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Column 666Section 1(1)(b) of the Trade Descriptions Act 1968."
That Act is the key measure that trading standards officers use to combat counterfeiters. The BPI continues :
"As a result of the Court's decision, Kent Trading Standards Officers are no longer taking action if disclaimers are used in conjunction with the sale of counterfeit goods."
Mr. McLoughlin : I am aware of the BPI's point, but the hon. Gentleman will know that the Bill deals not with counterfeiting but only with trade marks. In opening, I specifically referred to counterfeiting of trade marks.
Mr. Griffiths : The Minister has now made it clear what he is saying, but that reinforces my fear that laws on other areas of counterfeiting do not have the support of enforcement officers. The Crown Prosecution Service has been singled out for criticism for not taking a sufficiently vigorous approach to the prosecution of criminals who trade in illegal goods.
The Minister mentioned the importance of the clauses that address the problem, but potential loopholes have been drawn to our attention. Clause 87 proposes the insertion of the words, "with a view to gain",
which may cause problems because they imply an element of guilty knowledge. Trading standards officers, who are in the front line of enforcement, tell me that they can foresee an offender evading liability by claiming that he or she was not selling for profit. Clause 87 (3) contains the phrase,
"knowing or having reason to believe".
Again, difficulties may arise in proving guilty intention. Trading standards officers show a distinct lack of confidence when they ask why the word "infringement" is used in the defence subsection--subsection (5)--and not in the offence subsection. They ask whether a defendant will be able to claim that he was not aware that the use of a sign infringed a trade mark. They point out that prosecuting counsel may have problems securing convictions. Like trading standards officers, we believe that the Bill is a clear improvement, but it should contain a strict liability element. Our fears are echoed by market traders closer to home. Jubilee Market Hall in Covent Garden is concerned about the Crown Prosecution Service's failure to act in several cases where illegal traders are offering counterfeit goods and have been arrested for doing so. We seek a guarantee that, under the Bill, at least at some, if not all, of those practices will be eliminated so that a prosecution can be brought without any difficulty and, if proven, a conviction secured.
Concern has been expressed about the inadequacy of provisions for returning goods that have been seized where, for some reason, a conviction has not been secured. Kent county council drew our attention to a recent case in which a consignment of counterfeit clothing and Reebok and Adidas sportswear was imported into the United Kingdom. The consignment was seized and detained by Customs, but, because there were no apparent perpetrators in the United Kingdom, it was difficult to institute proceedings. Customs rightly ask what it is supposed to do with 5.5 tonnes of counterfeit clothing. There is no quick way of ensuring that it can be disposed of legally or that it does not go back on the market.
There are, of course, more serious cases in which the people responsible for the illegal manufacturing plants in this country that make fake goods are detained and charged, but, for technical reasons, are not convicted. In such cases, there is no way in which the legitimate
Column 667manufacturer who holds the trade mark can have the counterfeit goods properly impounded and destroyed instead of being returned to the person responsible for manufacturing but against whom no prosecution is likely or whose conviction has not been secured. British business has pleaded for the trade mark provisions to be put on a par with those in section 100 of the Copyright, Designs and Patents Act 1988.
My fourth concern relates to the role and future of the Patent Office. For 119 years, we have been fortunate in having a public body, paid for by business and the taxpayer, to monitor the registration of patents. It is probably one of the reasons why British manufacturers secured a world lead in protecting their investments. The sad fact is that, had the Government acted quickly to implement the White Paper published in 1990, we should have been in pole position to have the European service based here. Due to their dithering and failure, the new trade mark is to be administered by a Community trade mark office located in Alicante, Spain, instead of in its rightful place. Because of the length of time that we have had a Patent Office and patent protection, that rightful place was in this country, in south Wales or elsewhere.
As we have lost the opportunity to have the European trade mark organisation and office in this country, just as we have lost so many other opportunities in Europe because of our dithering stance, we want an undertaking from the Minister that he will not weaken the service provided by the Patent Office either by embarking on an unwanted and costly privatisation exercise, in which neither the consumer nor business would have much faith, or by hiving it off in any other way. It is important that an office with such a responsible function, and which deals with thousands of millions of pounds' worth of business covered by patents, remains firmly in the public sector and remains open in Britain and does not move to Alicante or anywhere else.
As I said, my main regret about the Bill is that there has been so much delay and dithering. The opportunities and the £90 million which the Minister said that business had lost because of the delay in implementing the Bill are history. The Bill's best provisions should be introduced as quickly as possible so that businesses and their employees and consumers can benefit without further unnecessary delay.
Sir Dudley Smith (Warwick and Leamington) : I broadly support the Bill and its objectives, which have been admirably outlined by my hon. Friend the Parliamentary Under-Secretary of State for Technology. The Bill will achieve the necessary updating, which is overdue. I do not agree with the criticisms expressed by the hon. Member for Edinburgh, South (Mr. Griffiths), but I do agree that there has been a delay, although it is sometimes wise to proceed carefully to get things right and experts believe that the Bill represents an advance and is right in many respects.
I must declare an interest in that I have been involved in the industry for more than 30 years, although not as a trade mark expert. I have been connected with trade marks that affect a business's progress. I am also connected with a number of companies that manufacture consumer goods
Column 668and, in view of my earlier intervention, it will not come as a great surprise to my hon. Friend the Minister if I concentrate primarily on that issue.
The need to include in the Bill powers to deal with the problem of look- alike products has already been explained to the House. My hon. Friend may say that the Bill is not the appropriate vehicle for that, that representations have come too late or that other considerations need to be taken into account, but look-alike products are a serious and growing problem. Lookalikes is the generic term used in the industry. Such products have packaging and labelling deliberately designed to resemble the overall appearance of existing brand leaders.
The House will be aware that counterfeit goods are passed off as originals. That is rightly regarded as a criminal activity because it harasses legitimate manufacturers. However, producing look-alike goods is not a criminal activity although it is undesirable and, in my view, as morally reprehensible as passing off goods as something that they are not. It is subtle and deceptive.
The hon. Member for Edinburgh, South implied that the manufacturers of brand leaders want to run own-label goods off the supermarket shelves, but that is not the case. I must emphasise that I am not against own-label or own-brand products, whatever one wishes to call them. What the supermarkets and big retailers are doing is a perfectly legitimate sales operation, which has grown enormously in the past 25 years ; it has added to competition and helped to increase sales and the prosperity of this country. However, I decry their deliberate imitation of brand-leader goods, which is wholly wrong. I shall not mince my words : it is cheating, and it is not legitimate competition, which is so necessary in our society. I am all in favour of proper competition, but it must be fair and should not involve the deliberate copying of someone else's products. I know that my hon. Friend the Member for Medway (Dame P. Fenner) is closely involved with the British Retail Consortium, the retailers' trade organisation. Via that organisation, retailers are making much of the fact that their own-label approach is in the consumer's interest and helps to reduce prices, but they have no logical excuse for blatantly copying other people's products in order to mislead or confuse the consumer into believing that it is the same product or from the same source. They ruthlessly and unscrupulously imitate goods with household names, and it is sometimes very difficult to tell at a glance which is the house brand and which the brand leader. There will be serious long-term consequences unless unfair competition legislation is introduced in due course. Branded goods have been developed after considerable investment and with much expertise and research. Someone who gains from that investment by selling a look-alike product gains an unfair advantage. The hon. Member for Edinburgh, South mentioned the share of the market gained by certain dog foods, by cornflakes and other products. It is extraordinarily important to remember that companies have developed their share of the market through their skill and by producing an excellent product. The fact that they have been able to obtain a large share should not be to their detriment. I am all against total monopoly ; there is plenty of room available for others who want to come in to segment the market. However, I do not believe that it should be done in this way.
If the branded goods manufacturers are gradually run out of town--there were recent suggestions that at least
Column 669one big manufacturer was considering dropping one in five of its brand names because of falling markets--there will be a serious effect on employment, not only in manufacturing industry, but on allied industries.
Mr. French : Does my hon. Friend accept that in many cases, the branded goods manufacturer agrees to be the producer of the own-label or other look-alike product ? What does my hon. Friend say to that ?
Sir Dudley Smith : That is sometimes true. Speaking personally, it is not a process that I like or with which I agree. The vast majority of branded products are produced by a company that does not also produce a duplicate range for the supermarkets.
I was talking about the erosion of branded goods and the difficulties that it will present for employment and for our industrial effort ; I think especially of television and newspapers. Consumer goods advertising is one of the bulwarks of the television industry. My hon. Friend the Member for Lewes (Mr. Rathbone), whom I see here today, probably knows more about advertising than any other hon. Member. He knows that advertising involves the jobs of hundreds of people. If we constantly erode the advertising base, we shall suffer the consequences.
Perhaps even more important than the loss of jobs in various activities is the fact that branded goods sales in Europe and the rest of the world will be undermined. Who can carry on exporting if his home market is fatally undermined by lack of action by the Government ? We shall penalise ourselves, yet again, in terms of exports.
The consumer is called in aid by the retailers, and has already been referred to in this debate ; I have no doubt that we shall hear of the consumer again. Will he be so pleased when, in years to come, he can buy any cornflakes, any soap powder or any toothpaste he likes as long as it is a Sainsbury's or a Tesco product? That will be a possibility as a result of the road down which we are going. Will he be happy when the supermarket chains, having cornered the market in branded goods, proceed to increase their prices ? That is the logical end. We may get cheaper prices at first, but when a monopoly begins to be established as the branded goods drop off, extra charges will begin to be put on.
We used to pour scorn on the fact that in communist countries, only the state version of anything was available. I hope that in the years ahead, we shall not have to fight a rearguard action to save our own competitive practices. Supermarkets are rightly appreciated by the public because of their convenience, service and simplicity ; we all use them. They have an important place in today's society, but surely they cannot be allowed to undermine and to finish off the branded goods industry as they have the small trader through the determination and advocacy that led to the Sunday Trading Bill. I believe sincerely that the present Bill gives us an opportunity to do something about unfair competition. It is the first vehicle before the House for a long time which would allow a clause to prohibit the practice about which I have spoken and which would allow fairness for a significant part of British industry. The EC directive, which the Bill necessarily follows, gives that opportunity. I am subject to correction, but I do not believe that the practice to which I have referred is allowed in other European countries. I can see the day coming when we
Column 670shall have a European directive on this issue. We shall then have to comply with it, although we appear to be a little hesitant at present.
I realise from what my hon. Friend the Minister has said that he has no intention of accepting an amendment on this matter in Committee, so I suppose that it would be fruitless to table such an amendment. However, I warn him in the most friendly way that we shall inevitably have to come back to this issue. It is of great importance to many people--not only to the consumer, but to British industry. Those people are entitled to be heard and to have the foremost consideration in the matter. I know that my hon. Friend the Minister is a reasonable man, so I very much hope that he will take on board what I have said and what, I hope, other hon. Members will say as well. I hope that in due course, we shall see some light from the Government on the issue.
"Nid da lle gellir gwell."
The motto of the Bettws comprehensive school in my constituency is appropriate to the debate for two reasons : first, this is a good Bill, and the motto means that there is no good that cannot be improved on ; secondly, the young people at that school are looking to the Bill, although they may not know about it now, because it may have a profound effect on their futures. Almost the largest employer in my constituency, which is certainly the provider of the best-paid and highest-skilled jobs in my constituency, is the Patent Office. We look to the future of the Patent Office with some confidence based on its success in relocating in Newport, but also with some trepidation because of the many threats to it.
We shall want to make improvements to the Bill in Committee. I found the convoluted argument of the hon. Member for Warwick and Leamington (Sir D. Smith) rather strange. He seemed to say that the Bill was likely to take the bread out of the mouths of billionaires. We see on the Conservative Benches two groups of vested interests : those who run the supermarkets and those who produce the main branded products. The two groups are in dispute ; both are very prosperous. It is an artificial dispute because, in many cases, although the branded product has a different label, it is chemically identical to the product in the other package. As the hon. Member for Gloucester (Mr. French) made clear, the reason is that many who manufacture branded goods also produce those goods for supermarkets where they are sold under own-name labels. The consumer has the choice between having branded names on her or his shelves for snob value or not paying the advertising costs and buying the unbranded goods--the supermarket's own brand. That is the real battle that is going on ; in terms of the Bill, it is very much a side issue.
The Bill has been long awaited and will do a great deal of good. It comes after the almost complete relocation of the Patent Office from London to my constituency, which was the subject of an Adjournment debate in 1988. There has been a splendid report on that relocation by the National Audit Office. The report praises the relocation as a success which has worked in all aspects, especially the trade marks aspect.
The alteration or registration of trade marks almost always requires a face -to-face interview between the people who want to register the trade mark and the Patent Office. Many of the interviews are carried out in London, but some are carried out via video links and some are
Column 671carried out in Newport. I can foresee difficulties when the move is made to Alicante. Although that move may be inevitable, we must continue to ensure that the maximum number of registrations are carried out in this country and that we keep the national interest. A matter about which I am greatly concerned may be dealt with under clause 5 ; I seek the Minister's guidance. I refer to the use to which trade marks are being put. There is one trade mark in particular, which has been used abroad and, to a small extent, in this country, on which I think we should legislate because it is used by companies in a way that is surreptitious and deceptive. We were all astonished when, about 30 years ago, one company, Guinness, advertised without using the name of its product. Now many products are advertised in a totally mysterious way, with advertisements which to many of us seem meaningless. Unfortunately, many of those advertisements are produced by cigarette companies, which have perfected the art of the advertisement that mentions neither the product nor the name of the company. There is a grave danger in that art, which we must address because there is a Bill going through the House at present that would ban the advertising of cigarettes. We know that there is a trade mark registered for cannabis cigarettes called Marleys, which may well have come about as a crime-reducing measure.
In other countries, cigarette advertising is banned. In Hungary, there is no advertising of cigarettes, but there has been an enormous growth in the consumption of cigarettes. Two brands in
particular--Marlboro and Camel--are involved. The company that owns Marlboro has persuaded all the clubs and many of the pubs in the area to become Marlboro clubs. The signs above the clubs say "Marlboro Magyar Club" ; they are in red and white and mimic the well-known Marlboro advertisements. Camel cigarettes are banned, but on almost every bus in Budapest there is a sign showing the familiar camel advertising not Camel cigarettes but Camel shoes ; I do not know whether such shoes exist.
In Britain, Dunhill produces a whole range of goods which are advertised. It sells a cigarette lighter that looks similar to the design of the Dunhill cigarette packet. Also in this country we have recently seen subtle advertisements by a tobacco company which I shall not name, which uses blue and white and a certain kind of lettering. That company advertised at a sporting event in my constituency without mentioning the name of the company or the product ; however, it was clear from the sign what it was advertising.
It is sad to note that those advertisements were criticised because it was claimed that, because of the moronic jokes that they included, they appealed especially to children and young people. Unfortunately, the danger is that the work of the House and its possible future decision to ban or to restrict the advertising of certain products, which may well happen with cannabis cigarettes, could be frustrated if we allow the trade marks for products to be used to advertise different products.
There would be no difficulty in avoiding that under clause 5, which lists a number of reasons why a trade mark should not be registered. It specifies, for example, that a product shall not be registered for goods or services similar to those for which the earlier trade mark is protected. I
Column 672should like some guidance, either later in the debate or in Committee, on whether that would apply to a cigarette company that decided to produce Silk Cut tee-shirts, trainers, computer games or anything else that might appeal to young people, thus advertising its product in a devious way and abusing its trade mark. I have no argument with companies such as that which owns Mars, which has used its product to advertise similar confectionery. There are frozen Mars bars, Mars drinks and so on and that seems perfectly legitimate. However, either we need a new clause or we need to expand clause 5 to ensure that that cannot happen in future, because I am afraid that the clever and subtle advertising that occurs could well mean that, against the wishes of the majority of hon. Members and the people of the country, advertisers get round the new laws.
The future of the Patent Office is of considerable importance and is certainly a matter of great concern in my constituency. While I do not wish to press the Minister on that matter with too much urgency, because we want the right decision rather than an early decision, may I gently remind him that in October he told me and a number of representatives of the Patent Office that a decision would be made by Christmas ? There have been claims that a decision has, indeed, been made. It was claimed in The Daily Telegraph that the Price Waterhouse report suggested that what has been planned--possible privatisation, contractorisation, management buy-outs-- was not practical because it would require primary legislation. I know that the Minister appreciates the anxiety felt by many people who work at the Patent Office and realises that they have been in a state of uncertainty for a long time. Although I do not want to press the hon. Gentleman to make a bad decision rapidly, I hope that he will give the matter serious consideration.
One point that I commend to the Minister, if he is considering the future of the Patent Office, is contained in a letter to the President of the Board of Trade from the Minister of State dated 14 February. The Minister of State, Welsh Office referred to a meeting attended by representatives of a number of unions and myself at which he said that the points about the future of the Patent Office and other agencies of the Department of Trade and Industry were strongly made. He went on to say :
"It was suggested, for example, that the existing agency status could be developed further, to enable them"
-- the agencies
"to bid for a wider range of work."
That point may be developed in clauses 78 and 79, because they concern the register of trade mark agents. I hope that the Minister and his Department will seriously consider adding the comptroller general of the Patent Office to that register. If the chief executive of the Patent Office became a patent agent and a trade mark agent, it would be a useful way for the agency to improve and enlarge its role and make its role far more profitable.
There are resources available in the Patent Office which may be used profitably so that it becomes competitive in the uncertain years ahead. However, that means a change in the status of the office. The Patent Office has existed for a long period. The Government must not be hide-bound on the issue. There was a certain resistance to "next steps" agency status at first, but it has been a success in managerial terms and in the running of those bodies. They were great monoliths before and could not be run effectively by Ministers in Whitehall. There have been
Column 673obvious gains in management efficiency in the process and there are now about 75 such agencies. It would be a bad move if "next steps" agency status led to the further steps of contractorisation, a management buy-out or privatisation. In the case of the Patent Office, that would be especially disastrous.
At last, the Government are saying that certain bodies are unable to be privatised. It was a great pleasure to see that the Department of Transport recently decided that the Vehicle Inspectorate was one such body. There must be a similar case to be made in respect of the Patent Office. There is not a patent office in the world in commercial hands. The office cannot conceivably be placed in a position where it would be subject to commercial influential and control. Its independence is paramount ; it must exist in that way. It has become a great national resource. My hon. Friend the Member for Edinburgh, South (Mr. Griffiths) paid tribute to it and we may take some pride in our role over the years as a world leader in the registration of patents and trade marks. The White Paper has already been mimicked in several countries--even before the introduction of the legislation--and the processes that take place in Britain lead the world. We cannot conceivably go down the path of contractorisation, privatisation or management buy-out.
Our intellectual property is a great national resource. It is difficult to think of the design on a can of baked beans as intellectual property, but it is of enormous value. It is a priceless resource. We have excelled at the fascinating business of registering patents and trade marks and we can continue to do so. I appeal to the Government, and to the House generally, to invest in the Patent Office, expand its work and enlarge the area in which it works. The message is clear from the users of the Patent Office-- those who register trade marks--from the industry generally and from the staff of the office at virtually every level : do not change the status of the Patent Office ; we must remember that the Patent Office at Newport is a world brand leader ; beware of cheap imitations. 5.40 pm
Mr. Iain Mills (Meriden) : I am glad that there seems to be cross- party support for the Bill. It is a most significant and important measure. I am sorry that the hon. Member for Edinburgh, South (Mr. Griffiths) felt that we had been laggard in introducing it. I have some sympathy with that view--I should have liked to see it earlier--but having introduced it in the teeth of a fairly hectic parliamentary programme in the second year of the Government's office ain't half bad. The ensuing advantages to industry have been made clear in answers to my questions and in debate. All those who have spoken so far have referred to those important advantages. A sad feature in one sense--if I am fortunate enough to be called to serve as a member of the Committee that will consider the Bill, I am sure that we shall go more fully into these matters--is that the office that will administer the Community trade mark, which is one of the main planks of the Bill, will be located at Alicante. I know that some hon. Members will say that it is an area of low employment. I am sure it is, but the United Kingdom has the necessary infrastructure. I chaired a committee that considered measures designed to promote the interests of London. Against that background, the only serious location for intellectual
Column 674property of the sort that we are discussing is London. I should have said that any interests I have in intellectual property are clearly defined and registered in the Register of Members' Interests, which has recently been republished. Anyone who wants to read about any of my involvements will find the relevant information in the Register, including my chairmanship of the committee that considered the Community trade mark.
The Community trade mark office will be extremely important because it will to some extent, if it is not effective, become marginalised. Like the hon. Member for Newport, West (Mr. Flynn), I have the greatest admiration for both the London and Welsh operations of the Patent Office, but we must remember that we are seeking the Community trade mark to lower costs for industry, especially for small and medium enterprises that are trying to build up their brands. It will be a disaster if we do not have a good and effective trade mark office to administer what we shall be enacting.
I have written to the comptroller general of the Patent Office to suggest a meeting between myself and members of the committee I represent--they are eminent people who are involved in intellectual property--to discuss, if not a sub-office in London, a facility rather like that which we have at Newport, where there could be videos, faxes and other electronic communications with Spain. I have written to Mr. Jacques Delors, who is well known to us all. His reassurances on the facilities that will be provided at Alicante leave me with some doubts. Air services and the ability for people to register trade marks give rise to doubts in my mind. We must proceed with the Bill, however, and I look forward with enthusiasm to the Committee stage, if I am involved.
There are aspects of the Patent Office's work that I should be happy to see privatised. I recognise, however, that the judicial and quasi-judicial features of Patent Office judgments would be difficult to put into private hands. Perhaps the privatisation of some aspects of registration and marketing could be considered. The Patent Office exercises a judicial function in making judgments when companies are in dispute over trade marks, and I would be concerned about privatisation in that context.
I welcome the Bill, because it will update the Trade Marks Act 1938, which is something that those of us who are involved in trade marks and intellectual property have been seeking for years. The Bill represents the best news that we have had for a very long time. As my hon. Friend the Minister said, the Bill implements the protocol to the Madrid conference, which the United Kingdom negotiated. It is rather miserable if the hon. Member for Edinburgh, South, who speaks from the Opposition Front Bench, is downscaling the benefits to Britain that will flow from the Bill. I hope that he will not be too negative when the Bill is examined in Committee.
I strongly support the Bill, but I have some questions for the Minister, which I shall put briefly. I have met him and warned him about most of my questions. The rights of representation for trade mark agents and trade mark courts are important. They reflect the Government's philosophy in introducing the Bill and trying to lower the costs of registering trade marks and patents for those in industry and business.
I am informed that trade mark agents do not have the same rights as patent agents in terms of a trade mark court, which would be a court of first instance. There is a means of lowering quite considerably the cost of registering trade
Column 675marks. I am informed that, in France and the Benelux territories, such as Holland, the cost of registering is between £3,000 and £5,000, whereas in the United Kingdom, because of the way in which our system works, it could be between £20,000 and £50,000. Everything that hon. Members have said about the value of trade marks to our companies, large and small, makes it that much more expensive to obtain registration and protection.
Many of those who are seeking registration are put off by the high cost of doing so. If there are international boundaries and difficulties in deciding where a case will be brought, the likelihood is that the companies concerned will seek to register their trade marks in France or in the Benelux countries.
The Community trade mark will help, but it is necessary that we have rights similar to those in other countries in Europe. That means that trade mark agents will be able to plead, just as patent agents do. I understand that most parties to the institutions that are concerned are happy--except, I guess, solicitors, who have right of audience and may not wish to see that right extended to trade mark lawyers.
Let us move to simplified court procedures, agreed facts, a statement of case, discovery only with the leave of the judge, and cross-examination on matters that we could discuss in Committee. I have been in correspondence with my hon. Friend the Minister and with the Lord Chancellor. My hon. Friend the Parliamentary Secretary, Lord Chancellor's Department, in his letter of 8 February, stated : "The proposal to introduce a county court jurisdiction for trademark cases is not one to which the Department would be opposed in principle, but it is something which we would wish to consider carefully before committing ourselves to it."
My hon. Friend goes on to explain that it is not primarily a matter for the Bill, and I am happy to accept that. It is relevant, however, to the climate that the Bill will introduce, of lower costs for those who are wishing to involve themselves in the registration and protection of intellectual property.
The term trade mark attorney was discussed during the consideration of the Copyright, Designs and Patents Bill, as it then was, in Committee. It was discussed also in the other place on several occasions. I would hope to raise the matter if I am called upon to serve as a member of the Committee that will consider the Bill. I understand--perhaps my hon. Friend the Minister will write to me if he feels that it is not appropriate to respond today--that at present a trade mark agent could call himself a trade mark attorney. There is no inhibition, but there may be some who are involved in intellectual property, such as solicitors, who feel that the same level of qualifications as solicitors should be required. As a result of the Government's efforts and the responsibilities of the institute that represents trade mark agents, which it has accepted gladly, qualifications for agents have been introduced over the past few years that leave them extremely well qualified.
The structure of qualification is such that, should I wish to find another job and to qualify as a trade mark agent--I am already somewhat qualified in marketing--I would seek the leave of the House to spend time late at night not voting after debates, but studying carefully, as a solicitor would, to qualify to practise as a trade mark agent.
Column 676I want to raise a few brief matters with the Minister. The remedy for groundless threats is perhaps best left to Standing Committee. However, clause 19 provides a right of action against those who threaten retailers and other non-primary infringers--both manufacturers and importers--with infringement proceedings unless the trade mark proprietor can show that the acts complained of are an infringement. I hope that I will be able to raise the problem of groundless threats with my hon. Friend in Committee, as they are likely to disadvantage trade mark proprietors.
I was involved with the work of the anti-counterfeiting group long before I became a Member of this place. When I worked in the motor industry, I looked after new products, branding and counterfeiting. The anti- counterfeiting group is, by and large, satisfied with the agreements made in the other place in respect of the counterfeiting measures.
However, I agree with the hon. Member for Edinburgh, South that there are questions about the effectiveness of the Crown Prosecution Service. Are we really happy about the problem of disclaimers, particularly with regard to the lower market car boot sales and the less responsible car boot sales, when we are keen to deregulate local authorities' powers in respect of trading standards officers ? My constituency is in the centre of England, crossed by the M6 and the M42. We have an awful lot of car boot sales in my constituency, and I am concerned about the laundering of counterfeit products through those sales.
The Minister referred to Kent county council v . Price. Are we satisfied with that judgment ? Like the hon. Member for Edinburgh, South, I am concerned about the apparent ease of return of counterfeit goods when no court action is taken against an infringement. I hope that my hon. Friend can reassure me that that matter can be controlled, or that an amendment may be tabled to deal with that. I should be grateful if my hon. Friend could reassure me on that point, either by letter or in Standing Committee. Without such a provision, if the owner of the goods is identifiable, the trade mark owner will still be put to the trouble and expense of taking civil action, or threatening it. It has been recognised that we do not want counterfeit goods. We estimate that counterfeit goods cost more than 100,000 jobs in this country as they are brought in to compete with our brands. I seek advice from the Minister on that point.
I want now to consider lookalikes, and I assure the House that I will be brief, as other hon. Members have referred to them already. I have been involved in intellectual property in the House, and before I became a Member, for nearly 30 years. The late entry into the Bill in respect of lookalikes is controversial. I have some support for both sides, in that it is clearly competitive, as my hon. Friend the Member for Medway (Dame P. Fenner) said, to have goods competing on the shelves.
As hon. Members have said, people who are selling products to big retailers may be producing the same goods, in the same packaging, as their own brands. Having examined the information and spoken to most of the key players over the past few days--I hope to meet representatives of the Consumers Association and the retailers when they come to the House tomorrow--I find it difficult to be convinced that the public are totally fooled by the fact that a bottle may be the same shape and colour, when the trade mark is clearly quite different.
Column 677Sainsbury markets Head and Shoulders, and also its own brand called Headway. In terms of legal action, that is not counterfeiting. It may be considered to be passing off, but I very much doubt it. I strongly suggest to the British Brand Owners and Producers Group, the Consumers Association, the retailers and anyone else involved--I spoke to most of the main parties on Friday and today--that they should get together and discuss the matter. If they believe that a legislative solution is required, they should offer a proposal to the Minister. I recall with almost burning interest the problems we had in the Standing Committee that considered the Copyright, Designs and Patents Bill. Group after group approached the Minister, or asked for my help to meet the Minister. The interests involved car part design versus car manufacture design. In that regard, who has the design rights--must match, must fit ? The two parties must manage to iron out their differences and produce an acceptable proposal.
There have been discussions among the various parties. I have received a fax of a letter from Paul Walsh of the British Brand Owners and Producers Group. He states that the group has presented its case to the Government and to the standing advisory committee : "We have also had separate but inconclusive meetings with the Consumers Association. We would therefore be happy to meet with the British Retail Consortium"
and the Consumers Association
"in a further attempt to find a mutually agreeable solution to the problem of copying brands."
Dame Peggy Fenner : I am not sure whether my hon. Friend is aware of this, but, during the growth of own labels, there have been only 25 cases of manufacturers talking to retailers and they have been able to resolve their differences. I am sure that my hon. Friend is right to say that such consultation has been informal, but it has worked.
Mr. Mills : I thank my hon. Friend for her helpful comments. Perhaps what she and I have said will help to persuade the two parties to get their heads together to produce a solution, instead of posing problems for the House and the Minister to resolve. There are clearly arguments on both sides. I do not wish to take sides, but I believe that the problem must be resolved. If we do not resolve it, a European solution may be imposed.
I want to leave some minor drafting points with the Minister. Clause 3 states that a sign shall not be registered as a trade mark if it is a
"shape which gives substantial value to the goods."
That phrase is taken from the directive. Similarly, a trade mark shall not be registered if the application is made in bad faith. If an applicant files in respect of a very broad range of goods going far beyond those on which he does intend to use the mark, is that bad faith ? No doubt the Standing Committee will have to examine what is in accordance with honest practices. As it is incurably vague, "honest practices" will be very difficult to define.
I want to end, as it would be most unfair of me not to leave sufficient time for this important Bill. The Minister rightly referred to the significance of trade marks and brands. Many companies are now assessing the value of their brands and including them on their balance sheets.
As chairman of the all-party motor industry group, I found it interesting when we talked to BMW. The people at BMW told me that they valued Rover's brands very highly. BMW purchased Rover not just because Rover was
Column 678most attractive in terms of work practices, cost-efficiency, unit labour costs and attitude : it purchased Rover because of its brands.
Increasingly, we must protect our companies from predatory purchasing--no longer because a company wants the factories or assets, but because that company wants the intellectual assets. I appreciate that the Minister has emphasised the importance of assessing brands. The Bill is important, and, if I am fortunate, I look forward to discussing it further.
Mr. Malcolm Bruce (Gordon) : As the debate proceeds, it is clear that we are finding controversy only around the edges, because there is wide agreement that the Bill is needed. Indeed, it has been needed for some considerable time, as it is more than 50 years since the last major piece of trade mark legislation in this country. The Bill appears to have hit the right balance in most areas. It seeks to simplify and lower the cost of trade mark legislation, and to achieve our obligations within the European Union, at a time when we are moving into the next round of talks on the general agreement on tariffs and trade.
I wonder whether the Minister can comment on the fact that it is unfortunate that two different systems of trade mark registration are being established almost simultaneously, as the Bill acknowledges--the Community trade mark and the international trade mark, which is promoted by the World Intellectual Property Organisation. I wonder whether there is a possibility of harmonisation, rather than divergence. If not, it is clear that we will be back here in a few years to see how we operate in that situation. We should be aiming for a worldwide system, rather than two different systems. The Bill addresses in some detail anomalies that have been outstanding for some time, such as introducing the idea of a sign that can be represented graphically. I know that at least the Coca-Cola people wish that that had happened a little earlier, because it would have saved them some money. There are others for whom the development is obviously welcome. The Bill has also got rid of one or two anomalies, such as the idea that drug manufacturers can register the colour coding of their pills. That seems to take the matter to an absurd degree, but SmithKline- French got away with it for a while.
The reference to lookalikes seems to have sparked off the liveliest debate. That may be because, in a technical and specialised area, it is the one area of populism with which even the tabloid newspapers can get to grips. Obviously, the issue is generating heat, even if light is not flooding in everywhere at present.
I can understand why people who have invested money in developing innovative products, marketing them, advertising them and securing acceptance for their brand names may want to protect their investment. However, marketing in the proper sense of the word is the best way to protect the investment. The quality of the product, the quality of the marketing and the consumer's acceptance of the product ensure that branded goods secure a premium position in the market. People know that branded goods are more expensive than own-label goods. As I said in an intervention on the hon. Member for Edinburgh, South (Mr. Griffiths), someone like Kellogg--which produces a basic commodity--has two simple practices. First, it makes it clear, and
Column 679advertises, that it makes the product for no one else ; if people want the product, they must buy it under the company's brand name. While the hon. Gentleman said that it was disgraceful--perhaps it was disgraceful in the context in which he referred to it--that Kellogg was somehow trying to protect the price level at which its product entered the market, nevertheless he acknowledged that it was the brand leader at that price. Clearly people believe that it is worth spending more money to buy Kellogg's Cornflakes than any other cornflakes.
In addition, do we need to amend this or any other legislation to protect the position of Kellogg in the market ? The Armageddon suggested by the hon. Member for Warwick and Leamington (Sir D. Smith)--the elimination of brand products--takes a lot of believing in reality. Indeed, I have a great deal of confidence that most of our manufacturers and marketers of fast- moving consumer goods know how to ensure that they stay ahead of the game.
At the risk of detaining the House any longer on this matter, I should say that the debate has a slightly historical connection for me. In a previous incarnation a long time ago, I worked as a buyer of proprietary products for Boots the Chemist. At that time, I discovered that Boots was wasting an awful lot of space marketing its own brand of toothpaste, and it was losing the company money. When Boots realised that, it decided to discontinue its own brand and market Colgate ; it subsequently produced a better product, and marketed it more successfully. That shows that own branding does not always come out on top, even in profitability.
The representation we received from Boots summarises the matter well. The company has some qualification to make a special plea that it is in the unusual position--the company describes it as "probably unique"--of being a major manufacturer of branded products such as Nurofen, Strepsils and so on ; a contract manufacturer of own-label products ; and one of the largest retailers of own brands which are accepted as national brands in their own right, such as Boots No. 7 cosmetics.
Boots summarised its position by saying :
"We do not believe that a wish on the part of manufacturers to protect market share is in itself a reason for legislation which can only operate against the public interest."
In referring to the amendment tabled in another place, Boots said :
"The remedy is to develop and launch an even better product that leaves the competitor standing . . . This amendment is protectionist, anti-competitive and clearly against the public interest." That sums up the situation well.
I have no objection to the argument that those who believe that there is a point of concern should talk about it, but I am not at all sure that the House should do anything about it ; indeed, I am glad that the Minister has said that he does not intend to do anything in terms of this Bill.
It is interesting that the Bill has addressed some issues that have caused controversy. For example, it recognises that we can have a concept of well- known makes ; clearly, that is a Community idea which has been imported here. It also provides a new protection that does not exist in United Kingdom law at present, which allows goods to take advantage of an established reputation. Whatever the merits of the argument, presumably it would have