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Delegated Legislation Committee Debates

Draft Contracting Out (Functions in Relation to Applications for Patents) Order 2002

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Sixth Standing Committee

on Delegated Legislation

Tuesday 26 November 2002

[Mr. David Amess in the Chair]

Draft Contracting Out

(Functions in Relation to Applications for Patents) Order 2002

4.30 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): I beg to move,

    That the Committee has considered the draft Contracting Out (Functions in Relation to Applications for Patents) Order 2002.

The draft order will make it possible for the United Kingdom Patent Office to contract out some of its search and examination work. Contracting out serves two purposes. First, it will advance the process of international co-operation, in which the Patent Office plays a leading role. Secondly, it will help the Patent Office to improve turnaround times.

Let me talk about the key elements and about the role that the Patent Office plays in the international scene. Applicants seeking protection throughout the world—which is increasingly common—are able to make a single application to the World Intellectual Property Organization in Geneva that eventually evolves into national patents in some 179 countries. Alternatively, the European patent convention allows a single application to be made to the European Patent Office, which results in European patents that are effective in up to 30 European countries. Such co-operation is advanced by a continuous process of harmonisation of patent laws in different countries. Increased harmonisation makes it easier, cheaper and quicker to obtain patent protection throughout the world.

The UK Patent Office is widely recognised as a strong performer. It has improved its efficiency on a number of measures since it became an agency 15 years ago, and it delivers a high level of service to its customers. It has recently been awarded the charter mark for the fourth consecutive year. Some years ago, the Patent Office introduced a fast-track search and examination procedure, which is currently used by 20 per cent. of applicants. It issues search reports quicker than most of its counterparts in Europe and the world. Of course, that puts a strain on resources. The Patent Office recognises that it must do better to meet the needs of its customers, and in particular to reduce turnaround times.

In recent months, the patents directorate of the UK Patent Office has introduced a series of measures to make further improvements in its efficiency, turnaround times and customer service. Those measures include improved recruitment, retention and training of patent examiners. The office is also working with patent agents to streamline the way in which applications are drafted and examined.

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Reducing the number of applications that are waiting for processing is a medium-term objective for the patents directorate. Various measures are being used to achieve that objective. The Patent Office intends to provide a more rapid response than it currently achieves; in the longer term, it intends to provide a response with substantially no delay at all. In that way, the office will not only be better geared to the needs of its customers, but it will be better prepared to contribute to wider innovation issues in future.

The draft order has been introduced under the Deregulation and Contracting Out Act 1994. Although very brief, it means that the Comptroller-General of Patents, Designs and Trade Marks will be able to authorise people outside the UK Patent Office to carry out the search and examination functions normally carried out by UK patent examiners. The Patent Office is currently discussing contracting out a small number of searches to the Danish Patent and Trade Mark Office and a small number of searches and examinations to the Netherlands Intellectual Property Office. Such contracts will constitute a further measure, in addition to those that I have already mentioned, to help deal with the pending work. At the same time, the contracts will initiate some practical co-operative working arrangements between the offices of the UK, Denmark and the Netherlands, which will be a step towards work sharing.

The contracts under consideration would initially run for two years. They would be renewable in one-year tranches if both parties agreed. Any contract must cease 10 years after the contracting out starts, as the 1994 Act provides. The total number of search and examination actions under consideration is less than 5 per cent. of the UK input, but the contracts provide flexibility to increase that number, and the option is open to do so, if convenient. However, it is not intended that the number be increased to any great extent. The cost to the Patent Office will be the same as the in-house cost and the applicant will pay the same fee. On timing, most of the preparations have been made and the contracts could begin soon after the passing of the order, which is, of course, subject to the will of the Committee and the House.

The work will be done to the same standard as in the UK office. During the past year, Danish and Netherlands examiners have worked alongside UK examiners to train in UK practice and procedures, and their work has been assessed in comparison exercises. In any contract, their cases will be included in the Patent Office's existing quality assurance system and the outcome will be fed back in regular management meetings. The Danish and Netherlands offices will be subject to the same confidentiality obligations as the UK office, and any patent application with a bearing on national security will not be included in the scheme.

The Patent Office consulted on the proposals earlier this year. The consultation paper was placed on its website and sent to 46 organisations and 77 individuals. Very few responses were received—five, to be exact. In the course of bringing forward the proposals, the views expressed were carefully considered by the Patent Office, and it made some

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refinements to its preparations as a result. The responses are posted on the Patent Office website, together with a discussion of them and the decision to go ahead.

Among the responses there was broad support for contracting out the search function. Respondents recognised the advantages of improved responsiveness and of preparing for the future, but stressed the need to safeguard aspects such as quality, cost, security and timeliness. Those matters are of great concern to the office, and I have already mentioned the measures that will be introduced to safeguard them.

Respondents raised other matters in relation to patent examination. Under the arrangements being discussed, examination will be carried out in the Netherlands office. Issues raised included Netherlands examiners' competence to operate in accordance with UK law and procedures, and the need for close interaction between the applicant and the examiner during examination. I understand the concern, but those factors should not affect the outcome for the applicant. Contracting examiners have a very good command of general and technical English, already work under patent law that is aligned across Europe, and have trained in UK procedures. The office will run a buddy system whereby applicants can discuss their case with a buddy UK examiner. The work that the office has done with those in the Netherlands to satisfy itself about their English language and examination capabilities is positive so far, but continues none the less. A satisfactory outcome will be required if the contract is to proceed.

The draft order is a practical move for the Patent Office. It will introduce a useful element of flexibility into its resource planning over the next few years and will involve close working with colleagues in other offices. It will help the office to improve customer service in the short term by providing a faster turnaround, and potentially in the long term by developing international co-operation. I am pleased to commend the draft order to the Committee.

4.37 pm

Mr. Andrew Robathan (Blaby): I have listened to the Minister, and it seems to me that the underlying reason for the draft order is that the Patent Office, faced with an increasing number of applications, is finding it difficult to recruit extra staff. We have some concerns about the order, even though it appears to be fairly innocuous and to have little content. I hope that the Minister can allay our concerns.

It is a pity that only five respondents took part in the consultation exercise. I have a question about the Government's conclusions on the responses to the consultation document. Paragraph 3 states that the proposals are

    ''intended primarily to provide extra resources for the completion of patent search and examination reports for a temporary period and also to promote cooperation between Patent Offices.''

Will the Minister provide clarification in respect of that temporary period? She said that 10 years is stipulated in the legislation. Is the duration of the

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measure intended, as the document says, to be a temporary period?

Paragraph 15 of the document says:

    ''We are also discussing the possibility of contracting a smaller amount of search and examination work to the Netherlands Industrial Property Office. The purpose of this is to enable Netherlands examiners to maintain their skills so that they are better able to act as technical advisors within the Netherlands court system.''

I am keen on co-operation across Europe and elsewhere, but it seems slightly strange for a British Government to be maintaining skills in an ally and friend's patent office. It transpires that the Danish and Dutch offices probably do not have enough work. I suspect that that is relevant. I do not perceive any conspiracy here, but they have the extra capacity to do work that our Patent Office is too overworked to carry out.

I should like to raise a couple of points about responses to consultation, which the Minister covered in general. The Chartered Institute of Patent Agents said that it did not want to see the reservoir of talent and experience in the UK wasted. That is unlikely given that there is lots of work. I am sorry—I think that it was the Trade Marks, Patents and Designs Federation that raised that point. I know that everyone in Committee has read these reports. The federation certainly said:

    ''The Dutch office gave up its search capacity long ago and recently gave up examination work.''

I understand from research that the Dutch office does not grant patents anymore; everything goes through the European Patent Office. Did the Dutch office give up its search capacity long ago? If so, that is at odds with what we are trying to do.

What are the plans to recruit more staff for the UK Patent Office? The Minister said that there will be no increase in fees, but can she say whether this year's fees will be consistent with last year's? Sometimes, when a change takes place, fees go up too.

I was encouraged by what the Minister said about maintaining high standards, but I would like to raise the issue of English. Although in my experience most Dutch and Danish speak excellent English, it is of vital importance that applicants are able to communicate, perhaps by telephone, with people taking part in the search and examination.

Allegedly, the issue of national security is covered under section 22 of the Patents Act 1977. It is a long section that gives the comptroller and the Secretary of State power to do various things with regard to the publication of patents, such as control them and keep them secret where they are

    ''prejudicial to defence of realm or safety of public''.

The order is drafted in wide terms, and two respondents to consultation noticed, as the Minister mentioned, that it makes no reference to national security. Is it not appropriate, especially at this time, to make explicit mention of the protection of national security in the order?


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Prepared 26 November 2002