court in order to be independent of the particular choice of the parties.
The problem of securing personnel for the court is, as he said, not altogether an easy one. I have been thinking about that with my colleagues, and considering what could be done about it. I am very grateful for what he says. I also join with him in the welcome that he has given to the noble Lord, Lord Jauncey. Whether he will be with us when we reach the next stage of this Bill I cannot be certain; but I certainly hope that by that time he will be a member of your Lordships' Chamber.
With those observations, I commend to the Committee, the clauses as presently in the Bill, but undertake to consider the constructive suggestions that have been made with a view perhaps to elaborating these clauses by the time we come to the next stage.
Clause 264 agreed to.
Clause 265 agreed to.
Clause 266 [Restriction of acts authorised by certain licences]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 303:
Page 120, line 32, at end insert—
("( ) Pesticidal use is excepted, that is—

(a) use of the product in the form of any substance, preparation or organism as a pesticide within the meaning of the Food and Environment Protection Act 1985, and

(b) the doing of any other act mentioned in section 60(1)(a) above with a view to such use.").

The noble Lord said: I should perhaps preface my remarks in introducing this amendment by suggesting that we are entering into an area in which no discussion has previously taken place; namely, the area of the agrochemical industry. I hope that the Committee will forgive me if I take a little while, but this matter is of some considerable importance, because it impinges upon the further development of agrochemicals—in the amendment the expression "pesticide" is used, which I find difficult to accommodate. However, it is the word that is used in the Food and Environment Protection Act of 1985 and that term is perhaps better understood.
This matter affects the licences of right provisions primarily of the 1977 Act, which discriminates against research based companies. In the agrochemical industry there are but six major research based companies remaining. I say that because it is a sadness that the number of research

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based companies has diminished. For example, one only has to look at Fisons and Boots, who found research and development expenses in the agrochemical field so onerous that they amalgamated. In turn they were taken over and their work is now being done by Schering. The history suggests that the agrochemical industry is faced with enormous expense and only the largest of companies can sustain that kind of expenditure. We are therefore left with six research based companies in the United Kingdom.
The United Kingdom accounts for only 3 per cent. of world markets. This UK-based industry is therefore having to meet the competition of world markets. North America accounts for 30 per cent. or 40 per cent. of product and Europe 25 per cent. or 30 per cent. of product. But the UK alone accounts for only 3 per cent. of world markets.
Section 266 of the Bill now before the Committee proposes to repeal those provisions in the Patents Act 1977 that relate to the licence of right in respect of pharmaceutical patents. We shall come to that section shortly. However, the six research-based companies in the United Kingdom are anxious that any such repeal to which the Government have agreed should also include agrochemical patents. These companies made a detailed case for such repeal to the Department of Trade and Industry earlier this year. I believe that the department looked upon that case with some sympathy.
There is a pressing need for new agrochemical compounds which are environmentally more acceptable and safer to the user and the crop. It is not an exaggeration to say that environmental issues—the use of pesticides, the wellbeing of the countryside and indeed the people—are contained in these needs. These more stingent requirements have resulted in an increase in difficulty and expense of research, and a fall in the rate of discovery of such new compounds. It is estimated that only one in some 18,000 compounds reaches the marketplace. Therefore sales of that one compound have to finance all the others and the abortive studies that result.
It is estimated that the costs of developing a new compound to full approval have risen enormously in the past 15 years from about £0·75 million to £15 million. It is compulsory—and rightly so—that the new compounds undergo prolonged testing to establish safety and effectiveness before approval to sell is given; and there is no quarrel about that. But the industry has only limited scope for achieving an adequate return on the enormous research investment by means of pricing. I recognise that the farming community has an interest in this matter; but since the price of an agrochemical product is dependent on the financial return to the farmer, there is in effect a market force already apparent in the pricing of the new compound.
It is essential therefore that there should be very strong patent protection in our domestic legislation. Certainly there should be protection at least equivalent to that in continental Europe. It is essential, if the industry and its investment in research in the UK is not to become weakened, that that position is obtained.
Clause 266 authorises the Secretary of State to make an order extending the repeal of the licence of right provisions to other uses as he thinks fit. While this procedure could be applied to agrochemical uses, there is a pressing need now for repeal in this area. This need is not met by the Bill, particularly as the procedure is likely to lead to uncertainty and delay: the kind of uncertainty that we have experienced in other areas of a similar industry.
The amendment provides specifically for a repeal of licences of right in respect of agrochemical patents and would therefore remove the doubt that would obtain if the other provisions were used. It would also enable further research planning to be undertaken. I commend the amendment to the Committee. I beg to move.
Lord Beaverbrook: We have received submissions from the British Agrochemicals Association and a group of research-based agrochemical companies arguing that patents for pesticides, like pharmaceutical patents, should be removed from the scope of Schedule 1 of the 1977 Act licence of right provisions. There are however aspects of the case put to us that require further clarification. We are in touch with the British Agrochemicals Association on this but are not at present able to make a decision.
Without commitment, I am happy to agree to consider the arguments put forward by my noble friend and hope that by the next stage we shall be able to come to a conclusion.
Lord Lucas of Chilworth: I am grateful to my noble friend the Minister for what he has said and look forward to seeing what the Government are able to come up with by the time we reach the next stage. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.30 p.m.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 304:
Page 121, line 5, leave out from ("has") to ("1987") in line 7 and insert ("on 28th October").
The noble Lord said: In moving the amendment, I speak at the same time to Amendments Nos. 305, 306, 307 and 308. Perhaps it is not necessary, but I shall nevertheless remind the Committee that exactly a year ago on 12th January 1987 we discussed in this Chamber the repeal of licences of right in the pharmaceutical industry. Because of the time, I shall not remind the Committee of the figures involved, the number of people, the value of the pharmaceutical research-based industry in this country, not only in terms of balance of payments, but in terms of employment. I think that the Committee will probably recall all of this. However, I draw the attention of the Committee to the fact that in 1977 a compromise arrangement was made with regard to licences of right. It was an unhappy situation and in the early 1980s the Government agreed that if the pharmaceutical industry could produce a satisfactory case, that not only had the cost of development of new drugs, but also the time required to bring those drugs to market been eroded from the original

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20-year term of patent life, the Government would give consideration to the repeal. That was accepted in 1986. There was a proposal in 1986 in the suggested Intellectual Property Bill which never came to Parliament, that resulted in the Lord Northfield Bill of January 1987, which had the support of the government of the day. That failed.
We now have the repeal in this Bill, which I welcome. I note that the effective date of the proposals in the Bill as set out in Clause 276 is to be two months after the passing of this Bill, which may be at the end of the Session. That date is not known, but it is realistic, I believe, to suggest that it might be in September or October 1988.
Since the Government have agreed to the repeal, is it not a case of the sooner the better? It has been long promised. There has been a good deal of misunderstanding. There has been a good deal of apprehension as to when all this was going to come about. The licence of right provision applies only to patents completing 16 years before June 1994, so further delay will obviously eat into the patents affected, and the value of the repeal will itself be eroded. The only unfair aspect of the amendment which I have set down might be retrospectively to turn a past act into an act of infringement. But I am suggesting to the committee that the amendment takes care of that.
It is noteworthy that the Government's proposal itself causes some pending applications for a licence of right to lapse. This is because during the passage of the Bill there could be applications to the Patent Office for terms to be settled on all the patents which may be subject to licence of right in the future. That is up to June 1994. The Patent Office might not have processed them, but they would have been made. Section 267 4B(2) provides that paragraph 4B(2) shall nullify all pending applications on patents which have not yet passed the end of their 15th year.
In this amendment one is looking to put right the anomaly of the 1977 Act and to secure that which was proved to the satisfaction of the Government in 1985 and accepted by the Government in 1986 and which was somewhat thwarted in 1987. It would come into effect at a determined date—October 1987, the date of the introduction of this Bill—rather than leave the further undetermined date that obtains by virtue of Clause 276. At the same time it would reduce the erosion of the repeal.
This matter is of concern to some nine major research-based pharmaceutical companies in this country, all of whom have, if I may put it this way, a jewel in their crown. Some of the jewels may be large and some of the jewels may be small; but when one takes into account the fact that so much work has to be done and so many inventions and proposals fall by the wayside that these jewels are important in sustaining the further research that all these companies must undertake during future years, I believe that what I am suggesting is not totally unreasonable. It will be to the general benefit of the industry and it will also be generally to the benefit of the health of this nation. I beg to move.
Lord Kilmarnock: I am afraid that I must differ to some extent with the noble Lord, Lord Lucas of Chilworth, in respect of his amendment. The clause which we are considering is what one might call "son of Northfield". The measure proposed was moved in a Private Member's Bill by the noble Lord, Lord Northfield, but, as the noble Lord, Lord Lucas said, it fell. It was put forward in that way because the Government did not at the time have outlined any legislation on intellectual property. It has now appeared as a Government measure in this compendious Bill, with the difference that the retrospective element of the Northfield proposals has been dropped. In my submission to the Committee, that is a slight improvement. I have some queries about the clause as a whole but I believe that it has emerged in a cleaner version as written into the Bill at the moment.
As I understand the amendments proposed by the noble Lord, Lord Lucas, they reintroduce the various retrospective elements which were in the Bill of the noble Lord, Lord Northfield. Therefore they take us back from "son of Northfield" to "Northfield".
I remember that there was a long discussion about this issue late at night and that we did not reach any satisfactory conclusion on the retrospective proposals in the Northfield Bill except that there were severe defects in them. (I see that the noble Viscount, Lord Craigavon, is in his place.) It seems to me, therefore, that it would be a mistake to reintroduce them into the Bill at this stage.
I also submit to the Committee that it is contrary to our general procedures in Parliament that legislation should be made retrospective when it alters the position between two groups of private parties. I have a note that that point was recognised by the noble Lord. Lord Lucas, when he spoke on 22nd April, 1986. I think that we should move on to discussing the clause as drafted by the Government, about which some Members of the Committee may have worries. I believe that what is proposed by the noble Lord. Lord Lucas, is a step backwards.
Lord Hacking: As a participant in the Committee stage—a little earlier in the evening—on 12th January last year and as a supporter of a patents amendment Bill which was then before the House exactly a year ago, I should like to support, if I may, the amendments placed before the Committee by the noble Lord, Lord Lucas. One always hesitates over the passing of any measure in Parliament which has a retroactive effect. Therefore, it is right to look with caution at any proposal which has a retroactive effect.
In the nature of patent protection, which has gradually been increased over the years—the 1977 Act increased it from 16 years to 20 years but gave the licence of right relief—and the nature of patents of long periods of time, it is inevitable that one has to tackle the retroactive problem. Indeed, the 1977 Act, although it did not give complete retroactivity in the extension of the patent period from 16 years to 20 years, did so for all patents that had been filed after June 1967. Therefore, there was a retroactive provision in the 1977 Act.

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In creating a fair balance I believe it is right—as was pointed out by the noble Lord, Lord Lucas—to take into account that this matter has been on notice for a long time and that all companies which may have been minded to take advantage of the licence of right provisions have had adequate notice that these new provisions were coming before Parliament and that they had the prospect of passing into law.
Therefore, taking into account this notice, the position of the major pharmaceutical companies and their contribution to research in the pharmaceutical industry, and taking the other matters before the Committee, I believe that these amendments are worthy of further consideration. I hope that the Government will give further consideration to them. On that basis I support the noble Lord, Lord Lucas.
Viscount Craigavon: I am grateful to the noble Lord, Lord Kilmarnock, for reminding the Committee that I made a rather long speech on 4th February last year about retrospection. I felt very strongly about it and I still do. On that basis, I oppose this amendment.
Given the time of night, I shall not weary the Committee with long philosophical arguments on that point, but I still believe that it has to be debated before we break what is a standard procedure in this place: that the laws that we pass come into effect on the Assent of the Sovereign and not—in the rather casual phrase that the noble Lord, Lord Lucas, used— the sooner the better. I found that to be an extraordinary way of expressing it.
Much of the legislation that we pass is for the benefit of the nation and is providing justice and fairer results all round. Because of that we do not say, "Well, let us have it tomorrow. Let us have it straightaway. Let us have it a month previously". We wait until the end of the Bill; until it has received the Royal Assent. I hope that the Government will pursue that line for the benefit of the department as well as parliamentary practice.
There is also a problem which the noble Lord, Lord Hacking, did not raise, although he was clutching in his hand a leaflet which many Members of the Committee will have received. It is headed House of Lords briefing. The first page clearly states the ABPI's position. It states:
"The relevant provisions of the Copyright, Designs and Patents Bill currently before the House deserve support".
That is the Bill before the Committee and not a Bill as amended by the noble Lord, Lord Lucas. I believe, if I may say so, that the noble Lord, Lord Kilmarnock, got it slightly wrong as to what we were inheriting from the noble Lord, Lord Northfield; that he, with the assent of the ABPI changed his Bill to diminish and reduce completely the retrospective element in it. That was a Bill which we passed to another place, which had no retrospection and which, especially reading this briefing from the ABPI, I believe to be its policy. I hope that the noble Lord, Lord Lucas, can say how the companies of which he might be speaking—and I have a letter from one of them—are reconciled to the policy that he is putting forward and to what the ABPI is telling us is a reasonable position. The noble Lord, Lord Lucas, also used the phrase "the jewel in the crown".
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Perhaps I may refer to one company which I think might be providing some kind of impetus for these amendments, although I am not sure that that is the case. It is very much affected by the Bill as it now stands.
I should like to mention the effect on one particular company because I understand that by far the most important product to be affected is the second largest-selling drug in the world which is due to come into licence of right in March 1988. It is called Cimetidine. It is produced by an American-based firm called Smith Kline and French.
Generic companies are naturally preparing to produce this drug and have already invested significantly to enable them to do so. We are told in various persuasive handouts by the drug companies that the average life of a drug on the market before the end of the patent is between four and five years. In fact with this drug, Cimetidine, there has already been a complete patent monopoly of over 11 years. I understand that this is really the only major drug to be affected by the commencement date as at present in the Bill.
11.45 p.m.
Lord Hacking: I wonder whether the noble Viscount can assist us? What did he mean by an 11 year patent monopoly? I did not follow the noble Viscount.
Viscount Craigavon: I may not have put it technically correctly, but I refer to the completely free use of a patent. When I say "free" I mean the sole use of a patent of a product.
Lord Hacking: Under current law it is 16 years, is it not?
Viscount Craigavon: I am sorry that I have not expressed this very carefully. I am implying that if the total length is 16 years, and the research and development, by implication, took four or five years, then the drug has been on the market for the benefit of the company for 11 years. That is very different from the four to five years which we are told is an average figure.
I shall leave it at that tonight, but in relation to these amendments I very much oppose any retrospective element in this Bill. If the noble Lord, Lord Lucas, wishes to bring this proposal back on Report I shall oppose it.
Lord Williams of Elvel: I do not wish to add to what was said by the noble Lord, Lord Kilmarnock, and the noble Viscount, Lord Craigavon. We agree wholly with what they say. We dislike the idea of retrospection. We disliked it in the case of the Patents (Amendment) Bill and we said so at the time. We dislike it now. We hope very much that the Government will resist this amendment. We shall support the Government if they resist this amendment.
Lord Beaverbrook: With the leave of the Committee I shall speak to Amendments Nos. 304, 305, 306, 307 and 308. Following a decision in

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proceedings before your Lordships' House sitting in its judicial capacity, the Comptroller presently accepts applications to settle terms of licences of right before the relevant patents actually become open to such licences. The aim is to have the licences settled so that licensees can work inventions as soon as the patents enter their seventeenth year; that is the licence of right period.
The effect of the amendments of my noble friend Lord Lucas would be that, upon commencement, licences held by anyone who had a licence application outstanding on 28th October 1987 could be extinguished by the patent owner. The amendments would also cause applications to settle terms of licences which were outstanding at the date of commencement of Clause 267 to cease to have effect.
In both cases this would amount to deprivation of property within the meaning of the European Convention on Human Rights. I am aware that this gives a meaning to "property" rather wider than most noble Lords, or indeed, the courts of the United Kingdom, might accept, but it is consistent with the most recent decisions of the European Court of Human Rights.
My noble friend Lord Lucas of Chilworth mentioned that Clause 267 might equally result in a deprivation of property within the meaning of the European Convention because that clause might cause some premature pending applications to lapse. We acknowledge that there may be a deprivation of property here. However, the class of persons that would be affected by the provision is small and the risk of the United Kingdom being taken to the European Court is correspondingly low. In addition, we are confident that the Court would hold that the public interest should prevail in this situation, because there is very little that can be said in favour of allowing applications to settle terms long before the licence of right in question becomes effective.
I would say to the noble Lord, Lord Hacking, that we do not accept that the transitional provisions in the 1977 Act were retroactive. They extended patent term subject to licences of right for the future but had no effect on any past events. What the noble Viscount, Lord Craigavon, meant by 11 years patent monopoly was probably that it has had a product licence from the DHSS for that time and has been on the market under a patent monopoly for 11 years.
It may be regarded as unfortunate that some considerable time has passed since my noble friend Lord Lucas announced in this House in April 1986, during the passage of the Patents, Designs and Marks Bill, the Government's intention to remove pharmaceutical patents from the scope of the licence of right provisions in question. However, the parliamentary timetable is such that the wishes of some cannot always be given the priority that they desire. Thus for the reasons I have given it is not appropriate to provide an earlier operative date in relation to the patents that will be affected by the clause.
Lord Hacking: Before the noble Lord sits down I wonder whether he would reconsider the point concerning the 1977 Act. That Act precisely gave
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extended terms of patent for all patents that had been granted after June 1967 and at the same time gave the licence of right provision as well. It was retroactive, and that was the point I was seeking to make to the Committee.
Lord Beaverbrook: I cannot agree with the noble Lord that that was retroactive. He is entitled to his opinion and we are entitled to ours, but I feel that that aspect of the 1977 Act was not in fact retroactive.
Lord Lucas of Chilworth: I have to confess that I am not overly surprised at the responses I have heard this evening in your Lordships' Committee. I should, however, reply to some of them. I remind the Committee that this amendment is also under the name of the noble Lord. Lord Hunter of Newington, and I apologise to him for not having mentioned that at the outset.
I am surprised that the noble Lord, Lord Kilmarnock, should describe the amendment in the terms that he did. Technically it is retrospective, or retroactive, or whatever word one likes to use, but in fact the industry has been under no illusions since 1986 that these matters were going to come to pass. What one is trying to do is to set a firm date so that the difficulties that have been experienced by the industry should no longer he in doubt. because doubt has existed for very many years. That is not good for any kind of industry.
I cannot quote legislation without a lot of research, but I believe that retroactive legislation has been passed by both Houses of Parliament in recent years. This is not a new idea. The noble Lord, Lord Hacking, has made the point very eloquently.
I turn to the noble Viscount, Lord Craigavon, whose strong feelings I recall vividly. I am not surprised that he should be here, even as late as it is, again to reiterate those feelings. There is no standard procedure on retroactive or retrospective legislation. It depends on what Parliament determines, and Parliament has decided in the past, and no doubt will in the future, that certain pieces of legislation shall be effected as from a date before the point of discussion.
I found his extraction of the original ABPI brief rather odd. I do not want to comment particularly about the brief because it has in fact produced another piece of information which may or may not have reached him. It has reached some noble Lords, I know.
We are not talking about one particular drug. We are talking about Zovirax from Wellcome, Opticron from Fison, certainly Tagamet from SKF, Triludan from Dow, drugs from Pfizer, May and Baker, Bristol Myers and Astra, which has an asthmatic drug which will effectively have only two to three years real marketable life. So whether he likes my description of jewel—whether it is a big one or a little one—matters not a jot. These are all important drugs which are seriously affected by this legislation, three of them from 1988 and the asthmatic one a year earlier.
I turn now to the Minister's answer.
Viscount Craigavon: The noble Lord implied that that policy of the ABPI had changed since this blue document was issued. Can he confirm whether that is the case?
Lord Lucas of Chilworth: All I would say is that the papers I have seen suggest to me that the ABPI would give support to the amendment that I have set down.
There is just one point in the Minister's response that I want to take up. He suggests that there is a risk of challenge from the European Court in so far as the human rights convention is concerned. I recall vividly that the Government have in fact not had a happy time in the European Court over recent years. It may he that which determines their present thinking. But I do not believe from that which has been provided to me that they are well advised in this regard.
I have been provided with an opinion by an eminent QC, Mr. Robin Jacob, a man well versed in patent law and in European law, which suggests that an application, or indeed a licence, is not a property which is tradable. It cannot be assigned; certainly an application cannot be. Even if the application granted by the comptroller were to come into force, that cannot be assigned; that cannot be a property. It cannot therefore be a deprivation of some particular body under the terms of the convention.
It is nearly tomorrow. There are but few Members of the Committee here. It would be ridiculous of me to test opinion. I merely say to the Committee that I am not happy with, nor indeed am I satisfied with, the Government's response in this regard. I shall seek to discuss with them the human rights issue, which I believe is the one they are mostly afraid of. The retrospective question is a matter for Parliament. I shall ask the leave of the Committee to withdraw this series of amendments tonight and give notice that I shall most certainly return at a later and perhaps more appropriate time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 305, 306, 307 and 308 not moved.]
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Lord Rea Lord Rea moved Amendment No. 308A:
Page 121, line 30, at end insert—
("(8) A declaration filed under this section shall have no effect and any declaration already filed shall cease to have effect in relation to a medicinal product which has been licensed for sale or supply in the United Kingdom under section 7 of the Medicines Act 1968 for a period of ten years or more.").
The noble Lord said: I apologise for tabling this amendment so late in the passage of the Bill through the Committee. I do not apologise that I have to move it so late in the day—or so early in the morning as I should say. I can only regret it. It was only after discussions with members of the pharmaceutical industry during the recess that I realised that action along the lines of this amendment could be useful. It might, I felt, possibly be acceptable both to the industry and to the Government. The Government in this case represent the taxpayer and in their hands lies the future and safety of the National Health Service.
My personal position is that Clause 266 should be dropped and I intend to support my noble friend Lord Williams on this matter. However, in the unlikely event that my noble friend is unable to convince the Committee that the clause should not stand part of the Bill, I feel that this amendment would improve the clause and meet some of the points made by the pharmaceutical industry in persuading the Government to abolish licences of right.
Their argument—and I précis it and may therefore miss some of the points—is that new drugs take a long time to develop up to the point of marketing after the patent has been filed. Some may take up to 12 or more years. In that case there are only four years of protected market life before licences of right become available under the present system. At that point other firms can breach the monopoly and sell at a lower price.
However true that may be, there are other drugs that get on to the market remarkably quickly after the patent has been filed. An example is Ranitidine, which is better known as Zantac, one of the H2 receptor antagonists. It is very useful in the treatment of peptic ulcers. This received a licence only four years after it had been patented. Therefore it will have 12 years' protection before licences of right become available.
This amendment is intended to introduce some fairness into a situation which is manifestly unfair at present, particularly as short patent licence periods or patent marketing periods are easier for pharmaceutical firms to achieve with the "me too" or derivative drugs, where the basic research has been done by another firm, or, as is equally likely, by a university department of clinical pharmacology. A10 year period of patent protection guaranteed to all products would be both logical and fair. I am sure the Minister will be familiar with this approach. It has been debated before when a similar amendment to the Bill of the noble Lord, Lord Northfield, was put down by my noble friend Lord Stallard.
It has been calculated that this amendment might save the National Health Service some £24 million per annum between 1993 and 1997. That is out of the £40 million to £50 million per annum which inclusion of this clause will cost the National Health Service. The noble Lord will probably dispute my figures, but I can show him my calculations in writing. I do not wish to press the amendment, but I shall be interested to hear the Minister's response.
Lord Kilmarnock: The intention of the amendment, with which I have some sympathy, seems to be to preserve licences of right in respect of branded products with an uninterrupted market monopoly of 10 years. The noble Lord, Lord Rea, gave the instance of the case of Zantac. He has also given some figures of potential savings for the National Health Service. Noble Lords who are interested in the NHS will attach importance to that.
There is another side to the question. The noble Lord referred to guaranteeing the patent right of exploitation for 10 years after licence to all products. That could have a different effect in the case of a drug with a long period of development. He said that there

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was a period of four years before Zantac came on to the market. The industry states that many drugs now have a development period of 12 or 13 years before coming on to the market. If one were to apply the principle across the board, one might well come to the position in which patents were extended beyond a 20-year period, possibly to 22 or 23 years. I want to be clear in my own mind that the noble Lord is aware of that implication in the amendment. If he is, then this is probably quite a sensible way to go.
If there was a period of 10 years guaranteed protection in all cases from the moment of licensing, some of the concerns of the industry would be taken care of. I am looking at the noble Lord, Lord Lucas of Chilworth, to impress upon him that I am not an enemy of the industry. The vital point is that, when the patent protection period comes to an end, the end is final and the generic process can take place from that point. If that is the intention of the amendment, I have some sympathy for it.
Lord Beaverbrook: The Government's intention behind removing pharmaceutical patents from the scope of the Schedule 1 licence of right provisions of the Patents Act 1977 was to compensate the owners of these patents for significant delays in obtaining marketing approval for pharmaceuticals. These days, on average, approximately 11 years of a pharmaceutical's patent term will have expired before the pharmaceutical can be marketed.
The amendment would allow licences of right to be had on patents for pharmaceuticals that had been licensed for sale or supply in the United Kingdom for 10 years or more. That is for pharmaceuticals that had been granted marketing approval quicker than the average.
We have not had time to consider the implications of this amendment. However, in view of the Government's original intention, we shall consider whether licences of right should continue to he available on patents for pharmaceuticals that have taken significantly less time than the average to get marketing approval. Perhaps the noble Lord, Lord Rea, will withdraw his amendment in order that we may consider the matter further. We accept that the noble Lord's amendment would result in a saving to the NHS, but we cannot agree his figure. Our estimates put the figure at approximately £2·5 million.
Lord Rea: I could bandy words about the sum involved, but this is not the right place to do so. I am encouraged by the noble Lord's words, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 266 shall stand part of the Bill?
Lord Williams of Elvel: We have all had a sense of déjà vu about this debate as most of us who are in the Chamber participated in the debates on the Patents (Amendment) Bill last year. The speech that I was expecting to make opposing Clause 266 stand part,
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has been considerably modified by the Minister's response to the amendment moved by my noble friend Lord Rea. It was a response that I did not expect and, like my noble friend, I am encouraged. There may be some grounds for hoping that a common position, or at least a position that is acceptable to all sides of this Committee (other than certain interested parties) may emerge.
We should still like to see Clause 266 removed from the Bill. It is, of course, late at night and we are late into the Committee stage of the Bill, so I do not intend to press this to a Division. Nevertheless, we have strong objections to Clause 266.
We fully accept the importance of research and development to pharmaceutical companies, but, with the current state of National Health Service funding and the controversy that that is arousing even now and will continue to arouse, we cannot accept that extra burdens should be placed on the NHS without proper compensation, which is what this clause would achieve. We can bandy figures around. Last year we bandied figures around about how much it would cost the NHS between 1993 and 1997 if the Patents (Amendment) Bill were passed into legislation by both Chambers. We could bandy figures around as to what the figures would be if this clause were put into effect. Our belief is that the figure is probably somewhat higher than the Government's estimate in the financial section of the Explanatory Memorandum. Nevertheless, I agree that it is extremely difficult to arrive at a consensus of what that figure might be. It is difficult, but it is necessary, because we must ensure that the National Health Service is not burdened to the point where cuts in services result from this provision without any compensating benefit. I said that we accept the importance of R & D to the British economy and to the pharmaceutical industry. No one can deny that. Therefore, I propose to put forward to the Committee ideas that may go some way towards mitigating out hostility to Clause 266.
If some way were to be found to ensure that the extra revenues accruing to those companies (whose plight the noble Lord, Lord Lucas of Chilworth, has eloquently explained to us) were applied to research and development; and if some way were found to ensure that the prices charged to the NHS, perhaps through the PPRS or whatever, as a result of the abolition of licences of right, would not increase, we might be able to get back onto some common ground. If the amendment moved by my noble friend Lord Rea were accepted as it stands by the Government, again we might be on some common ground.
I hope very much that the Government have looked at the Canadian situation, the famous Bill entitled C.22, which is causing something of a constitutional row in Canada at the moment because the Senate has insisted on certain amendments which the Lower House has not accepted. But in that Bill it is proposed to abolish licences of right. I hope the Canadians will excuse me, but Canada has been something of a rogue elephant in this context. But to insist that a certain proportion of the proceeds should go to research, and indeed that there should certainly

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he a price control over the companies which benefit from the abolition of licences of right, is along the lines of what we should like to see.
We should furthermore like to see some protection for generic producers, which, when they have the ability to produce, can be allowed to do so properly and in proper and fair competition with the pharmaceutical companies which have the patented products. I shall not take up any more of the Committee's time because I think I have said enough to explain exactly what our attitude is. It is not one of a wholly closed mind. We recognise that there is a problem. However, as it stands Clause 266 is unacceptable, but I am encouraged by the response which the Minister gave to my noble friend Lord Rea.
12.15 a.m.
Lord Kilmarnock: I just wanted to say why I had added my name to the list of noble Lords who are opposing this clause. I think I should describe my opposition as being of a probing nature. The last time round the course the main question was the cost to the National Health Service and I think that was not properly resolved at the time. The figure which comes to my mind, and the noble Lord, Lord Beaverbrook, will correct me if I am wrong, is that the Government forecast a cost of between £5 and £8 million over 10 years. That was the sort of figure which they were mooting. I think that is obviously not realistic. The simple instance which the noble Lord, Lord Rea, gave as the cost of Zantac would be way above that figure.
If there is a policy decision to support the industry at the expense of the National Health Service, that is a political decision which the Government may have taken. As they are in government, they have the right to make that decision. But if so, it should be on the basis of complete openness about the figure so that we can judge the decision on its merits.
My first question to the noble Lord is whether the Government stand by their calculations on the costs of the National Health Service implicit in the clause of the Bill as it now stands. My view is that the Government's original forecast is difficult to sustain. As the noble Lord, Lord Williams, said, we ought to be a little clearer on that point.
There is one other matter which I wanted to raise with the noble Lord this evening and which I think is very important. I wanted to ask him what view the Government are taking of the ruling of Mr. Justice Henry in a recent judicial review in favour of the company SKF and against the Department of Health and Social Security. From that it appears that not only may copying under licences of right be illegal but also all applications to make generic drugs, even when the patent has expired. If this were to become the accepted position under law, it would have a very profound and far-reaching consequence for the cost of drugs in this country and as a spin-off a very large-scale effect on the economics of the National Health Service.
I have had a considerable amount of correspondence on this. I have had a letter from
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Professor Andrew Herxheimer of the Department of Clinical Pharmacology and Therapeutics at Charing Cross. In it he says:
"I completely agree that the new Bill should encourage competition from generic drug producers after the expiry of the patent. The legal position cannot be allowed to remain the mess it has become after Mr. Justice Henry's decision".
I have another rather longer letter from the regional principal pharmacist in the North East Thames Regional Health Authority which I shall not read out at this time of night. I think it would be very interesting for the Committee to know what action the Government are proposing to take about this.
Finally I wish to return to the position that I adopted when we were discussing the Bill of the noble Lord, Lord Northfield, which was broadly that the repeal of licences of right, if that is what is due to the industry, should be accompanied by some stimulus to generic production and some attempt to limit National Health Service costs in the future. To that end I moved, but subsequently withdrew, an amendment which would have made generic substitution mandatory on the pharmacist subject to a veto by the general practitioner. For that amendment I simply adopted the method proposed in Section 24 of the Greenfield report on effective prescribing, with which the noble Lord, Lord Rea, and no doubt other noble Lords are familiar.
I still find it a little hard to understand why the Government have endorsed, as they have on a number of occasions, the importance of economic and effective prescribing but cannot bring themselves to take the two steps most calculated to bring this about, which are, first, to ensure the availability of generic products and, secondly, to encourage their use by general practitioners by some sort of mechanism such as that advocated by Greenfield— that is to say, the pharmacist would substitute a generic equivalent where one existed unless the prescribing doctor indicated otherwise in a box which would be provided for that purpose. Generic prescription is, after all, mandatory in hospitals and it is hard to see how the public at large would suffer by its further extension into general practice, as it has already taken place to some extent.
The Government have brought in the limited list scheme and that has naturally achieved some savings but nothing in comparison with what would be achieved by the wider adoption of generic substitution. If the interests of the pharmaceutical industry are at stake here and causing concern, it is worth pointing out that in the United States, where generic products are approaching a 50 per cent. share of the market, this has been accompanied by increased patent protection, so there is no reason why the two should be incompatible.
I should be interested to hear from the noble Lord why we should not follow the same road in this country. If he can tell me that the Government are prepared to consider all these matters with an open mind and with a view to curtailing National Health Service costs, which is a matter of great preoccupation at the moment, I shall have less difficulty with this clause as it stands and I shall perhaps not feel obliged to put down another generic substitution amendment. But, if I do not get such

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encouragement, I have to tell the noble Lord that I shall certainly want to consider putting down such an amendment at a later stage in the Bill.
Lord Monkswell: I am sorry to intervene at such a late hour but I wish to make two very quick points. First, I hope that the Government can come up with some mechanism whereby the licence of right provision can be done away with. There has been some discussion earlier and I shall not go into that.
Secondly, following the amendment of the noble Lord, Lord Rea, and the Government's very sympathetic response to it, it would seem to me as a layman in pharmaceutical terms that there must be incredible pressures on pharmaceutical companies actually to get their new drugs on to the market, given that their protection starts from the point at which the patent is registered or accepted rather than when they start marketing the drug. I wonder whether there is not sometimes so much pressure that they cut corners in terms of the checking and safety provisions for drugs. It has been mentioned in my ear that they are not allowed to, but there have been a number of cases over the past few years where drugs have come on to the market and then after a year or two have had to be withdrawn. I wonder whether the suggestion that the noble Lord, Lord Rea, made that the pharmaceutical companies should be given 10 years of effective safe marketing would reduce the tremendous pressures that must be imposed on them to get their drugs on to the market quickly.
Lord Beaverbrook: I am sure that the noble Lord, Lord Monkswell, will not be surprised if I do not take up again his invitation to debate the matters of consumer safety, drug testing or licences of right. However, I am grateful to the noble Lord, Lord Williams of Elvel, and I think that we are more likely to find common ground on the clause in the context of the amendment put forward by the noble Lord, Lord Rea, than on the suggestion to recycle extra revenue into further R&D. Perhaps the matter will become clearer when we have responded fully to that amendment.
Perhaps I may say to the noble Lord, Lord Kilmarnock, that the Department of Health estimate of the likely overall cost, which is in the range of £5 million to £8 million, could be widened at both the lower and upper ends. However, that indicates the expected order of costs. There are a number of factors to be taken into account, in looking at the 1990s, in a market of discovery. Who knows what drugs are waiting in the wings to topple today's best sellers? Who can say what doctors will prescribe for their patients at that time? Factors such as those cause wide variations in estimates of cost. I believe that we must look at the relatively modest cost of abolition against a widespread gain in confidence from the major pharmaceutical companies prepared to invest in this country in research and manufacturing.
I can assure the noble Lord, Lord Kilmarnock, that the Department of Health understands his concern over the continued availability of generic medicines. The licensing authority has taken
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immediate steps to ensure that it abides by the recent judgment by Mr. Justice Henry. The Department of Health and Social Security is studying that judgment and, once the precise terms of a consequential order, which is to be made shortly, are known, it will decide whether to appeal and what if any further action is called for. In the meantime, it would be premature for me to make any further statement about the implications of the judgment. Perhaps I may further say to the noble Lord that the Government do not propose to encourage generic substitutions. However, they already encourage doctors to prescribe generically.
Clause 266 agreed to.
Clauses 267 and 268 agreed to.
Schedule 5 [Patents: minor amendments]:
Lord Beaverbrook Lord Beaverbrook moved Amendments Nos. 309 to 311:
Page 177, leave out lines 6 to 11 and insert—
("(2) In section 43 of the Patents Act 1977 (supplementary provisions with respect to employees' inventions), in subsection (4) (references to patents to include other forms of protection, whether in UK or elsewhere for "in sections 40 to 42" substitute "in sections 39 to 42".").
Page 177, line 42, leave out ("any such additional matter") and insert ("matter extending beyond that disclosed in the application as filed").
Page 177, line 45, leave out ("any such").
The noble Lord said: Perhaps it will be for the convenience of the Committee if I move en bloc Amendments Nos. 309, 310 and 311. Those amendments clarify and simplify certain provisions in Schedule 5. The first amendment stems from the recognition that the proposed paragraph 7(4) extending certain rights for employee inventors to patent applications made anywhere in the world is unnecessary. The required effect can be achieved simply by extending the scope of a similar provision already existing in Section 43 of the Patents Act 1977.
The second and third amendments clarify the provisions in the new Section 76 of the Patents Act 1977 which would be inserted by paragraph 10. In subsections (2) and (3) of the new Section 76, the words "any such" in the phrase "any such additional matter" do not clearly identify the type of additional matter in question. The words refer back to the term "additional matter" in subsection (1). However, the definition of additional matter in subsection (1) refers to an earlier application and is inappropriate for subsections (2) and (3) which are not concerned with earlier applications. The amendments will eliminate any possible confusion. I beg to move.
On Question, amendments agreed to. Schedule 5, as amended, agreed to.
Clauses 269 and 270 agreed to.
Clause 271 [Supplementary provisions as to fraudulent reception]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 312:
Page 123, line 13, leave out subsection (5) and insert—
("(5) Any expression used in section 269, section 270 or this section which is defined for the purposes of Part 1 of this Act (copyright) has the same meaning as in that Part.").
The noble Lord said: This amendment tidies up a minor drafting point in order to clarify the meaning of subsection (5) of the clause. I beg to move.
On Question, amendment agreed to.
Clause 271, as amended, agreed to.
12.30 a.m.
Clause 272 [Fraudulent application or use of trade mark an offence]:
Lord Mottistone Lord Mottistone moved Amendment No. 312A:
Page 23, line 17, leave out ("section is") and insert ("sections are").
The noble Lord said: The amendments are grouped so that there might be 10 debates, but I have put them all together and, with the agreement of my noble friend on the Front Bench, I shall speak to Amendments Nos. 312A to 312N together. I am advised on this matter through the CBI by the Anti-Counterfeiting Group.
Clause 272 proposes a new Section 58A of the Trade Marks Act 1938. It contains a new offence to deal with counterfeiting, which a government White Paper has rightly described as a pernicious activity. Clause 272 is greatly welcomed both by industry which falls victim to this practice and the trading standards service which has hitherto fought to control it. All the amendments that have been tabled are designed solely to achieve a smoother fulfilment of the objectives of the clause.
The amendments fall into two groups. The first group consists of Amendments Nos. 312B to 312F, which put forward four separate drafting changes— two in subsection (1) of the new Section 58A—firstly to remove wording implying an element of intent, which is believed to be inappropriate at this point (Amendments Nos. 312B and 312D); and secondly, to catch possession of counterfeit goods by way of trade (Amendment No. 312C). There is one change in subsection (2) of the new Section 58A which would change the burden of proof of a belief held by a defendant into a defence which he may raise; that is covered by Amendment No. 312E. I have already spoken to Amendment No. 312F, which my noble friend has undertaken to accept.
Turning to the second group consisting of Amendments Nos. 312A and 312G to 312N, all those amendments put forward powers for the proper enforcement of Section 58A. They do it by proposing additional new sections numbered 58B to 58H. These sections are all modelled on existing legislation or on earlier provisions in this Bill for the enforcement of copyright. There is enforcement by trading standards officers (Section 58B, Amendment No. 312G); power for the police to apply to a magistrate for a warrant to search for counterfeit goods (the proposed new Section 58C, Amendment No. 312H); power for a court to order forfeiture of counterfeit goods (Section 58D, Amendment No. 312J); and power for enforcement authorities to share relevant information with each other and in proper cases with industry (proposed new Section 58E, Amendment No. 312K). In addition, there are provisions enabling Customs to treat imports of counterfeit goods as
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prohibited. These amend existing provisions for copyright to bring them into line with provisions for copyright in Clauses 102 and 103 of this Bill. There are also Sections 58G and 58H which are covered respectively by Amendments Nos. 312M and 312N.
All these amendments are designed by people who are experienced in these matters to tidy up Clause 272 and I hope that they will appeal to my noble friend the Minister if not in total then in part. If they are not entirely appealing, perhaps my noble friend may be able to say that he might be able to improve the wording, or whatever, of the relevant parts. I beg to move.
Lord Beaverbrook: For the convenience of the Committee, I shall speak to Amendments Nos. 312A to 312N, excluding Amendment No. 312F, which was spoken to earlier by my noble friend. We believe that Amendments Nos. 312B and 312D proposed by the noble Lord will not have the effect that he desires. Instead, we believe that they will merely serve to obscure the scope of the offence. The replacement of the formula "used or intended to be used" by "for use in" would not make it any less necessary to prove the intention of the person who made, sold or used material for labelling, packaging or advertising goods, but might require the prosecution to establish also that the material was of a type which was normally used for that purpose. This could lead a prosecution to fail merely because the defendant made, or intended to make, an unusual use of material.
As the clause is drafted, it is enough that the material either has been used or is intended to be used for a counterfeiting purpose. If it has been used for that purpose, no further proof of intention is needed. The amendment, however, would render evidence of actual use inadequate. It would become necessary to prove the intention underlying the use, in order to show that the material was for use in labelling, packaging or advertising goods.
Moreover, there might be cases in which the accused intended to use material for labelling, packaging or advertising purposes which was not normally used for that purpose. As the clause is drafted, proof of his intention would be enough. The amendment might, however, open the door to a defence along these lines: "I know that I intended to use this material to label goods, but it is not normally used for that purpose, and you have failed to prove that it is material for use in labelling goods". I am not saying that such a defence would succeed, but there is no point in running the risk that it might.
Turning to Amendment No. 312C, we are happy to accept this in principle. It would make it an offence merely to be in possession of counterfeit goods in certain circumstances—the amendment says "by way of trade", but I shall come back to that phrase in a minute—without the prosecution having to prove an actual sale or offer for sale. When the Bill was introduced, we did not think it right to create an offence of mere possession punishable by 10 years' imprisonment; but having received representations on the point and having heard what has been said here today, we think that possession should be added to the clause. The man with a warehouse full of

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counterfeit goods ought to be convicted whether or not the prosecution can prove that he has successfully made a sale.
We do not, however, think that "by way of trade" is right. That phrase appears in the Copyright Act 1956, and when we repeated it in the copyright clauses sent out for consultation last year we were rightly questioned about its obscurity.
I suspect that what is needed is something along the lines of Clause 98(1)(c), "in the course of a trade or business with a view to the commission of a further offence under this section." However, we should like to give further thought to the exact words and come forward with our own amendment at a later stage.
Amendment No. 312E would replace subsection (2)(c) with a statutory defence, and this is another amendment that we can accept in principle. We recognise that the existing formulation of subsection (2)(c) would place on the prosecution the heavy burden of proving an absence of belief on the part of the accused.
Proof of a negative is always difficult. We believe that the shifting of the burden of proof would ease that burden without being unfair to the accused.
I should like to be able to accept this amendment without more ado, but unfortunately the drafting is not quite right. It does not say that for the defence to succeed, the accused must actually believe as well as having reasonable grounds for belief. Obviously, a person who has reasonable grounds for believing his entitlement but actually knows otherwise ought not to be able to use this defence. If the noble Lord would withdraw this amendment, we shall deal with this question together with the other amendments that we have undertaken to bring forward on this clause at a later stage.
Turning to Amendment No. 3I2G, I can say at the outset, that we favour giving the trading standards officers powers under the new law. In practice, they are the people who will in many cases uncover evidence of counterfeiting and it would be anomalous if they could not use that evidence to bring a prosecution.
The approach adopted in the Amendment No. 312G is attractive because it would adapt the powers trading standards officers already have under the Trade Descriptions Act to enter premises and seize goods or documents. In practice it would be unlikely to result in any new encroachment on private rights, or a drain on local authorities' resources, because the new law is not expected particularly to increase the number of cases needing investigation at the outset. The benefits of Clause 272 are more in improved chances of conviction and more realistic sentencing in serious cases.
Local authorities will clearly have an interest in any proposals concerning trading standards officers and we have already started a consultation exercise to determine their views on the possibility of trading standards officers being given powers to enforce the new offence. As I have said, I believe that the additional resource implications will be minimal. I therefore hope for a positive response, particularly since the proposals are supported by the trading
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standards officers themselves. Once this consultation is completed we shall be in a position to bring forward whatever amendments may be needed.
New Section 58C proposed by Amendment No. 312H would give constables new powers to enter and search premises over and above the general powers they have under the Police and Criminal Evidence Act 1984. Under the existing law a constable may obtain a search warrant only if the offence committed is a serious one. This depends on the circumstances of the individual case. The amendment would remove the need to show that the offence was serious. This is, however, unnecessary if trading standards officers are given the powers. I indicated just a moment ago that we are prepared in principle to give them. These officials have general authority to enter business premises and can obtain warrants in respect of residential premises by showing due cause. I therefore cannot accept Amendment No. 312H.
Trading standards officers will of course be able to take police officers with them if violence is anticipated. In those serious cases where the police may be expected to take a lead in the investigations they will be able to obtain warrants in any case. Accordingly I ask my noble friend to withdraw the amendment as I certainly could not accept it.
Turning now to Amendment No. 312J, property used in the commission of an offence is already liable to be forfeit under general powers given to the criminal courts. These powers are in fact being strengthened by Clause 65 of the Criminal Justice Bill, which is currently being debated in another place. Nevertheless, we acknowledge that counterfeiting gives rise to special considerations. Counterfeits are not like other property used in the commission of an offence. For example, housebreaking equipment may be perfectly innocent everyday tools. It would not be right for hammers or screwdrivers to be confiscated unless they actually related to an offence for which a conviction had been secured. Counterfeits, on the other hand, are not innocent in themselves. In a sense they are the offence.
But there is a problem. It is that a distinction is quire rightly being drawn between counterfeiting, which is a criminal matter, and simple trade mark infringement, which is not. But how is a court to decide, where there has been no conviction, that goods are counterfeit as opposed to straightforward civil infringements? We must be very careful that the criminal courts should not trespass on what ought to be a matter for the civil law.
The proposed amendment takes no account of these considerations and we therefore believe it is much too broadly framed. We are, however, prepared to look again at whether there is scope for some strengthening of the powers of forfeiture; for example, where convictions have been secured on specimen charges only but where large quantities of goods similar or identical to those in respect of which charges were brought were also seized.
Amendment No. 312K has two aspects. Both are concerned with the disclosure of information by enforcement authorities. The first aspect is that an enforcement authority is to be permitted to pass on information to any other enforcement authority. We

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have no problem with this aspect. Indeed we believe that exchange of information of this kind is important for efficient enforcement. However, we see difficulties in the second aspect in which it is proposed that enforcement authorities should be able to pass on information. The amendment would create a duty to pass certain information to trade mark proprietors and give the courts power to order disclosure in certain circumstances. We are not convinced that that is right. It is not at all clear to what extent information about criminal investigations should be made available for the purposes of private litigation, particularly only to one side in that litigation. There are matters of general principle involved here and we shall have to think very carefully about what amendments, if any, should be made.
We have reservations about Amendments Nos. 312M and 312N. In the first place, importation of counterfeit products from outside the EC is already covered by an EC regulation. Thus the amendments could not be applied to such imports. Furthermore, trade mark proprietors already have the right to notify Customs and Excise of the expected importation of all infringing goods, whether counterfeit or not, and to have them treated as prohibited. This right is given under Section 64A of the Trade Marks Act 1938, which was inserted by Section 17 of the Trade Descriptions Act 1968.
The proposed new provision would, however, go much further in allowing counterfeits to be treated as prohibited goods for up to five years. We believe that such a provision would place a heavy burden upon the Customs and Excise. We are not convinced that this would be justified. We shall, however, look carefully at resource implications and consider whether there is anything more that can be done.
I hope that that is helpful to the noble Lord in relation to this large group of amendments. Perhaps he would like to consider further what I have said.
Lord Lloyd of Kilgerran: I am very grateful for the clear comments made by the Minister. I, like my noble friend Lord Ezra, whose name is attached to this amendment, was also approached by the group known as the Anti-counterfeiting Group. My noble friend Lord Ezra asked me to tell the Committee that, as president of the Institute of Trading Standards Administration, he is very keen to strengthen the provisions against counterfeiting. He specifically referred to Amendment No. 312G, which the Minister approached with some sympathy.
Lord Mottistone: I am grateful to my noble friend for his careful explanation of all these amendments and indeed for his acceptance of so many of them in principle, and for his undertaking to look at most of those that he has not accepted. I think that it is most hopeful that the major purpose of this group of amendments to tidy up Clause 272 will be achieved, if not immediately, at later stages of the Bill. I beg leave to withdraw Amendment No. 312A.
Amendment, by leave, withdrawn.
[Amendments Nos. 312B to 312E not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 312F:
Page 124, line 11 after ("director,") insert ("manager,").
The noble Lord said: I beg to move. I have already spoken to this amendment.
On Question, amendment agreed to.
[Amendments Nos. 312G to 312N not moved.]
Clause 272, as amended, agreed to.
Clause 273 [Financial assistance for certain international bodies]:
[Amendment No, 312P not moved.]
Clause 273 agreed to.
Clause 274 agreed to.
Clause 275 [Extent]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 312Q:
Page 124, line 39, leave out ("(performers' rights)") and insert ("(rights in performances)").
The noble Lord said: Amendments Nos. 312Q, 313 and 314 are by way of corrections to Clause 275. I hope that it is convenient to the Committee to deal with them all together.
First, we only recently spotted an error in subsection (1), which Amendment No. 312Q will correct. The title of Part II is not "performers' rights" but "rights in performances". Secondly, the Committee will doubtless have noticed that subsection (1) does not specify the relevant clause in Part II which deals with the extent of that part. We therefore need to insert a reference to Clause 185 in subsection (1).
Thirdly, noble Lords will note that Part VII commences with Clause 269 and not Clause 271, as might be inferred from subsection (4)(a). As the subsection stands the bill is silent as to the extent of Clauses 269 and 270. Amendment No. 313 will correct our mistake and rectify this omission. I beg to move Amendment No. 312Q.
On Question, amendment agreed to.
Lord Beaverbrook Lord Beaverbrook moved Amendments Nos. 313 and 314:
Page 124, line 40, after ("146") insert (", 185").
Page 125, line 6, leave out ("271") and insert ("269").
On Question, amendments agreed to.
Clause 275, as amended, agreed to.
Clauses 276 and 277 agreed to.
Schedule 6 agreed to.
[Amendment No. 315 not moved.]
Schedule 7 [Repeals]:
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 315A:
Page 188, line 3, at end insert—

("1938 c. 22

Trade Marks Act 1938

Section 28(6)").

The noble Lord said: I beg to move this amendment. I have already made a few remarks about this and the noble Earl, Lord Dundee, said that he would reserve his comments until this particular amendment came up for consideration.
I should like to refer to a letter written by the Chartered Patent Agent, Mr. Ashmead, to the Secretary of State for Trade and Industry, pointing out the importance of obtaining trade mark registrations in regard to character merchandising. The Trade Marks Act 1938 did not cover such trading and did not realise that such trading was possible. I should like to reiterate what was said by the noble and learned Lord, Lord Bridge, about Section 28(6) of the Trade Marks Act. He said:
"It is a complete anachronism and the sooner it is repealed the better".
I beg to move.
Lord Beaverbrook: I fully understand the purpose of this amendment. It is to sanction the practice known as character merchandising; that is, the granting of a licence by a person who has created, for example, a children's cartoon character, allowing the use of that character as a trade mark on goods such as clothing or toys. This is of course a practice undreamt of at the time of the 1938 Act.
In the Government's view however this amendment should not be accepted. In the first place it would not be timely, as the Department of Trade and Industry is currently considering what changes in this area of the law are desirable, particularly in the light of developments in the European Community. Character merchandising is one of the subjects on which the department has consulted interested circles, but it is in the context of a more general look at trade mark law that any necessary action should he taken rather than in this Bill.
In the second place, even accepting that some change in the law is needed, I am not convinced that a simple repeal of subsection (6) of Section 28 provides an answer. That provision was included to prevent the practice of dealing in trade marks as a commodity in their own right by means of speculative registration by a person who has no intention of using the marks but who instead offers to sell or licence them to bona fide users. We would not wish to open the door to this practice and would, therefore, before agreeing to repeal subsection (6) want to consider carefully whether some other provision should replace it in order to control trafficking of this kind.
It is for that reason that I cannot accept the noble Lord's amendment as drafted at the moment.
Lord Lloyd of Kilgerran: I thank the Minister for his reply. The Bill already contains matters relating to trade marks. The amendment is simple and is easily incorporated into the Bill. The last major review of copyright was in 1956 and also in the Trade Marks Act 1938. The repeal is urgently required by industry and if this opportunity in the Bill is missed there may not be another for many years. The law of trade marks is part of the overall scheme of intellectual property legislation and it is of great interest in the competitive atmosphere that the Government are endeavouring to encourage in this country.
After consideration of what the Minister has said, I shall withdraw the amendment on the
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understanding that the matter will be raised again at Report.
Amendment, by leave, withdrawn.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 316:
Page 189, line 38 column 3, at end insert ("Section 88.").
The noble Lord said: This is a minor correction to ensure that the list of repeals in Schedule 7 is complete. Section 88 of the Patents Act 1977 is repealed by paragraph 14 of Schedule 5. It ought, therefore, to be included in the Schedule 7 list. I beg to move.
On Question, amendment agreed to.
Schedule 7, as amended, agreed to.
In the Title:
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 317:
Line 3, after ("designs") insert ("and trade marks").
The noble Lord said: I have already spoken to this amendment. I beg to move.
Lord Beaverbrook: I was not quite sure what the noble Lord intended by this amendment. Read literally it would cause the title to refer to "a design right in trade marks". This of course does not make sense. I assume that his concern is to ensure proper mention of trade marks, but this is already achieved in lines 5 ("trade mark agents") and 9 ("fraudulent application or use of a trade mark") and no other provisions in the Bill relate to trade marks.
The Government are currently considering what changes to trade marks law are desirable, particularly in the light of developments in the European Community. When the details of all these changes are known it will be necessary to have separate legislation dedicated to trade marks. I hope, therefore, that we can leave it until that point, which I trust will not be too far off.
Lord Lloyd of Kilgerran: I am obliged to the Minister. When he says that it will not be too far off, can he give any indication as to whether this is a matter which can be dealt with before this Bill leaves this place?
Lord Beaverbrook: Absolutely not.
Lord Lloyd of Kilgerran: With great regret, I cannot understand the reply of the Minister, but in view of the lateness of the hour I will not press the matter; although as this is the last amendment of the Committee stage I had hoped to achieve some success. Unhappily I have not done so.
Before I ask leave to withdraw the amendment, I thank the Minister for his courtesy and for the way in which he has treated these matters in this long Committee stage.
Lord Beaverbrook: I am grateful to all noble Lords who have participated in many days of long deliberation in Committee on this complicated Bill. When we started the proceedings I said that I should

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be interested to hear the views of Members of the Committee and I have found them particularly helpful with their comments. I hope that we are working along the road of improving this Bill as we continue with our proceedings.
Lord Williams of Elvel: I join with the noble Lord, Lord Lloyd of Kilgerran, in thanking the noble Lord, Lord Beaverbrook, for his patience and hard work and also the noble Earl, Lord Dundee. They have both worked extremely hard on this Bill and I believe I am right in saying that this is the first major Bill that the noble Lord, Lord Beaverbrook, has piloted through this place. It is a long and complex Bill and he has handled it extremely well.
Lord Lloyd of Kilgerran: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
House resumed: Bill reported with amendments.
House adjourned at two minutes before one o'clock.