HL Deb 02 November 1988 vol 501 cc277-84

89 After Clause 93, insert the following new clause:

'Undertaking to take licence of right in infringement proceedings

.—(1) If in proceedings for infringement of copyright in respect of which a licence is available as of right under section (Powers exercisable in consequence of report of Monopolies and Mergers Commission) (powers exercisable in consequence of report of Monopolies and Mergers Commission) the defendant undertakes to take a licence on such terms as may be agreed or, in default of agreement, settled by the Copyright Tribunal under that section—

  1. (a) no injunction shall be granted against him,
  2. (b) no order for delivery up shall be made under section 94, and
  3. (c) the amount recoverable against him by way of damages or on account of profits shall not exceed double the amount which would have been payable by him as licensee if such a licence on those terms had been granted before the earliest infringement.

(2) An undertaking may be given at any time before final order in the proceedings, without any admission of liability.

(3) Nothing in this section affects the remedies available in respect of an infringement committed before licences of right were available.'.

Lord Young of Graffham

My Lords, I beg to move that the House to agree with the Commons in their Amendment No. 89.

With the leave of the House, and in particular the noble Lord, Lord Lloyd of Kilgerran, I think that in moving that the House do agree with the Commons in their Amendment No. 89 it would be convenient if I were to speak to Amendments Nos. 144, 144A, 217, 218, 225, 252, 376, 377 and 407. These amendments make provisions to deal with anti-competitive abuses of any of the four main intellectual property rights; that is, patents, registered designs, design rights and copyright. The idea behind the Commons amendments is that if the Monopolies and Mergers Commission, on an investigation into a monopoly or a merger or an anti-competitive practice, finds that there are matters which operate, or which might operate, against the public interest and that these include the terms imposed in licences, or a refusal to grant licences, then Ministers should be able to do something about that.

In that respect, the remedy available to Ministers is essentially the same as that in the present Patents Act; that is to say, that orders can be made to vary or cancel the terms and conditions of existing licences or to compel the rights owners to grant licences to anyone as of right.

Disputes over the terms applying under the licences of right should be settled by the Comptroller or by the Copyright Tribunal as the case may be.

Moved, That the House do agree with the Commons in their Amendment No. 89.—(Lord Young of Graffham.)

Lord Williams of Elvel

My Lords, I shall also speak to the grouping specified by the Minister. My particular worry is Amendment No. 144, which concerns the role of the Secretary of State on recommendatons of the Monopolies and Mergers Commission. It appears as a new clause after Clause 137.

There seems to be two major problems. The first concerns the public interest. Definitions of the public interest have varied and indeed still vary between one statute and another. There is the basic definition of the public interest in the Fair Trading Act but different Acts have provided different requirements for the Monopolies and Mergers Commission in terms of assessing any particular reference against the public interest.

As we know, the Secretary of State is indivisible. In law, there is no Secretary of State for Trade and Industry or Secretary of State for Transport; there is a Secretary of State. The Secretary of State can make a reference to the Monopolies and Mergers Commission. He can make that under the Fair Trading Act, the Airports Act, the Gas Act or the Telecommunications Act. There is a whole series of Acts under which he is entitled to make references and to act on them.

The problem here is to determine under which Act the public interest is to be determined and under which Act the Secretary of State, whoever he may be, has powers to take the appropriate action. We recognise that there may well be anti-competitive practices and although we have doubts about its total capacity to determine these important issues we recognise that the Monopolies and Mergers Commission is a body which can decide whether it is competent to write the appropriate report and make the appropriate judgment.

Perhaps I may cite a hypothetical case. Clause 31 of the Airports Act 1986 requires the commission when reference is made to it under that Act in respect of anti-competitive practice in local authority airports, to have regard to a number of objectives. The Act states that, in the case of a matter relating to the granting of a right by virtue of which any operational activities relating to an airport may be carried on by any person or persons, shall in addition have regard to the following objective, namely the furtherance of the reasonable interests of persons granted such rights". In other words, the reasonable interest of concessionaires in airports.

If the Monopolies and Mergers Commission is required to deal with a copyright problem, it could easily be that the problem involves the concessionaires in local authority airports. If the reference is made under the Airports Act there is one definition of public interest, and presumably under Amendment No. 144 the Secretary of State has to act on that. If it is made under the Fair Trading Act then the Secretary of State has to act on a series of rather difference criteria. I do not wish to go through the Gas Act and no doubt we shall have the electricity Act, the water authority Act and other Acts with different definitions of public interest.

However, copyright runs right across the spectrum. It is not merely a question of something happening to airports or the gas industry. That poses a question. Let us suppose that the Monopolies and Mergers Commission, having recieved a reference from the Secretary of State for Transport on airports covering a copyright matter, produces a report making a recommendation having regard to the particular criteria which I have just read out from the Airports Act. If the same case is referred by the Secretary of State for Trade and Industry and the commission says, "Well, the criteria we were asked to judge are now somewhat different and therefore there is a different recommendation", what does the Secretary of State, who is indivisible in it all, do in those circumstances? This is a much wider problem than the pure ambit of Amendment No. 144. I hope that the Secretary of State will concentrate on the whole question of what is the definition of public interest in terms of statute throughout the whole of competition policy. With great respect, we are in something of a muddle here.

The second problem arising from Amendment No. 144 concerns subsection (3), which quite properly states: A Minister shall only exercise the powers available by virtue of this section if he is satisfied that to do so does not contravene any Convention relating to copyright to which the United Kingdom is a party". That refers to the current Berne Convention to which the United Kingdom is a party.

If a Minister takes action on the basis of a Monopolies and Mergers Commission recommendation, he does so provided he is satisfied. I am advised that the question of satisfaction is open to judicial review. Therefore, what would occur is that the Minister, whoever he may be, will say, "I have received a report. I am satisfied that what I am about to do is not in contravention of the Berne Convention". Someone can then say, "Well, we are going to take you to judicial review to see whether you are right in saying that you are satisfied".

That puts the Berne Convention into the courts, and that is exactly what the Government have been trying to avoid throughout the whole progress of the Bill through this House and another place—probably rightly. If I were in the Government's position I would not want the interpretation of the Berne Convention to be subject to the United Kingdom courts. Nevertheless, the convention is put fairly and squarely into United Kingdom courts through the process of judicial review.

That opens up a whole new area of debate because the Berne Convention becomes evidential material in a United Kingdom court. If that is to happen, it would seem to be somewhat strange that we do not have an exposition of the Berne Convention in front of us—we were pressing for it to be a schedule to the Bill—or some definitive statement of what is the Berne Convention for the purposes of the United Kingdom courts.

I accept completely that the Berne Convention can change or be modified, but there are ways of getting round that problem by giving the Secretary of State powers to modify the schedule, if there is to be a schedule, by order. However, the main problem is there: the Berne Convention becomes a matter of interpretation in United Kingdom courts.

Those are the two difficulties that I have with Amendment No. 144: the different definitions of public interest and what the Secretary of State, whoever he may be and whatever portfolio he may hold, can do about it; and the problem of the Berne Convention, or whatever convention is appropriate, becoming evidential material in the United Kingdom courts.

I should be grateful if the Secretary of State could respond to those two points. They are important and I should like to have the government view put on record.

9.15 p.m.

Lord Young of Graffham

My Lords, the noble Lord, Lord Williams, suggested that Amendments Nos. 144 and 217 are defective because they refer to the public interest without taking account of the special public interest test in certain other legislation often connected with privatisation; for example, the Telecommunications Act 1984, the Airports Act 1986 and, if I may throw one in, the Gas Act 1986.

However, in our view there is nothing in those Acts of which account can be taken in the Bill. I should like to explain that. In the Telecommunications Act the special test is Section 13(8). That subsection, however, is about what are called licensed modification references; in other words, references to the Monopolies and Mergers Commission of questions about whether there should be modifications in the conditions contained in licences granted for the running of telecommunications systems.

The consequence of an adverse report is that the Director General of Telecommunications may modify the conditions contained in such a licence. None of the powers under Schedule 8 to the Fair Trading Act is actually available. In other words, the new powers created by Amendments Nos. 144 and 217 could never be available following a licence modification reference under the Telecommunications Act. As a result, the special public interest test under that Act would never be appropriate to those amendments.

Similar considerations apply as regards the special test in Section 43(5) of the Airports Act. This is appropriate only to references about the imposition or modification of conditions placed on the operation of airports. Similarly, the special test in Section 24(6) of the Gas Act 1986 is appropriate only to references as regards modifications to conditions in the authorisation of a public gas supplier. In neither of these cases would the public interest test ever be appropriate to Amendments Nos. 144 and 217.

The noble Lord asks about the definition of public interest and why it is not defined here. The public interest is defined in Section 84 of the Fair Trading Act. It is under that Act that the Monopolies and Mergers Commission's reports are made, and that is the appropriate place for the definition to be.

Lord Williams of Elvel

My Lords, before the noble Lord continues with his answer. I am very grateful for the answer to my first point. The Minister will undoubtedly know that Section 84 of the Fair Trading Act is a very general clause containing a whole series of different criteria with varying degrees of precision, if I may put it like that. The noble Lord himself and his predecessors as Secretary of State at the Department of Trade and Industry have made many ministerial pronouncements as regards what guides the Monopolies and Mergers Commission in its interpretation of Section 84.

No doubt the noble Lord's successors, if there are any and he does not live until eternity in his present position, will issue further pronouncements stating what is meant by Section 84 of the Fair Trading Act. That is what he and his predecessors have also been doing. I cannot take very seriously the Minister's representation that Section 84 is in any sense a determining criterion for the Monopolies and Mergers Commission on the question of public interest. It is really what the Minister says is the thrust of competition policy at any given time.

I also find rather difficult his response to my point as regards the Airports Act. It is, as the Minister is correct in saying, concerned with concessions that are given to concessionaires at local authority airports. Nevertheless, those conditions may involve copyright. Perhaps I may give an example. It may be that McDonalds is given a concession to sell hamburgers at Manchester Airport, which is now privatised, so long as it allows its big "M" to be displayed at the entrance to the airport. It will be said, "No, that is a copyright matter or it may be a trademark. It is not something that we are prepared to allow". I am speaking very hypothetically because one can never tell what matters will arise in the real world.

There appear to be matters in the Airports Act—I accept the Minister's remarks about the Gas Act—where the public interest has a slightly different definition. That is also likely to be the case with future Acts. Judging from the response as regards the Airports Act, I am not entirely convinced that the noble Lord the Secretary of State has fully answered the point that I made.

Lord Young of Graffham

My Lords, it may be that the noble Lord, Lord Williams of Elvel, is too addicted to McDonalds or to hamburgers. However, I suspect that if there was a matter which the Monopolies and Mergers Commission was looking at as regards general copyright, it would not be concerned with the specialised section under Section 43(5) of the Airports Act, which is chiefly concerned with the imposition or modification of conditions placed on the operation of airports. It is true that conditions relating to a minor part of it are strictly speaking within it, but that would be stretching the point a little far. The normal functions of the Monopolies and Mergers Commission in investigating a monopoly, a merger or an anticompetitive practice and finding matters that operate or might operate against the public interest, including terms imposed by licences, are seen on a much broader scale than the specific area, which comes down almost to a particular case. I really do feel that this Bill would not apply.

It is also not correct that the meaning of public interest in Section 84 of the Fair Trading Act is a matter for the Secretary of State. It is a matter for the Monopolies and Mergers Commission. All I can decide is which type of case should be referred to the commission. In any event it would not help the Bill to attempt a definition because the commission does not report under this Bill. The essential powers of the commission are to report under the Fair Trading Act. If there was a need to limit or prescribe the definition of public interest for the Monopolies and Mergers Commission, it would be necessary to modify the Fair Trading Act and would not come under this legislation.

The noble Lord asked about the effect of the copyright judicial review in regard to the Berne Convention and other conventions. The copyright provision does not specify the conventions concerned—for example, the Berne Convention—because of fears which have been expressed that we might be contravening the Paris Act of the Berne Convention. In particular, Article 9 of the Paris Act appears to prohibit any exception from the reproduction right which conflicts with a normal exploitation of the work or prejudices the legitimate interests of the author.

I should say that the Government do not accept that there would be any contravention of the Berne Convention if licences were ordered as a result of a Monopolies and Mergers Commisson finding. Nevertheless, we accept that something should be said to reassure rights owners that nothing would be done which is contrary to the United Kingdom's obligations. Subsection (3) of Commons Amendment No. 144 makes the necessary provision and is broadly similar to the rider contained in Section 53(5) of the Patents Act 1977. The House will however notice that subsection (3) of the amendment is quite general. This is necessary not only to ensure that it covers all of the existing copyright conventions, which include the Berne Convention and the Rome and Geneva Conventions, but also to accommodate any future changes in our international obligations in this area. In our view this comprehesive approach is preferable.

The decision of any Minister under subsection (3) of Commons Amendment No. 144 might also, as the noble Lord surmises, be subject to judicial review. It is by no means uncommon for an interpretation of a treaty to be subject to scrutiny by a court in the United Kingdom when the treaty itself is not part of our statute law. The most obvious example is the Treaty of Rome. We have deliberately not scheduled the Berne Convention to the Bill because in general what matters are the provisions of the Bill and not the convention. The interpretation of Clause 144 would in no way be improved by scheduling the convention to the Bill itself.

Lord Williams of Elvel

My Lords, I am grateful to the Secretary of State. I take issue with him on one small point about the interpretation of the Fair Trading Act 1973. I speak from memory and so I could easily be wrong. I believe that the Monopolies and Mergers Commission is required to report under Section 84 of the Act. It is not just a question of references. The Monopolies and Mergers Commission is governed by those criteria. Secondly, I understood from the Secretary of State that the Berne Convention may well become—we hope not—evidential material in a United Kingdom court if there is judicial review about the satisfaction of the Minister under Clause 144(3). I think that one has to accept as a fact of life for Ministers that the convention will be interpreted by a United Kingdom court. I may be good, it may be bad; but I think that that is now established.

I am sorry that this whole discussion did not arise at an earlier stage of the Bill's proceedings because it has been a most useful one. Nevertheless, I am glad that we have had it this evening.

On Question, Motion agreed to.