HL Deb 10 May 2002 vol 634 cc1418-30

12.15 p.m.

Lord Razzall

My Lords, I beg to move that this Bill be now read a second time.

For those who have not followed the history of this Bill, it started as a Private Member's Bill in the other place under the auspices of Dr Cable, who piloted it through the other place. It had, I believe, almost unanimous support from all quarters of the House and I very much hope that we can continue to get such cross-party support in this House. I await with interest the Minister's response to the Bill. I have had substantial help from officials in the Department for Trade and Industry in relation to the Bill. In the light of that, if the Minister is not supportive of the Bill, those officials must have been acting without his authority.

The Bill may appear to noble Lords to be somewhat long and complex. However, it is not particularly complex in practice. The concepts that lie behind it are quite simple. The underlying theme—the only underlying theme—is that of fighting crime. In considering the Bill, it is important for noble Lords to appreciate what it does not do. It does not create any new offences. Someone who is not committing an offence today will not be committing an offence in the future as a result of the Bill. For anyone who is committing an offence today, the consequences will undoubtedly be different if the Bill passes into law.

It is worth touching on the importance of the matter with which the Bill deals. People tend to talk about victimless crime but intellectual property offences and intellectual property theft can be very serious matters. The regulatory assessment that has, I believe, been placed in the Library contains the calculation that that industry—if we can call criminal activity an industry—costs about £8 billion a year.

However, it is not simply the business community that we wish to protect further through the Bill; we should also consider the obvious effect on consumers. That is a contemporary problem. I guarantee that today, following the successful launch of the latest "Star Wars" film, a significant number of counterfeit DVDs and videos will already have been sold. They will give consumers who buy them a most unsatisfactory viewing of the film that they hope to watch. That problem is not restricted to DVDs and videos. Much more serious issues are involved: cosmetics that include irritants, toys with sharp and dangerous parts and software that damages the whole PC.

The effect on jobs, including the effect at the local level in the high streets, is another area that the Bill is designed to regulate. The regulatory assessment indicates that there are proven links with organised crime. This is a very serious matter. Offences already exist to deal with the illegal activity and they are not changed by the Bill, which seeks to change the method by which those offences are enforced.

There are significant problems arising from enforcement. The purpose of the Bill is to make it more straightforward and transparent in dealing with the offences and in the way in which people committing those offences might be punished. The latter is particularly important because it is necessary to ensure that the Bill improves deterrence and that people committing offences fear that they may be caught or punished. We are all aware that that is the best way of dealing with any crime.

The Bill will have three effects. First, it will increase transparency; secondly, it will improve deterrence; and, thirdly, it will introduce fairness. In delivering these three things the Bill does nothing completely new. It copies the best existing criminal provisions in one IP area into others and so might well be called a rationalisation or harmonisation measure. It would also be fair to say that every measure in the Bill has been scrutinised in the House at some stage in the past in the context of enforcement against IP crime, although not necessarily for the particular type of IP crime for which the Bill now provides.

The current position is, therefore, that criminal provisions exist in the trade marks area on the one hand and copyright related areas on the other. We have legislated on these at different times in the past. We had trade mark legislation in 1994 and copyright legislation in 1988, but for no very clear reason significant differences have arisen. The first purpose of the Bill is to removed some of those unjustified differences.

The existing differences between IP areas do not make sense. They can confuse enforcers and mislead criminals into thinking that some IP crimes can never be as serious as others. That is obviously not the case as a copyright crime can lead to just as much money being lost by rights holders, just as many job losses, and just as many consumers being cheated in the same manner as in a trade mark crime. Both types of crime can have links to serious organised crime. It is no good just looking at what the Bill does for copyright. We need to know that that has already been effectively achieved in the trade marks area, too.

Perhaps I may summarise what the Bill seeks to do. However, I do not want to prejudge the work that we shall do in Committee. First, the Bill tackles harmonisation of maximum penalties. If theft of a trade mark and of a copyright are equally serious, they should attract the same maximum penalty. That is the first objective of the Bill. The penalty, which currently exists only for trade marks, is an unlimited fine and/or up to 10 years' imprisonment. It is not easy to see why the maximum term of imprisonment should be only two years for a copyright offence when 10 years has been set as the maximum sentence for a trade mark crime.

The second area dealt with by the Bill is catching criminals. The Bill attempts to make it easier for the police to catch what one might describe as intellectual property thieves. They need to have the right tools to look for evidence when appropriate. That is why the Bill applies more widely into the overall IP crime area the very useful search warrant provision in the copyright area. In its threats assessment published in August 2001, the National Criminal Intelligence Service, as I have already mentioned, indicated that profits from intellectual property theft can help organised crime groups to become more established and also to fund other criminal activity. So investigating intellectual property crime is undoubtedly a way for police to break up other criminal activity.

I should emphasise here that the offences to which the search warrant provisions apply are all about commercial dealing in illegal material. The offences are not strict liability offences as they involve a test of knowledge; in other words, the person who is to be prosecuted cannot have been entirely without any information suggesting that what they were doing was wrong. In addition, a justice of the peace or sheriff will need to be satisfied that there are grounds for believing that an offence has been, or may about to be, committed before granting a search warrant. So people copying material for private use and even consumers buying fakes have nothing to fear as they are not caught by the offences set out in the Bill. I am not suggesting that they should buy fakes or copy material for private use.

I understand that enforcers can already very often find a way of tackling offending behaviour in the copyright area by pursuing other offences to which a higher sentence can apply. There can even be ways around the inadequate search warrant provisions by reading intellectual property offences into offences such as conspiracy to defraud. Indeed, there is a good deal of overlap between the different intellectual property offences, as illegal material which infringes copyright often also carries an illegal trade mark. On that basis it has been said that the Bill is unnecessary. But I would argue that this only shows the need for greater transparency so that no one is left in any doubt about the consequences of an offence and how it might be tackled.

To illustrate that point I give the hypothetical example in the world of physical rather than intellectual property. Let us suppose that we had higher penalties for stealing electronic components than television sets. Would not noble Lords agree that the law has sufficient transparency if a person who breaks into a warehouse and steals a lorry load of television sets is prosecuted for stealing electronic components as that attracts a higher penalty? That is the kind of illogicality which the Bill attempts to eradicate in the intellectual rather than the physical property area.

Finally, in the Bill there are provisions on forfeiture of illegal material which appear to be somewhat intimidating because of their complexity. I shall be happy to explain them at the Committee stage and, I hope, with the continued assistance of officials. There is a great deal of necessary repetition in the way the provisions have been written out in the Bill. There is a provision for copyright offences and one for each of the related areas of performers' rights and unauthorised decoders such as smart cards and satellite television. That makes three nearly identical provisions. In each case there is a slightly different version for Scotland, making six almost identical provisions in total. The forfeiture provisions only allow the courts to order forfeiture of goods that have been seized as evidence during an investigation where the court is satisfied that the goods are illegal because they infringe copyright or a related right. These provisions are modelled on the existing provision in trade marks law.

In summary, I believe that the Bill removes some of the unhelpful inconsistencies between the different areas of intellectual property law where there are offences relating to theft of intellectual property. The Bill passed through another place without controversy. I urge noble Lords to support the Bill in this House.

Moved, That the Bill be now read a second time.—(Lord Razzall.)

12.28 p.m.

Lord McNally

My Lords, I thank my noble friend Lord Razzall for an extremely clear explanation of the contents and purposes of the Bill. I should make a declaration of interest. which may be slightly longer than usual because of bitter experience. In March 2000 I introduced a copyright and trade marks Bill in this House, which I withdrew following an extremely persuasive speech by the noble Lord, Lord McIntosh of Haringey. Nothing happened for about seven or eight months. Then, one morning, I opened the Guardian to find quite the nicest photograph that it had ever printed of me, in full Lord's fig, coupled with a story that I had promoted the Bill for the benefit of Weber Shandwick clients, the public relations company which employs me.

Weber Shandwick has 3,000 clients the world over. It does not take even the investigative talents of the Guardian to find among those clients people who have an interest in a copyright and counterfeiting Bill. But the fact is—I shall say it today because I did not do so on the previous occasion—that I know of no Weber Shandwick client who has other than a general interest in this Bill. So far as I am aware, the company does no work in this area, and I am personally not involved. But that will probably still not prevent the Guardian running a story.

I have had an interest in this area since serving on the Select Committee on Trade and Industry in another place from 1979 to 1983 and then as director-general of the British Retail Consortium in the mid-1980s. The matter was, even then, a live issue. When I entered this House, I was the spokesman on trade and industry for the Liberal Democrats and was heavily lobbied on the issue by the Alliance Against Counterfeiting and Piracy and by the British Brands Group.

In that respect, perhaps I may make a plea on behalf of lobbying. Lobbying is too often associated with the sleazier side of parliamentary behaviour. Let us remember that lobbying is one of the lifebloods of a vigorous Parliament. Where there is need for reform in the law—not only this law but in many laws—good and active lobbyists can speed that along. Certainly the groups that I have mentioned have done that.

I said that I withdrew my Bill. I did so after the Minister promised that the Government would look at the cases made out in the Bill and respond to them. As my noble friend said, slightly giving the game away, although this is a Private Member's Bill, there has been some judicious support from the department in seeing it through another place and the Government have given it some encouragement. I certainly take that as the response to the promise of the Minister two years ago about the Government treating this matter seriously. Henceforward, I shall not be as cynical as I once was about promises of future action made by Ministers at the Dispatch Box. The noble Lord, Lord McIntosh of Haringey, has a fine record on this issue that will stand him in good stead in the future.

This Bill covers only part of the issues contained in the Bill that I put forward. As my noble friend outlined, it increases the penalties for copyright theft; it strengthens search warrant provisions; and it gives greater powers to allow rights owners to obtain forfeiture of infringing material. There is still work to do on other areas, including burden of proof, occasional sales, funding, and so on, but I do not want to be churlish. I believe that the Bill carries us forward and is welcomed by all those involved.

My noble friend has highlighted the importance of the industries concerned. Counterfeiting and piracy are serious problems affecting virtually every area of the country. Legitimate, hard-working businesses are being forced to close. Local, national and international organised crime is funded. And, as my noble friend indicated, consumers' lives are put at risk through exposure to shoddy, substandard and potentially dangerous merchandise.

There are also wider economic issues. If Britain is to prosper in the 21st century, we must get into the knack of producing goods and services which are at the high tech/high value-added end of the market. But if we are really to make such an economy a reality, it is not enough to encourage people to come up with good ideas. We must ensure that people who have those good ideas have them protected. The aim of this legislation must be to make counterfeiting and piracy as unacceptable as other forms of theft and to raise public and political awareness of copyright and trade mark issues so that intellectual property is highly valued by everyone.

The rapid development of information technology, the globalisation of the economy and the advent of the world wide web all mean that in the 21st century the integrity of intellectual property will become ever more important. Intellectual property does matter. The industries represented by the Alliance Against Counterfeiting and Piracy account for 20 per cent of our GDP. They are our most creative and competitive industries, and the industries where, most often, we enjoy world leadership.

Therefore, intellectual property is a very important type of property. Increasingly it will be what really matters in business, especially in the creative industries, such as design. Globalisation and the information revolution mean that goods, be they plastics or packaging, CDs or CD-ROMs, can be manufactured in any one of a dozen locations anywhere around the globe.

So what will make the difference between the thriving economy and the struggling economy? I believe that the difference will be ideas—the ideas which lie behind a new book or film, a new perfume, or the packaging in which they are placed, and the skill with which they are marketed. Ideas are the currency of the 21st century. It is in new ideas that real value lies—in making something different, better and more marketable.

But what value an idea if some cheapskate or crook can simply wait for you to put in all the work and investment and then copy what you do? They rip you off rather than bother with ideas. Therefore, protecting intellectual property is the key to protecting the UK's future economic success. If someone steals the idea behind a product or design or the advertisement to sell it, he may as well have stolen the product itself. Theft is theft. It is that simple.

As noble Lords know only too well, over the years the theft of ideas has become all too commonplace. And that, in turn, has had a real impact on real people—on their jobs and on the public services they receive—by reducing the creative industries' overall contribution to the UK economy.

But counterfeiting and piracy have other negatives, too. Pirate and counterfeit products are of unpredictable quality. Thus consumers never know what they are getting for their money. For example, look-alike packaging trades off the back of the good reputation of one product, seeking to claim the attributes of another. That is not value for money, and it confuses the consumer.

At the other extreme, some pirated goods are downright dangerous. There have been instances of counterfeit engine parts and even counterfeit vaccines. Those could cost lives. Year in and year out, arrests for copyright and trade mark offences also confirm that organised crime has cottoned on to the fact that counterfeiting and piracy provide high profit, relatively low-risk vehicles for profiteering, despite the valiant efforts of enforcement agencies.

In conclusion, I thank the noble Lord, Lord McIntosh, and the Government for redeeming their promise of two years ago and giving a fair wind to the Bill. I congratulate the Alliance Against Counterfeiting and Piracy on its successful lobbying. And I congratulate my honourable friend Vince Cable in another place and my noble friend Lord Razzall on their championing of the Bill. I urge its rapid passage through this House and its successful implementation as a good piece of legislation.

12.39 p.m.

Baroness Miller of Hendon

My Lords, I, too, thank the noble Lord, Lord Razzall, for the very clear explanation that he gave of the Bill. I am also grateful for the Explanatory Notes that were provided by the DTI with his consent. They were very clear indeed. Credit is also due to the honourable Member for Twickenham for having used his precious space in the lottery for Private Members' Bills in the other place to introduce what is a very important piece of legislation.

The Bill received cross-party support in the other place and followed a very similar one previously introduced there before the election by the honourable Member for Ellesmere Port and Neston. A copyright and trade marks Bill was also introduced by the noble Lord, Lord McNally. It received its Second Reading on 17th March 2000. The noble Lord has already spoken about that.

Perhaps I may mention the history of the present Bill. It has received cross-party support throughout the several attempts to get this piece of legislation on the statute book. The Bill and its predecessors have received welcome support and assistance from the Government. The noble Lord, Lord McNally, congratulated the Government on helping now. It is a pity that they were not able to deal with the matter in their own legislative time in order to save someone having to use precious time in a ballot. Nevertheless, as the noble Lord, Lord McNally, said that he is satisfied, I should not be churlish and should be satisfied too.

No one will dispute the fact that the pirating of copyright and performance rights and fraudulent access to TV transmissions are nothing less than theft. Copyright theft is estimated to cost industry £9 billion a year and the Treasury £1.25 billion a year in lost tax. I assume that those figures apply to the United Kingdom alone because, according to the International Chamber of Commerce, counterfeiting accounts for a staggering 5 to 7 per cent of world trade. It also says that counterfeiting has destroyed an estimated 120,000 jobs in the USA and 100,000 jobs in Europe in each year over the past 10 years.

The United Kingdom record industry, which is a major player in the music industry—perhaps the greatest, considering the world wide popularity of some of our performers and composers—is the source of what we used to call "invisible exports" to the tune of some £4.6 billion a year. That is because British music and performers are frequently found at the top of the charts around the world. As my honourable friend, the Member for Maldon and Chelmsford East pointed out in another place, blockbuster films such as "The Full Monty" and "Harry Potter" were made in this country, as were many others which have achieved world-wide popularity even if the revenues have gone elsewhere.

In fact, in addition to the prestigious Alliance Against Counterfeiting and Piracy and the Federation against Copyright Theft, the International Chamber of Commerce has recently created its own legal bureau of law firms to help fight the problem in the courts. I sincerely hope that those three organisations will not get their wires crossed and will be able to co-operate well in fighting this international crookery.

International it is, because this Bill is not designed to cope with the trivial and technical breaches of copyright that I have no doubt some of us may have committed from time to time by photocopying a newspaper article to pass on to someone else or videoing some programme from the television to watch at a more convenient time. However, like the noble Lord, Lord Razzall, I do not suggest that trivial and technical breaches should in any way be encouraged. But the Bill is designed to catch and punish the criminals who do such acts for commercial gain. They steal from the artistes who perform on records; and from the producers of movies who invest and risk millions in producing films which are sometimes pirated before they have even appeared in the cinema. They steal from the designers of computer games and other software which themselves can cost vast sums and take months or years to develop. They steal from the owners of subscription television broadcasting channels whose signals they intercept by the use of counterfeit decoders. The noble Lord, Lord Razzall, mentioned several other examples.

They will imperil the whole newly developing techniques and security of electronic banking, conveyancing and other commercial transactions by breaching the encryption techniques now being developed. Only a part of that illegal activity is conducted by small-time criminals operating a couple of high speed recorders from their garages and flogging off their products at car boot sales. It is so profitable that it has become a part of international criminals and gangs and has been said to be a source of funds to international terrorists. The noble Lord, Lord Razzall, also mentioned that.

More than that, counterfeiting CDs has been carried out wholesale in the Far East either with the connivance of local governments or by their turning a blind eye to it because it is such a lucrative source of foreign currency.

The noble Lord, Lord Razzall, pointed out that one of the objectives of the Bill was to increase the penalties payable to bring them into line with those under the legislation against the fraudulent use of trade marks. In an intervention in another place during the Second Reading speech by the promoter of the Bill, his honourable friend the Member for Brent North asked him to justify the severity of the penalties to be payable after the passing of the Bill against sentences passed in recent cases of child abuse. The answer may be, although the promoter did not give it, that it is not because the penalties proposed under the Bill are too severe but that the courts do not always inflict the penalties which their powers allow in cases of child abuse and crimes of violence. One cannot compare such penalties; we are not comparing like with like.

The offences which the Bill deals with by the infliction of additional penalties and the giving of greater enforcement and investigatory powers do not involve victimless crimes. We are all victims either because we pay more for the legitimate products we buy from honest traders or because of the loss of tax revenue which, in one field alone, costs the Treasury £1.5 billion a year. How many extra hospital beds, nurses, doctors, schools, teachers or policemen would that money pay for?

The Bill will help the authorities to bear down on organised crime and international terrorists and that will protect us in many ways. As my honourable friend said in another place, the sponsors of the Bill have made a powerful case for tightening the law. We on these Benches fully support the Bill. We congratulate the noble Lord, Lord Razzall, and look forward o the Bill's early passage into law.

12.45 p.m.

Lord McIntosh of Haringey

My Lords, I, too, congratulate the noble Lord, Lord Razzall, on bringing the Bill before the House today. As the noble Lord said, I have been here before and he has been here before. In March 2000 we discussed his Copyright and Trade Marks Bill. He accused me at that time of responding to his Bill with a dead bat Since I am not very good at sporting metaphors, I looked at my speaking notes but found no reference to any bald, mouse-like nocturnal mammals of the genus chiroptera, so I denied his accusation. However, I think that he will find a somewhat different response today.

I had indicated that we supported some part of the measures he proposed; and that we were in the process of a consultation exercise on the merits of three issues in the Bill. They appear now in a similar form in this Bill. The consultation exercise resulted in general endorsement of the rationalising measures between copyright and trade mark law which were being proposed. The Government subsequently decided that they would legislate on these matters. However, the Government have not yet brought forward their legislation in this area so we are pleased that the Bill before us presents an opportunity to put the changes of the law that we have agreed on to the statute book at an early stage. We gave the Bill full government backing in another place and that will continue for its passage through this House.

The House and the noble Lord, Lord McNally, can take credit for instigating the legislation before us today, but there are some important differences between the Bill introduced in 2000 and the present Bill. The Bill introduced in 2000 was more far-reaching in the area that it covered. The Bill before us today presents us with a realistic and sensible package of measures which will bring some rationalisation to the provisions applying to intellectual property or intellectual property crime. I am delighted to say that the reservations I expressed on the Bill introduced in 2000 do not apply to the Bill before us today.

I do not wish to talk at length about the contents of the Bill or repeat what the noble Lord, Lord Razzall, said in his excellent introductory speech. I believe that we are all convinced of the seriousness of intellectual property crime for holders of intellectual property. The industry umbrella group, the Alliance Against Counterfeiting and Piracy has left me and no doubt other Members of the House some detailed information about the effects on it and on jobs and consumers. There is also the link with serious organised crime. The noble Lord, McNally, has set that case out.

We have noted also the comments made by the National Criminal Intelligence Service, which has identified particular links with drug dealing and immigration crime. If the crime can be serious—it can be just as serious whether it is copyright being stolen or a trade mark theft, or both—we should make sure that law enforcers have the right tools to tackle that crime. There are differences between the relevant copy law on the one hand and trade mark law on the other which do not make sense. The Bill addresses that issue and has the full support of the Government in doing so. Law enforcers must be given equivalent tools to punish and investigate this offending behaviour regardless of whether it is copyright or trade mark that is being stolen.

Perhaps more importantly, equalising the sentence and enforcement tools will improve the deterrent effect so that theft of one type of intellectual property is not seen as a soft option. I should stress one important point about the Bill, or rather about a matter that is not in the Bill.

As the noble Lord, Lord Razzall, rightly said, the Bill does not change the nature of any of the intellectual property offences; it changes only the consequences for people who may in future commit those offences. We are aware of some problems with the definition of the offences in the copyright area in connection with what might be called "on-line piracy", which was the subject of the Bill introduced by the noble Lord, Lord McNally. The right place to address any changes of law that may be necessary is as part of the implementation of the copyright directive that was adopted last year. The Government will bring forward a consultation document on implementation of that directive in due course.

Before I conclude, perhaps I may give the noble Baroness, Lady Miller, some comfort regarding her remarks on trivial infringements of copyright. There is an exception to copyright that legally allows her to copy a television programme to watch at a more convenient time. Indeed, for those of us who keep the peculiar hours of this House, that is essential if we are to watch the programmes that we like. There is no threat to that exemption.

Lord McNally

My Lords, I thank the noble Lord for giving way. First, I welcome the consultation on on-line piracy. As my noble friend indicated in his speech, piracy of new films and records is a growing problem. I refer to a point raised by the noble Baroness, Lady Miller; that is, international complicity by legitimate governments. To show how long that has been around, 20 years ago, with the late Sir Donald Kaberry, I went to a number of far eastern countries on an all-party delegation to ask them to clamp down on counterfeiting taking place in those countries and coming into our markets. I wonder how much priority the Government give now to putting pressure not on organised crime but on legitimate governments which show a degree of complicity with counterfeiting within their borders.

Lord McIntosh of Haringey

My Lords, even if that is legitimate in their country, which we regret, it is a crime when anything is exported from those countries to this country. The answer to that is partially in what I have been saying about the European directive. Clearly, the European Union, acting collectively, has a greater bargaining power with those other countries which are being neglectful or worse in dealing with copyright crime. We use every opportunity to lobby other countries, but there are still problems.

The noble Lord, Lord McNally, reminded me about the issue of on-line piracy. Perhaps I may say that there are other issues in his Bill which have not been forgotten. As regards the issue he raised today of look-alike packaging, although we think that it may be a matter of revision to passing off law rather than the subject matter of this Bill, these are still issues which need to be addressed and which we want to address.

To sum up, the Bill harmonises and brings greater transparency to enforcement provisions across copyright and related areas and trade mark laws. Our view is that this is a sensible attempt to rationalise what might otherwise be a confusing mix. As I have already indicated, we supported the Bill in another place and shall continue to do so during its passage through the House. We have taken advice and believe the Bill to be compatible with the European Convention on Human Rights. The provisions in the Bill provide a balanced and acceptable solution to the problems of intellectual property crime.

Lord McNally

My Lords, before my noble friend responds, perhaps I may say that I consider that response to be a Botham-like sweep rather than a dead bat; much changed from last time.

Lord McIntosh of Haringey

My Lords, I do not understand that.

Lord Razzall

My Lords, I shall not attempt to pursue the cricketing analogy. However, without detaining the House, I want to continue the animal analogy. What has pleased me most about this debate is the dog which did not bark. When thinking about how the Bill would be received by noble Lords, one point concerned me. I thought that some noble Lords might attempt to suggest that, as all of the issues which have been raised by my noble friend Lord McNally in his previous Bill have not yet been dealt with by the Government, as the Minister indicated, therefore we should wait until they are dealt with in order to have a comprehensive reform Bill. I am delighted that no one has suggested that. Leaving those issues aside for another time, it is important that we pass this aspect of copyright and trade mark reform. Therefore, on that basis, I ask the House to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

House adjourned at four minutes before one o'clock.