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Paul Flynn (Newport, West) (Lab): It is a rare privilege for us parliamentarians to discuss a patents Bill. As they appear only every 25 years or so, an MP can experience a whole parliamentary career without having such an opportunity. While there will not be dancing in the streets of Newport, I believe that the whole city will be suffused with a pleasant glow at the news that the Bill has been given a Second Reading.

The Minister was magnanimous in his conclusions, but a little curmudgeonly in his opening remarks. He failed to see the romance of the whole business of patents, which stirs such passions in the inventor class. All human life is in the patents business. Fortunes are made, fortunes are lost, fortunes are missed out on. Humankind's genius and creativity are expressed at their most prolific and productive. The nations of the United Kingdom are especially adept at being innovative, but unfortunately we have not been so good at applying that.

A rather sad story, brought to my attention by Jeremy Philpott of the Patent Office, illustrates the near-tragedies of the patent business. It involved a man called Bill Frost of Tenby, who applied for a patent for a flying machine in 1894. He went to his death swearing blind that his design for an inflatable dirigible with wings had flown, but there was no record of it. If it were true, he would have beaten the Wright brothers, who flew in 1903. If we had had a Patent Office in Newport—put there by a benign, sensible and far-sighted Labour Government of the time—a Welshman might have been recorded in 1894 as the first person to make a powered
 
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flight. These dramas take place repeatedly on the journey down the M4 to Newport, with people having similar ideas simultaneously. There is often a rush to get the initial application in first.

We need a patent policy that is liberated and makes the most of our innovations. Patent protection is one of the cornerstones of our economy. The Bill is modest, but adds zest and a reviving stimulus to the situation described by the right hon. Member for North-East Hampshire (Mr. Arbuthnot), whose remarks on the various patents provided a snapshot of what is happening. Sadly, there has always been a large difference between the number of patents registered in the UK and in Japan and the United States. That says more about our lack of ability to use the applications of science in a practical form than about the ability of our inventors to produce the goods and genuine innovations.

I rejoice in the fact that the Patent Office is situated in Newport, West. It was located there in 1991 and it has a 1,000-strong work force. It deals with three areas: intellectual property; processing patents and trademarks; and design applications. Of the 1,000 employees, 208 are patent examiners, whose job is to process the 30,000 applications every year for inventions as diverse as a robot lawnmower to a ladder for helping trapped spiders out of the bath. The patent examiners are the intellectual aristocrats of the world of knowledge. In 1991, they all moved from south-east England to Newport, some very reluctantly. They are highly skilled and are the world experts in sometimes very narrow fields. They are people of great ability who are suitably rewarded for it.

It is encouraging that a number of local people have been recruited over the years and have developed the necessary skills. Some of my constituents are now patent examiners. The office has drawn its work force from a wide area and science graduates come from all over the UK, bringing their valuable expertise. That ensures that the Patent Office continues to be a habitat that blends rigorous scholarship with intellectual stimulation. It has been a huge success.

The world is very little understood, as hon. Members have pointed out, but it defines and chronicles all the ferment of activity and creativity in our country—all the original ideas, new notions, brainwaves and certain improvements and refinements to existing patents that are shaped into practical inventions and registered.

David Taylor (North-West Leicestershire) (Lab/Co-op): I was pleased to hear that one division of the Patent Office in Newport deals with intellectual property. Does my hon. Friend agree that if we do as the Bill suggests and comply with the revised European patent convention, there is a risk that software patents will become the rule in Europe, as they are in Japan and the United States? There are real risks to that, in that such matters are not the subject of intellectual creation; they are just different ways of doing things and obvious ways of using new technology. If we go down that path, we will chill innovation, damage our competitiveness and open programmers and the companies that employ them to legal challenge at every turn. To declare an interest, I speak as a former software developer.

Paul Flynn: My hon. Friend is right to draw attention to the harm that has been done by the tyranny of one or
 
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two large companies in monopolising ideas and certain practices to the detriment of the worldwide development of patents and other advances in that field. We certainly do not want to see any change that would put such an obstacle in the way of those developments. I am sure that my hon. Friend will understand what is being said on that.

In a typical year, the Patent Office receives 30,000 patent applications and it is fascinating to look back into the past and see that in 1897 the number of applications was exactly the same. At that time, however, the dominant subject of patent applications was improvements to bicycles. The office now deals with telecommunications, nanotechnology and biotechnology, fields in which we all find great excitement. Nanotechnology, in particular, is the sort of field that will excite the wonder of our grandchildren.

The Government deserve congratulations on providing constructive legislation designed to encourage and assist parties to settle disputes over patent rights. I feel sure that small and medium-sized enterprises, in particular, will find that part of the Bill helpful. The work of small and medium-sized enterprises has been referred to, and we all recognise that they are the core of the economy, which will keep the economy healthy and provide the seedcorn for bigger enterprises. The Bill makes useful provision in that regard, and it is right to recognise that it is the nature of the SMEs themselves that has been inhibiting, rather than the activity of the patent business. Among the useful provisions are ones that will sharpen industry's incentive to innovate through an effective, flexible and up-to-date regime for patenting.

I have seen the Patent Office develop, and one of its characteristics is that when it first moved to Newport, it used a filing system that looked archaic, even in '91. It was quite rightly reluctant to move straight into a high-tech, sophisticated system, which many other Government offices have done disastrously. Having a passport office in the town, we are reminded of the problems that were caused there. The Patent Office moved with great caution from its old filing system to one that depended entirely on software, with all its problems.

David Taylor: Can my hon. Friend reassure the House that, as far as he is aware, future modernisation and use of technology in the Newport Patent Office will not incorporate the damaging concept of the private finance initiative and will not use the disastrous firm Capita?

Paul Flynn: I would like to, and I am sure that my hon. Friend the Minister will give my hon. Friend the Member for North-West Leicestershire (David Taylor) that reassurance.

Another interesting point is that the Patent Office is one of the few Government agencies or offices that has actually done some insourcing, rather than outsourcing. I should like to see it do a great deal more because in a number of fields, work is being done very expensively by patent agents and trade mark agents, at great cost to British industry. That work could be taken in-house by the Patent Office, and done more efficiently and at less cost to the customers. However, it has not gone that way because of Treasury rules. If we were looking to turn the
 
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Patent Office into an institution that was not rigidly tied in to Treasury rules but had a freedom to innovate and compete in the private sector, there could be major insourcing, as it took in those jobs. Already, a small number of Newport jobs that were outsourced have been drawn back in again.

Mr. Sutcliffe: While my hon. Friend is rightly complimenting the Patent Office, he may note that it has Investors in People accreditation and has achieved the international charter mark standards that it sought. It is certainly one of the best patent offices in the world.

Paul Flynn: Indeed. I was complimenting it on its caution in not rushing headlong into new technology in 1991, despite the attractions. It took a measured pace, while other patent offices ran into serious difficulties after plunging into the bewildering world of high tech.

We all want to see continued innovation. In my constituency, as in many others, sunset industries that resisted change have not developed, and we have a task in competing with the emerging economies in the far east. Industries that are more likely to succeed in the global marketplace are those that depend on and invest heavily in that mysterious, intangible, elusive product called knowledge. I understand that the European patent system is not a European Union system, but it is none the less a crucial European framework that benefits the UK's innovative businesses.

By delivering full compliance with the European patent system, I hope that the Bill will allow the UK to continue to be a top league player in future developments of that system. That is essential if we are to secure the most beneficial outcome for UK businesses. That is the core of the prosperity that is growing in my constituency, which, like many others, has gone through the trauma of losing sunset industries, which have been replaced by the dawning industries of high tech that have moved in.

The Bill's enforcement provisions will be especially helpful in surmounting the problems, but equally welcome are the modernisation and updating of patents legislation to respond to customer needs. The service is in intimate daily contact with its various customers. We think of it as dealing with individual inventors, but these days it often deals with huge corporations, often registering patents by the dozen. I understand that the Bill will allow the Patent Office to adapt its services the more easily to meet its customers' requirements. It already runs highly efficient and responsible services with full regard to its stakeholders' needs, but I have every confidence that its operations will benefit further from the regulatory provisions. This is a most welcome deregulatory measure, and one would have expected a warmer welcome for it from the Opposition.

I fully agree with the Minister's sentiments about innovation generally. He is right to tell us of the undesirable effect if the knowledge arising from innovation and creativity is not properly protected. It is tremendously important to have patent protection, so that businesses have the incentive to make the necessary investment in finding new and improved products and processes for the benefit of all.

The Bill will permit the Patent Office to provide non-binding options on whether certain activities or products infringe a patent and/or whether certain
 
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information indicates the lack of validity of a patent. I certainly hope that such opinions can form the basis for negotiated settlements of disputes. That may take a change in the current culture, where litigation is seen as a quick fix for disputes—sadly, it is rarely that: in this complex area, apart from the translators, whom we heard about, the only people who benefit in the long term from long court actions are the lawyers. The Patent Office is dedicated to delivering high standards in all its services, but I have no doubt that it will use its vast experience to deliver first-class opinions on questions that can be so important to the inexpensive resolution of disputes. No one else is in the position to give such advice, and it seems rational to tap into that expertise in order to offer the customer a low-cost, specialist service of this type.

The Bill will also adjust the impact of provisions applying to unjustified threats of patent infringement. I listened to what the Minister said on this issue and I support his sentiment. It is crucial that the disincentive to settling disputes that the existing provision certainly creates be removed, and it is clear that we should support changes that encourage negotiation and lead to the early settlement of disputes. If we can do that while retaining the appropriate and necessary safeguards against the threat of litigation from retailers, the Bill will indeed provide a wormhole through which the interminable wasted space of litigation can be penetrated.

The Patent Office is an outstanding Executive agency that has done some excellent work, and I am delighted that the Bill will proceed through the House today without opposition—

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