HL Deb 01 March 1988 vol 494 cc104-70

3.25 p.m.

Lord Beaverbrook

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Beaverbrook.)

On Question, Motion agreed to.

Clause 192 [Design right]:

Lord Mottistone moved Amendment No. 313: Page 85, line 33, at end insert ("whether it be a replacement part or otherwise").

The noble Lord said: My Lords, with the agreement of the House, I propose to speak also to my Amendment No. 314, government Amendment No. 315 and Amendment No. 336A. tabled by my noble friend Lord Stockton.

In putting forward these amendments I have endeavoured to respond to points made by my noble friend the Minister on amendments on this subject moved in Committee on 12th January. Clause 192 defines design right and that which is to be protected by that right. It should be remembered that design right does not confer an absolute monopoly on a designer but only protection against others copying or imitating his work; in other words, it appears to be intended to protect the skill and labour invested by a designer in the course of his work.

Subsection (3) defines certain matters which are not to receive protection under design right. Four items are set out in subsection (3)(a), (b), (c) and (d) respectively. The exclusion contained in subsection (3)(a) of, a method or principle of construction", is perfectly reasonable bearing in mind that design right is intended to protect aspects of the shape or configuration of an article. In that respect, I responded to what my noble friend the Minister said in Committee.

The exclusion set out in subsection (3)(b), which has come to be known as the "must fit" exception, is necessary to permit designers freedom to design items which must co-operate with other items. However, as worded, subsection (3)(b) is very broad. I believe that it is necessary to protect those features of an article's shape which are unavoidably determined by that of another article with which it has to co-operate. There are many features of shape or configuration which, it could be argued, enable an article to be, connected to, or placed in, around or against, another article", but those will not always be required in order that the two articles perform their proper function.

The exception for protection should be no wider than is strictly necessary to enable a designer, for example, to make a plug which will fit into a specified socket. It is for that reason that I propose to reword subsection (3)(b). The exclusion set out in subsection (3)(c) has come to be known as the "must match" exception. It excludes from design right protection those features of the style of the design which are similar to those in a related article. The essence of any design is its style. To have an exception from protection which will permit others to copy the style or aesthetic features of a design defeats the object of design right.

I would suggest that Amendment No. 315 put forward by the Minister will have the effect of preventing this exclusion applying to sets of articles such as a dinner service. However, it does not overcome the problem that might be associated with a vegetable dish, in which the lid must match the bowl and the bowl must match the lid. This means that with the present subsection (3)(c) remaining in the Bill, the bowl and the lid can presumably not enjoy design right protection as individual items and could therefore be sold as separate items, thereby avoiding any design right protection that the designer had in the bowl and lid as an integral item. Today many articles are made up of a variety of parts; frequently these parts are easy to assemble. Any such article will no longer enjoy effective protection against piracy if subsection (3)(c) is retained in the Bill.

Turning now to subsection (3)(d) of Clause 192, this is presumably intended to prevent dual protection for surface decoration through both copyright and design right. It is questionable whether this is needed or would be a good idea. However, if it is to be retained it should be made clear that the exception only applies to decoration in which copyright subsists. Some decoration of course may be in the form of a purely two-dimensional design on the surface of an article. On the other hand, design and ornamentation may be in relief and may therefore constitute features of the shape of an article. The dividing line between what would be regarded as pure decoration and what would be regarded as a feature of shape or configuration is by no means clear from the current wording of the Bill. Hence my proposed alterations to what is currently subsection (3)(d).

There has been much discussion as to whether or not replacement parts should enjoy effective protection under design rights. In the light of this controversy, the Bill should make it clear that such items do enjoy protection. That is the reason for my Amendment No. 313. I have spent considerably longer on Amendment No. 314 because I believe this to be the more fundamental feature of the clause. I beg to move Amendment No. 313.

3.30 p.m.

The Earl of Stockton

My Lords, I should like to support the amendment in the name of my noble friend Lord Mottistone. I should point out that in the event that his amendment is successful I shall not need to move my Amendment No. 336A.

Lord Jenkin of Roding

My Lords, perhaps I may support the amendments which have been moved by my noble friend Lord Mottistone and make a general point. There has been a good deal of publicity over the past year or two about the manufacture of motor car spares. It has been represented in a number of quarters that this has been to the oppression of the customer and the prevention of competition in that manufacturers of motor cars have had what has been seen to be an undesirable exclusive right over spares.

As I understand it, this clause and perhaps some of the later amendments to which we shall be directing our attention are designed—I must not be guilty of an unintentional pun—or aimed at dealing with the problem of motor car spares. However, there seems to me a risk that in attempting to deal with something which is really a matter of competition law and which should be dealt with in that way, some harm will be done to other branches of industry which deserve the protection of the design provisions of this Bill.

In particular, the point that we shall come to later is that a shorter period is proposed for design right. The exceptions to which my noble friend Lord Mottistone has drawn attention are now drawn very widely indeed where there is no design right protection. That is primarily aimed at helping those people who wish to manufacture spares for motor cars and not to be the subject of restrictions by the motor car manufacturers.

With the greatest respect, I do not believe that the Government have got this quite right. If there is a move to deal with that subject it should be dealt with in another way and not at the risk of allowing designs which should be under the protection of the designer, the British designer, the British manufacturer, to be used and copied or pirated too freely by competitors with British industry; I believe that my noble friend's amendments go some way towards restoring the position and I hope very much that my noble friend on the Front Bench will at least undertake to consider them carefully.

Lord Lucas of Chilworth

My Lords. I rise to oppose the amendments of both my noble friends. I also do not agree with my noble friend Lord Jenkin. As I see it, the Bill does not remove all protection for British design because it continues and extends registered design protection for novel aesthetic designs for a period of 25 years. In addition, it replaces design copyright by the more simple and logical form of protection which we call design right.

I think there are a number of red herrings drawn across this clause under the guise of soup tureens, lids, ladles and bowls, whereas what we are really dealing with—and let us not fool ourselves about it—is motor car parts.

Lord Jenkin of Roding

My Lords, why?

Lord Lucas of Chilworth

My Lords, that is what has excited the interest, not soup tureens which are protected under copyright and under design. It is the argument which the noble Lord. Lord Jenkin, advanced that this exclusion came about through the reference to the MMC of the Ford Motor Company. It was highlighted again in your Lordships' House, sitting in its judicial capacity, in the BL v. Armstrong case. It was highlighted again in the Community before the Directorate General for Competition, who held, in the case of Ford v. Veng (UK) Ltd., that the Ford action was anti-competitive.

So when we came to look at this Bill, right at the beginning, back in 1985–86, when we were considering the intellectual property rights and competition, my noble friend the Secretary of State said at Second Reading that we sought to give the consumer a fairer crack of the whip, if I may put it that way. These exceptions were provided for in the Bill.

If the noble Lord, Lord Jenkin, or others seek to protect the motor manufacturer, I think that I should remind your Lordships that in the reference to the MMC the Ford Motor Company, for example, accepted and agreed that the cost of its panels was on average 39 per cent. higher than competition and in some cases 366 per cent. higher. It was the contractual arrangements between the motor manufacturer, whether it was Ford, General Motors, Austin or Rover, or whoever, with their dealerships, that prevented a true market competitive element.

It is interesting to note that the State Farm Insurance Company of America has a law suit pending against the Ford Motor Company because the same practice is in force there as is in force here. The consumer is not getting the advantage. Prices are artificially held. The provisions that are in the Bill give a much fairer position across the whole hoard—to the manufacturer, the independent manufacturer and the consumer. I believe that what the Government have in the Bill is about right and that it should stay where it is.

Lord Morton of Shuna

My Lords, I hope that it is permissible to intervene from this side in the discussion. The discussion seems to have been carried out wholly on the other side. We on this side think that this interesting discussion merely proves that it is a bad principle to start out on one particular thing such as the motor industry and then expand without having thought the matter through or thought through how it will affect other parts of industry.

Also, we consider that basically the White Paper got it right, that the Government have got it wrong in this Bill and that there should be some protection for spare parts. Otherwise one will discourage innovation and obstruct employment. Possibly the way out, as was suggested earlier, is by extending design copyright.

It also appears to me that noble Lords opposite are prepared to adopt different standards depending on what they are talking about. We spent quite a large part of last month discussing the necessity for competitive tendering. The noble Lord, Lord Lucas of Chilworth, wants competition on spare parts for motors. But if I may refer to the Statement that has just been read, there is not a hint of competitive tendering in relation to the taking over of the Rover Group. Perhaps some things are more equal than others.

It appears to us that the Government have got it wrong. On the whole, we are sympathetic to the amendments in the name of the noble Lord, Lord Mottistone, but it will be interesting to see if he pursues those to a Division.

Lord Somers

My Lords, one thing puzzles me slightly about this. Everybody knows that a car is made up of multifarious objects which are designed by other firms. Supposing somebody wishes to fit a different type of carburettor in a car. Whose copyright is being offended—the maker of the car or the maker of the carburettor? It is that kind of thing which seems to me to present rather a problem.

3.45 p.m.

Lord Beaverbrook

My Lords, with the leave of the House I should like to speak to Amendments Nos. 313 and 314 in the name of my noble friend Lord Mottistone; Amendment No. 315 in my own name, and the recently tabled Amendment No. 336A in the name of my noble friend Lord Stockton. These all concern the exceptions to design right contained in Clause 192(3) or the related question of whether design right applies to replacement parts.

I shall turn first to Amendment No. 313 of my noble friend Lord Mottistone, together with subsection (3B) in Amendment No. 336A of my noble friend Lord Stockton. These are both intended to make it clear that design right does apply to replacement parts. However, in our view this is already clear from the Bill as drafted. Clause 192(2) provides that "design" means the design of any aspect of the shape or configuration of the whole or part of an article, and a replacement part is as much an article as the object of which it is to be part. There is nothing in the Bill which points to a different conclusion.

We are of the view, therefore, that these amendments are unnecessary. We are reluctant to include redundant words and it seems inappropriate to make a specific reference to replacement parts given that Clause 192(2) contains a very general definition of "design" which applies to all articles. It is also possible that the amendments would have undesirable consequences. The apparent emphasis on replacement parts in Clauses 192 and 205, which are otherwise very general provisions, could conceivably result in interpretation problems in Part III itself.

In addition, the presence of express wording referring to replacement parts might have an effect on the interpretation of other intellectual property legislation. No other intellectual property statute includes similar provisions and we would not want anyone to be able to use the inclusion of such provisions in Part III to bolster an argument that the absence of a similar provision in another statute is an indication that the protection conferred by that statute does not apply to replacement parts. For these reasons, I very much hope that my noble friends feel able to withdraw their amendments on this point.

I shall now turn to Amendments Nos. 314 and 315 and subsection (3A) in Amendment No. 336A of my noble friend Lord Stockton. These all concern the must-fit and must-match exceptions. We discussed these exceptions in Committee, when I explained at some length what they arc intended to achieve and why they are of fundamental importance. I am sorry that my explanation has not convinced my noble friends, but I must say to them that we remain of the view that their proposals would have very undesirable consequences.

Paragraph (b) in Amendment No. 314 of my noble friend Lord Mottistone would provide that copying would only be allowed where it was absolutely unavoidable and essential. The same is true of subsection (3A) in the amendment of my noble friend Lord Stockton. As I said in Committee, this kind of formulation is far too narrow. The result would be that we would have a recipe for litigation. It would almost always be possible to argue that this feature or that feature was not really essential. We do not want British industry to spend all its time arguing over whether minor design details are or are not covered by the must-fit exception. In our view, the formulation in the Bill would allow British industry to get on with the job in hand; it would allow those who operate fairly to continue to do so without the ever present threat of a writ; and it would provide orignal designers with the protection they need from those who would operate unfairly.

As to whether the must-fit exception should be placed in Clause 192 or in Clause 205 as the amendment of my noble friend Lord Stockton would provide, I can only say to my noble friend that I dealt with this point at some length in Committee. We have not changed our view on this, so perhaps I may refer him to the Official Report for the record of what I said in Committee.

Turning now to the must-match exception, I cannot accept that it is unfair or unreasonable. Just like the must-tit exception, it is necessary in order to avoid the situation where design right could completely shut competitors out of the market. However, as my noble friend Lord Mottistone will know. I gave an undertaking in Committee to look at the precise wording of Clause 192(3)(c). Amendment No. 315 in my name is the result of those deliberations and is intended to make it absolutely clear that the exception applies only to parts of a single object. The effect would be that the exception would not apply to individual items in a set of cutlery or a suite of furniture. In other words, it would not apply to families of articles but only within a single article.

I appreciate that this amendment does not go as far as my noble friend Lord Mottistone would wish. Nevertheless, as I explained in Committee, the must-match exception is of fundamental importance. Without it, design right would result in monopolies. And that is something that we do not want to see.

Finally, turning to paragraph (c) of Amendment No. 314 of my noble friend Lord Mottistone, we come to surface decoration. I think it is safe to say that here I am at one with my noble friend in saying that surface decoration should be covered by copyright. However, your Lordships have already accepted an amendment to Clause 51 which makes this absolutely clear. In view of this, I hope my noble friend will be able to agree that there is no need to make any change to Clause 192 in this respect.

Just to emphasise this point, I say to my noble friend that not all surface decoration will be protected by copyright. For example, there may be no original drawing, although this is admittedly unlikely; or the original drawing may not qualify for copyright under Clauses 143 and 144. Nonetheless, surface decoration is not a fit subject for the design right provided for in Part III of this Bill. If a particular piece of surface decoration is not protected by copyright the only appropriate means of protecting it should be registered design under Part IV of the Bill.

I say to my noble friend Lord Jenkin of Roding that design right is primarily directed to motor car spares. That was pointed out by my noble friend Lord Lucas of Chilworth, and I fully agree with him. My noble friend Lord Jenkin also said that it does not take into account the wider needs of other industries. This is not the case. The Government have carefully considered design protection in relation to all sectors of industry. We believe that the Bill provides the necessary balance between protection and competition bearing in mind that other forms of protection are available, in many cases under the patent system and the registered design system.

The noble Lord, Lord Morton, suggests that spare parts should be given protection as proposed in the White Paper. I hope that I have made it clear that the Bill will protect spare parts to the extent that they have features of shape and configuration which do not have to be copied in order to fit or to match aesthetically. A very large number of parts will be protected under the Bill.

I am sorry to be so unwelcoming towards my noble friend's amendments. We have thought very long and hard about all the exceptions to design right, and with Amendment No. 315 we think that we have achieved the right balance.

I should say to the noble Lord, Lord Somers, that we are dealing with design right in this section of the Bill and not copyright. I think that his example of a replacement carburettor for someone's motor car would probably be entirely at the discretion of the owner of the motor car. I do not believe that that would infringe any rights that the motor manufacturer might have in his particular product.

I shall conclude by saying that we believe that we have got it about right. It is a very difficult balance to strike, but I believe that the way that the Bill is now drafted in terms of the must-fit and must-match exceptions is right.

Lord Mottistone

My Lords, I thank my noble friend for explaining the position at some length. I am not altogether happy with what he has said. It is unfortunate—I think my noble friend admitted this—if, as my noble friend Lord Lucas said, the whole point of the provision is to look after motor cars. I cannot believe that that is what the Government intended. I know that the Minister went on to say that it also covers everything else. But what has frightened those of us on the industry side is that it seems to have started with motor cars and then perhaps been modified. It would have been better if it had started with everything else and then taken into account the motor car problem. It sounded to me as though my noble friend was admitting that the Government had started with motor cars and added the other bits later.

Lord Beaverbrook

My Lords, perhaps my noble friend will give way. We did not start with motor cars; the submissions that we received started with motor cars.

Lord Mottistone

My Lords, that makes it slightly better, but it looks as though the Government started with motor cars. Obviously one must read with great care what has been said. I am grateful to my noble friend for agreeing with me on the modifications to what is now subsection (3)(d) in saying that it is covered elsewhere in the Bill. We will have to take a close look at that to see whether we agree.

I do not propose to go any further at this stage. I think that there will be occasions when one may want to try to continue to press the Government to modify the provision slightly in the way suggested by my noble friend Lord Jenkin. I am most grateful for his support. I think that we shall not necessarily drop the matter at this stage and there may even be arguments about it when the Bill goes to another place. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 314 not moved.]

Lord Beaverbrook moved Amendment No. 315: Page 85, line 40, leave out from first ("of") to ("part") and insert ("an article of which that article is intended to form an integral").

The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Morton of Shuna moved Amendment No. 316: Page 85, line 43, leave out subsection (4).

The noble Lord said: My Lords, this amendment is aimed at taking out subsection (4) of the clause and removing the "commonplace" argument. It is our contention that this refinement should be omitted. It is likely to give rise to much litigation as to what is and what is not commonplace, and it seems totally unnecessary.

Perhaps noble Lords will turn to Clause 205 where the question of infringement of design right begins. The holder of the design right will have to prove that the design is reproduced without the right owner's licence. This apparently calls on the right owner to establish that a design has been copied. This copying may be difficult to prove in the case of an article having a number of variants. If direct copying of an article can be established we consider that that should be enough. The owner of the design right should not have to overcome an additional hurdle by having to establish that the article which is being deliberately copied, in other words, pirated, is in fact commonplace. On that basis, I beg to move the amendment.

Lord Beaverbrook

My Lords, I admit straightaway to the noble Lord, Lord Morton, that the word "commonplace" does not have a precise meaning. Nevertheless we believe that in the context of this Bill it will provide a perfectly comprehensible and workable threshold for design right. In our view the meaning which would be given to the term "original" if this were not qualified—that is, something which is the creator's own work and not a copy—is too generous a test for the acquisition of design right. To put it in an extreme form, it could allow someone to acquire a right for re-inventing—I should really say re-designing—the wheel. Our intention is to avoid giving design right to mundane, routine designs of the kind which are common currency in the particular field in question.

We firmly believe that this kind of threshold is necessary and that the word "commonplace" will achieve the right result on its ordinary, commonsense meaning. Of course, if any of your Lordships can think of a better expression which both achieves the right result and is simple and easily understood, then I am open to suggestions. But I believe that we need a provision of this kind in the Bill, and in the absence of a better alternative we think that the way that we have drafted it will serve perfectly well.

Lord Morton of Shuna

My Lords, as is unfortunately sometimes the case, the Minister and I do not seem to see entirely eye to eye. I should have thought that if somebody designed a wheel and tried to take action against infringement of that basic design right, he could be met by a defence under Clause 205 that the person was not reproducing his wheel but somebody else's wheel. "Commonplace" will add to the problems.

If one has a special wheel—the Minister introduced the concept of the wheel— it is very difficult to see why somebody who specifically copies that wheel should be entitled to do so without there being any protection. However, rather than delay your Lordships' House any further, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

Clause 194 [Ownership of design right]:

Lord Beaverbrook moved Amendment No. 317: Page 86, leave out line 20 and insert ("which is not created in pursuance of a commission or in the course of employment")

The noble Lord said: My Lords, in moving Amendment No. 317, with the leave of the House, I should like to speak to Amendments Nos. 327 to 333, and Amendment No. 364. This series of amendments arises from representations which we have received on the effect of Clauses 194, 197 and 198. In the case of employee or commissioned designs, the effect of these clauses is that non-qualifying employers or commissioners will be entitled to design right if the actual designer is a qualifying person. Accordingly, the problem that was put to us is that of a British company confronted with a design stemming from a non-qualifying, foreign competitor. In those circumstances, the British company could not simply assume that design right did not apply without checking whether the design had been created, for example, by an ex-patriate qualifying employee. It was suggested, and we agree, that this would put an unreasonable burden on those who wanted to know where they stood. Therefore I have tabled this series of amendments which provide that, in the case of employee or commissioned designs, design right will arise only if the employer or commissioner is a qualifying person. This will overcome the difficulty and make it much easier to decide whether or not design right subsists. The amendments are, I think, largely self-explanatory. However, in connection with Amendment No. 364, I shall say that a consequential change was necessary and an opportunity presented itself to simplify the definition of British design. I beg to move.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord for explaining what this series of amendments is all about. I speak to the same grouping also. I am afraid that when the amendment was tabled and we looked at it we missed the point and thought that it was nothing more than a drafting amendment. However, it appears that it is an amendment of substance, so we shall have to read what the noble Lord has said before we are able to comment seriously on it.

In passing, perhaps I may say how useful it would be when amendments are tabled if the Government, as has happened on some previous Bills, offered to the Opposition or those noble Lords who are interested some explanation of them so that supplementary Notes on Clauses, such as we have had previously, could be made available.

Lord Beaverbrook

My Lords, I am grateful to the noble Lord, Lord Williams. I shall look into his suggestion because, particularly with a Bill of this nature, it could perhaps simplify proceedings in your Lordships' House. Perhaps I may add that from time to time it would be helpful to know whether or not an Opposition amendment is a probing amendment. I am grateful to the noble Lord.

On Question, amendment agreed to.

The Chairman of Committees (Lord Aberdare)

My Lords, if Amendment No. 318 is agreed to, I cannot call Amendments Nos. 319 or 320.

Lord Williams of Elvel moved Amendment No. 318: Page 86, line 21, leave out subsection (2).

The noble Lord said: My Lords, this amendment concerns subsection (2) of Clause 194 and addresses itself to what we believe is something of an inconsistency in the Bill as it is at present drafted. The commissioner of a registered design has first ownership of it under the Registered Designs Act 1949 and an equivalent provision is to be inserted for the new unregistered design right. However, there is no equivalent provision for copyright. Indeed, the Government have set their face against it in opposing a series of amendments that we have moved.

Nor, for that matter, is there such a rule for patents. Yet under the proposed scheme of the Bill as at present drafted the same subject matter, if it has aesthetic appeal, may be protected by copyright and by registered design. If it is a shape which lies in no man's land, somewhere between the aesthetic and the non-aesthetic, it will be protected either by copyright or by design right and it may not be clear which of them until a court decides.

Accordingly, there is much to be said for having a clear set of basic rules about first ownership of these rights that moves across the whole spectrum from copyright to design right to registered design right to patent. Of course, it is always open to a commissioner to acquire rights by contract if he so wishes. We feel that there is that inconsistency in the Bill as drafted and wish to draw it to the attention of the Government by means of this amendment. I beg to move.

Lord Beaverbrook

My Lords, I should like just to clarify whether we are also speaking to Amendment No. 377.

Lord Williams of Elvel

I beg your pardon my Lords, I should have mentioned at the outset that I was indeed speaking also to Amendment No. 377, which is an amendment along the same lines.

Lord Beaverbrook

My Lords, I am grateful to the noble Lord. With the leave of the House, I also shall speak to Amendment No. 377 as well as to this amendment. Perhaps I may just say by way of a preamble that there is an unfortunate relationship between the drafting of the noble Lords' amendments and that of Amendment No. 317 to which your Lordships have just agreed. If the present amendments were to be accepted, the result would be that no one would be the first owner of design right in commissioned designs.

Aside from that (because I understand that the noble Lord would like to hear my explanation of an apparent inconsistency) perhaps I may say that of course it is quite right that the Government are saying different things on ownership as between commissioned copyright works and commissioned designs. But I see nothing wrong with that; we are, after all, dealing with quite different things and I see no good reason why copyright and design right should necessarily be treated in the same way. Indeed, in this case quite the reverse. Design right concerns the designs of articles, which are the very essence of industry. Consequently, it seems to us that he who pays the piper should call the tune.

As I explained in Committee, the designs ownership provisions are essentially those which have operated in registered designs for almost 40 years without any difficulty. It is always open to those from whom designs are commissioned to agree different arrangements with the commissioner, and the argument that commissioners will always have the whip hand does not seem to me to be necessarily valid. In any event, that sort of argument cuts both ways because if commissioners have the whip hand, they would be able to impose agreements overriding the provisions which the noble Lords' amendments would make. I do not think that there is anything to be gained from following that line of argument, and I believe that the right thing to do is to decide what is just.

The noble Lord also mentioned the matter of patents. I think it is true that copyright, design right and to a certain extent patents may be in different areas but that is why we have Clause 215. Similarly, any conflict between copyright and registered design is dealt with by Clause 53, which deals with conflict and allows the right policy to be achieved in respect of each right. In this respect, I see no good reason why British industry should not be given the rights in designs which they commission and pay for. For that reason if the noble Lord were to press his amendments, I fear that I should have to resist them.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord for his reply. I was prepared to have Amendments Nos. 318 and 377 grouped with his amendment, Amendment No. 317. As he began by saying, they were more or less on the same subject and the one amendment was inconsistent with the other. However, the Government did not oppose the grouping so I did not see why the Opposition should do so.

I accept the arguments of the noble Lord; but the point to which I do not think he has addressed himself is the case of an article or a shape which lies somewhere in the grey area between what is aesthetic and what is non-aesthetic. The noble Lord may have responded to that point but if so I did not hear him clearly. Under those circumstances, the work may be protected by copyright or by design right and one may not know which until the court decides the matter. That seems to me to create a problem if the commissioned work has different rights depending on whether it is copyright or design right. That is the point that I was making. Perhaps, with the leave of the House, the noble Lord would care to respond to that point before I decide what to do.

Lord Beaverbrook

My Lords, this is a complicated area. The noble Lord, Lord Williams, knows that design right protects all original designs of all articles without registration and that the registered design provisions protect new aesthetic designs of articles. However, the Bill restricts this to articles whose aesthetic appearance is significant, but a shape in the grey area may be covered by two rights at once. However, I believe that Clauses 53 and 215 resolve any problem of this overlap area.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord. I shall certainly read with care what he has said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Beaverbrook moved Amendment No. 319: Page 86, line 21, leave out ("for money or money's worth").

The noble Lord said: My Lords, with the leave of your Lordships, I should like to speak to Amendments Nos. 319, 365, 368 and 369.

These amendments are purely a matter of drafting. Following the amendment that your Lordships have made to Clauses 194, 197 and 198, the Bill now contains several references to commissioned designs. Each reference is concerned only with commissions "for money or money's worth" and the use of a definition of this phrase in Clause 241 avoids undue repetition. The other amendments to Clauses 241 and 242 concern the point about business including professions and are the same as the other amendments on this point throughout the Bill. I beg to move Amendment No. 319.

Lord Williams of Elvel

My Lords, I am glad to hear that these are drafting amendments. I was beginning to think, after my last experience with a government amendment, that I had missed something yet again. I am grateful to the noble Lord. We shall not oppose it.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendment No. 320: Page 86, line 22, leave out ("entitled to") and insert ("the first owner of").

The noble Lord said: My Lords, with leave, I should like to speak to Amendments Nos. 320, 321 and 322.

In Committee, my noble friend Lord Mottistone drew attention to some inconsistencies in the drafting between Clause 194 and the equivalent clause, Clause 11, in Part I of the Bill. As will be apparent, these amendments correct the inconsistencies and I am very grateful to my noble friend for drawing them to my attention. In relation to Amendment No. 321, I should perhaps add that when I addressed the point in Committee I said that our preliminary view was that it was Clause 11 which should be changed rather than Clause 194 as my noble friend had proposed. I am more than happy to acknowledge that, on reflection, we have concluded that my noble friend was correct, and that it is Clause 194 which should be changed. I beg to move Amendment No. 320.

Lord Mottistone

My Lords, I am most grateful to my noble friend for thanking me. Unfortunately, although I pointed something out to him, his amendments do not encompass the amendment that we wished to make to Clause 194 at an earlier stage. To that extent, therefore, his contribution is not quite as splendid as I should have hoped.

On Question, amendment agreed to.

4.15 p.m.

Lord Beaverbrook moved Amendments Nos. 321 and 322:

Page 86, line 25, leave out ("a person") and insert ("an employee").

Page 86, line 25, leave out ("entitled to") and insert ("the first owner of").

On Question, amendments agreed to.

Clause 195 [Duration of design right]:

Lord Mottistone moved Amendment No. 323: Page 86, line 32, leave out ("fifteen") and insert ("twenty-five").

The noble Lord said: My Lords, I should like to speak also to Amendments Nos. 324 and 325, all three amendments being linked.

Although I have endeavoured to take account of the comments of the Minister on a similar amendment in Committee on 12th January, at cols. 1124 to 1126, and especially of his helpful remarks at the top of col. 1126, I do not consider that at that stage he saw the industry's point. I am therefore trying again with revised amendments. It is a pity that my noble friend's helpful remarks do not seem to have borne fruit.

Clause 195 deals with the term of design right. In most respects the protection conferred by design right replaces that which was given under the Copyright Act 1956 for design. The term of protection under that Act was 50 years plus the designer's life. The proposed term for design right represents a very substantial reduction on this term of protection, and can be expected to have a profound effect on those industries which are dependent on good design. It could be suggested that the term of a design right should be judged in the light of that conferred by patent protection—namely, 20 years —and that, since patents protect valuable inventions, the design right must have a lesser term. However, this ignores the fact that the protection conferred by a patent is an absolute monopoly while that conferred by a design right is a protection only against plagiarism.

In determining the duration of any intellectual property right it is always necessary to strike a balance between the need to encourage the creator of intellectual property and the need to encourage competition. In the case of the design right, industry believes that the Government have the balance substantially wrong. One of the strengths of the United Kingdom lies in the quality of the design that it produces. Surely this is something that the intellectual property rights system of the United Kingdom should be structured to preserve.

The Government have decided that registered designs warrant a period of 25 years' protection. Why should design rights, which, unlike registered designs, do not create an absolute monopoly, have a lesser period of protection?

Because of this, I am seeking in Amendment No. 323 to increase the design right life to 25 years. In Amendments Nos. 324 and 325 I am seeking to increase the marketing protection to conform to that time. It seems that in choosing a period of 10 years' protection the Government have allowed themselves to be influenced by problems that have occurred in one small sector of industry—namely, once again, the motor car industry. As a result they have ignored the needs of the remainder of British industry. Surely if there is a fear that the proprietors of design rights will adopt anti-competitive practices, the answer is to direct legislation at anti-competitive practices as such, not unwarrantedly to restrict the period of design rights. Some of that argument is rather similar to that advanced by my noble friend Lord Jenkin on the earlier amendment which we were discussing.

I hope that this time the Government will listen to what we have said and will perhaps accept these amendments. I beg to move Amendment No. 323.

Lord Jenkin of Roding

My Lords, I should like once again to support my noble friend. I do not wish to repeat the same arguments but to address my noble friend on the Front Bench on what seems to be one important aspect of this argument of design.

I believe that in recent years the Government, and in particular his department, have earned a good deal of praise from those concerned with industrial design for giving it an altogether higher status and profile in the general scheme of things. I remember that one of his fellow Ministers, John Butcher, was, very exceptionally and rather remarkably, awarded a prize by the Royal Society of Arts because of the contribution that he had made as a Minister to the importance of design, in particular in manufacturing industry. I find it therefore puzzling that, when it comes to protecting the results of the designer's work—as this Bill seeks to do it is at the lowest end of the scale of values that the industrial designer finds himself placed.

If one is concerned with copyright, as we were discussing last week, the period for artistic work which does not involve industrial design is 50 years—indeed 50 years plus. If one is talking about a registered design, that which is intended to appeal aesthetically to the eye, the period is 25 years. But for design right, which is the source of protection for industrial design, the Government seek only to give 15 years and I find that a puzzling order of priorities.

British designers have a very fine reputation in the world and it was pointed out at the recent CBI conference that the designers who work for Porsche, for Sony and for Mercedes-Benz are led by British designers. One can repeat that for lots of foreign companies, many of which compete in this market based on design. I am not saying that the one is the cause of the other, but if the Government wish to enhance the importance of industrial design as an element in our competitiveness, it seems, to say the least, slightly perverse that the period of protection for industrial design should be so signally shorter than that which is offered to other areas of creative work.

I understand the argument which my noble friend has addressed to your Lordships about the need to encourage competition, but I must say that I have a lot of sympathy with the remark which was quoted in an article in the Financial Times only last Saturday by Mr. Geoffrey Adams, managing director of the Design Protection Advisory Council, which your Lordships will recognise is part of the Design Council. After making the point which was made by the noble Lord, Lord Morton of Shuna, a few moments ago that the White Paper had got it about right for reasons which pleased nobody, he said in relation to the problem that we are considering now and the part that has been played in this by the motor car industry: Instead of the Bill's approach the Confederation— he was talking about the CBI— wants the problem of companies abusing their monopoly rights over spare parts to be dealt with by a copyright tribunal empowered to grant compulsory licences". I believe that in order to deal with the mischief which has clearly had a major impact on the Government's thinking that is the correct remedy—not to limit, as we did in Clause 192, the protection given by design right or, as in this case, to give it a very much shorter period of protection than other forms of creative work. I hope that even now, at this late stage in your Lordships' consideration of this Bill, the Government might be persuaded to look at this again.

Lord Lucas of Chilworth

My Lords, not I fear for the last time do I find myself opposed to both of my noble friends. This Bill does not weaken any of the incentives for British companies to innovate or to design. It will encourage them even further by removing unjustifiable protection, since the Bill will not set the United Kingdom apart from other industrialised nations. It will in fact bring the UK and those people engaged in industry and industrial design and innovation into line with most of the industrialised nations—countries like Japan, West Germany, the USA, Canada, Italy and so on. They do not have any form of protection for functional designs.

To me it seems ridiculous that, on the one hand, we should be encouraging greater freedom and yet provide what my noble friend's amendment does, which is a more contained protected period. This just cannot be right. I am not quite sure how my noble friend Lord Jenkin got onto motor car parts again and the Copyright Tribunal, but certainly I can see with the millions and millions of parts and panels, copied or pattern—not pirate—that there may be, that a copyright tribunal would be the worst possible organisation to deal with a dispute. It would take years to get through. It would be an absolute feast for the lawyers. The last thing we want to put matters of this kind to is a tribunal. We want an understanding in the Bill of what is allowed and what is not allowed. I believe that the Bill does just that and I hope my noble friend will resist this series of amendments.

Lord Williams of Elvel

My Lords, there are clearly sharp divisions of opinion on the Benches opposite on this matter. It is for the Government to make their case. We had a discussion in Committee, as your Lordships will remember, and I made reference at the time to the submission from Westland plc which impressed me with some of the extremely serious arguments that it made about the length of time required for design right protection. I am not saying that Westland is the only company in the world and no doubt the Government have received representations from other companies on the same lines, or indeed on different lines. But in this case, since we are dealing with a new right, it is for the Government to make their serious case for the time limit that they impose.

If I may offer a peace pact between noble Lords on the opposite Benches, it would be possible to extend the design period along the lines that the noble Lords, Lord Mottistone and Lord Jenkin of Roding, recommend, but also to make available compulsory licenses of right where those design rights are abused in any way, and extend the remit of Clause 217, which introduces licences of right in cases where design right monopoly is abused.

Lord Beaverbrook

My Lords, I shall also speak to Amendments Nos. 323, 324 and 325. Listening to the debate on this point in your Lordships' House, I certainly agree that the Government find themselves in the middle of an argument that has very strong advocates on both sides. But in speaking to my noble friend's amendments, it seems to us that there are first some drafting problems, particularly in cases where first marketing occurs more than 25 years after a design is first recorded in a material form. In such cases the two amended paragraphs of Clause 195(1) would give conflicting results. Nevertheless, my noble friend's aim is clear and he will not, I think, be surprised when I tell him that I am not able to accept an increase in the duration of design right.

I explained our reasons for resisting when we discussed this question in Committee and I can only say that our views remain the same. Functional designs are of central importance to the functioning of industry and it is important that they are not locked away for long periods. That is why we do not believe that they should have as long a period of protection as aesthetic and artistic designs, which are what registered designs and copyright protect; and in this respect the period of protection we are proposing gives as much, and in many cases more, protection than is available in other countries.

Apart from a very small number of countries which still have a copyright law derived from British statutes, and a small number which protect functional designs through registration for 15 years or less, we are aware of no other countries which have any coherent system of protection for functional designs. In this respect it has been said that protection is given by the unfair competition laws, which do indeed operate in other countries. We have of course looked at these laws but they are invariably, and necessarily, so vague and uncertain that they simply cannot be said to be at all effective against those who merely copy functional designs. There is certainly no evidence of which we are aware that they are used against this kind of copying.

The consequence of this is that, if we were to accept my noble friend's amendments, the United Kingdom would be well out of line with its foreign competitors in a way which would be damaging. Competition and the further development of designs and their application in new areas would be inhibited to an altogether undesirable extent, particularly in relation to the more competitive regimes which prevail in other countries. In any event it should not be forgotten that patent protection will still be available for inventive designs. In our view that, together with the protection we are proposing for non-patentable designs, is sufficient. It provides a proper balance between designers and their competitors and customers.

Having said that however, I should refer to the question of exactly what sort of marketing should start the 10-year clock running under Clause 195(1)(b). This issue arose in the debate in Committee and is a particular problem where designs evolve over a long period. For example, a design may well begin life as a concept rather than as an actual design or it might be that there are a few rudimentary designs. Either of these might form the basis of an agreement for the subsequent sale of equipment once a final design has crystallised. We have been looking at this with a view to ensuring that marketing of this kind does not start the 10-year clock. Unfortunately, this has proved to be a fairly complex matter of drafting, and we have not been able to table amendments in time for today's debate. However, we will be returning with amendments on Third Reading when I hope we will be able to make it clear that the 10-year clock is not started until articles made to a design are actually in existence, and the first of them has been marketed.

Finally, my noble friend said that there is no reason why design right protection should approach the 20 years' protection given by patents since patents give art absolute monopoly and design right protects only against copying. There is of course a difference between the two kinds of right. What they have in common is that they deal predominantly with articles that have a useful function and therefore can contribute to the overall efficiency of industry. Nor can there be any doubt that once an inventor has satisfied all the conditions needed to obtain a patent he deserves substantially longer protection than that given automatically to the designer.

I appreciate that this will not entirely satisfy my noble friend, but for the reasons given I cannot accept art increase in the term of design right. I must therefore resist the amendment.

4.30 p.m.

Lord Mottistone

My Lords, I thank my noble friend for putting his point of view so fully. It would have been nice had it been different. It is interesting that in his closing remarks he said that inventors deserve greater protection than designers. I am not sure that that would always be the case.

This is not a stage at which to challenge my noble friend, particularly because the amendment is obviously defective in detail. I shall not undertake to drop the matter, but we shall study carefully what has been said and perhaps return to it at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 324 and 325 not moved.]

Clause 196 [Qualifying individuals and qualifying persons]:

Lord Beaverbrook moved Amendment No. 326:

Page 87, line 6, at end insert— ("(1A) References in this Part to a qualifying person include the Crown and the government of any other qualifying country.").

The noble Lord said: My Lords, with this amendment I should like to speak to Amendments Nos. 326 and 370. It has been drawn to our attention that in Clause 196 of the Bill we have contrived to prevent the Crown from being a qualifying person. The result of this would be that the Crown would be prevented from acquiring design rights and this is clearly wrong. Similarly, it is also wrong that governments of qualifying countries should be prevented from acquiring design rights. The amendments correct these defects. I beg to move.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord for his explanation of this somewhat hardy amendment, the Government having now woken up to the fact that they had excluded the Crown from a rather important ability.

Clause 220 and following clauses deal with the Crown's ability to use designs without the licence of the design right owner in certain circumstances. I imagine I am right in saying that if the Crown itself is a design right owner and wishes to use that design right, the Crown must arrange with itself the terms under which it uses the design right. Is that a case for an argument between different departments of government about who pays what for which right? How will this operate?

Lord Beaverbrook

My Lords, that is an interesting point. I should have to look at it rather more carefully. There would no doubt be a number of different circumstances for each different occasion. We shall be discussing more fully later in the Bill the terms of the Crown's rights in these matters. I shall look into what the noble Lord has said.

On Question, amendment agreed to.

Clause 197 [Qualification by reference to designer]:

Lord Beaverbrook moved Amendments Nos. 327 to 330:

Page 87, line 28, leave out from beginning to ("qualifies") and insert—

  1. ("(1) This section applies to a design which is not created in pursuance of a commission or in the course of employment.
  2. (2) A design to which this section applies").

Page 87, line 31, after first ("design") insert ("to which this section applies").

Page 87, line 34, leave out ("If") and insert ("Where").

Page 87, line 34, leave out ("only").

The noble Lord said: My Lords, with the permission of the House, I beg to move Amendments Nos. 227 to 330 en bloc.

On Question, amendments agreed to.

Clause 198 [Qualification by reference to commissioner or employer]:

Lord Beaverbrook moved Amendments Nos. 331 to 333:

Page 87, line 38, leave out ("made") and insert ("created").

Page 88, line 1, leave out ("If) and insert ("Where").

Page 88, line 23, leave out ("only").

The noble Lord said: My Lords, with the permission of the House, I beg to move Amendments Nos. 331 to 333 en bloc.

On Question, amendments agreed to.

Clause 199 [Qualification by reference to first marketing]:

Lord Beaverbrook moved Amendment No. 334:

Page 88, line 21, leave out subsection (4) and insert— ("(4) In subsection (1)(a) "exclusively authorised" refers—

  1. (a) to authorisation by the person who would have been first owner of design right as designer, commissioner of the design 123 or employer of the designer if he had been a qualifying person, or by a person lawfully claiming under such a person, and
  2. (b) to exclusivity capable of being enforced by legal proceedings in the United Kingdom.").

The noble Lord said: My Lords, the amendment deals with designs which do not otherwise qualify for design right and sets out conditions concerning the circumstances in which articles made to the design are first put on the market. If these conditions are met, design right arises. One of the conditions is that the person who first put the articles on the market is the only person authorised to do so in the United Kingdom; in other words, the clause requires that there be an exclusive distribution agreement. Such agreements are of course subject to both UK and Community competition law, and in our view it would be absurd if an exclusive distribution agreement which was unlawful could give rise to design right. The amendment therefore makes the appropriate provision. We have also taken the opportunity to make the wording consistent with that used in Clause 194. I beg to move.

On Question, amendment agreed to.

Clause 205 [Primary infringement of design right]:

Lord Auckland moved Amendment No. 335: Page 90, line 4, after second ("design") insert ("which constitutes a substantial part of an article as a whole").

The noble Lord said: My Lords, I rise to move the amendment in the stead of the noble Lord, Lord Alport, who unfortunately is stricken down with influenza. He has asked me to deputise and to move the amendments standing in his name, which I do with your Lordships' permission. In moving this amendment I should like to speak also to Amendment No. 338 as the two are interdependent. I shall speak more briefly than the noble Lord would have done because of the short notice. I hope that my noble friend the Minister will acquit me of any discourtesy, but obviously I have not had the advantage of discussing matters with the companies concerned.

The noble Lord, Lord Alport, has been in discussion with the representatives of an industry affected by the new design rights of the Bill which were debated under Clause 192 and ensuing clauses up to Clause 240. I understand that the design right provisions are wholly new and in many ways the most innovatory part of the Bill. If that is so, I am not completely surprised—nor, I am sure, will my noble friend the Minister be surprised—that many sectors of the industry are feeling their way in this area and need to be able to probe the draft clauses to a certain extent so that the Minister can take the opportunity further to clarify these difficult areas.

I have been asked by the noble Lord, Lord Alport, to put down amendments on behalf of the Carbon and Ribbon Manufacturers Association. It has an important office in Colchester where the noble Lord, Lord Alport, had a distinguished career as a Member in another place for a number of years. These amendments are tabled in order to draw the attention of the House to what is thought to be a defect in the otherwise comprehensive drafting of the design right clauses. The point has been raised with my noble friend and the Ministers' officials, but a conclusion to these discussions has not yet been reached.

The fit and function exception which has been introduced into the Bill since the publication of the White Paper is welcomed by the Carbon and Ribbon Manufacturers Association companies since the product in question here—replacement typewriter ribbons housed in cassettes, as they universally are nowadays—is necessarily constrained in design terms by the necessity to fit the space on the typewriter where they are inserted.

Many if not most of the design features of the cassette are covered by the fit and function exception in the Bill. However, some minor design features of the cassette may not be constrained by fit and function, and if these features were reproduced by office stationery companies in the replacement cassette market then in principle under the Bill they can be taken to court for breach of design right.

The purpose of the amendments is to suggest that the Bill should contain something like a de minimis provision allowing the courts to say that they will discourage litigation on the margin in relation to minor design features. So if the article in question is mostly constrained by fit and function, though not in each and every feature, then it will nonetheless be covered by the fit and function exception. The drafting may be capable of amendment at this stage but the companies have made a genuine effort to try to have it right and they would certainly be happy to accept an improved draft from the Minister.

These are small companies, and it has been the wish of every government to give small companies every facility to export, which I believe this company does, and to retain their place in the community. I believe this amendment will help to do that. I thank the Minister for patiently listening to me, particularly at short notice, and I look forward to his reply. I beg to move.

Lord Beaverbrook

My Lords, with the leave of the House, I should like to speak to Amendments Nos. 335 and 338. As I understand it, the problem arises where most of the design features of a particular product do not attract design right; for example, because they are must-fit, or indeed must-match features. In such a case there may be a few remaining features which form only a small proportion of the product but which could not be copied. The solution put forward by the noble Lord, Lord Alport, is to deny design right protection to the design of features which do not constitute a substantial part of the product as a whole.

Although I can quite see what has led to this proposal, it is something I must resist. The reason for that is quite simple. Why should a design feature get no protection just because it happens to relate only to a small part of a product? It is perfectly possible for a design feature to be concerned with only a small part of an article and yet be highly significant. For example, consider the fins which are now starting to appear on the ends of aircraft wings. These are certainly very small in relation to the size of the wings. But I understand they have very significant effects in improving the performance of the aircraft.

In our view, such features deserve protection. Of course, if they are commonplace they would get no protection under the Bill as drafted. An example might be a vehicle exhaust pipe. In this case many of the features of the design will be constrained by the need to fit the pipe underneath the vehicle. These must-fit features will not get design right and all that might be left which could qualify for design right might be a couple of straight or routinely curved pieces of piping. Such features would surely be commonplace and could therefore be copied.

However, where what is left is a small but significant feature, then in our view it would be quite unfair on the designer if it could be copied. It must be remembered that in cases like this the designer's protection for his investment in the design will already have been considerably reduced in the interests of competition by the must-fit or must-match exceptions. There is no reason on competition grounds to take way the remaining protection where it is possible to design around the feature in question. That would simply be a free gift to the copier.

For those reasons, I resist the amendments in the name of the noble Lord, Lord Alport, which were so eloquently introduced by my noble friend Lord Auckland.

Lord Auckland

My Lords, I thank the Minister for his rather disappointing reply to this amendment. It is a highly technical matter and I shall need to study the reply before deciding on the next move to make. However, I thank my noble friend for his full reply, and I reserve the right to consider whether I should table something else at the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

The Earl of Stockton moved Amendment No. 335A: Page 90, line 14, after ("reproduction") insert ("means copying but").

The noble Earl said: My Lords, I beg to move the amendment standing in my name, and I should like to speak also to Amendment No. 336 standing in the name of the noble Lord, Lord Lloyd of Kilgerran. As drafted, Part III of the Bill is defective in failing to say that reproducing means copying. If that is not said, it could be reproduction to arrive at the same design by a totally independent act of creation and therefore be an infringement under subsection (2). That would make the design right analogous to a patent right—a monopoly right independent of derivation—instead of analogous to a copyright where derivation is of the essence. I beg to move.

Lord Beaverbrook

My Lords, with the leave of the House, I shall speak also to Amendment No. 336 in the name of the noble Lord, Lord Lloyd of Kilgerran. I am grateful to my noble friend Lord Stockton for raising the issue of the meaning of the term "reproduction" because it is clearly very important that we know exactly what will and what will not constitute a reproduction of a protected design. If I understood my noble friend correctly, he fears that because there is no explicit indication that reproduction means copying, and because design right applies to designs of any part of an article, any reproduction of the smallest, most mundane feature of a design will infringe design right.

I say immediately that it is not our intention that design right should operate in this way; nor do we believe that it would do so. For example, although design right does indeed subsist in the design of any part of an article, there is already a built-in limit as to how far this can be taken. This is because design right does not subsist in commonplace features, and as one takes ever smaller parts of a design, sooner or later the result will be commonplace. The Bill as drafted is therefore already self-limiting to prevent it being taken to absurd limits. Equally, the word "reproduction" appears in the current copyright law and has always been taken to mean the copying of the particular expression of an idea or design and not, for example, merely the taking of an idea. There is no reason why the courts should attach any different meaning to the word in the context of design right.

Nevertheless, we are aware of the concerns which have been expressed, and in this respect I should acknowledge the contribution of my noble friend Lord Campbell of Alloway who raised a similar point in Committee. It was I think clear that in the debate in Committee there had been no meeting of minds. That was of some concern to me but, having now had the opportunity to read and consider what my noble friend said, it is clear that the debate was based on mutual misunderstandings. As a result, my honourable friend the Parliamentary Under-Secretary of State for Trade and Industry met some of my noble friend's advisers and I am glad to say that the misunderstandings have now been cleared up.

My noble friend's advisers now, I think, understand what we are trying to achieve and we certainly now understand what is concerning both my noble friends Lord Campbell of Alloway and Lord Stockton, and also the noble Lord, Lord Lloyd of Kilgerran. On this basis we will be looking at the drafting of the Bill to see whether, and if so how, the position should be clarified. I can give no commitment that we will wish to make any changes but we certainly are aware of what is causing difficulty. I should therefore be grateful if my noble friend would agree to withdraw his amendment and perhaps the noble Lord, Lord Lloyd of Kilgerran, will also consider my remarks when we reach his amendment.

The Earl of Stockton

My Lords, I thank my noble friend for his assurances and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 336: Page 90, line 18, at end insert— ("(c) reproduction is the copying of a design so as to produce a design which is identical to the original design or which differs therefrom only to an immaterial extent; (d) reproduction involves the taking of a substantial amount of the original skill and effort from that expended in the creation of the design in which design right subsists as distinct from ideas embodied in such design.").

The noble Lord said: My Lords, I think it must be unique in any debate in this House that someone like myself about to move an amendment has had his amendment discussed so well by two noble Lords beforehand, including the Minister.

We are now dealing with what constitutes infringement of a design right. It is essential for the owner of a design right to know the nature of the infringement. It is also very important for the person who is attacked and said to be infringing to understand what constitutes an infringement. The intention of my amendment is to recommend the addition of two subsections, (c) and (d), in order to clarify the position as to what constitutes "reproduction".

The noble Earl, Lord Stockton, has put a view which has been accepted with sympathy by the Minister and I understand that the Minister accepts with some sympathy the amendment I am moving. In those circumstances, unless the Minister wishes to say anything further about the detail of my amendment I shall not move it but, if necessary, raise it again on Third Reading.

[Amendment No. 336 not moved.]

[Amendment No. 336A not moved.]

Clause 206 [Secondary infringement: importing or dealing with infringing article]:

Lord Beaverbrook moved Amendment No. 337: Page 90, line 26, leave out ("trade or").

The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Clause 207 [Meaning of "infringing article"]:

[Amendment No. 338 not moved.]

Lord Lloyd of Kilgerran moved Amendment No. 339:

Page 90, line 40, at end insert—("or (c) where the article is imported or proposed to be imported from another member state the manufacture or sale of that article was contrary to the laws of that member state.").

The noble Lord said: My Lords, I do not think anyone else has spoken to this amendment. Clause 207 deals with the meaning of "infringing article". Subsection (3) of the clause states: an article is also an infringing article if", and then in paragraphs (a) and (b) gives two instances. My amendment suggests including another example of where an article is an infringing article. This is: where the article is imported or proposed to be imported from another member state the manufacture or sale of that article was contrary to the laws of that member state". It is a very simple proposition. If an article is made in a foreign state contrary to the laws of that member state, and that can be proved, it is an article which is an infringing article.

I am certain that it will be argued against me that it is difficult to prove whether an article is made contrary to the laws of a member state. The fact that there is such a difficulty should not be enough to defeat this amendment, but I should be grateful for observations that any noble Lord can make on this practical matter of what constitutes an infringing article. I beg to move.

Lord Morton of Shuna

My Lords, I think I can see what the noble Lord, Lord Lloyd, wishes by this amendment but does it not go too far? There may be articles which are contrary to the law of another state for reasons that have nothing to do with design copyright or anything else with which we are concerned in intellectual property. It may be to do with the religious preference of the state or something of that nature. Why should an article which has no design right in it but which happens to be illegal in one state not be imported into Britain if it is not illegal in Britain?

Lord Beaverbrook

My Lords, we were somewhat mystified as to the intention behind this amendment. If read literally, its breadth is staggering. It would include within the definition of "infringing article" articles imported from another member state, the manufacture or sale of which was contrary to the laws of that member state, regardless of whether any design right would have been infringed if the articles had been made in the United Kingdom. In addition, the noble Lord's amendment places no restriction at all on which Community laws should be considered. We therefore have the spectre of, for example, an article being held to be an "infringing article" because its making contravened, say, the health and safety laws, the planning laws or, as the noble Lord, Lord Morton, said, some obscure religious laws or preference in another Community country. I hope that the noble Lord agrees that that perhaps goes too far.

We thought that perhaps the amendment was intended to provide that articles imported from another EC member state would be infringing articles if their manufacture or sale was contrary to the intellectual property laws of that state and if there would have been an infringement of design right if the article had been made in the United Kingdom. However, if that is the intention the amendment is unnecessary because the Bill as presently drafted already has this effect.

Subsection (3) of Clause 207 contains a general rule under which an article is treated as an infringing article if it is imported into the United Kingdom and its making in the United Kingdom would have amounted to an infringement of design right. Of course subsection (5) creates an exception to that general rule by providing that design right cannot prevent the importation of an article which the importer has the right to import under Community law. One of the matters intended to be covered by subsection (5) and likely to be relevant in this context is Article 30 of the Treaty of Rome, which relates to the free movement of goods within the EC. However, Article 30 only guarantees free movement to goods which have been lawfully produced or marketed in the member state from which they are exported. Consequently, if goods had been manufactured or sold in another member state contrary to the laws of that state, they would not benefit from Article 30. Therefore, they would not fall within the exception in subsection (5) and would be "infringing articles" under subsection (3).

I hope the noble Lord will understand from what have said why I must resist this amendment.

Lord Lloyd of Kilgerran

My Lords, I am surprised at the attack that has been made on this amendment, particularly by the noble Lord, Lord Morton. He seems unfortunately not to have read subsection (1) in Clause 207. It may be my fault that I did not read it out, but when I make amendments of this kind I endeavour to be as brief as possible. Obviously I was too brief on this occasion. The answer to the noble Lord, Lord Morton, is simply that subsection (1) states: 'infringing article', in relation to a design". Therefore, whenever we are referring to an article and an infringment thereof, it is in relation to a design. The attack by the noble Lord, Lord Morton, on my amendment is therefore a little too broad.

I come to the theme of this amendment. It is quite simple. The object is to exclude imports made unlawfully in another member state. There again, the attack made upon the amendment by the Minister is somewhat wide. Reference was made to certain parts of the Treaty of Rome particularly Article 30. I do not want to take up a lot of time discussing the treaty his evening. In view of what the Minister has said I shall read Hansard and decide whether that matter should be brought up again.

Amendment, by leave, withdrawn.

5 p.m.

The Earl of Stockton moved Amendment No. 339A: Page 91, leave out lines 1 to 4

The noble Earl said: My Lords, I propose the deletion of subsection (4) on the ground that it places far too onerous a burden on a defendant to leave him to prove that at the date an article was made the design right alleged to be infringed did not subsist. The time when the design right—if there is a design right—came into existence would be a matter peculiarly within the knowledge of the plaintiff. Further, that date dictates the time when the design right ceases to exist. A defendant would often be faced with a totally impracticable, if not an actually impossible, task by subsection (4). I beg to move.

Lord Beaverbrook

My Lords, if I understand my noble friend correctly, he is concerned that Clause 207(4) is not only a presumption that allegedly infringing articles were made when design right subsisted, but also a presumption that design right does, or did, exist. This proposition is demonstrably incorrect. Perhaps I may refer my noble friend to the first line-and-a-half of Clause 207(4) which require it to be shown that an article is made to a design in which design right subsists or has subsisted. What this clearly means is that the design-right owner must riot only show that there is or has been a design right, but also that the allegedly infringing articles were made to that design. Once the design-right owner has proved his case on these two points, but only then, will Clause 207(4) come into play.

The presumption of the clause is necessary because it would be very difficult for the design-right owner positively to prove when a particular allegedly infringing article was made by someone else. Against that, it should be relatively easy for the defendant to prove when the article was made because in many cases he himself will have made it. At the very least he will be importing or trading in the article and will be in a much better position to know, or to find out, when it was made. It would be quite unreasonable to put the burden of proof of the time of manufacture on the design-right owner and for this reason I have to resist my noble friend's amendment. I hope that, in the light of what I have said, he might be able to withdraw it.

The Earl of Stockton

My Lords, I thank the Minister for his explanation and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 210 [Right to seize infringing copies, &c]:

Lord Beaverbrook moved Amendment No. 340: Leave out Clause 210.

On Question, amendment agreed to.

Clause 211 [Supplementary provisions with respect to forfeiture orders]:

Lord Beaverbrook moved Amendment No. 341: Page 92, line 13, leave out from ("'up)") to end of line 14.

On Question, amendment agreed to.

Clause 213 [Rights and remedies of exclusive licensee]:

Lord Beaverbrook moved Amendment No. 342: Page 93, line 22, leave out from ("&c.)") to end of line 23.

On Question, amendment agreed to.

Lord Lloyd of Kilgerran moved Amendment No. 342A: After Clause 215, insert the following new clause:

("Rewards to employees.

Where it appears to the Registrar on an application made by an employee that the employee has made a design belonging to the employer that the design is (having regard among other things to the size of the employer's undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation or award to be paid by the employer, the Registrar may award him such compensation or award as he thinks fit having regard to the nature of the employee's duties his remuneration and the other advantages he derives from his employment and the effort and skill which the employee has devoted to making the design.").

The noble Lord said: My Lords, the noble Lord, Lord Jenkin of Roding, earlier today referred to the fine reputation of British designers. He also referred—and I should like to add my praise—to the Minister, Mr. Butcher, in the other place who recently received a high award for his support for industrial design.

The designer in a firm is often a difficult man to replace. He is not often a man who receives much promotion since he is kept within a somewhat narrow area because of his expertise. Sometimes, therefore, the design of such an employee in a firm produces very great wealth to his employers. In the Patents Act 1977—in a clause which I took some part in getting through—where an employee makes an invention or, as in this case a design of great value, he should have the opportunity of asking his employer for greater remuneration or recognition of the value of the design to his firm. If the employer turns down this request he should have as a statutory right, the ability to go to a tribunal and put the facts to it. If the design is of tremendous value in the commercial activities of the firm, then the tribunal, after taking all matters into consideration, could, if it so wished, make some kind of award to the employee.

The wording of this amendment is quite simple. I shall quote from it: Where — the employee has made a design belonging to the employer"— There is no attempt by the employee to obtain rights in the design because the design belongs to the employer— that the design is (having regard among other things to the size of the employer's undertaking) of outstanding benefit to the employer and that by reason of those facts it is just"— There is a social aspect to this to encourage design and inventions in other places— that the employee should be awarded compensation or award to be paid by the employer"— The tribunal, although I refer to the registrar, may award him such compensation or award as he thinks fit having regard to"— Then there are listed some of the parameters which the tribunal would naturally take into account. It would take into account, the nature of the employee's duties his remuneration and the other advantages he derives from his employment"— I interpose here and say that he may have been promoted and the tribunal would take into account whether and in what way he had been promoted. Lastly, the tribunal would have regard to, the effort and skill which the employee has devoted to making the design".

This seems a just way in which to treat employees in the specialist area of design where, as the noble Lord, Lord Jenkin, said earlier this afternoon, British industry has a world-wide reputation based on the work—often in particular firms of an individual designer. It seems to me just in every sense that where an employee has made a design and his firm refuses to take into account that the design is of outstanding merit bringing great wealth to the firm and the employer is unsympathetic, the employee can go to the tribunal as of right for it to decide the issue. The employee is not seeking to take ownership in the design because that belongs to the employer. The employee is trying to obtain compensation or an award for the great assistance he has given to the development of the business of the company.

This kind of clause is now enshrined in the Patents Act 1977. I submit to your Lordships that it would be proper to have a clause of this kind. I agree that my proposed clause may be deficient in its drafting in some aspects. I believe however that this kind of clause should be enshrined in the Bill. I beg to move.

Lord Morton of Shuna

My Lords, the noble Lord, Lord Lloyd of Kilgerran, was largely responsible for Section 40 of the Patents Act. It has been of considerable value to employees and it would seem appropriate that the same right should be given in this Bill. We strongly support this in the unregistered design right. If the noble Lord, Lord Lloyd, were speaking to Amendment No. 389A, which does the same for registered designs, I would have supported him on that also, but perhaps my support will have to wait until he deals with it.

Lord Beaverbrook

My Lords, I would not wish to be admonished by the noble Lord, Lord Lloyd of Kilgerran, for pre-empting his later identical amendment but on this occasion perhaps he will be agreeable if I also speak to his Amendment No. 389A.

Lord Lloyd of Kilgerran

My Lords, perhaps I may apologise to the Minister. I had intended on this occasion to conform to the grouping. By way of explanation I should like to say that the identical amendment is concerned with designs which have been registered. I think that is right.

Lord Beaverbrook

My Lords, I am grateful to the noble Lord and I am sure that it will be for the benefit of the House if we expedite these discussions by grouping these similar amendments.

The amendments concern rewards for employee designers which, as all your Lordships will know, is a subject dear to the heart of the noble Lord, Lord Lloyd. We have had rather less time than we should have ideally liked in which to consider the idea and to undertake the necessary consultations and discussions. Nevertheless, we have already set the wheels in motion and I am sure that the noble Lord will understand that I am not yet in a position to give him the Government's complete considered view at this stage.

As the noble Lord said, his amendments are based on provisions in the 1977 Patents Act, with which he had much to do. I do, however, see some differences between patents and designs. A patent by its very nature is rather more special than a design right. As a result, applying the principle to designs would almost certainly lead to a significant regulatory burden on British industry. The noble Lord will know that we are dedicated to removing unnecessary regulatory burdens, and given that the effectiveness of the provisions in the Patents Act is as yet unproven, I have to say that our preliminary view is somewhat unsympathetic. Nevertheless, as I have said, I am not in a position to give a firm view either way at this stage.

In any event, I am sure the noble Lord will accept that there are a number of technical problems with the drafting of his amendments. For example, Amendment No. 389A seeks to amend only Schedule 4, which is merely a statement of the Registered Designs Act as amended by the Bill. To make this amendment effective, a similar substantive amendment would be needed in Part IV of the Bill.

I wonder whether the noble Lord would be prepared to withdraw his amendments. We will then do our very best to come back with our considered view in time for Third Reading.

Lord Lloyd of Kilgerran

My Lords, I am grateful to the Minister for what he has said. In those circumstances, I beg leave to withdraw the amendment without further comment.

Amendment, by leave, withdrawn.

Clause 216 [Effect of patent application]:

Lord Beaverbrook moved Amendment No. 343: Leave out Clause 216.

The noble Lord said: My Lords, in Committee my noble friend Lord Mottistone argued that Clause 216 was unfair to patent applications and would discourage inventors, particularly small inventors, from using the patent system. I asked for time in which to reflect upon the arguments and, as will be apparent from the amendment, we have decided that my noble friend was right.

I would, however, like to make it clear that our acceptance of the deletion of Clause 216 will not mean that design right owners will be totally free to exercise design right in cases covered by the clause. There is some jurisprudence on the topic in the context of copyright and there is also the legal principle of non-derogation from grant. For example, it would seem to be the case that where a design right owner licensed someone to include his design in a patent application, he would not be able to use his design right to prevent that person from doing anything necessary to work the invention. Clause 216 would go further than that, and in the light of my noble friend's arguments and the existing safeguards to which I have referred, we have concluded that it is not necessary. I beg to move.

Lord Mottistone

My Lords, I should like very briefly to thank my noble friend for so fully following the recommendations that we made in Committee on this point.

On Question, amendment agreed to.

Clause 217 [Licences available in last five years of design right]:

5.15 p.m.

Lord Mottistone moved Amendment No. 344: Page 94, line 35, leave out from ("licence") to ("any") in line 36 and insert On respect of a design right for a design of a description, or an article of a description specified by the Secretary of State in accordance with subsection (3) below to do").

The noble Lord said: My Lords, with the leave of the House I shall speak to Amendments Nos. 345 and 355. En Committee I sought to remove Clause 217 altogether and I have endeavoured to respond to my noble friend's remarks at that time by putting forward Amendments Nos. 344 and 345. In speaking to Amendment No. 355, which amends Clause 226, perhaps I may say that that was another clause which I sought to remove concurrently with seeking to remove Clause 217.

With regard to Amendments Nos. 344 and 345, for many industries the existence of a licence of right destroys the value of the design right. Clearly where the proprietor of a design right abuses that right to frustrate legitimate competiton, some mechanism needs to be provided to prevent that abuse. Rather than have a universal licence of right or design rights, it is surely better to permit the Secretary of State to designate designs or articles for which there is competitive abuse and to set an appropriate term during which the licence of right shall apply.

This measure will introduce a degree of flexibility into the term of protection for design right which should enable industry to enjoy both the protection needed in order to encourage good design and at the same time prevent anti-competitive practices. If Amendments Nos. 344 and 345 are accepted I see it as the designer being able to persuade the Secretary of State to include or exclude his design for licence of right. In general the Secretary of State will be able to deal with abuses without damaging the industry as a whole.

I turn now to Amendment No. 355. In setting the terms of a licence of right the comptroller should have the freedom to set terms as are appropriate in the light of all the circumstances of the application. In certain cases it may well be appropriate in the interests of United Kingdom industry to place territorial restrictions on the scope of a licence. If the licences of right are to be used as a means of controlling anti-competitive practice the scope of the licence should be determined by what is necessary to prevent that anti-competitive practice and should be no wider. If this is not the case the proprietor's rights will be derogated without just cause or reason. For that reason, I seek to remove the relevant subsection from Clause 226. I beg to move.

Lord Beaverbrook

My Lords, with the leave of the House I shall also speak to Amendments Nos. 344, 345 and 355. Perhaps I may deal first with my noble friend's Amendments Nos. 344 and 345 which would ensure that licences of right would be available only where a design right had been abused.

When we discussed licences of right in Committee I explained that' they were not intended to deal with abuses. Indeed, abuses are dealt with quite separately in Clause 218. As I said, licences of right are in fact included for two quite different reasons. First, they bring the benefits of competition into play after five years while ensuring that rights' owners can receive reasonable royalties for the remainder of the design right term. Secondly, they provide a mechanism which enables the reward given by design right to take account of the investment put into a design.

My noble friend Lord Campbell of Alloway touched upon this question in Committee and I was able to explain that the royalties payable under a licence of right would reflect the costs that went into the design. In this way the rewards flowing from a design right will be matched with the investment. In our view, this flexibility is a vital part of the design right package and we do not wish to lose it. As I have said, abuses are dealt with separately in Clause 218, and I must resist Amendments Nos. 344 and 345.

I turn to my noble friend's Amendment No. 355. I can accept his proposal to delete paragraphs (b) and (c) of Clause 226(3). I must, however, make it quite clear that this amendment will not mean that the terms of a licence can involve any restrictions on importation, or any restrictions applied only in a part of the United Kingdom. On reflection, we have concluded that paragraphs (b) and (c) of Clause 226(3) are redundant in the face of paragraph (a), and it is for this reason that I am happy to accept my noble friend's Amendment No. 355, which I hope he will move in due course.

Lord Mottistone

My Lords, I am most grateful to my noble friend for accepting one amendment, especially as he allowed me an earlier one which effectively removed Clause 216. Therefore I am doing well. However, I shall try not to get too carried away on Amendments Nos. 344 and 345. In that respect I shall read with care what my noble friend has said and reserve my judgment to a later stage, should that be necessary. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 345 not moved.]

Clause 219 [Undertaking to take licence of right in infringement proceedings]:

Lord Beaverbrook moved Amendment No. 346: Page 96, line 39, leave out ("or 210").

The noble Lord said: My Lords, I have already spoken to this amendment and therefore I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendment No. 347:

Page 96, line 43, at end insert— ("(1A) An undertaking may be given at any time before final order in the proceedings, without any admission of liability.").

The noble Lord said: My Lords, with leave I should like to speak also to Amendments Nos. 347, 348 and 400. Those amendments arise from a point raised by my noble friend Lord Lucas of Chilworth in Committee about whether Clause 219 would have the effect of forcing defendants to choose between contesting an infringement action and giving an undertaking to take out a licence, and thereby limiting the relief which can be awarded against them. As I said in Committee, it is not our intention to force defendants to make such a choice. These amendments make it clear that the giving of an undertaking in no way prevents a defendant from contesting the action. I am most grateful to my noble friend for his suggestion that there may be some doubt, and I am happy to remove that doubt.

Having taken the aforementioned view in relation to design right, we also thought that it would be desirable to make an equivalent amendment to the corresponding patent provisions; that is the reason for the amendment to Schedule 5. I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendment No. 348: Page 96, line 44, leave out from beginning to ("the") and insert ("Nothing in this section affects").

On Question, amendment agreed to.

Clause 220: [Crown use of designs]:

Lord Lloyd of Kilgerran moved Amendment No. 349: Page 97, line 10, leave out ("include") and insert ("are limited to").

The noble Lord said: My Lords, I beg to move Amendment No. 349, and with the leave of the House I shall speak also to two other amendments tabled in my name: Amendments Nos. 350 and 351. I should then like to speak to three amendments tabled in the name of the noble Lord, Lord Mottistone; that is, Amendments Nos. 352, 353 and 354. Finally, I should like to speak also to four further amendments; namely, Amendments Nos. 410, 411, 418 and 419, which have also been tabled in my name.

I never thought that in a Bill dealing with design rights, albeit the powers of the Crown in relation to unregistered design rights, I should see such a predatory clause—if that is the way to explain it—as Clause 220. It provides for the services of the Crown, as defined broadly in the Bill, the right to go along to any firm—be it a large electronic, engineering or any other firm—that has a design which has been brought to the Crown's notice and say to it, "We want all rights to use that design. Of course you will get compensation; of course we will pay you something. But if you do not like it, you can go to the courts".

The idea of the Crown having the right in relation to a design, not a registered design—if it were a registered design or a patent that would be a different matter—to take it away is not a good one. Some large firms have informed me that they are very distressed about the situation, and no doubt representations have been made to the appropriate Ministries that the clause is too broad. I therefore agree with the line taken by the noble Lord, Lord Mottistone, in Amendments Nos. 352, 353 and 354, that such a clause should be deleted. However, I should say this. If there were an emergency of some sort—for example, a military emergency or some such circumstance as defined in the well-known Acts dealing with such matters—then of course we could agree that in those circumstances the Crown should have the power to take such a design, but not for the normal services of the Crown.

I then looked at the so-called Explanatory and Financial Memorandum, which is attached to the Bill. I wondered whether I should go quite as far as the noble Lord, Lord Mottistone, and suggest that the clause should be deleted, because I read the words: Part I replaces it with a fresh statement of the law on a more logical and consistent basis, taking into account the technological changes of the last 30 years and making various reforms". I consider that possibly the Government may be sympathetic to the suggestion in relation to unregistered designs: that their powers to take such action for the services of the Crown should be limited to matters relating to atomic energy and not for foreign defence purposes or health services. In other words, the object of my first amendment, coupled with the second set of Amendments, Nos. 350 and 351—which are consequential to my main theme—is that the powers of the Crown for the use of designs should be limited to subsection (2)(c) as it stands in the Bill, which provides: such purposes relating to the production or use of, or research into, matters connected with atomic energy as the Secretary of State thinks necessary or expedient".

That would conform with the statement at the beginning of the Explanatory and Financial Memorandum that the Bill should have regard to technological changes in the past 30 years. It is obvious that during that time there have been tremendous changes in the field associated with atomic energy, not only for military purposes but also for civil purposes. It seems therefore right that my first three amendments should be devoted to limiting the powers of the Crown under Clause 220 to that extent.

If the Government are not sympathetic to my submissions that the clause should be so limited, then I shall go along with the arguments that will no doubt be made in due course by the noble Lord, Lord Mottistone, that those clauses should be deleted in the national interest. Firms in this country should not be invaded, as it were, by government officials taking over their designs, even if that were subject to compensation of some kind. It seems contrary to British justice to allow unregistered designs to be taken away in such a manner.

I shall now deal with Amendments Nos. 410 and 411. They are somewhat technical. They have nothing much to do with the powers of the Crown. When your Lordships were considering the Patents Act 1977 there were considerable difficulties over how to deal with the Patents Act 1949. The 1977 Act had a number of schedules. Schedule 1 provides for the, Application of 1949 Act to existing patents and applications". Paragraph 1(1) provides that the schedule does not apply to patents and applications under the 1977 Act.

I therefore looked at line 40 on page 183 of the Bill, which refers to the Patents Act 1949. My amendment is a probing amendment to discover the justification for including there the words: after 'copyright' insert 'or design right' ". I can see not justification for that, but that may be entirely due to my ignorance.

Amendment No. 411 deals with the next page. It relates to the Defence Contracts Act 1958. It states: In section 6(2) of the Defence Contracts Act 1958 (application of Act in relation to copyright restriction), after 'copyright in any work' insert, 'or design right in any design' ". Amendment No. 411 is again a probing amendment. I do not see how that insertion is justified, especially as in the Patents Act 1949 and the Defence Contracts Act 1958 the reference to copyright is in a minor form.

I take together Amendments Nos. 418 and 419. They relate to pages 186 and 187. Schedule 6(15) suggests that the Patents Act 1977 should be amended and that, when the word "copyright" appears, "or design right" should be inserted. It is not the kind of amendment which appears to be anticipated in the Explanatory and Financial Memorandum included in the original Bill. As copyright is introduced there almost as an afterthought, and certainly in a minor way, I do not understand why it is necessary to include "design right". Once again, Amendments Nos. 418 and 419 are probing amendments. I apologise for raising this difficult, technical matter in relation to Schedule 6. I beg to move.

5.30 p.m.

Lord Mottistone

My Lords, I shall speak briefly to Amendments Nos. 352, 353 and 354. I tabled similar amendments in Committee. I am pleased to hear that the noble Lord, Lord Lloyd of Kilgerran, thinks that my amendments might be the best answer to the problem. As I understand it, his amendments are a fallback.

Since the Committee stage, the CBI has been in correspondence with my noble friend. I understand that he may come forward with something on this subject on Third Reading. One of the reasons for putting down the amendments is to ensure that he realises that we still mean them. More importantly, the CBI has also had discussions with the Ministry of Defence which have encouraged us to think that these three clauses are not necessary because the Ministry of Defence is protected by the Designs Contracts Act 1958, to which the noble Lord, Lord Lloyd of Kilgerran, referred.

I rather suspect that his Amendment No. 411 would nullify the removal of Clauses 220, 221 and 222, so I am not sure that I can support him on Amendment No. 411. One of the reasons for not retaining Clauses 220, 221 and 222 in the Bill is that the Ministry of Defence is protected by the Defence Contracts Act 1958.

Lord Lloyd of Kilgerran

My Lords, I am obliged to the noble Lord for giving way. It may be helpful to him if I explain my position. As he said, my original amendment limiting Clause 220 to atomic energy is a fallback amendment. If I had my way, I would entirely support the noble Lord's submission that the clause should be deleted.

Lord Mottistone

My Lords, I thank the noble Lord. The only other point in relation to the Ministry of Defence is that it could give no examples of the need for the clauses that I seek to delete. It is possible that that would be the best solution, but I shall be interested to hear what my noble friend has to say.

Lord Jenkin of Roding

My Lords, I am grateful, to the noble Lord. There is a good deal to be said for this group of amendments, whether it be the more limited ones tabled by the noble Lord, Lord Lloyd of Kilgerran, or the more radical excisions proposed by my noble friend Lord Mottistone. I say that because I believe that the Government are right to pursue a policy which throws the research and development effort for the production of goods, designs or whatever it may be for the benefit of the Crown on to industry rather than always doing the designs and inventions in-house, which is what has been happening.

Obviously, industries such as British Telecom have been privatised. Yesterday's announcement is a direct reflection of the fact that the research and development on public exchanges is now being firmly placed in the hands of industry. Under successive Secretaries of State, the defence industry has been seeking to go down that road. The Ministry of Defence should not do the whole of its research in defence establishments; it should define its requirements and expect industry to do more of the research and to produce the necessary products. That policy should be warmly supported because if industry develops the capacity to do research, it is more likely that it will be able to research other areas and increase its market in this country and overseas.

My anxiety about these clauses, although in the narrow area of design right, is that they will act as a disincentive to industry to take on the research and development activities which the Government are rightly seeking to persuade it to take on. If the Government insist on keeping the very stringent provisions which allow them to take over the designs which may have been developed by industry in the course of the research work which it is undertaking at the request of, and under pressure from, government departments and other public agencies, then it seems to me that this must weaken the incentive for industry to do that research.

So I hope very much that in looking at these clauses again my noble friend may be persuaded that they are to some extent in conflict with the wider policy objectives which the Government are quite rightly pursuing in seeking to push the research and development effort in public procurement on to the industries from whom the goods and services are procured, taking them out of the hands of the government establishments themselves.

Lord Morton of Shuna

My Lords, we have had discussions at earlier stages of this Bill on the Crown's apparent right to take anything that anybody else designs or invents or does anything with and use it for itself. Without entering into the argument as to whether the clauses should disappear altogether, which seems to me perhaps better, I think it is very wide to put into the Bill that the services of the Crown "include" this and therefore it is necessary to limit them in some direction. I support the first amendment of the noble Lord, Lord Lloyd of Kilgerran. I also very strongly support the reference to "foreign defence purposes" which seems to me to be the Government entering into something which they should not be entering into and which they should leave to the owner of the design right.

Lord Beaverbrook

My Lords, with leave, I shall speak to Amendments Nos. 349 to 354, 410 and 411, 418 and 419, which all concern the Crown use provisions. I am grateful to the noble Lord, Lord Lloyd of Kilgerran, for so fully explaining the thrust of his own amendments. When we discussed these provisions in Committee, it was generally agreed that a Crown use power was necessary for defence purposes, but I agreed then to consider whether the general power presently provided in the Bill was justified. We have a great deal of sympathy with the view that the general power provided in the Bill is not in fact necessary. What we are now looking at is precisely what specific powers are necessary and how these might be provided in the light of other relevant statutes, such as the Defence Contracts Act 1958 which was mentioned by my noble friend Lord Mottistone. I should of course make it quite clear that we shall certainly be ensuring that the needs of the Crown in relation to defence are adequately provided for. This is however a complex matter and we have not yet been able to complete the work.

The noble Lord, Lord Lloyd of Kilgerran, questioned the reason for the provisions which he seeks to amend by Amendments Nos. 410, 411, 418 and 419. These provisions all relate to the right of the Crown to do things notwithstanding copyright in the design of articles. Now that copyright in the design of articles is substantially being replaced by design right, it seems right to cover both copyright and design right in those provisions. I think that those provisions should continue to refer to design right, whatever may happen to Clauses 220 to 223, but we shall of course look at them in considering the fate of those clauses.

We do however intend to bring amendments forward. On that basis, perhaps my noble friend Lord Mottistone and the noble Lord, Lord Lloyd of Kilgerran, would be willing to withdraw the amendment at this time.

Lord Lloyd of Kilgerran

My Lords, I am very grateful to the Minister for what he has said, and on the undertaking given, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 350 to 354 not moved.]

5.45 p.m.

Clause 225 [Jurisdiction to decide matters relating to design right]:

The Earl of Stockton moved Amendment No. 354A:

Page 101, line 7, leave out subsection (1) and insert— ("(1) Any person interested in any of the following matters may make application to the comptroller for his decision—

  1. (a) the subsistence of design right,
  2. (b) the term of design right, or
  3. (c) the identity of the person in whom design right first vested;
and in the case of the reference of a dispute as to any of those matters the comptroller's decision on the reference is binding on the parties to the dispute.").

The noble Earl said: My Lords, I beg leave to move the amendment standing in my name. I believe that problems will arise in practice in attempting to establish the subsistence, term and identity of ownership of design rights in a system where marking is not required. However, in the absence of marking I believe that there must be a course open to manufacturers who, despite making reasonable efforts, are unable to ascertain whether a design right subsists, what is its terms and what is the identity of the person owning the right.

Clause 225 only enables an application to the comptroller where a dispute exists. Under Clause 226 no application could be made more than one year before the earliest date on which the licence may take effect. It may prove impossible to ascertain whether the time has yet arrived at which an application can be made under Clause 226. Clause 227 attempts to solve some problems but only if the applicant has been able to make a proper application under Clause 226. Clause 228 only applies where the application is made to the comptroller under one of the other clauses.

It therefore appears that there is no solution where an interested party cannot make an application under Clauses 225 or 226. I therefore believe that Clause 225 should be broadened to enable an application to be made to the comptroller where the interested person has no one with whom to dispute as he has been unable to ascertain any other interested party and has also been unable to ascertain whether the time has yet arrived under which an application can be made under Clause 226. I beg to move.

Lord Beaverbrook

My Lords, my noble friend Lord Stockton is concerned that the restriction of Clause 225 to actual disputes is too narrow. At first sight he does seem to have a point. It may well be possible to say that, for example, someone who wishes to manufacture articles which are apparently protected by design right, but who has been unable to trace the design right owner, cannot possibly be a party to a dispute because there is no one for him to be in dispute with. I am afraid, however, that his suggestion will not work. If there is a dispute between two parties, its resolution can be binding on both. If, however, there is no dispute but only an assertion by one person against no one in particular, the confirmation of his assertion will bind no one else, which makes that confirmation worthless. To be more specific, if the manufacturer of articles to a design obtains a ruling from the comptroller binding on no one else and the owner of the design right then turns up, that owner will not be bound by that ruling and will still be able to sue the manufacturer for infringement, so the manufacturer will be no better off.

For that reason, I should have to resist this amendment.

The Earl of Stockton

My Lords, I thank the Minister for his explanation, I shall read it carefully. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 226 [Application to settle terms of licence of right]:

Lord Mottistone moved Amendment No. 355: Page 101, leave out lines 33 to 36.

On Question, amendment agreed to.

Clause 227 [Settlement of terms where design right owner unknown]:

[Amendment No. 356 had been withdrawn from the Marshalled List.]

Clause 233 [Remedy for groundless threats of infringement proceedings]:

Lord Beaverbrook moved Amendment No. 357:

Page 104, line 19, at end insert— ("( ) Proceedings may not be brought under this section in respect of a threat to bring proceedings for an infringement alleged to consist of making or importing an article.").

The noble Lord said: My Lords, in substance, this amendment is exactly the same as an amendment which my noble friend Lord Mottistone kindly withdrew in Committee in order to give us time to consider our view on the matter. The matter in question is whether a design right owner should be able to notify allegedly infringing manufacturers and importers that he intends to take legal action without laying himself open to a threats action. I say "notify" because, although the clause is drafted in terms of "threats", which suggests a somewhat ruthless demeanour, it is the case that any indication that legal action is contemplated would qualify as a threat, however innocently it might be phrased.

Having considered this, we have come to the view that my noble friend was right. We think that he was right to suggest that design right owners should be able to say to manufacturers and importers in clear and unambiguous terms that they intend to take action. The amendment therefore disapplies Clause 233 in relation to manufacturers and importers. On the other hand, we also think that my noble friend was right to say that there is a strong case for protecting traders, and they will continue to benefit from the provisions of the clause. I beg to move.

Lord Lloyd of Kilgerran

My Lords, I myself find this rather a surprising clause because under the Patents Act 1977 and under previous Acts if a person made a threat regarding infringement of patent rights then he could be sued for that threat. The person making the threat would have to put in issue the validity of his patent. I personally, and this may be entirely due to my general ignorance, do not understand why persons should be allowed to threaten to bring proceedings for infringement of a design, alleged to consist of making or importing an article", in this way. Why should anyone be allowed to make that threat against someone without any justification at all?

Lord Morton of Shuna

My Lords, it seems to me that this amendment takes a good deal of any content out of Clause 233 when one looks at subsection (3), which states: Mere notification that a design is protected by design right does not constitute a threat of proceedings". The people who will be threatened are the makers or importers of articles. I cannot quite see what the Minister is trying to achieve by saying that that is not a threat. Therefore it seems to be a totally circular argument in respect of manufacturers and importers who are the main people concerned with the infringement of a design right.

Lord Mottistone

My Lords, I intervene briefly to thank my noble friend very much for including this provision even if it does not appeal to other noble Lords on the opposite side of the House. I should have thought that the best thing to do, as a kind of answer to the noble Lord, Lord Morton of Shuna, would be to refer him to col. 1162 of the Official Report of 12th January where he will find my explanation for this amendment. That should satisfy him. Once again I thank my noble friend very much.

Lord Beaverbrook

My Lords, by way of reply to the noble Lords, Lord Lloyd of Kilgerran and Lord Morton of Shuna, I would say that the Bill as drafted without this amendment would mean that design right owners could say little more than that a design is protected by design right. We believe that it is necessary that they are able to make the position clear to the sources of infringing articles in both strong and unambiguous terms.

As I have already said, traders would still have the protection of the clause. I would say to the noble Lord, Lord Lloyd, that the provision being inserted by this amendment already appears in Section 70(4) of the Patents Act 1977. I hope that I have been able to go some way towards explaining the position.

On Question, amendment agreed to.

Clause 234 [Licensee under licence of right not to claim connection with design right owner]:

[Amendment No. 358 had been withdrawn from the Marshalled List.]

Clause 236 [Countries enjoying reciprocal protection]:

Lord Beaverbrook moved Amendments Nos. 359 and 360:

Page 105, line 17, leave out ("that") and insert ("a").

Page 105, line 18, after first ("or) insert ("British").

The noble Lord said: My Lords, I have already spoken to Amendments Nos. 359 and 360. I beg to move.

On Question, amendments agreed to.

Clause 237 [Territorial waters and the continental Shell]:

[Amendment No. 361 not moved.]

Clause 239 [Joint designs]:

Lord Beaverbrook moved Amendment No. 362: Page 105, line 45, leave out ("separate from the contribution") and insert ("distinct from that").

The noble Lord said: My Lords, I have already spoken to this. I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendment No. 363: After Clause 239. insert the following new clause:

("Requirement of signature in Part III: application in relation to body corporate.

.The requirement in the following provisions that an instrument be signed by or on behalf of a person is also satisfied in the case of a body corporate by the affixing of its seal—

The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Clause 241 [Minor definitions]:

Lord Beaverbrook moved Amendment No. 364:

Page 106, leave out lines 15 to 22 and insert— (" "British design" means a design which qualifies for design right protection by reason of a connection with the United Kingdom of the designer or the person by whom the design is commissioned or the designer is employed;").

The noble Lord said: My Lords, I have already spoken to this with Amendment No. 317. I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendments Nos. 365 to 367:

Page 106, line 22, at end insert— ("business" includes a trade or profession; "commission" means a commission for money or money's worth;").

Page 106, line 39, leave out ("trade or").

Page 107, line 6, leave out ("trade or").

The noble Lord said: My Lords, I have already spoken to Amendment No. 365. I beg to move Amendments Nos. 365 to 367 en bloc.

On Question, amendments agreed to.

Clause 242 [Index of defined expressions]:

Lord Beaverbrook moved Amendments Nos. 368 to 371:

Page 107, line 13, at end insert—

("business section 241(1)")

Page 107, line 14. at end insert—

("commission section 241(1)")

Page 107, line 41, column 2 at end insert ("and (1A)").

Page 107, line 41, at end insert—

("signed section (Requirement of signature in Part III: application in relation to body corporate)")

The noble Lords said: My Lords, I beg to move Amendments Nos. 368 to 371 en bloc.

On Question, amendments agreed to.

Clause 243 [Registerable designs]:

Lord Beaverbrook moved Amendment No. 372:

Page 107, line 49, leave out from ("process") to end of line 51 and insert— (", being features which in the finished article appeal to and are judged by the eye, but does not include—

  1. (a) a method or principle of construction, or
  2. (b) features of shape or configuration which—
    1. (i) are dictated solely by the function which the article has to perform, or
    2. (ii) are dependant upon the appearance of an article of which that article is intended to form an integral part.").

The noble Lord said: My Lords, with the leave of your Lordships I shall speak to Amendments Nos. 372 to 375 together. I shall deal first of all with the amendment of my noble friend Lord Mottistone, No. 373, which is an amendment to my Amendment No. 372 and concerns the exceptions to registered designs. The amendment of my noble friend is exactly the same as the corresponding amendment that he proposed to Clause 192, just as my amendment includes exactly the same change to the must match exception as I proposed in relation to Clause 192.

The issues are essentially the same in this clause. As your Lordships accepted my amendment to Clause 192, I hope that it will be appropriate to follow the same course here. I should perhaps add that what my noble friend is seeking to do here is to replace the must match exception with a narrow form of must fit exception. However, because registered designs do not protect functional features at all it is not in our view necessary or indeed appropriate to provide a must fit exception. A must match exception is, however, necessary for exactly the reasons that apply in Clause 192. It therefore follows that I must resist the amendment of my noble friend.

I shall now turn to my Amendments Nos. 372, 374 and 375. As I have said, these include exactly the same change to the must match exception as your Lordships agreed to in Clause 192. But apart from that they are the follow-up to Amendment No. 296A which I tabled in Committee but did not move. Under the Bill as it presently stands the expression "design" is defined broadly in the new Section 1(1) and in the new Section 1(3). It then excludes certain aspects of such designs from being registered.

By contrast the existing Registered Designs Act takes excluded matter out of the definition of design altogether. It has been put to us, and we agree, that the existing arrangement is preferable. The main effect of the existing arrangement is that, because excluded features are by definition never part of a design in the first place, one does not have to take any further account of them. In particular if an application for registration is presented which includes some non-design features, the registration of the design automatically and necessarily excludes those features. That is the way in which the Registered Designs Act has always operated and on reflection we think that it should continue to operate in the same way.

I should stress that the amendments do not have any effect on what may be registered under the Bill. They simply change the structure of the provisions. Accordingly Amendment No. 372 takes the excluded features presently found in the new Section 1(3) out of the concept of design. Amendment No. 374 makes a consequential change and Amendment No. 375 deletes the new Section 1(3). I beg to move Amendment No. 372.

Lord Mottistone

My Lords, I appreciate that my Amendment No. 373 is in conformity with my Amendment No. 314, which I withdrew in response to the argument of my noble friend. I shall not rehearse the arguments why I think my amendment is necessary. Suffice it to say at this stage that I am advised that there is a recent analysis of the proceedings under the Registered Designs Act 1949 listing certificates of registration issued for a period of about a month in November and December of 1987. It is estimated that if the Bill goes through without my amendments both to this clause and to Clause 192, in particular the elimination of the must match feature, about a third of the certificates of registration issued in the period I have described would not have been so issued. That must be a restriction on the development of design in industry, and I should be grateful if my noble friend would undertake to look at that. I do not think that we have reached the end of this argument. However, at this stage I beg leave to withdraw the amendment.

The Deputy Speaker (Lord Airedale)

My Lords, Amendment No. 373 is not moved and so the Question is that Amendment No. 372 be agreed to.

6 p.m.

Lord Williams of Elvel

My Lords, I did not quite understand the procedure adopted by the noble Lord, Lord Mottistone. He spoke to his Amendment No. 373, which was called. He made a distinguished speech and then decided not to move the amendment. When an amendment is moved it seems to me to be the property of the House and we should speak to it. Then it is up to the noble Lord to decide what he does with his amendment after debate.

Lord Mottistone moved, as an amendment to Amendment No. 372, Amendment No. 373. Leave out paragraph (b) (ii) and insert— ("(ii) are unavoidably required in order that an article may co-operate with a second article, which co-operation is essential in order that either article may perform its normal function.").

The noble Lord said: My Lords, I am sorry, I should have moved Amendment No. 373. I beg to move.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord for getting us back on the rails so far as procedure is concerned. During Report stage there have been a number of occasions on which noble Lords have stood up and explained why they would not be moving an amendment. As I understand the procedures of this House, that is not correct.

We find ourselves in some difficulty both in relation to the amendment of the noble Lord and the principal amendment to which the noble Lord, Lord Beaverbrook, has spoken. The Minister said that in the Government's view the Registered Designs Act should continue more or less in the way that it has operated up to now because it has been understood and properly interpreted by the courts and has created no difficulty. In referring to the amendment of the noble Lord, Lord Mottistone, to the government amendment—before the noble Lord had had a chance to explain the thrust of his argument—the Minister pointed out that the noble Lord was bringing back into registered designs the idea of designs that did not necessarily have eye appeal.

That simply serves to confirm our view—and I have said it so many times that I am getting rather bored with hearing myself say it—that unregistered design right is not a necessary right. We believe that if the Government were to take the view that we have copyright, registered design right and patents, it should be possible to cover the whole spectrum of rights. That would involve incorporating what the noble Lord, Lord Mottistone, has introduced, which is a non-aesthetic design under registered designs. I wonder whether even at this late stage the Government would be prepared to see the logic of what the noble Lord, Lord Mottistone, has said and manoeuvre the Bill around so that we do not have to create a new right which is untried, doubtful in application and extremely controversial.

Lord Howie of Troon

My Lords, is it the Government's intention to bring this part of the Bill into conformity with Clause 192?

Lord Beaverbrook

My Lords, I think that the noble Lord, Lord Williams, will not be too surprised if I say that we do not intend to go entirely down the road that he has suggested. He will know that we have worked on the provisions of this part of the Bill for some time and we believe that they are entirely appropriate. Design right is part of the policy of this Bill. As regards the interjection from the noble Lord, Lord Howie of Troon, the government amendments standing in my name would modify the must match exception in the same way as in Clause 192.

Lord Mottistone

My Lords, I have not yet withdrawn Amendment No. 373. Having heard what my noble friend has said, I now withdraw it.

Amendment to the amendment, by leave, withdrawn.

On Question, Amendment No. 372 agreed to.

Lord Beaverbrook: moved Amendments Nos. 374 and 375.

Page 107, line 52, leave out ("to which this Act applies and")

Page 108, leave out lines 4 to 11

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

On Question, amendments agreed to.

Lord Mottistone moved Amendment No. 376: Page 108, line 15, leave out ("to a material extent")

The noble Lord said: My Lords, in Committee I sought to leave out the whole of subsection (4) of Clause 243. Noting what my noble friend the Minister said on 12th January in col. 1169 of Hansard, I have sought to limit my amendment this time to a narrower point. The design of any article plays an important role in influencing the purchaser. This is true even of functional items such as scientific instruments. There may of course be situations in which design cannot have an effect on the purchaser because, for example, the particular article is not visible to the final purchaser, being part of a larger article and its shape and configuration determined principally by the function which it is to perform. This subsection should be seen as re-enforcing the exclusion from registered design protection for features of shape or configuration dictated solely by the function performed by an article.

I should add that unnecessary restrictions on the type of design for which a registered design can be obtained will limit the ability of British industry to obtain reciprocal protection overseas. Such provisions cannot be in the interests of United Kingdom industry and encouragement of good design within the United Kingdom.

Perhaps I may also say that the effect of this amendment would not stifle competition. Unamended, subsection (4) discourages the improvement of industrial design and the application of good design techniques to functional articles. Therefore I hope that my noble friend will feel that he can accept this very much more modest amendment to Clause 243. I beg to move.

Lord Williams of Elvel

My Lords, in moving his Amendment No. 376 the noble Lord, Lord Mottistone, drew my attention to the wording of subsection (4) of this clause, which seems to me to be rather difficult to understand. I can understand the wording, of which the appearance is not material". but I cannot quite understand the expression, where aesthetic considerations are not taken into account to a material extent".

A Noble Lord

Order, please.

Lord Williams of Elvel

My Lords, I find that a curious piece of English, and if for no other reason I would support the noble Lord's amendment to cut out "to a material extent". Quite apart from the other arguments which the noble Lord adduced, it seems to be better drafting of the Bill.

Lord Campbell of Alloway

My Lords, I find it impossible to support or not to support this amendment. The subsection as it stands is all but unintelligible. If the amendment of my noble friend Lord Mottistone induces the Government to consider redrafting the subsection, that would be a most valuable contribution. Take the phrase: aesthetic considerations are not taken into account … by persons acquiring or using the article". How does one determine that? What does it mean— aesthetic considerations are not taken into account to a material extent"? I find it very puzzling.

Lord Howie of Troon

My Lords, the noble Lord, Lord Mottistone, has been far too modest in attempting to amend subsection (4) by deleting the words: to a material extent". That does not improve something which certainly needs a good deal of improvement. Apart from anything else in line 13 it says: the appearance is not material". So having taken out the words "to a material extent" in line 15, the word "material" in line 13 should also be deleted.

In fact, whatever the intention behind the subsection, it seems to me that it is quite remarkably subjective wording to find in a Bill coming before the House. I have no doubt at all that if the matter came before a court of law the judge would be able to come to some kind of decision about whether the appearance is material or whether it should be taken into account to a material extent. I have no doubt at all that such a judgment could be made. However, it is hard to see how any two judges would have the same viewpoint about it, as each would have his own measure of what was or was not material. I think that the Government should look anew at this entire subsection and redraft it from the first to the last word.

Lord Lloyd of Kilgerran

My Lords, I support the noble Lord, Lord Howie of Troon, when he suggests that the Government should take back this subsection. To use the happy phrase used earlier by the noble Lord, Lord Williams, it is necessary to have a clear set of basic rules, particularly in this part of the Bill. I am inclined to say to the noble Lord, Lord Mottistone, that his proposed amendment makes the provision a little more difficult to understand.

Lord Beaverbrook

My Lords, as usual with the Bill before us at the moment not very much of it is perfectly simple. However, when we discussed at Committee stage subsection (4) of the proposed new Section 1 of the Registered Designs Act, the noble Lord, Lord Morton of Shuna, questioned the meaning of the words "to a material extent" which my noble friend is now seeking to delete. I accept that the words are open to interpretation but I do not accept that they are unnecessary. Nor can I accept that they are in any sense confusing, nor that they will unduly prevent designs of things like telephones, or even farm tractors and scientific instruments, from being registered.

As I explained at Committee stage, the Registered Designs Act is appropriate only for articles which are chosen because of their aesthetic appearance. That is to say, the Act applies only to articles whose aesthetic appearance matters—in other words, whose aesthetic appearance is taken into account to a material extent. And as my noble friend Lord Mottistone pointed out at Committee stage, the outward aesthetic appearance of telephones, and indeed farm tractors, probably does matter to potential purchasers. If this is so, then aesthetic considerations are taken into account to a material extent. The same may very well be true of certain scientific instruments.

As a result, aesthetic designs for such articles would undoubtedly still be registrable. Indeed, wherever it could be said that aesthetic appearance matters, the registration of a design would not be excluded. The only things which would definitely be excluded are things like internal structural girders and ordinary nails, screws and other essentially Functional items where it could not be shown that the aesthetic appearance matters. I believe that that is quite right. However, if one looks at what is currently accepted for registration, one will find that many essentially functional articles of this kind are accepted because of the uncertainty in the meaning of the present statute and the consequent difficulties which the Designs Registry has in applying it.

It is not our intention to deny registered designs protection unreasonably. Rather, the aim is clearly to restrict the Act to its proper field. As I have said, the present statute gives rise to difficulties in this regard and we need to put this right. The words "to a material extent" are necessary for this purpose because, without them, it would be possible to argue that the shape of part of a wholly functional article such as an exhaust pipe or carburettor was aesthetically pleasing to someone. Perhaps the designer liked the shape, or an engineer who fits such parts could say that he found some exhaust pipes more attractive than others. Opinions of these kinds should not affect the issue of whether such features of such articles are registrable. What is needed is evidence that users generally would be influenced by the eye-appeal of design features when acquiring that kind of article. If registrations can be made without this kind of evidence then the distinction between, on the one hand, the registered design system for articles with genuine eye-appeal and, on the other, design right, which embraces designs which are purely functional, will be blurred.

I do not say that there will never be any difficulties in deciding whether aesthetic appearance is taken into account "to a material extent". There will always be borderline cases in any area of intellectual property. In the vast majority of cases, however, the answer will be perfectly clear and this is what is needed. The words "to a material extent" have their perfectly ordinary, common sense meaning and I have to resist their deletion.

So far as concerns the drafting I shall take account of the criticisms and, as I am always willing to do, I shall look again at the wording of subsection (4). I cannot make any commitment on that point but I shall take note of everything that has been said in your Lordships' House today.

Lord Howie of Troon

My Lords, before the noble Lord sits down perhaps I may ask him to reconsider his comments about girders and reflect that the Hong Kong Bank, for example, consists of some very large girders of a very high aesthetic quality.

Lord Mottistone

My Lords, this is out of order at Report stage if it is a second speech.

Lord Howie of Troon

I was intervening in the Minister's speech, my Lords—and as briefly as I could. I shall cease to do so of course.

Lord Campbell of Alloway

My Lords, although this is the Report stage, perhaps I may ask a question for clarification.

A noble Lord

No.

Lord Mottistone

My Lords, I thank my noble friend the Minister for his full explanation. I am not entirely happy that this subsection is right, quite apart from the wording of it, but at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 245 [Authorship and first ownership of designs]:

[Amendment No. 377 not moved.]

Clause 246 [Right given by registration of design]:

6.15 p.m.

Lord Beaverbrook moved Amendments Nos. 378 to 380:

Page 110, line 13, at end insert— ("( ) The right in the registered design is infringed by a person who without the licence of the registered proprietor does anything which by virtue of subsection (1) is the exclusive right of the proprietor.")

Page 110, line 15, leave out from ("who") to ("anything") in line 16 and insert ("without the licence of the registered proprietor makes, in the United Kingdom or elsewhere,")

Page 110, line 19, leave out ("in the United Kingdom does") and insert ("without the licence of the registered proprietor does in the United Kingdom")

The noble Lord said: My Lords, with the leave of the House I should like to move Amendments Nos. 378, 379 and 380 together. These amendments are purely matters of drafting which stem from a question which was put to us; namely, why in the new Section 7(2) of the Registered Designs Act is there a reference to the right also being infringed when there is no previous reference to infringement? The answer of course is that the previous reference to infringement was missing and Amendment No. 378 corrects that defect. Having got to that point, we also realised that the new Sections 7(2) and 7(3) should be qualified by a reference to acts done without the licence of the proprietor. Amendments Nos. 379 and 380 make the necessary changes. With your Lordships' leave, I beg to move.

On Question, amendments agreed to.

Clause 247 [Duration of right in registered design]:

Lord Beaverbrook moved Amendment No. 381:

Page 110, leave out lines 32 to 43 and insert— ("; but that period may be extended for a second, third, fourth and fifth period, each of five years. (2) If the first, second, third or fourth period comes to an end without—

  1. (a) an application for extension being made to the registrar, and
  2. (b) the prescribed renewal fee being paid,
the right shall cease to have effect. (3) But if during the period of six months immediately following the end of that period an application for extension is made and the prescribed renewal fee and any prescribed additional fee is paid, the right shall be treated as if it had never expired, with the result that—
  1. (a) anything done under or in relation to the right during that further period shall be treated as valid,
  2. (b) an act which would have constituted an infringement of the right if it had not expired shall be treated as an infringement, and
  3. (c) an act which would have constituted use of the design for the services of the Crown if the right had not expired shall be treated as such use.").

The noble Lord said: My Lords, as your Lordships will know, the period of protection given by registered designs is made up of a series of five-year periods which are subject to renewal up to the maximum period allowed. The system is broadly similar to that applying to patents, except that patents are renewed annually. There is, however, a difference between the arrangements made for patents and for registered designs in relation to late renewals.

Under the existing Registered Designs Act, an application for renewal must be made before the expiry of the current five-year period. However, the fee for the renewal may be paid up to six months after the end of the five-year period. Patent law, on the other hand, permits both the making of the application for renewal and the payment of the fee during the following six months. It seems to us that there is no good reason for the difference. Indeed, it is somewhat strange that the registered designs system is harsher than the patent system given that the period between renewals is much longer and renewals are conseqeuently more easily forgotten. In any event, it seems to us that the requirement that the application must be made before the end of the five-year period is unnecessarily rigid and puts an unnecessary burden on the proprietors of designs.

As a result, we propose to bring the registered designs system into line with that which applies to patents, and this amendment makes the necessary provisions. The result would be that if an application for renewal is not made and no fee is paid before the end of one of the five-year periods, the registration will lapse, subject to revival during the following six months. I beg to move.

Lord Williams of Elvel

My Lords, we appreciate what the noble Lord has said and why he wishes to effect the changes that he has proposed. I cannot quite understand why the Government produced the original version of the Bill in the first place and why they have now changed their mind. I did not understand what representations had been made to the Government to make them change their mind. Perhaps the noble Lord can help us on that.

Lord Beaverbrook

My Lords, I am not sure whether any representations were made. However, as the noble Lord well knows, we are always open to suggestions. We are always looking at the Bill as it goes through its procedures in your Lordships' House in order to effect any possible improvements. The noble Lord will know that we listen with care to comments that he and all other noble Lords make.

On Question, amendment agreed to.

Schedule 3 [Rights in performances: permitted acts]:

Lord Beaverbrook moved Amendment No. 382:

Page 143, line 35, leave out from ("country).") to end of line 36 and insert ("leave out subsections (2) and (3) and insert— (2) Where an application for registration of a design is made by virtue of this section—

  1. (a) the application shall be treated, for the purpose of determining whether that or any other design is new, as made on the date of the application for protection in the convention country or, if more than one such application was made, on the date of the first such application, and
  2. (b) a design registered on the application shall be registered as of that date;
but no proceedings shall be taken in respect of any infringement committed before the date on which the certificate of registration of the design under this Act is issued.".").

The noble Lord said: My Lords, this amendment is intended to complement the new Section 1(5) of the Registered Designs Act, which deals with the question of whether a design is novel. Under Section 1(5) a design is not regarded as novel if—to paraphrase the words in Clause 243 of the Bill—it is the same as a design registered as a result of a prior application for registration. So far as concerns applications in the United Kingdom, the effect of this provision is perfectly straightforward. However, as it stands the Bill does not take account of the backdating of applications which flow from provisions in the Paris Convention on industrial property.

Under the Paris Convention, when an application is made for registered designs protection in a convention country, subsequent applications for the same design which are made within six months in other convention countries are treated as if they were made on the date of the earliest convention application. It is of course necessary to take this backdating into account in order to meet our convention obligations and the amendment makes the necessary provisions. I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook moved Amendment No. 383: Page 147, line 36, after ("director,") insert ("manager,").

The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Schedule 4 [The Registered Designs Act 1949 as amended]:

Lord Beaverbrook moved Amendment No. 384:

Page 150, line 16, leave Out from ("process") to end of line 18 and insert— (", being features which in the finished article appeal to and are judged by the eye, but does not include—

  1. (a) a method of principle of construction, or
  2. (b) features of shape or configuration which—
    1. (i) are dictated solely by the function which the article has to perform, or
    2. (ii) are dependent upon the appearance of an article of which that article is intended to form an integral part.").

The noble Lord said: My Lords, with leave, I should like to speak to all the amendments in Schedule 4, apart from Amendments Nos. 389A and 392, which we have already debated separately. I speak to Amendments Nos. 384, 385, 386, 387, 388, 389, 390 and 391.

Schedule 4 to the Bill sets out the text of the Registered Designs Act following the amendments made by the Bill. This series of amendments simply incorporates the text of amendments which I have tabled and which your Lordships have accepted. I beg to move Amendment No. 384.

Lord Williams of Elvel

My Lords, as the noble Lord points out, these are amendments that reflect amendments your Lordships have already approved. I have only one question. I hope the noble Lord will bear with me.

In Schedule 4 to this Bill we now have a restatement of the Registered Designs Act 1949. When this Bill is passed into legislation, it will become Schedule 4 to the Copyright, Designs and Patents Act. At the end of Schedule 4 it states, in reference to the Short Title of the Act, that this Act may be known as the Registered Designs Act 1949. I believe that that is still the Short Title of that Act.

It is an odd situation in which Schedule 4 to one Act is referred to as an Act in its own right. Can the noble Lord help us`? In the future are we to refer to the provisions contained in the pages here as the Copyright, Designs and Patents Act, Schedule 4, or are we to refer to the Registered Designs Act 1949? It seems odd to have an Act incorporated as a schedule in another Act.

Lord Jenkin of Roding

My Lords, perhaps I too may ask my noble friend a question on this point. As I understand it, this is a Keeling schedule. It repeats in full the earlier Act, with the amendments that are being made by this Bill. In another place I was one of those who argued for more Keeling schedules because I believe that they are extremely helpful to practitioners. They avoid the appalling complications that one sees in so many measures, of legislation by reference and by amendment. I welcome this.

The question I have to ask is this. My noble friend has just made two amendments that the House has accepted to Schedule 3. I have searched in vain for any sign of those amendments being repeated in Schedule 4. May I therefore assume that there will be a further amendment at a later stage that will reflect in Schedule 4 the amendments that we have just agreed to Schedule 3?

Lord Beaverbrook

My Lords, perhaps I may say to the noble Lord, Lord Williams, that this schedule is known as a Keeling schedule—a point made by my noble friend. That is a device that is frequently used. However, the 1949 Act will continue to be known by its existing name.

I take note of what my noble friend has said. I shall consider whether there has been some omission, and if so we shall put it right. Meanwhile, I beg to move Amendment No. 384.

On Question, amendment agreed to.

The Deputy Speaker

My Lords, a number of further amendments have been spoken to. With leave, I can take Amendments Nos. 385 to 389 together, after which an amendment in the name of another noble Lord intervenes.

Lord Beaverbrook moved Amendments Nos. 385 to 389:

Page 150, line 19, leave out ("to which this Act applies and").

Page 150, leave out lines 23 to 29.

Page 155, line 16, at end insert— ("( ) The right in the registered design is infringed by a person who without the licence of the registered proprietor does anything which by virtue of subsection (1) is the exclusive right of the proprietor.").

Page 155, line 18, leave out from ("who") to end of line and insert ("without the licence of the registered proprietor makes, in the United Kingdom or elsewhere,")

Page 155, line 22, leave out ("in the United Kingdom does") and insert ("without the licence of the registered proprietor does in the United Kingdom").

On Question, amendments agreed to.

[Amendment No. 389A not moved.]

6.30 p.m.

Lord Beaverbrook moved Amendments Nos. 390 and 391:

Page 155, leave out lines 30 to 40 and insert—

("; but that period may be extended for a second, third, fourth and fifth period, each of five years. (2) If the first, second, third or fourth period comes to an end without—
  1. (a) an application for extension being made to the registrar, and
  2. (b) the prescribed renewal fee being paid, the right shall cease to have effect.
 (3) But if during the period of six months immediately following the end of that period an application for extension is made and the prescribed renewal fee and any prescribed additional fee is paid, the right shall be treated as if it had never expired, with the result that—
  1. (a) anything done under or in relation to the right during that further period shall be treated as valid,
  2. (b) an act which would have constituted an infringement of the right if it had not expired shall be treated as an infringement, and
  3. (c) an act which would have constituted use of the design for the services of the Crown if the right had not expired shall be treated as such use.").

Page 158, leave out lines 11 to 25 and insert— ("(2) Where an application for registration of a design is made by virtue of this section—

  1. (a) the application shall be treated, for the purpose of determining whether that or any other design is new, as made on the date of the application for protection in the convention country or, if more than one such application as made, on the date of the first such application, and
  2. (b) a design registered on the application shall be registered as of that date;
but no proceedings shall be taken in respect of any infringement committed before the date on which the certificate of registration of the design under this Act is issued.").

On Question, amendments agreed to.

Lord Beaverbrook moved Amendment No. 392:

Page 167, line 51, after ("director,") insert ("manager,").

On Question, amendment agreed to.

Clause 250 [Persons permitted to carry on business of a patent agent]:

The Earl of Stockton moved Amendment No. 392A: Page 111, line 27, leave out ("individual, partnership or body corporate") and insert ("registered patent agent in the United Kingdom, or solicitor holding a practising certificate in the United Kingdom, subject to any extension of such limitation as may be made by order of the Secretary of State in favour of any state which affords reciprocity of treatment").

The noble Earl said: My Lords, I must apologise first to the House and to my noble friend the Minister for being late in tabling this amendment and a number of others in my name. Clause 250 is to enable anyone without restriction to offer patent agent services to the public. The Chartered Institute of Patent Agents is opposed to this clause and supports Amendment No. 302JZA tabled by the noble Lord, Lord Campbell of Alloway, in Committee and spoken to by the noble Lord, Lord Morton of Shuna. It is in substance the same amendment that I have tabled today.

The Government, represented in Committee by the noble Earl, Lord Dundee, stated that, we are anxious to improve the availability of services to small inventors who are most in need of professional advice".—[Official Report, 12/1/88; col. 1175.].

I agree that individuals and small business enterprises are indeed in need of that advice. However, because of their inexperience in such matters, those most in need of advice are least able to judge the correctness and quality of the advice they are offered. To put such people at the mercy of anyone who purports to be giving patent advice cannot be in the public interest.

As stated in the White Paper on intellectual property and innovation, The ability to claim ownership of ideas is a vital step in securing a profit from them". Such ownership is only claimed by filing appropriate and skilfully drafted patent applications. It is neither in the public interest nor in the national interest for patent applications to be drafted by the unskilled. A badly drafted patent application can put an invention in the public domain without giving the inventor the protection to which he is entitled. This causes loss not only to the inventor, but also to the country. It is a clear way to bring the patent system as a whole into disrepute. It is well established that the patent system aids in the encouragement of invention and in the encouragement of research and development but it will not continue to do so if untenable patent applications are filed.

My noble friend Lord Dundee stated in Committee at col. 1175 that the Director General of Fair Trading had concluded that the exclusive right which patent agents, together with solicitors, have to represent inventors, was having detrimental effects on the cost of services of patent agents and many smaller firms and private inventors particularly were being deterred from seeking professional advice.

With respect, this was not the conclusion expressed in the director general's report. The director general recommended that the policy of opening up patent services be followed, even though it would be, unlikely to transform overnight the availability of patent agent services or have much effect on their cost. The evidence given to the director general by the users of the system was strongly in favour of keeping the present restrictions.

United Kingdom patent agents do not object to competing with patent attorneys from other European countries, but it does appear unreasonable that nationals of other Community countries should be allowed to act as patent agents in the United Kingdom when reciprocal rights are not offered to British nationals in other Community countries. If United Kingdom patent agents lose business to foreign nationals, be they qualified or not, foreign earnings will also be lost to the United Kingdom. I beg to move.

Lord Morton of Shuna

My Lords, I spoke, because the noble Lord, Lord Campbell of Alloway, was not available at the Committee stage at the time this matter arose, in favour of this amendment and I continue to support it. There has to be a distinction at times between restricting the right of representation to people who have certain qualifications or opening it up freely. Nobody would want anybody to give medical advice; it is agreed that this should be restricted to doctors. On a very technical matter, it is right that it should be restricted to those who are technically qualified to give the advice. I support the amendment.

Lord Campbell of Alloway

My Lords, I should like to congratulate my noble friend Lord Stockton on his clear, comprehensive and precise exposition of the case for this amendment, which stood in my name at Committee stage. I hope that second time around it may commend itself to my noble friend the Minister, quite apart from drafting considerations which can always be put into shape.

There are three reasons why this clause calls for consideration and this amendment is sound in principle. First, it is requisite for the protection of the public; secondly, it is for the avoidance of disparity of treatment within the European Community; and, thirdly, it meets the problem of lack of reciprocity in the wider area beyond the European Community. For all these reasons, Clause 250 as it stands is not acceptable.

Lord Howie of Troon

My Lords, I am sympathetic towards the amendment. I listened with great care to the arguments advanced on its behalf. I hesitate only in one sense; it is this. What seems to be happening here, if I understand the amendment correctly, is that only one particular professional group is to be licensed to carry out certain functions. While that, in theory, might be defensible, and, in this instance, might be defensible, has the noble Earl considered that other professions are not so protected and that they might feel that what is good for patent agents is good for chartered engineers and other people of that kind? I am inclined to support him, on the grounds that the amendment would lead to the effect I have hinted at.

Lord Beaverbrook

My Lords, an identical amendment was indeed moved in Committee by the noble Lord, Lord Morton of Shuna. The issue of foreign competition and reciprocal access to overseas markets was first raised with the Government by the Chartered Institute of Patent Agents early last year before any final announcement of the Government's plans for legislation had been made. It was given most careful consideration at that time and the subject has been raised again on several occasions since.

The decision to end restrictions on who may represent patent applications was taken in the light of the Director General of Fair Trading's recommendations in his report published in 1986. The report concluded that the existence of the patent agents' "monopoly" was having detrimental effects on the costs of patent agency services, and that as a result private individuals and small firms were being deterred from seeking professional advice.

As my noble friend Lord Dundee said at the Committee stage, our decision to go ahead with the basic policy was taken following full consideration of the arguments put to us on both sides. We are, of course, well aware that the drafting and prosecution of patent applications require considerable skills, and that badly drafted applications can result in irretrievable loss of rights. We do, however, believe that the advantages of increased competition will be felt by all users of the system and will outweigh any disadvantages associated with the use of unqualified advice by some applicants, many of whom in any case seek no advice at all at present.

It is against this background, then, that the issue of foreign competition must be viewed. As far as the lack of reciprocity is concerned, all countries, including member states of the European Community, have the right to regulate their professional activities as they see fit. I understand for example, that in some other countries, practice as motor mechanics and even as hairdressers can be restricted to the professionally qualified.

Lack of reciprocity is a logical consequence of this variation in the practices of different countries. We firmly believe that the advantages to be expected from the overall policy of ending the monopoly will outweigh any potential losses of business by registered patent agents to overseas practitioners. Overseas practitioners will not be able to call themselves patent agents and will not be entitled to the special benefits that registration will bring, such as privileged communications, unless they pass the examinations and become registered here, which they are fully entitled to do at present.

It is also true that the number of UK patent applications, particularly ones originating from abroad, are falling and the greater part of UK patent agents' foreign earnings already come from work before the EPO which is won in competition with foreign practitioners. I should not expect qualified UK patent agents to suffer greatly at the hands of foreign competition.

For those reasons, I have to resist the amendment of my noble friend.

The Earl of Stockton

My Lords, I am grateful to the noble Lord, Lord Howie of Troon, for having raised the question of other professions. I cannot agree with him, however, since similar protections are afforded to doctors and solicitors.

This gives me the opportunity of pointing out that, when the Government decided the monopoly of solicitors in the business of conveyancing of housing should be broken, they insisted that for the protection of the public only licensed conveyancing agents should carry out the business. I hope that my noble friend the Minister will forgive me for saying that, because of the large number of people purchasing houses and the large number of conveyancing agents and solicitors, I feel that there may be some electoral reason for their having made this decision. I am fully aware that there is no mileage to be made in trying to get the patent agents' vote.

I should like to point out to my noble friend that in January 1987 senior officers of the Chartered Institute of Patent Agents went to see the then Minister with responsibility for information technology, my honourable friend the Member for Chertsey and Walton in another place, and were not permitted even to make a verbal submission. They were faced with a fait accompli; namely, a decision taken by the then Minister with responsibility for corporate and consumer affairs, the Member for Folkestone and Hythe in another place.

I urge the Minister to reconsider. As I can assure him that the matter will be raised again in another place, I beg leave on this occasion to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 252 [Persons entitled to describe themselves as patent agents]:

The Earl of Stockton moved Amendment No. 392B: Page 112, line 16, leave out ("in the course of a business").

The noble Earl said: My Lords, with the permission of the House, I should like to speak to Amendments Nos. 392B, 392C, 392D, 392F, 392H, 392J, 394D, 394E and 394F.

If I may speak to Amendment No. 392B principally, the clause deals with the use of the titles "patent agent" and "patent attorney". It is the Government's stated intention that, even though practice as a patent agent will be open to all and sundry, the use of the titles will be reserved to those on the register. The amendments seek to achieve this end by prohibiting unauthorised use of the titles.

Restricting the prohibition in the course of a business would clearly allow the use of the titles in other circumstances. No reasonable individual would wish to make unauthorised use of a restricted title and so cannot be damaged by a broader proscription. The broader prohibition on the use of the title is essential to protect the public from anyone acting under false pretences or seeking to avoid the prohibition. I beg to move.

Lord Beaverbrook

My Lords, the amendments seek to reverse the effect of government amendments fully debated and agreed to in Committee.

When the Bill was introduced it provided that any use of one of the reserved titles "patent agent", "European patent attorney" or "registered trade mark agent" by a person not so entitled would be an offence. On consideration, however, we came to the conclusion that the scope of the prohibition was too broad. The example quoted in Committee by my noble friend Lord Dundee was that Clause 252 as drafted would have made it a criminal offence, for instance, for a young man to pretend to be a patent agent in order to impress a prospective girlfriend. While such a person may be guilty of profound bad judgment, it should hardly be a matter for the criminal law.

More seriously, we accept that there may be a few circumstances where unauthorised use of one of the titles may be more than trivial yet not fall within the expression "in the course of a business". What we are unable to accept, however, is that such abuse should be a criminal offence. There may be circumstances where personal prestige may be enhanced or other benefits may accrue through the use of the titles, but if these have nothing to do with business we see no reason why criminal sanctions should be brought to bear.

For that reason I must resist my noble friend's amendment.

The Earl of Stockton

My Lords, I thank the Minister for his comments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 392C and 392D not moved.]

6.45 p.m.

The Earl of Stockton moved Amendment No. 392E:

Page 113, line 4, at end insert— ("(7) A person who contravenes this section also commits an offence under the Trade Descriptions Act 1968 and proceedings may be taken in respect of such offence by a Trading Standards Officer.").

The noble Earl said: My Lords, the only purpose of the amendment is to strengthen Clause 252. The Department of Trade and Industry says that the penalties under the Trade Descriptions Act are higher than the £1,000 fine at current level 5 on the standard scale. Further, it is thought that the efficacy of the clause will be greatly enhanced by giving prosecuting authority to professional trading standards officers. I beg to move.

Lord Beaverbrook

My Lords, Clause 252(6) provides that unauthorised use of the reserved title is to be an offence and lays down a penalty that we think appropriate. It is also consistent with the penalty in existing law for unauthorised practice as a patent agent. To involve the Trade Descriptions Act, as the amendment seeks to do, would have wider implications and should not be provided for in the Bill.

The Trade Descriptions Act carries much more severe penalties—up to two years' imprisonment on indictment. This is general consumer protection legislation. It is possible, depending on the circumstances, that an unqualified person pretending to be a qualified patent agent would be guilty of knowingly making a false statement within the meaning of Section 14 of the Act. However, it has not been conclusively established in case law that the Act would cover all statements concerning the standing, capabilities or professional qualifications of a person providing a service. This applies generally to all professions. It is just one of a number of aspects that will be considered in the context of any future review of the Act.

We do not believe that now is the time to make amendments on a piecemeal basis. For that reason, I resist the amendment.

The Earl of Stockton

My Lords, I thank the Minister for his assurance that the matter will be reviewed on a larger scale at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 253 [Persons entitled to describe themselves as European patent attornies, &c.]:

[Amendment No. 392F not moved.]

The Earl of Stockton moved Amendment No. 392G: Page 113, line 18, leave out ("attornies") and insert ("attorneys").

The noble Earl said: My Lords, a partnership should not be compelled by statute to misspell the plural of "attorney" in order to avoid the criminal offence of contravening Clause 252. I beg to move.

Lord Jenkin of Boding

My Lords, I thought that this was a new example of Eurospeak.

Lord Beaverbrook

My Lords, I am not sure why the amendment has been tabled. The Oxford English Dictionary confirms that the spelling used in the Bill is correct. Whether my noble friend Lord Jenkin of Roding has any view on a Eurospeak dictionary, I do not know. We believe that the spelling is correct.

If the amendment were agreed to, it would be necessary to propose a similar amendment to make the plural of "attorney" in Clause 252(2)(b) consistent with the amendment. I believe we probably have enough to do on Third Reading without these small points. I believe we have it right and therefore I resist the amendment.

The Earl of Stockton

My Lords, I stand corrected by both the Minister and the Oxford English Dictionary. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 39211 and 392J not moved.]

Clause 255 [Privilege for communications with patent agents.]:

The Earl of Stockton moved Amendment No. 392K: Page 114, line 23, leave out from ("to") to ("between") in line 25 and insert ("intellectual property as defined in section 72(5) of the Supreme Court Act 1981").

The noble Earl said: My Lords I beg to move the amendment and, for the convenience of your Lordships, speak also to Amendments Nos. 393, 394 and 396 in the name of my noble friend Lord Mottistone, and Amendment No. 395 in the name of the Minister.

The Government have recognised that the original subsection (3) was inadequate in that it restricted privilege in respect of copyright to that in which the copy right was connected with patent, trade marks, service marks, registered designs or design rights. However, the amendment proposed by the Minister is inadequate and, in one sense, worse than the original subsection. To begin with, the restriction to the protection of inventions and so on may not be adequate to protect advice given to a client who is contemplating making a competing product or who wants to know if it infringes the patent or wants advice concerning the validity of the granted patent.

It may be true that one could interpret the words, relating to the protection to include advice about infringement but it could hardly include advice about the validity of a patent and such advice forms a large part of the advice given by patent agents which is likely to require privilege. In any case, if the words, relating to the protection are liable to have a restrictive effect, we know of no good reason why they should be included.

The second point is that I do not accept that the words, inventions, designs or technical information, or the protection of trade marks or service marks are wide enough to cover everything on which a patent agent can reasonably be expected to give privileged advice. For example, it is by no means certain that it includes any kind of copyright and there are copyright matters which quite clearly fall within a patent agent's province where the copyright is in respect of an artistic work which is nevertheless industrially applied.

My proposal in the amendment used the broader expression "intellectual property" which is defined in the Supreme Court Act and is well understood. It has the benefit of simplicity as well as clarity. I beg to move.

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, if this amendment is agreed to, I cannot call Amendment No. 393.

Lord Mottistone

My Lords, perhaps I may speak to Amendments Nos. 393, 394 and 396. Amendment No. 396 is exactly the same as Amendment No. 394 in relation to Clause 261. As my noble friend Lord Stockton said, this is all about the privilege of communication for patent agents. It is a privilege which accrues to the advantage of the patent agent's client, and that client is usually industry. In general, industry wishes to have a professional adviser of its choice without artificial restrictions. Many industries use patent agents for advice on all intellectual property matters. Bearing in mind the criminalisation of copyright law, it is important that privilege should attach to communication with patent agents for all legal proceedings, including those of a criminal nature. It is doubtful whether patent agents would be involved in advising on criminal proceedings but their advice might be germane to such proceedings and should enjoy the same privilege as communication with solicitors.

As at present worded, Clause 255 preserves an archaic distinction between the work of patent agents and solicitors which is not seen by industry as being in its interests. Industrial patent agents usually know much more about copyright and industrial design than most solicitors. As is normally the case, when one has a particular type of profession which covers a broad range of subjects it cannot know as much as a profession which narrows its scope. Therefore, whatever my noble friend does with other amendments, I hope that he will give favourable consideration to my amendments which I shall move in due course.

Lord Morton of Shuna

My Lords, I have no particular axe to grind on these amendments except on Amendment No. 392K and then only on the drafting of it. I do not see the point of referring to Section 72(5) of the Supreme Court Act where that definition, as the noble Earl will be well aware, defines intellectual property in two lines. Why is it necessary to refer to another Act and not just put the definition into his amendment? It would seem much clearer and from the point of view of somebody who occasionally has to refer to Acts, it is much easier if one does not have to keep on picking up a different Act everywhere in order to find out what is the meaning.

Lord Jenkin of Boding

My Lords, I support the amendments proposed by my noble friend Lord Mottistone because it seems to me that there is a point of some constitutional importance here; namely, the privilege that should exist between a client and his adviser notwithstanding that it involves criminal matters. There are a number of issues in this Bill where offences have been criminalised in order to strengthen the rights of the owner of intellectual property and if an individual or a company finds that it is falling foul of those provisions and seeks the advice of a patent agent, it is not entirely clear as to why communications between them should not be privileged when, if he sought the advice of a solicitor, they would be.

In an earlier amendment my noble friend on the Front Bench sought to draw parallels between the work of solicitors and patent agents in handling matters with which this Bill is concerned. It seems to me that it would be right for the privilege to extend to matters involving possible criminal offences as well as to civil proceedings. I believe that the amendment of my noble friend achieves that, and I hope it will be accepted.

7 p.m.

Lord Beaverbrook

My Lords, with the leave of the House, I shall also speak to Amendments Nos. 392K, 393, 394, 395 and 396. Perhaps I may deal first with Amendments Nos. 392K and 393. In Committee my noble friend Lord Dundee explained the intended scope of subsection (1) of Clause 255. His explanation can be found in Hansard for 12th January at columns 1185 and 1186. He acknowledged that matters relating to other intellectual property rights, in particular copyright, may well arise in connection with the protection of inventions, trade marks, or designs. However, we consider that the existing wording is adequate to cover all relevant communications in such circumstances. Were either of the amendments proposed to be made, the scope of the privilege would extend considerably beyond what we believe would be justified by the training patent agents receive and their expertise. Patent agents themselves do not claim to be qualified in, for example, questions of pure copyright like that in music or works of art.

It is not in the public interest for privilege to extend any wider than is absolutely necessary and, in the light of my explanation, I hope that my noble friends will feel able to withdraw their Amendments Nos. 392K and 393.

I turn to Amendments Nos. 394 and 396. These amendments would bring criminal proceedings within the scope of the privilege for communications with patent agents and registered trade mark agents and would also remove proceedings before the comptroller from such scope. I assume that the latter effect is unintended; it would certainly be undesirable.

There may however be a valid point with regard to criminal proceedings. The exclusion of criminal proceedings from these provisions follows a similar provision in Section 104(3) of the Patents Act 1977. However, the privilege conferred under that Act covers only communications relating to patent proceedings. Since there is no such thing as criminal patent infringement, the exclusion of criminal proceedings up to now has been of little significance.

However, the situation under this Bill is different. Clause 272 creates the new offence of fraudulent use of a trade mark, an important element of which is trade mark infringement. There are also offences involving copyright infringement which would fall within the competence of patent and trade mark agents whenever the circumstances relate to the protection of inventions, designs or trade marks. It does, on the face of it, seem anomalous that where a civil court and a criminal court could be considering similar questions, a given communication with a patent or trade mark agent would be privileged in the former but not in the latter. If my noble friend agrees to withdraw the amendments I shall happily undertake to give the matter further thought.

Finally, I deal with my own Amendment, No. 395. Clause 261 provides that communications with trade mark agents on the register to be established under Clause 259 will be privileged from disclosure in legal proceedings but only with respect to, any matter relating to trade marks or service marks". We are now convinced, however, that this wording is not right in two respects.

In the first place, there is no reference to designs. Trade mark agents have traditionally given advice and acted for applicants in registered design proceedings, and the examinations for corporate membership of the Institute of Trade Mark Agents reflect this. The new unregistered design right, which is the subject of Part III of this Bill, will also fall logically into the area of expertise of trade mark agents. It is therefore right that if communications are to be privileged at all, that privilege should extend to communications relating to designs.

The second respect in which the existing wording is not quite right is more subtle. A similar point was addressed by my noble friend Lord Dundee in Committee when he was speaking to an amendment to Clause 255, which relates to privilege for communications with patent agents. The present amendment will bring Clause 261 into line with Clause 255 as it was amended at that time.

The point can be illustrated as follows. If a client's competitor is passing off his goods as those of the client it would be essential for any well-rounded advice to include all the possible courses of action available to him. The trade mark agent would need to consider not just simple trade mark infringement but also possible breaches of copyright in packaging or labels and the common law of passing off. It can be argued that the existing wording, any matter relating to trade marks or service marks would cover all this, but we consider that the addition of the word "protection" puts it beyond doubt.

I should say in conclusion that the changes we are now proposing are in line with the recommendations of a working group which was set up under the chairmanship of one of my department's officials and included representatives from the Law Society, the Chartered Institute of Patents Agents and the Institute of Trade Mark Agents. The working group's final report was only completed late last year, and now that we have considered it we think it is appropriate to make the changes contained in this amendment.

The Earl of Stockton

My Lords, I should like to thank the noble Lord, Lord Morton of Shuna, for drawing the drafting matter to my attention. I shall pay more attention to my amendments in future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 393 not moved.]

Lord Mottistone had given notice of his intention to move Amendment No. 394: Page 114, line 36, leave out subsection (2).

The noble Lord said: My Lords, I shall not move this amendment, but I should like to thank my noble friend for considering it together with Amendment No. 396.

[Amendment No. 394 not moved.]

Clause 256 [Power of comptroller to refuse to deal with certain agents]:

The Earl of Stockton moved Amendment No. 394A: Page 115, line 3, leave out from ("The") to ("refuse") in line 4 and insert ("comptroller shall").

The noble Earl said: My Lords, for the convenience of your Lordships, I speak also to Amendment No. 394B. The purpose of the amendment is to make it mandatory on the comptroller to refuse to recognise as his agent, in respect of business under the patents and design Acts, persons guilty of the offences set out in subsection (2). Having regard to the advised intention of the Government to open up practice as a patent agent to anyone, qualified or not, it becomes all the more important to have strong sanctions against anyone contravening Section 252 or guilty of any other matters enumerated in paragraphs (a), (b), (c) and (d).

The amendment proposed to be made in line 20 is consequential on the amendment to lines 3 and 4. I beg to move.

Lord Beaverbrook

My Lords, with the leave of the House, I shall speak also to Amendment No. 394B. The substance of Clause 256 is not new. The Patents Act 1977 and the Registered Designs Act 1949 both have provisions along similar lines, and these are being replaced by Clause 256.

I should like to emphasise that we regard this clause as providing an important safeguard, in that it offers the possibility of imposing a kind of professional discipline on unqualified patent practitioners.

However, I think that the amendment proposed by my noble friend would write into the Bill an inflexibility which is undesirable. The present formulation lays down certain classes of person, partnership or body corporate which, on the face of it, are not fit to act as agents. It is, however, left to rules to determine which persons the comptroller may refuse to recognise as agents. If the amendment were to be adopted, the comptroller would be compelled to refuse to recognise a person who, for example, had at any time been convicted of one of the offences listed or been found guilty of certain misconduct. There is no provision for rehabilitation, if I may call it that.

While I accept that provision for such matters could be built into the statute, this is the sort of matter where it is preferable to leave details to subordinate legislation. This will be more important in future when unqualified persons acting as agents will be much more common than they are at present, and we may well need the flexibility that subordinate legislation allows. I therefore resist the amendments.

The Earl of Stockton

My Lords, I thank the Minister for his assurances about subordinate legislation, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 394B not moved.]

Clause 259 [The register of trade mark agents]:

The Earl of Stockton moved Amendment No. 394C: Page 116, line 26, after ("marks") insert ("or service marks").

The noble Earl said: My Lords, in moving this amendment perhaps I may say that it is my fault that the reference to agents acting for others in respect of service marks was omitted. There is no intention that the proposed register of trade mark agents should be limited to those handling trade marks to the exclusion of those handling service marks. I beg to move.

Lord Beaverbrook

My Lords, this amendment would change Clause 259(1) in that it would result in an agent who concerned himself only with service marks and not with trade marks being able to obtain registration as a trade mark agent. However, it is almost inconceivable that an agent would limit his practice in this way and as a result it seems unnecessary to clutter up the subsection with these extra words. I therefore resist the amendment.

The Earl of Stockton

My Lords, I thank the Minister for his assurances, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 260 [Unregistered persons not to be described as registered trade mark agents]:

[Amendments Nos. 394D to 394F not moved.]

Clause 261 [Privilege for communications with registered trade mark agents]:

Lord Beaverbrook moved Amendment No. 395: Page 117, line 37, leave out ("trade marks or service marks") and insert ("the protection of trade marks, service marks or designs")

On Question, amendment agreed to.

[Amendment No. 396 not moved.]

Clause 262 [Offences committed by partnerships and bodies corporate]:

Lord Beaverbrook moved Amendment No. 397: Page 118, line 26, after ("director,") insert (", manager").

On Question, amendment agreed to.

Clause 264 [Patents county courts to exercise special jurisdiction]:

The Earl of Stockton moved Amendment No. 397ZA: Page 119, line 9, after ("court") insert ("or any newly constituted county court").

The noble Earl said: My Lords, it seems only logical to include provision for any newly constituted county court, since it may very well be necessary to do just that in order to avoid overloading any existing county court. I beg to move.

The Lord Chancellor

My Lords, Clause 264 incorporates the recommendations of the Committee on Patent Litigation which were issued in December 1987. I understood that a copy of the committee's report has been placed in the Library. Although the Government are still considering the details of its recommendations, it seemed appropriate in this clause, which marks the Government's general intention to create a patents county court, broadly to follow the report's recommendation as to the conferral of patents and designs jurisdiction on one or more county courts.

The initial intention is to select a single court in central London, but the power is there to appoint other courts around the country should the level of demand in those areas be sufficient. It is not, however, necessary to provide explicitly for any county court which may be established in the future to be covered by the jurisdiction order. The present reference to "any county court" is sufficient to include all courts in existence at the time the order is made and is wide enough to allow amendment of the order on the establishment of any new court if it is wished to designate it a patents county court. I hope that the noble Earl may, in the light of this explanation, feel able to withdraw his amendment.

The Earl of Stockton

My Lords, I thank the noble and learned Lord the Lord Chancellor for his explanation and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Stockton moved Amendment No. 397ZB: Page 119, line 39, after ("not") insert ("except by agreement between the parties").

The noble Earl said: My Lords, it was the clear intention of the Oulton Committee that a newly-constituted patents court should always have jurisdiction over proceedings irrespective of the value of the claim if both parties were agreeable to the case going before the new patents court. There can hardly be any objection to both parties agreeing to have the case tried before the patents county court, just as there can be no objection to both parties agreeing to the case going before the High Court. I beg to move.

The Lord Chancellor

My Lords, Clause 264 at present enables a financial ceiling to be imposed, varied or removed entirely from claims falling within the special jurisdiction of a patents county court. The report of the committee to which reference has been made recommended that this financial limit should be waived if the parties so agreed. The Government accept the recommendation of the committee, and in principle, therefore, they accept the amendment which my noble friend has just proposed.

However, there are a number of details about this particular provision which in the light of what I said at Committee stage require to be set out in more detail. The amendments which seek to do this, I hope, will be ready to bring forward at Third Reading in your Lordships' House. I believe it is likely that the shape of the clause may change with those amendments. I should be grateful if my noble friend would allow me to fit this principle into the amendments. For that purpose I hope that he will be willing to withdraw the present amendment.

The Earl of Stockton

My Lords, I thank my noble and learned friend for his agreement to include the principle. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Stockton moved Amendment No. 397ZC:

Page 119, line 46, at end insert— ("31C. In any proceedings before a Patents county court involving issues of validity and infringement of a patent, the court shall refer such issues to the Comptroller-General of Patents, Designs and Trade Marks who shall give an opinion thereon and the Comptroller's opinion shall be communicated in writing to the court and to the parties before the trial.").

The noble Earl said: My Lords, throughout the discussions on the White Paper proposals to reform patent litigation, the CIPA has consistently maintained that an important ingredient is to obtain a report from the comptroller at an early stage. This could be of great assistance to the parties in helping to arrive at an early settlement. It is also in line with EPO practice. In particular it should be noted that it refers specifically to the issues of validity and infringement which are precisely the issues that will be reserved on appeal to the Community patent appeals court if ever the Community patents convention comes into effect. I beg to move.

The Lord Chancellor

My Lords, as I said a moment or two ago, Clause 264 as at present drafted does not cover the more detailed procedural points raised in the report which was received only a short time before the Bill was in Committee. I can assure your Lordships that the Government intend to introduce provisions which will allow the court in proceedings within its special jurisdiction, with or without the application of any party, to order the Patent Office to inquire and report on any question of fact or opinion so that there is a flexible power in the court to get reports such as the report envisaged in my noble friend's amendment.

In our view it would not be right at present to compel the court to seek a report in all cases involving the validity and infringement of a patent. In our view this would create too rigid a procedure and place too heavy a burden on the comptroller and his staff. We fell it is right to make what my noble friend has in mind an option to the court but not obligatory in every case. There are some cases in which it would not be either necessary or perhaps even desirable. I hope that my noble friend will feel able to withdraw his amendment on the understanding that the detailed amendments which we shall bring forward will create a discretion in the court in suitable cases to obtain the kind of report that his amendment envisages.

The Earl of Stockton

My Lords, I thank my noble and learned friend for his assurances and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.