COMMONS AMENDMENT (Hansard, 19 July 2004)

My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendment No. 2.

Noble Lords will recall that when we were considering the Bill previously, we had some useful exchanges about how to improve the enforcement framework for patent disputes. Indeed, the noble Earl, Lord Attlee, brought forward an amendment that enabled us to identify an additional improvement to the provisions in the Bill that adjust the threats provisions in the Patents Act 1977. We believe that Commons Amendment No. 2 provides another small improvement to the enforcement framework which may be particularly beneficial for SME patent holders in certain circumstances.

14 The amendment would ensure that the courts have regard to all the relevant circumstances, including the financial position of the parties, when making an award of costs in a patent dispute where a decision has to be made regarding infringement. This amendment would still leave the courts with discretion over whether or not to require the losing party of a patent dispute to pay the costs of the winning party. There may well be circumstances in which financial circumstances should not be reflected in the actual award of costs. However, this amendment would put an SME engaged in a patent dispute against a wealthier party in a better position than the current one. It ensures that the financial position of the parties will always be a relevant factor to be weighed in the balance when the courts consider what award of costs to make.

We hope that the amendment will have an effect beyond those cases that reach the stage in the courts where costs are considered. With wealthier parties aware that they may not necessarily get an award of all their costs in a dispute against a less financially secure party, even when they win, there may be greater willingness to agree to settle the dispute more cheaply in the first place by, say, mediation or voluntary binding arbitration.

I hope that noble Lords will therefore agree with the sentiments in the other place that this is an amendment worth making. I stress, however, that it does not mean that we will not also continue to explore other approaches to facilitate quicker and cheaper enforcement of patent rights. For example, I am delighted to be able to confirm today that the Patent Office-led feasibility study into the patent enforcement project has concluded that there may be a way of constructing new, mutual insurance-based arrangements to help SMEs enforce their patent rights. We are looking at how best to work with insurers and others to make this happen. The Patent Office will publish the feasibility study by the end of the month.

With those comments, I invite noble Lords to approve this new clause and a small consequential repeal in Schedule 3, as made by Commons Amendment No. 4.