§ 4.14 p.m.
§ Lord McNally
My Lords, I beg to move that this Bill be now read a second time.
I congratulate those noble Lords who have put down their names to speak in this debate on their fortitude in waiting while the Europeans have had their day in the sun. I know that a number of noble Lords who would have participated have, because of the length of the previous debate, had to leave for other commitments. The noble Lord, Lord Borrie, slipped me a note to apologise, as have a number of other noble Lords. I have to give a badge of honour to the noble Lord, Lord Lyell. He should have been on the six o'clock plane to Scotland but he now tells me that he is on the midnight plane. Without in any way wishing to contravene the new rules on bribery and corruption, perhaps I may say that there is a dram waiting for him in the bar after the debate, if he cares to collect it.
When Talleyrand died, his old adversary Metternich was shown a telegram announcing the death of the great French statesman. "Now what does he mean by this?", said the old adversary. I can well believe that a number of noble Lords have looked at the Bill and wondered at my motives in bringing forward such legislation. So let me begin by stating clearly that I have no vested interest in bringing forward the Bill. It is skilfully drafted; and for that I am grateful to the Alliance Against Counterfeiting and Piracy and its professional advisers. But I have no commercial or professional interest or connection with either the alliance or any of its professional advisers.
To give a background to the interests which have motivated this attempt at legislation, it may be worth reading into the record the members of the alliance. They are: the Anti-Counterfeiting Group, Anti Copying in Design, the British Association of Record Dealers, the British Brands Group, British Music Rights, the British Phonographic Industry, the British Video Association, the British Software Alliance, the Copyright Licensing Agency, the European Leisure Software Publishers Association, the Federation Against Copyright Theft and the Newspaper Licensing Agency. In general, they may be described as representing the creative industries and our creative talent.
My motivator in bringing forward the Bill is no less a person than the Prime Minister himself. I have been much impressed by his call for Britain to make her way in the world in the new century by adding value, innovating and using our creative talents. I am sure he is right in pointing us in that direction. However, if that is the way ahead, we have to ensure that those who create and innovate are protected from the pirate and the counterfeiter if the full fruits of their talent are not to be stolen.
1886 My interest in the subject was sparked in the mid-1980s when I was for two years Director-General of the British Retail Consortium. I saw at first hand the value of brands and the need to protect the consumer from the fake and the shoddy. My interest was further stirred during the passing of the Competition Act when I acted in a supporting role to my noble friend Lord Ezra in helping the noble Lord, Lord Simon, see that piece of legislation onto the statute book. In some ways this Bill is the unfinished business from the Competition Act.
I am aware that the Minister may be awaiting the final shape and content of the European legislation in this area on both copyright and e-commerce. What I would say to that is that the European dimension should not be used as an excuse for foot-dragging and delay here at home. Quite frankly, the scale of the problem is too big and the speed of technological change too fast for these issues to chug along inside the department or in the Brussels labyrinth. I am reliably informed that the Minister will dead bat these proposals today. I sincerely hope not. If they are a dead bat, my speech is long enough for him rapidly to rewrite his speech in a more positive tone. A great deal of work has gone into the Bill. I hope that it clears the ground to enable the Government to move forward with speed and decisiveness, in Europe and with domestic legislation.
Time is not on our side if we are to create an environment in which talent and creativity can be properly rewarded and the consumer protected from criminals who see this as an area of easy pickings. I am a little disappointed. Looking across at the Benches opposite, I thought the Minister was sending for an urgent redraft of his speech as a result of my remarks!
I should declare an interest as president of the British Radio and Electronic Equipment Manufacturers' Association (BREMA). I in no way speak on its behalf today, but in separate representations to the Minister, Mr Kim Howells, BREMA made it clear that it wanted to see severe penalties for law breakers which would act as a deterrent to organised and large-scale law breaking. It is concerned, however, that laws should not be so tightly and unenforceably drawn as to pose a threat to otherwise law-abiding consumers. It stresses the need for a balance in legislation between rights holders, consumers and manufacturers.
I share the view that legislation should not seek to make outlaws of individual consumers, or for that matter innocent landowners. But we must not shut our eyes to large-scale organised crime, which is doing great damage to our creative industries. What is the point of having ideas, if some crook can just wait for a designer or entrepreneur to put in all the work and investment and then copy what people do and rip them off?
The Bill seeks to modernise, strengthen and bring consistency to existing laws in the area of copyright, trade marks and intellectual property. It seeks to ensure that those whose creativity will drive forward 1887 the UK economy in the 21st century will have sufficient protection to defend their ideas and sufficient incentive to innovate.
Many consumers still believe that buying a dodgy CD from a car boot sale or a street market is a victimless crime; and they see Parliament's inertia on the issue as an implicit green light to go ahead. Yet counterfeiting and piracy are not victimless, and their cost to the UK economy in social as well as monetary terms climbs every day. A survey last year undertaken by the Alliance Against Counterfeiting and Piracy revealed the true financial cost of bootlegging and counterfeiting. In 1998–99 British industry lost £6.42 billion to the pirates. Moreover, the Exchequer lost £1.08 billion in taxes which would have been paid by industry but which was not paid by the bootleggers. That money could have been spent on health or education, but instead lines the pockets of organised criminal gangs.
It is clear that organised crime is behind many of the counterfeiting and bootlegging operations in the UK. The image of the sole market trader, the Del Trotter or the Arthur Daley, selling a few fake designer T-shirts out of a suitcase in the high street is, sadly, wide of the mark. Investigations by the police, Customs and Excise, trading standards officers and the industry's own enforcement operations have established links time after time with criminal gangs involved with drugs and pornography, and even with terrorist groups.
Anything and everything can be, and is, copied and counterfeited, often putting the consumer in great danger. Counterfeit "Teletubby" bean-bags sold by a market trader in Chepstow were potential killers. Marked "non-flammable", in tests the bags were engulfed in flame within 90 seconds. Even worse, following reports of a meningitis epidemic in Niger, the international community responded by sending vaccine. One such shipment comprising 68,000 doses was sent to Niger via the World Health Organisation. There, it appears to have been exchanged for counterfeits. Later, tests by the manufacturer confirmed that the substitute "vaccine" had no active ingredient. Three-thousand deaths are thought to have resulted. It is no coincidence that the two most successful economies in the world, the US and Japan, adopt a zero tolerance approach to the theft of intellectual property.
I welcome the consultation exercise that is now under way and hope that the Minister views today's debate as part of that exercise. I urge Ministers to bear in mind the strength of feeling on this issue throughout the creative industries and to respond accordingly. The Bill that I present to your Lordships today is the product of extensive consultation and work within the industry. It seeks to bring coherence and consistency to existing laws, some of which date back to the 18th century and are founded only on common law. It also seeks to give the police, customs and trading standards officers the weapons that they require to take on criminal gangs who are based firmly in the 21st century.
1888 Part I of the Bill covers sales, such as car boot sales and markets, and seeks to bring a greater sense of responsibility to those who profit directly from the sale of counterfeit goods on their land. Clause 1 imposes civil and criminal liabilities on landowners and local authorities who knowingly—I stress that word—allow the sale of counterfeit or pirated goods on their land, for example from market stalls or car boot sales. The organisers of such sales would also face liability.
Clause 2 seeks to impose the same liability for offences related to the unauthorised use of trade marks and amends the Trade Marks Act 1994. Your Lordships may believe that the measure is too draconian. However, the clause is not aimed at the local Women's Institute car boot sale or the impoverished farmer who holds a small sale on his land to gain a little more income. Surely, neither of these examples would he happy to fund organised crime. I have in mind primarily the large-scale, highly organised car boot sales which have become a major outlet for bootleggers and counterfeiters and are often controlled by criminal gangs.
I refer your Lordships to an excellent article by Colin Freeman in the London Evening Standard on Friday 21st January in which he describes a visit to the weekly car boot sale at Hackney Wick dog track in London:The Del Boys of this market have plenty of competition. To the left is a stall selling fake Levis and Tommy Hilfiger shirts, to the right is one touting fake perfume and more copied music CDs. Further down a man is selling cross-channel whisky and vodka, and tucked away in a corner a woman touts hardcore porn.Mr Freeman continues by quoting a local trading standards officer:When markets are inspected regularly, word gets around and counterfeiters know there's not much point in going there.However, when Mr Freeman spoke to the organiser of the Hackney Wick car boot sale he was told that counterfeiting was not his problem and that the police and trading standards officers should take responsibility. Nevertheless, he is happy to make money out of the problem and should, I believe, be held responsible, as should the organisers of other similar car boot sales. It is those cases where the market organiser has been informed of the trade in counterfeit goods but takes no action which provide the focus for these clauses.
Clause 3 seeks to tighten up the currently weak laws on competitive imitation. It is intended to prevent business from dressing up products so as to resemble competing goods, thereby taking unfair advantage of the original's reputation for quality and safety and investment in innovation and marketing. Such legislation is necessary because the imitation is designed deliberately to mislead consumers by stealing the identity and reputation of the rival product. When I was at the Retail Consortium I noted that it was not only the back-street trader who indulged in such copycat retailing. I believe that to steal a brand image is unfair to the initiator who over decades may have made an investment to win customer confidence in a particular product.
1889 At the moment, imitation is governed by passing-off law that dates from the 18th and 19th centuries. It is very vague and has proved ineffective in providing protection to rights owners. The required standard of proof under passing-off law is extreme and gives copycats immense freedom to copy designs in a way that misleads consumers. It is unrealistic to ask industry to fight legal actions and to lose just to prove a point. The lack of legal cases demonstrates the difficulty in bringing actions. I am proposing that courts are in the best position to decide what constitutes imitation. The Bill also gives the wronged party a chance to seek damages in cases where imitation is proven. The present laws, like so many others in this area, present a barrier to innovation by industry and consumers continue to be deceived.
Clauses 4, 5 and 6 epitomise much of the Bill in that they modernise the existing legal framework. The law at present is inconsistent and confusing, with anomalies that confound rational explanation.
Clause 4 tidies up the law to enable prosecuting authorities to obtain search warrants where copyright infringement is suspected. At present a loophole in the law means that warrants can be obtained for one category of copyright offence but not another. For example, if the courts have evidence that a person is selling, letting for hire or offering for sale in the course of business an article that infringes copyright the court cannot grant a search warrant. However, the court can grant a search warrant if that same person distributes the same infringing article in the course of the same business. These anomalies cannot be explained, let alone justified, and they constitute a loophole that has long needed closing.
Clause 5 removes restrictions on the rights to seize counterfeit goods. Seizure is currently allowed from temporary but not permanent places of business. The intention is to allow goods to be seized directly from the man in the dodgy shades who trades out of a suitcase up and down the high street. The current legislation recognises that more disruption would be caused in high street shops and so seizure is not allowed in these circumstances.
Unfortunately, the definitions of "permanent" and "temporary" in present legislation are highly ambiguous. At present it can be argued that market stalls, temporary shops, even vehicles are "permanent". Even the man trading out of a suitcase is claiming permanency by standing in the same place each week on the high street. This is clearly not the intention of the current law. The loophole needs closing.
Clause 6 provides the same rights of seizure and forfeiture of products under the copyright legislation as under trade mark legislation. It will bring a level of consistency to the law that is missing at the moment. This section demonstrates the disorganised and anomalous nature of the various pieces of legislation currently on the statute book. Why should the legislation for trade marks be different from legislation for copyright? The only explanation I can offer is that copyright law was dealt with by the Copyright, Design and Patents Act 1988, whereas trade mark law is more 1890 recent. The main piece of legislation is the Trade Marks Act 1994. I am seeking to iron out the anomalies between the two and introduce much needed consistency.
Clause 7 increases the penalties available to the courts for offences committed under this Bill. The maximum sentence for making or dealing with infringing articles, including those offences listed in Part I, would be increased from two to seven years.
The clause goes to the very heart of the Bill by bringing into line the penalties for the theft of intellectual property with those for the theft of physical property. It is the strong contention of the supporters of this Bill that the value of any product is derived as much, if not more, from the ideas which lead to its conception, design and marketing than from the product's physical manufacture. Indeed, this view is borne out by the way in which companies and markets reward inventors, designers and "creatives". Companies know that these are the functions that will give them the edge over their competitors. Surely, therefore, the value of these functions must be reflected by the law in the way that it punishes subversion.
The principle behind the clause is simple: steal the idea behind the product and it is the same as stealing the product itself. The clause ensures that the punishment for intellectual property theft will in future fit the crime. Clause 8 is designed to stop pirates from manufacturing or adapting technology intended for the sole purpose of circumventing copyright protection. It targets pirates and counterfeiters, not consumers who might purchase such goods. Since such devices have only one use and are clearly made with the purpose of breaking copyright protection, I can see no reason why they should not be outlawed.
Clause 9 deals with the granting of a copyright licence and shifts the burden of proof to the accused person to demonstrate that he has a copyright licence or the permission of the copyright owner to copy a piece of work, rather than the current situation where it is left to the owner to prove that the accused did not have copyright permission.
That seems perfectly straightforward to me, but in this Alice in Wonderland world in which we find ourselves, perhaps I may give an example. A case was heard in Swansea one Monday morning in the recent past. A man appeared in court accused of bootlegging a Bob Dylan record. In his defence he claimed that he had the permission of Bob Dylan, the owner of the copyright. The onus was on Mr Dylan to prove that he had not granted a licence to the accused person. Mr Dylan was asked to come over from the USA to Swansea to give evidence. Not surprisingly, he was unable to get to court, at which point the case collapsed.
That is only one example of the spurious legal arguments which counterfeiters are currently able to make. At the core of the problem, however, is the fact that they are able to make them at the public expense, and it is easy for defendants in copyright and trademark cases to obtain legal aid. I know of one local 1891 authority trading standards office which was forced to spend an entire year's legal budget on a single case because the defendants were happy to run up legal aid costs.
The Bill would reverse the onus of proof. Just as a driver of a car has to prove, when asked, that he has a driving licence, so someone making copies of a copyrighted work would have to prove that he had a licence to make those copies.
The remaining sections of the Bill are largely common sense measures designed to bring clarification and consistency to existing legislation. The Bill also includes protection for whistleblowers who inform rights holders about illegal copying but who do not want their names to be revealed.
There is a section which introduces corporate responsibility to copyright and trademark infringement. Directors who "consent or connive" with their companies to break copyright law are already personally liable for the infringement. This clause requires them actively to ensure that their companies do not infringe copyright by making them personally responsible if their negligence or neglect leads directly to the infringement of copyright by their businesses.
Finally, there is a new statutory duty on trading standards authorities to enforce the protection of copyright.
I view the Bill as an important weapon in the fight against organised crime and the protection of intellectual property. Many of its provisions close loopholes or remove inconsistencies or anomalies in existing legislation which are expertly exploited by counterfeiters and bootleggers.
If we wish to defend the industrial and artistic creativity that has brought wealth and success to our country, our courts and law enforcement agencies must be given the legal tools for the job. I welcome the Government's moves in this area, but progress is sluggish and the need for legislation is urgent.
The Government have asked for response to their consultative document by 3rd April, which is a welcome sign of urgency. The Bill is brought before the House today and I am pleased that noble Lords who are to speak have experience of the issues. I am only a front man for an organisation which, as your Lordships can gather from my remarks, has put a great deal of work into the preparation of the Bill. It has made its expertise available to the department and to the Minister.
I hope that the Bill is a spur to action and a pointer to the Government on what kind of legislation could meet the needs of the creative industries and consumers alike. In that spirit, I commend it to the House.
§ Moved, That the Bill be now read a second time.—(Lord McNally.)
§ 4.39 p.m.
§ Lord Jenkin of Roding
My Lords, I am sure that we all wish to congratulate the noble Lord, Lord McNally, on bringing this Bill before the House. He has embarked upon the hard road of getting a Private Member's Bill onto the statute book. In particular, he has the problem of getting it through another place if it is not successful in the ballot. However, he may always fall back on the subsidiary aim of persuading Ministers that the substance of the Bill is sufficiently important and right for the need, eventually, for government legislation.
The noble Lord, Lord McNally, set out the objectives of the Bill, and they are extremely clear. I believe that it should be supported by all right-thinking people. He pointed out that there is already much legislation on the statute book and mentioned the 1988 and 1994 Acts. However, those Acts are not working as they should. They are not effective in dealing with the huge flood of counterfeit goods which afflict this country at the moment. They are not effective in covering breach of copyright and trade marks, as they should. Above all, they are not effective in providing sufficient penalties and procedures to catch and deter the villains who engage in this trade.
One of the earliest lessons that I learnt as a law student (if I am allowed to quote it) was the Latin maxim Ubi remedium, ibi jus—"where there is a remedy that is where the law is"; or it could be interpreted loosely as saying that there is no use having a law against something unless the law is both enforceable and enforced. Manifestly, that is not the case with the matters with which we are dealing this evening.
I, too, read the fascinating article in the Evening Standard of 21st January. It was headed, "The bootleggers' enterprise zone". I pass Hackney Wick fairly frequently on my way in and out of London, but I have never been there on a Sunday because I gather that it might be difficult. However, it appears that the local authority has largely given up. It is reported that:Hackney council is well aware of the problems at the market, but councillors decided last year that because of lack of money, efforts should focus on manufacturers … rather than vendors".It goes on:Raids have been carried out … and prosecutions brought, but the cost of such operations is large and the penalties too lenient to provide much deterrent. Smaller offenders invariably escape with a fine, while more serious players tend to count their sentences in months rather than years".As the noble Lord, Lord McNally, said, part of the purpose of the Bill is to provide significantly heavier penalties, to shift the burden of proof on questions of copyright and licences, and to give new powers to trading standards officers. We must all be aware of just how disheartening it is to be a trading standards officer 1893 and to enforce a law that has such flaws in it. There are to be new powers of forfeiture and, above all, new provisions to extend the law to catch the organisers and the landowners if they,knew or had reason to believe that",sales would infringe copyright, etc. All that appears to be admirable and worthy of support.
I devote the rest of my remarks to Clause 3 regarding copycat sales. My experience of this matter comes purely from being an ordinary employee of a company many years ago. I used to work for the Distillers company, which had the most marvellous Aladdin's cave of lookalike products collected from all over the world. There was a bottle on the shelf that looked like a bottle of White Horse whisky. It was not until one got quite close to it that one realised that it was not a horse but an elephant. It was called "White Elephant" whisky. It was asked, "What is wrong with that? It's not a white horse at all". However, it was meant to look like it. No doubt some people on the other side of a bar, far enough away and perhaps with poor eyesight, would believe that that was what they were getting. There was another bottle bearing a large "Scotland", so that it looked as though it was made in Scotland. It was not until one got very close that one saw from the tiny print that it was "Label printed in SCOTLAND". There were hundreds and hundreds of examples. I find this fascinating.
That company devoted much effort to catching the look-alikes, the copycat sales and the breaches of copyright. It is right for the British Brands Group to describe such activity as commercial piracy, because that is what it is. It is a thousand miles removed from Hackney Wick, from the shady characters wielding suitcases or at car boot sales. As the noble Lord, Lord McNally, said, some of the most respected firms in the country are not averse to putting look-alikes on the retailer's shelves if they think they can get away with it.
The British Brands Group has spelt out the case for change, and I should like to read a sentence or two from its argument:Look-alikes are products which establish their credibility and achieve sales by deliberately mimicking the packaging of successful brands. This confuses consumers over the nature and source of the product…Look-alikes are predominantly produced by retailers, but are also produced by foreign and domestic manufacturers"—there are a couple of pictures showing what the group means—The courts currently have inadequate means of tackling the problem, and a law of unfair competition is badly needed".This is real. Shoppers are misled. In 1997 National Opinion Polls carried out a survey and found that 17 per cent of shoppers had bought a look-alike in error during the previous six months. That means that nearly one in five had been misled by the appearance of a product on the shelf.
As the noble Lord said, it is not only a matter of deceiving shoppers; it acts as a severe disincentive to business. A big investment is needed to build up confidence in a brand name to convince the market that one's products with that brand have consistency, 1894 quality and value on which the consumer can rely. It often costs millions of pounds. The most famous brand names are built up over decades or even over centuries.
Of course, if a company with a look-alike tried to use the brand name it could be caught at once, because that is clearly a breach of copyright or trade mark, which is an offence. I return to the word "mimic". The ill arises when such a company produces a package or product that mimics the well-known brand image. I shall not go into it, because the noble Lord dealt with it, but the matter was originally dealt with under common law, through the passing off provisions, as part of the tort of passing off. But that is extremely difficult to establish. If one is dealing with relatively cheap products, it is simply not worth the time, effort and cost.
What are we to do? The matter is covered by international conventions. This country is under an obligation to legislate to deal with this kind of unfair competition. It comes notably under the Paris Convention for the Protection of Intellectual Property. That convention goes right back to 1867, but the critical article is 10 bis, inserted by the Stockholm Convention of 14th July 1967.I was able, with the help of the Library and the Internet, to get hold of a copy of that article, which reads:The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition… The following in particular shall be prohibited: 1. all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor".That is a perfect description of a look-alike—creating confusion. That article on unfair competition underpins later treaties, notably the Agreement on Trade-Related Aspects of Intellectual Property Rights, signed in Marrakesh on 15th April 1994. That article refers back to Article 10 bis at several points.
What do we find out about that obligation on member countries to implement Article 10 bis of the Stockholm Convention? It has been implemented in a great many other countries but it has not been implemented here. One is entitled to ask why that is so. One might say that it is truly astonishing because it is a law which is supposed to apply to us and is an obligation on us and yet that is not actually what happens.
I shall no doubt be asked, "Well, you had 17 or 18 years in government. Why did your party not do something about it?" I accept that. Something should have been done. But the present Government cannot escape like that. I have here—and I have given the noble Lord, Lord McIntosh, notice of this point—their own White Paper on international development entitled Eliminating World Poverty, which was launched with a justifiable amount of "hoop-la" back in the first six months of their time in office. It contains this provision:We will work with multilateral institutions, such as the World Intellectual Property Organization (WIPO), WTO and UNCTAD, to help developing countries restructure their 1895 intellectual property rights systems, and implement the WTO Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement",which I waved just a few moments ago,in order to support domestic investment and attract foreign investment".So what do the Government say? I believe that we are owed an explanation. Paragraph 3.34 states:We are committed to rules on intellectual property rights which will facilitate the transfer of technology, and provide incentives for investment".Does that really mean that it applies only to other people and not to us; or is it a case of doing one thing and saying another, something with which we have become, regrettably, all too familiar? So it is left to the noble Lord, Lord McNally, a Private Member, to do the job for them and Clause 3 of his Bill does just that.
I have no doubt that the noble Lord, Lord McIntosh, will give us a long list of reasons why the Government will not smile on this Bill and help it on its way. But in the course of his response I hope that he will be able to give the House a clear statement that the Government recognise their obligation not merely to help developing countries but to legislate in this country under Article 10 bis to outlaw look-alikes and that they will legislate as soon as they can.
I venture to suggest to the Front Bench opposite that that may prove to be extremely popular. I suspect that Ministers would like that popularity at the present time. In the meantime, I hope that the House will give this Bill a Second Reading.
§ 4.53 p.m.
§ Baroness Dean of Thornton-le-Fylde
My Lords, I, too, welcome the general aims of this Bill introduced by the noble Lord, Lord McNally. Towards the end of his contribution, he said that he was a front man for a number of organisations and that there had been consultation on the Bill. I hope that the consultation has included consumers and not just the business world. I see that he is nodding in agreement. I am pleased about that. This is a two-pronged approach.
§ Lord McNally
My Lords, when the alliance approached me after I had expressed an interest, I asked it to talk to the Consumers' Association and other related bodies because, just as I indicated that the manufacturers have some concerns, I know that consumers also have some concerns. I am extremely anxious that all interested groups should talk to each other in order that we achieve the best possible legislation.
§ Baroness Dean of Thornton-le-Fylde
I thank the noble Lord for that intervention. To consider one side of the problem without taking into account the other side, that of the consumer, would certainly diminish the intentions of the Bill.
I thank him also for allowing me to go a little way down memory lane—more years than I care to share with noble Lords today. I spoke on this very issue as 1896 a young delegate to the Trades Union Congress. The issues, despite the adoption of new technology such as videos and CDs, are basically still the same. The impact of the problem is the same. Working in printing and packaging, we kept coming up against the problem of mimic packaging. It does not have to be even slightly different. The eye would not be able to detect the difference in normal use. We are talking about packaging on goods which the consumer believes are branded products. As we know, today the brand is everything in so many of the products that the consumer purchases. Therefore, such counterfeiting is theft, not only of intellectual property, but of jobs as well as of the business of companies.
I should be surprised if there is not one of us in the Chamber who has not at some point in his life bought something which he believed was the genuine product, but, when he really looked, found it was not. That is the consumer unwittingly buying something he believes is genuine, but which is not. The seller of the product is getting away. If one goes back to take up the issue, he has probably moved on. Therefore, I welcome the general aims of the Bill.
I welcome especially the shift in the burden of proof on licensing from the person who holds the original licence to the person who claims to have the licence and permission to use it. Clearly, for a member of the public, or indeed, the prosecuting authorities, it is nigh impossible to track down such people and deal with them in a local court. I welcome also the increased powers for trading standards officers. We all recognise the good work that trading standards officers, who are too often short of resources, do on the ground in local communities in tracking down such offences. The increase in their powers and the back-up penalties which courts may invoke on cases which they take to them are extremely welcome.
The intention in the Bill to give protection to whistleblowers is also extremely welcome. That borders on a quite nasty side to some of the places where such goods are sold, such as Hackney market. We have all read the article on it in the Evening Standard. However, while I recognise that the noble Lord acknowledged—I believe that he used the word "draconian"—that the powers may be interpreted as draconian, I am not sure about the new civil and criminal legal liabilities on landowners and local authorities which knowingly allow the sale of counterfeit and pirated goods on their land. I have reservations about the practicality of those provisions. The noble Lord, Lord McNally, mentioned the Women's Institute and the case of the local landowner who allows his land to be used for a car boot sale one Sunday morning. I have no problem with the intention, but I should want to consider the practicalities.
We have probably all read the article in the Evening Standard on 21st January. I live not far from the area in question. It sounds like a hive of criminal activity and yet innocent consumers are probably going there. For my part, I should be hard pushed to buy anything from a car boot sale except, perhaps, a second hand book. But consumers go there quite innocently. It is 1897 the local authority's responsibility to deal with such a situation, although I accept that local authorities are under great pressure.
I greatly welcome the Bill. It may not reach its ultimate conclusion, but I sincerely hope that the Government, if they do not pick up the Bill, will adopt its intention and many of its provisions which would assist consumer protection considerably. Those provisions would assist also the avoidance of straightforward theft of intellectual property and, I suggest on occasion, the theft of real jobs in this country.
§ Lord Lyell
My Lords, I am delighted to follow and support the noble Lord, Lord McNally, in his eloquent moving of the Bill. Perhaps I may say that flattery will get him everywhere. I am grateful for the offer of some branded, or perhaps not, liquor. However, as my journey will terminate on four wheels, perhaps tonight I may desist. I was also fascinated that the noble Lord desisted from referring to M Talleyrand until the clearing of the Chamber in the previous debate in which he took part. No doubt if he had mentioned him in another context, there could have been fun and games.
In my short contribution in support of the Bill, I have no particular interests to declare, apart perhaps from shares in companies that might be involved in products such as breakfast foods, pills or medicaments. Those particular forms of commerce have been eloquently mentioned by my noble friend Lord Jenkin of Roding. I was fascinated by his story of the "white whisky". His tale of distinguishing between an elephant and a horse might be relevant to drinkers of that brand. They are particularly relevant to some sportsmen who come north of the Border to my neck of the woods and have to be told, "No, no, that is a cow. You are supposed to be shooting deer today". We have a particular brand, especially when we get some of the more excitable sportsmen. I hope that that particular aspect will not be covered by the Bill.
On the other hand, my noble friend Lord Jenkin mentioned Clause 3. Both he and I, and I suspect other noble Lords, have some knowledge of one of the great industries of the United Kingdom; that is, pharmaceuticals. To that industry, intellectual property and, indeed, very often the protection of brands, is of particular and crucial importance. The Bill would cover many more of what are known as over-the-counter products. However, with those, too, there can be considerable danger for customers when they go into a shop, if they are not careful. There may, for instance, be a slight language difficulty if one is abroad. One may buy a product thinking it to be a particular brand of medicament and it is not. It may be far from that medicament in quality, effectiveness and other measures.
I am curious as regards Clause 9(2) of the Bill, which refers to Section 198 of the 1988 Act. I hope that the noble Lord, Lord McNally, or the Minister when he winds up the debate, will be able to reassure me that,making, dealing with or using1898 particular articles would cover one aspect of purchases that I have made. I am afraid I am rather old-fashioned and collect cassettes, rather than CDs. I find them in reputable stores, labelled under so-called "collections" of melodies, songs or performances of various artists. Such items are for sale and bought in reputable stores. I hope that such collections meet the relevant measures relating to intellectual property and are not caught under the terms of theft, used so eloquently by the noble Baroness, Lady Dean. I would think that Section 198 of the 1988 Act would cover those products. However, possibly Clause 9(2) of the Bill would refine that a little.
I return to Clause 3. I hope that the noble Lord, Lord McNally, and the Minister will be able to reassure me that both the 1988 and 1994 Acts are being refined little by little to catch what has been referred to by every speaker in the debate as "passing-off". I believe it was my noble friend Lord Jenkin who pointed out that "passing-off" in English law is a common law offence. The noble Lord has law training; I have very little. It is often difficult and time-consuming to obtain a proper and effective judgment in a dispute over the "passing-off- of a particular brand of goods. I have received the same briefing material as my noble friend Lord Jenkin which cites a well-known case concerning a biscuit. The biscuit and its original counterpart looked roughly the same; indeed, they were rather closer than the horse and the elephant. There was justifiable confusion.
The noble Baroness referred to consumers. I, too, am one because I am probably among a minority of noble Lords who do the normal weekly shopping. When I am let loose in a supermarket there can occasionally be problems. If a special promotion is taking place, usually presented by an attractive young lady or a persuasive young man, I will pay close attention. On the other hand, I am not a Scot for nothing. I will certainly have a look at the promotion and accept the free tasting or something of that ilk. But I tend to return to the brand of product that I know. Of course, many of the special promotions one encounters in retail outlets are set up to promote the "own brand" of that retailer, even though one may well find that the branded goods are on special offer as well.
The noble Baroness, Lady Dean, and my noble friend Lord Jenkin referred to clarity of labelling. There is a limit to how closely one can examine the detail on every label—which is rather reminiscent of certain proceedings in your Lordships' House. One also has to consider those like myself with visual challenges. I am a little short-sighted. However, I am quite able to see exactly what is displayed on the shelf. But passing off a brand name with slightly altered spelling can often pose a problem. I have not been affected by this to any great degree, but my noble friend said that 17 per cent of consumers had within the past six months been so deceived.
I conclude by looking not at words and figures but at the issue of symbols and brand design. The noble Baroness, Lady Dean, and I have something in common. Noble Lords may be surprised to learn that 1899 both of us drive motor cars that were originally constructed in the great German city of Stuttgart. As I recall, her motor car symbol is that of a three-pointed star with a circle around it, while mine has the badge of the Dukes of Württemberg. There is no doubt that right around the world, from the North Pole to the South Pole, the symbol of the three-pointed star with a circle around it is known and indicates a particular brand of goods; usually, but not exclusively, motor cars.
However, those noble Lords visiting the Alps or watching television at this time of year will on occasion see tough and wizened athletes hurtling most impressively down the slopes using a certain brand of skis. The tips of those skis also display a three-pointed star, but without the circle. It is an Austrian brand. As far as I am aware, no clash or difficulty has arisen over that symbol and there have been no disputes in the courts. I believe that the ski manufacturers have been using that symbol for the past 10 to 15 years. However, I am aware of that symbol and it brought home to me a difficult problem encountered by the manufacturers of popular branded sportswear. The symbol on a branded article of sportswear apparel is of particular importance for its manufacturers, but copies abound. I hope that in that area the Bill introduced by the noble Lord, Lord McNally, will be of assistance to British and other manufacturers. The counterfeiting of sports goods is probably one of the most widespread misdemeanours throughout the world.
Counterfeiting applies not only to luxury goods. I was interested to hear about T-shirts of a specific Italian brand. When the price of them was quoted to me I was tempted to ask whether it was in lira or roubles. I was advised sternly, "No, no". My Scottish blood came straight in to play and for me one T-shirt is as good as another, especially in the slanting rain of Angus. I shall therefore buy what I can see. But if other consumers want branded articles, they should be reassured that they represent the quality which they are entitled to expect.
With that in mind, perhaps I can refer back 23 years to the Patents Bill. It was an enormous Bill that completely re-wrote the law on patents. It was introduced by a Labour government. In the same year there was the Unfair Contract Terms Bill, which I believe also turned into an Act. That too had massive consequences for industry, trade and commerce. I hope that in this year 2000, the year of the millennium, the Bill of the noble Lord, Lord McNally, will have the success it deserves in helping to stamp out what the noble Baroness, Lady Dean, called plain "theft"; it is also greed. I wish the Bill every success.
§ 5.11 p.m.
§ Lord Northbrook
My Lords, from these Benches we welcome the Copyright and Trade Marks Bill of the noble Lord, Lord McNally. It is a subject that should be of concern to all of us, whatever our political persuasion.
1900 The Alliance Against Counterfeiting and Piracy, a trade association whose recent formation should be welcomed, brings together for the first time all the major organisations concerned with defending intellectual property rights. It says that the misappropriation of intellectual property cost UK businesses almost £6.5 billion in 1999 and the Treasury almost £1 billion in tax revenues. To quote its spokesman, Chris Matheson:Why should a business pay millions of pounds to research and develop and market a new product only to find that the expected profits are wiped out by counterfeiters, pirates or the producers of lookalike goods".In addition, there are the proven links between counterfeiting, piracy and drug smuggling, money laundering, pornography and terrorism.
The Bill has four main aims. First, it seeks to close the legal loopholes in existing copyright legislation. Secondly, it tackles look-alike and copy-cat packaging. As mentioned by other speakers, that area was brought to my attention by the trade association, the British Brands Group, which tells me that such measures are already in existence in every mainland European country and countries with common law jurisdiction such as Australia and New Zealand. Such measures are long overdue in the UK.
Thirdly, the Bill introduces legislation making owners of markets or the land on which car boot sales are held responsible for goods sold at such events. Fourthly, it makes increased penalties available to the courts for offences committed, treating intellectual theft as seriously as other forms of theft. Fifthly, it provides for a shift in the burden of proof to the accused person who claims to possess a copyright licence to show that he or she indeed has a copyright licence, or approval of the owner, rather than the current situation where it is left to the owner to prove that the accused did not have permission to make or sell copies.
Sixthly, restrictions are placed on the manufacture or importation of technology intended solely for the circumvention of electronic copyright protection. Seventhly, new duties are placed on trading standards officers to enforce copyright. Finally, greater protection is given to whistleblowers who inform rights holders about illegal copying but who do not wish their names to be revealed to those people acting illegally.
I attended a most helpful briefing of the Alliance Against Counterfeiting and Piracy on the Bill earlier in the week. I too have learned about the problems of counterfeit goods being sold at car boot sales such as at Hackney Wick dog track where, as others have said, fake designer shirts, CDs, whisky, vodka, cigarettes and hard core pornography are all apparently being sold. According to the Evening Standard of 21st January, it appears that customers can buy almost anything illicit and no vendor seems the slightest bit concerned about being caught.
1901 Action must be taken. Because of lack of money Hackney council will prosecute only the manufacturers of such goods, not the sellers. The director of regulatory services there admitted in the article that he did not have the resources to tackle the problem of the sale of counterfeit goods. This Bill will, I hope, change the situation.
First, Clause 1, I believe, needs careful attention. The extra onus put on the landowner or the person who holds the sale is a concern to us. We would not wish a genuine one-off car boot sale to be overburdened by bureaucracy; on the other hand we wish to tighten up regular sales such as that at Hackney Wick. I hope that the example of a raid on a Nottingham car boot sale last week will be followed by other authorities. I am assured by the alliance that the offence will be committed only by a person who knowingly allows counterfeit goods to be sold. But perhaps there should be a system of warnings before the offence is deemed to be committed.
Secondly, as I said at last week's alliance presentation, I believe that there should be a tightening up of the law on car boot sales in addition to what is currently in the Bill. Councils should be notified of the location, stallholders and the times of sales and should have to grant a licence before allowing them to go ahead. This would, I hope, have the advantage of scaring off some of the more dubious operators of market stalls altogether while still allowing bona fide ones to operate.
Thirdly, as a possible addition to the Bill, I am not sure that the Internet is adequately covered. This is obviously an international issue. I await the EC Green Paper on counterfeiting and piracy in the single market with interest and also the draft copyright and e-commerce directives which will be important in providing an appropriate legal framework in Europe. However, international action is also needed, as mentioned by my noble friend Lord Jenkin in connection with the Stockholm and Marrakech conventions.
I believe that this Private Member's Bill is necessary. The Government, although promising action, have been slow to put it into practice. For instance, while Kim Howells, the consumer affairs Minister, told a conference on copyright and piracy in November that he expected to identify areas where legislation could help clamp down on a problem that damaged business and consumers and a consultation paper has been produced by the Patent Office, no firm plans for government legislation have, or look likely, to emerge. Therefore I support the decision of the noble Lord, Lord McNally, to press ahead with this Private Member's Bill.
Can the Minister say what action the Government propose to take and what is the timetable after the deadline for comment on the consultation paper has expired on 3rd April? Does he support the arguments made in this speech, many of which have been included in the Bill? Do the Government have plans to introduce legislation themselves, and when? Could 1902 tougher sentencing for counterfeiters he added to the Powers of Criminal Courts (Sentencing) Bill? I await the Minister's response with interest.
§ 5.20 p.m.
§ Lord McIntosh of Haringey
My Lords, the noble Lord, Lord McNally, said that my response would be a "dead bat". I have searched my speech and I cannot find any reference to bald, mouse-like, nocturnal mammals of the genus Chiroptera, so I do not know what he is talking about.
I have listened to the debate about the noble Lord's Bill with interest. Counterfeiting and piracy are, of course, seen by the Government as very serious issues requiring effective solutions to reduce the incidence of this criminal activity. The Government believe that the levels of these crimes are lower than in many other countries in the world, but we are not complacent and we accept that further improvements are needed, even in the United Kingdom.
Thanks to the alliance which is behind this Bill, I have had the opportunity to read its briefing and to read the Evening Standard article, although, unfortunately, I was on duty and unable to attend its meeting earlier this week. I should like to elaborate on some of the initiatives that the Government are currently undertaking that have direct relevance to the topic that the noble Lord has highlighted with this Bill.
Possible improvements to the criminal provisions in intellectual property law are currently the subject of a consultation paper that was issued last month, which has been referred to in the debate. The paper recognises the desirability of more harmonisation and rationalisation between the different areas of intellectual property law—trade marks on the one hand, copyright and related laws on the other hand. Areas explored in the paper are the level of penalties for criminal offences, to which the noble Lord, Lord Northbrook, referred, police powers of search and seizure and the provisions allowing forfeiture of infringing goods.
These are all areas where the Government feel that changes could be justified, although of course final decisions will not be taken until after the end of the consultation period on 3rd April. The timetable for the consideration of the consultation is not yet established. Indeed, it could not be until we have seen the volume and quality of the responses. I can confirm that the contributions to this debate will be valued as part of the response to the consultation process.
Another initiative is the setting up of a new forum, the counterfeiting and piracy forum. This forum brings together interests from a number of areas to sit with government representatives to consider how to deliver more effective enforcement against intellectual property crime and perhaps eventually extend any successful outcomes beyond the UK. Industry—and I believe the alliance—will be represented on this forum, as will he public sector enforcers, prosecutors, retailers, consumers, Internet service providers and so on. This wide cross-section of interests is being brought together not only to improve actual 1903 enforcement against counterfeiters and pirates by greater co-operation and co-ordination wherever possible but also more indirectly by looking at how consumers can perhaps be persuaded not to buy fake goods in the first place.
The consumer angle is one that has already received publicity by government sponsorship of a seminar last November, which again has been referred to, and participation in road shows in December to highlight both the short and long-term issues for consumers where they purchase fake goods. More road shows are planned in May.
Consumers can be directly and immediately affected by the deceptive practices of those who sell fakes where such goods are of poor quality or do not work or, more seriously, where they are dangerous. Counterfeiters may be involved in organised crime, which consumers purchasing their goods appear unwittingly to support. Other issues for us all are the reduction in employment opportunities in legitimate businesses which suffer losses, less investment in future creativity and the development of new products and losses to the Exchequer.
While improving consumer education about intellectual property crime will be taken forward in the forum, there are of course wider education and awareness issues that will be highlighted in the report of the Intellectual Property Group, a sub-group of the Government's Creative Industries Task Force, that will he published later this month.
There is also much happening at the international level relevant to intellectual property crime, and the Government are generally supportive of these activities. We are all awaiting the follow-up to the European Commission's Green Paper on counterfeiting and piracy in the single market and we are hoping to support co-operative work in the G8 forum, among other things.
In response to the noble Lord, Lord McNally, I should say that we are not waiting for European legislation to do things in the United Kingdom, but there are certain aspects of the Bill that are linked to European Union legislation, for example, offences relating to circumvention devices, which should sensibly await implementation of the legislation.
Before I leave the international dimension, perhaps I may respond to the noble Lord, Lord Jenkin. We believe that the law on intellectual property in the United Kingdom is compatible with all the international conventions to which we are signatories. This includes the TRIPS agreement, the agreement on trade related aspects of intellectual property rights, which itself incorporates Article 10 bis of the Paris Convention. The United Kingdom law has been scrutinised by that council and was not found to be deficient. Of course we also encourage and expect developing countries to meet their obligations under 1904 TRIPS in respect of measures to deal with counterfeiting and protection against unfair competition, in addition to other areas.
§ Lord Jenkin of Roding
My Lords, will the noble Lord give way? I am most grateful to him. It has been represented to me by the British Council, as far as I can see very convincingly, that there is a lacuna in the British law in that laws have been passed, notably on the Continent and, as has been mentioned, in Australia and New Zealand, to outlaw unfair competition in a way that catches the look-alikes, and there is no similar law in this country. That point was made, and I wonder whether the noble Lord the Minister can respond to that.
§ Lord McIntosh of Haringey
My Lords, since I have given the view of the TRIPS council itself that our law is compatible and does implement these agreements, it would perhaps be better if the noble Lord or his advisers wrote to me so that we can put the forces up against each other and try to resolve the differences, rather than seek to resolve them in this Chamber.
To return to the Bill, I welcome the opportunity to indicate Government sympathy with the overriding objective of reducing levels of counterfeiting and piracy. Indeed, some of the provisions in the Bill are broadly similar to those on which we are currently consulting. But I have to say that there are other parts of the Bill which give rise to serious reservations. For example, it is not acceptable, except in exceptional circumstances, to make it easier to obtain a conviction for a criminal offence by reversing the burden of proof or to make certain activities less likely to occur by criminalising the activities of people such as those who arrange car boot sales but who are not directly involved in dealing with illegal material. I am not unsympathetic to what has been said about car boot sales—I recognise that this is a problem—but I hope that work in the new counterfeiting and piracy forum can help to find solutions, in addition to legislative ones, in the areas covered in the Government's consultation paper. However, as the Bill stands, such measures could seriously affect people's legitimate interests and have human rights implications.
The noble Lord, Lord Jenkin, also raised the issue of look-alike packaging, very vividly, if I may say so. The Government are not convinced that a change in the law to extend brand owners' rights, as against those who sell products in look-alike packaging, is needed. The subject was studied carefully by a committee in the other place which concluded that brand owners have probably not exhausted the possibilities to act using passing-off law. So the law is not clearly deficient and the Government broadly support these conclusions.
The noble Lord, Lord Lyell, referred to the 1988 Act. My understanding is that this Bill does not alter what would be within the scope of the criminal liability provisions in Section 198 of the Copyright, Designs and Patents Act 1988. It merely alters the presumptions when such an offence is to be prosecuted. But perhaps it is more appropriate for the noble Lord, Lord McNally, to answer that question.
1905 The best approach to delivering our shared objective of reducing levels of property crime would be for all interested parties to work with the Government in the areas I have indicated. I know that Dr Kim Howells, the Minister responsible for intellectual property, has already invited the industry body sponsoring the Bill—the Alliance Against Counterfeiting and Piracy—together with the noble Lord, Lord McNally, to meet him to discuss in more detail the issues raised in the Bill. I can assure the noble Lord that the Government's commitment to act where possible to reduce levels of intellectual property crime and work with the industry and others to achieve that is undoubted.
We do not express views as a Government on Private Members' Bills, but I hope that my remarks have been helpful.
§ 5.30 p.m.
§ Lord McNally
My Lords, the absence of a dead bat from the Minister's speech convinces me that I am not flogging a dead horse. Towards the end of my earlier speech I used the term "front man". Given the angst in this House and another place about lobbying, perhaps I should explain that I was active in the proceedings on the Competition Bill and, because I was active, the alliance thought that I was a likely lad to approach with this matter. We get into all kinds of concerns about lobbying, but I think it is a perfectly legitimate exercise in lobbying when at a pre-legislative stage an industry or alliance involves a parliamentarian and airs its issues and grievances. This has been an entirely healthy use of the parliamentary process.
As the Minister indicated in his response, and as all involved recognise, a good deal is going on at the moment. Dr Kim Howells is proving to be an active, interested and involved Minister in this area. I therefore have a dilemma. This is a very real problem. I am told that there are 7,000 car boot sales in this country on any weekend in the summer. That is a big issue. On another point, I was given an example of a 16 year-old who is able to run off 30,000 copies of a CD on equipment in his bedroom. The technology is moving to make it very simple to steal copyright. Perhaps I may say, in dealing with the point made by the noble Lord, Lord Lyell, that the Bill is not aimed at the individual consumer who wants to put together a compilation. What the individual does for personal use is one matter; what people do on a large scale for commercial gain is another.
The problem I face is whether, as the noble Lord, Lord Northbrook, urged me, to take the Bill further so that we can get into the nitty-gritty of Committee, or whether I should, as it were, put the Government on test. If a lot of the good things that are happening—the Minister referred to them in his response—do not provide real action by the next Queen's Speech and the next Session of Parliament, I reserve the right to 1906 introduce a mark 2 Bill in the next Session of Parliament. In the meantime, I beg leave to withdraw my Motion for Second Reading.
Motion for Second Reading, by leave, withdrawn.