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Hon. Members: No.

Question, That the Bill be now read a Second time, put and negatived.

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Copyright, etc. and Trade Marks (Offences and Enforcement) Bill

Order for Second Reading read.

1.36 pm

Dr. Vincent Cable (Twickenham): I beg to move, That the Bill be now read a Second time.

I am grateful—indeed, relieved—to have the opportunity to hold a Second Reading debate on my Bill. It is essentially the same Bill that was introduced in April by the hon. Member for Ellesmere Port and Neston (Mr. Miller). None the less, I appreciate that the House will want all the arguments properly heard, debated and scrutinised, and I shall approach our deliberations in that spirit.

I congratulate the hon. Gentleman on the way in which he introduced the original Bill. I appreciate that he has now taken Trappist vows of silence and will not be able to speak in the debate, but when he initiated the process he built a substantial cross-party consensus, which I have endeavoured to continue, as reflected in the eclectic nature of the sponsors.

I also congratulate the Alliance Against Counterfeiting and Piracy, which did much of the background work on the Bill. It represents a large number of entrepreneurs, large and small manufacturers, retailers and creative artists, whose livelihoods depend on the defeat of counterfeiting and piracy. I have an indirect interest in that my eldest son is an opera singer and I am looking forward to the days when he can rely on income from his recordings rather than on my parliamentary salary.

I acknowledge the role of another key organisation, the Federation against Copyright Theft—FACT—which is located in my constituency. It has the important function of working with the police and trading standards officers to plan the raids that are crucial to the enforcement of action against copyright theft.

I will set out what the Bill would do and why it is necessary, before dealing with a few of the technical points which would be more appropriately covered in Committee, if we reach that stage. The Bill is comparatively long and complex, but the principle behind it is simple. The complexity is due to the need to make a large number of insertions in existing legislation. The aim is to stop criminals from thinking that copyright crime is an easy option.

It is also important to understand what it does not do. The Bill would not create new criminal activities; essentially, acts that are not criminal will not be criminalised by the Bill. It aims to rationalise existing legislation and would achieve three objectives in particular.

First, the maximum penalty for involvement in copyright theft would be extended from two years to 10 to bring copyright legislation into line with trademark legislation. There is no logical reason for two sets of intellectual property law to impose different criminal sanctions, so the Bill would align and harmonise those.

Secondly, the powers of search would be strengthened, and the prosecuting authorities and the police would be able to use them to secure evidence for a criminal prosecution. Thirdly, the power of forfeiture would be strengthened, again to bring copyright legislation into line

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with trademark legislation. The Bill would harmonise different aspects of intellectual property law, but it would harmonise upwards and reinforce sanctions against criminal activity so as to acknowledge the subject's importance.

Why is the subject important? First, copyright theft operates on a large scale and the industry estimates that £9 billion a year is involved, although the explanatory note refers to £8 billion. The sums are large and that money would otherwise accrue to creative artists, entrepreneurs and workers in industries that produce goods legitimately.

The nature of the modern economy is such that, as we move further from traditional agriculture and metal bashing, more and more national wealth is created through knowledge-based industries and creativity. It is important that that is properly rewarded and that property rights are respected. That is the underlying basis for the concern about such large-scale theft.

A supporting reason why the subject is important is consumer protection. There is a popular myth that a cheap Harry Potter video at a car boot sale is an attractive purchase, but a lot of practical experience shows that consumers are exploited by counterfeits, which can be dangerous. There are many recorded examples of perfumes and skin creams being adulterated, of cheap toys disintegrating in the mouths of toddlers and of substandard audio and video recordings ripping off the consumer. The Bill would protect not only property rights, but consumers.

Richard Ottaway (Croydon, South): There is a Chanel factory in my constituency. We in south Croydon are only too aware of not only substandard goods, but complete fakes. The hon. Gentleman may come to trademarks, but does the Bill address imitation goods?

Dr. Cable: Yes, it relates entirely to that issue. Fakes are part of counterfeit. Indeed, Chanel perfumes are a commonly quoted example, and a haul from a particular raid included Chanel bottles filled with an unmentionable yellow liquid. Various people were duped into buying that fake product, so the hon. Gentleman's concerns are valid. They are covered by the Bill.

The Bill is important for another powerful supporting reason, which does not relate to theft from the entrepreneur or the creative artist. There is also theft from the taxpayer. It is estimated that the Treasury loses about £1.5 billion a year in tax that would otherwise have been paid. We all seek the nirvana in which we finance increased public services without increasing tax and such measures are an important step along that road.

The final major argument in respect of the need to strengthen the law is that much evidence suggests that organised crime, not just petty Del Boy operators, is moving in on a large scale. The National Criminal Intelligence Service has highlighted the involvement of drug barons in copyright theft and pirating, which are considered low-risk occupations because the penalties are relatively small. Such people undertake large-volume activity to recycle the proceeds of other criminal ventures. So, there is a law-and-order reason as well as commercial and consumer protection reasons why the Bill is necessary and desirable.

It is a general principle that we should take strong action against copyright theft, but the Bill is important for other reasons. First, the existing law is a mess. There is a

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patchwork of inconsistent pieces of legislation. We have the Copyright, Designs and Patents Act 1988 and the Trade Marks Act 1994, which specify different penalties for no obvious reason. It is important that legislation reconciles and harmonises.

Secondly, it is important that we have legislation that makes criminal sanctions effective deterrents. Various cases have gone through the courts in recent years, including Regina v. Watson, where the Crown prosecuted a major criminal. About £350,000 of taxpayers' money was invested in that prosecution. The offender attracted a penalty of two years imprisonment, which was subsequently reduced to one year. Those who monitor the industry record that the same pirates are back in court time and again. As I have said, it is a relatively low-risk occupation with short sentences.

Mr. Barry Gardiner (Brent, North): Will the hon. Gentleman tell the House how the maximum sanctions that he is proposing compare with those for other crimes? Recently, for example, a case was highlighted in the newspapers, where a sentence of only seven years was imposed for child abuse, which was disparaged. Will he comment on comparable maximum sentences?

Dr. Cable: My brief is somewhat narrow. I am trying to achieve some consistency between different types of theft, and especially different types of property theft. The hon. Gentleman may well be right that horrendous crimes are being committed elsewhere, the sentencing for which is entirely inadequate. I am sure that there are many opportunities for him to introduce a private Member's Bill or to take another legislative approach designed to address anomalies. I can attack only on a limited front, where there is a serious anomaly.

The Bill is important for transparency. It is possible for the authorities to proceed with prosecutions against those who commit copyright theft. That can be done by using the law in an indirect way. If two or more people are involved, the charge of conspiracy to defraud can be invoked. There are some who have argued that we do not need to change the law because it is possible to find some existing power under which sanctions can be imposed. That is an unsatisfactory way to proceed. The approach is cumbersome and costly, and often it does not work. There is an enormous inherent advantage in having a law that is clear, open and completely honest in what it is designed to achieve.

I have outlined some practical reasons for bringing the Bill forward now. Counterfeit theft takes place on a large scale and it seems that it is increasing. It is a serious threat that has been identified by the criminal intelligence authorities. The legislation that I am proposing will introduce clarity. It will make criminal sanctions effective and it will introduce greater transparency into the law.

There are a few technical points, which perhaps will be best pursued in Committee. However, I shall refer to them in passing because the Bill deals with a dense area of legislation. Hon. Members may be troubled by that, or will be curious.

The hon. Member for Brent, North (Mr. Gardiner) touched on sentencing. I stress that the sentence of 10 years imprisonment is the maximum. A sentence of such severity would rarely be invoked. The problem of someone being sentenced to 10 years imprisonment for

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the sort of crime that we are discussing and someone else receiving a lesser sentence for child abuse would probably not arise. It is important to have deterrent powers, and the 10-year sentence is consistent with that for other intellectual property theft.

I should say more about search warrants and search powers. There may be some sensitivity in the House about human rights in this connection. We must move carefully before additional search powers are granted. However, the Bill is quite tightly drawn. There is not the remotest prospect that the proposed legislation could be used, for example, to search a house because an individual is using a counterfeit product. That is certainly not the intention; the Bill clearly rules it out. A magistrate or a Scottish sheriff would have to demonstrate an intention to engage in substantial commercial counterfeiting operations, and that would be the basis for a search warrant. The legislation has been tested against human rights law. We should remember that people whose intellectual property is stolen have human rights, which must also be embodied in legislation.

There are complex provisions on forfeiture, which is largely a matter of legislative tidying. Different pieces of legislation relate to copyright, creative performative rights and the specific problem associated with decoding devices used to access satellite television; separate legislative provision is required for that. Separate clauses in the Bill relate to Scotland which, again, is a tidying-up operation. Intellectual property law is a reserved power, but Scotland has its own criminal system and the legislation must reflect that complexity.

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