§ 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 moved Amendment No. 281VA:
Page 84, line 6, leave out subsection (1).
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 1090 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 1091 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.
1092 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.
1093 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, 1094 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 1095 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 1096 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 1097 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 1098 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 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
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",
§ 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 1100 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 1101 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.
1103 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 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 1104 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.1105
§ 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 1106 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 1107 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 1108 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 1109 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 1110 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 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 1111 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 1112 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 1113 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.]1115
§ [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 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 1116 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 1117 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 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.1119
§ 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 1120 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 1121 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 1122 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 1123 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 1124 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. 1125 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.
1126 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 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.
1127 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 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, 1128 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 1129 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.
§ 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".1130 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 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.1131
§ Clause 205 [Primary infringement of design right]:
§ [Amendment No. 289A had been withdrawn from the Marshalled List.]
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 1134 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 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 1136 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.
§ 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 1140 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.
1141 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.