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Mr. Ian Taylor:
I am fascinated by all of this, but I wonder whether it is the duty of the Patent Office to decide whether or not an applicant is mad. If the Patent
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Office takes the fee, it is making a profit, which could benefit the constituents of Newport, West. If someone is mad enough to apply to patent such inventions, surely it is not the job of the Patent Office to reject them.
Brian Cotter: The hon. Gentleman makes a useful point so far as constituents are concerned, but there should be a certain level of examination of patents. The right hon. Member for North-East Hampshire said from a sedentary position that the idea of doors with the ability to detect colours was valuable, so I wonder whether, when the Conservative party opens its new offices in Victoria street, the door could detect whether the people coming through it were light blue, dark blue or not blue at all. The door might be slammed in certain people's faces, but I shall not go any further on that matter.
Paul Flynn: Fascinated as we are by the hon. Gentleman's examplesI welcome themI believe that the Patent Office can take decisions only on whether the patent applied for is original and not covered by other existing patents. It cannot make a judgment on practicality.
Brian Cotter: As the hon. Gentleman says, examples are important and I could provide more, but I still believe that it is a bizarre way for an organisation to operate. All sorts of suggestions could clog up the system. I could think of two or three as I stand in my place, but I would not want to try your patience, Mr. Deputy Speaker, by rehearsing them now.
Before we go any further, it does not seem unfair to conclude that the current patents system can sometimes reach the point of being somewhat ridiculousfar from the image of an official department, spearheading the development of the latest cutting-edge technology.
The failings of the current patents system are no laughing matter when we turn to the last group of users identified by Professor Kingston. The last group is made up of individuals and small businesses that have been granted a patent for good and workable inventions. However, they are often prevented from enforcing their patents because they lack the resources to challenge larger companies that determinedly seek to infringe them. Just obtaining a patent in the first place can be costly enough for a small business, as the right hon. Member for North-East Hampshire mentioned. Official estimates suggest that it can cost as much as €50,000 to obtain a patent in the EU.
A small firm would first have to pay the Patent Office hundreds of pounds to endorse the invention. As already mentioned, one of the big issues is the length of time that it takes to establish a patent, which can be all of three years. If a small firm is successful in gaining a patent, it will probably have to pay a patent lawyer thousands to draft a patent for it professionally and to translate it into all of the relevant European languages. Then, after all that money has been spent protecting a small firm's product, a larger company often comes along to exploit the idea illegitimately. These are not flights of fancy; I am referring to the work carried out by Professor Kingston.
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The small firm then has the option of issuing a licence to the larger company or politely requesting that licence fees are paid, following the infringement of its idea. At best, the large firm will usually ignore such a request. At worst, it will issue a lawsuit, questioning the validity of the patent, as, the inventor of the "anyway-up" children's drinking cup was dismayed to learn. If the small business loses such a case, it may be liable to pay the other side's costs. Unsurprisingly, most small businesses abandon their attempts to defend their patents in court.
"will grant you a patent at enormous expense, if you are clever enough to be able to beat the whole of the rest of the world technically. But if someone steals your patent, then the PO will do . . . absolutely nothing. If someone steals your car, then you call the police"
"if someone steals your invention, then you have to go to the court to recover it. If you do, then the Inland Revenue will tax the patent holder his winnings and give tax relief to the thief. Patents do not do 'what it says on the box' and are essentially fraudulently sold to UK industry."
The Minister said earlierit is on the record, I am surethat patents were designed to give a 20-year monopoly to firms. I have to inform him that that is not the case. There have been previous attempts to reduce costly litigation and streamline the legal process to make it more accessible to small businesses, but many small firms claim that so far those have had little effect.
The patent county court was established in 1988 to provide a cheaper and more friendly legal recourse for small businesses to defend their patents. Yet in November 2003, the patent county court judge, Justice Laddie, complained that the case on which he was working, which dealt with a relatively simple issue, had been
"allowed to grow into a four day trial costing over £850,000".
"That cannot be an appropriate way of conducting litigation".
I know that my noble Friend Lord Razzall was given an assurance that the work of the patent county court would be kept under review, but I would again press the Government to ensure that they return to look again at the problem of enforcement, if the changes outlined in the Bill do not have the desired effect of helping to reduce legal costs for small and medium-sized enterprises. That is what I would maintain. It is imperative because, although the Government have recognised that costly litigation makes it impossible for small businesses to enforce their patent rights, some people believe that the system in the Bill will be of little more use to small firms than previous initiatives.
The Government claim that they will make it easier for firms to enforce their patent rights under clause 13, which provides a new procedure under which the Patent Office would issue, on request, an opinion on certain matters that might be relevant to a patent dispute. The system would allow a patent holder to bring arguments before the Patent Office rather than the courts, the idea being that it could obviate the need for costly litigation
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in settling an infringement dispute between companies. However, it could be that in offering a non-binding opinion, the Government are offering a solution with no teeth.
Even if the small business owner chose to take advantage of the process and the Patent Office found in its favour, all that the business would have is a piece of paper suggesting that its larger rival ought to pay licence fees. A big company could be just as likely to refuse to pay up and go to court anyway, particularly given that the courts are under no obligation to take the view of an arbitrator on board. According to Noel Akers, partner at the intellectual property law firm, Howrey, Simon Arnold and White,
"the non-binding opinion is not going to stop a large company that says, 'we've got deeper pockets, we can take the other side as far as we need to break them'."
In addition, concern has been raised that the Patent Office will have neither the time nor the expertise to make judgment on cases of alleged infringement, particularly as it seems that it is so often busy endorsing madcap inventions such as the cat flap idea. Explaining its rationale for contracting out a number of patent examinations to Denmark back in March 2002, the Patent Office admitted that the decision was
"part of wider efforts to deal with the rising input of patent work, which has so far not been matched by our ability to recruit and retain examining staff."
How can a patent holder be confident that the Patent Office will have the resources to come to measured judgments in cases of infringement? As the patent reform group pointed out, in order to reach a reasoned judgment as to whether a patent has been infringed, the Patent Office will need the co-operation of the infringer. How likely is it that a defendant will readily hand over the product or technology for examination? What additional powers will the Patent Office have to ensure that an alleged infringer provides all the relevant material to the case? Why have the Government rejected the idea of binding and technical arbitrationthat has teeth and is based on technical assessmentto settle infringement disputes and make it easier for small businesses to protect their patents? What evidence do the Government have for their proposal that the use of a non-binding opinion would provide a practical alternative to costly litigation for SMEs, when the procedure is already available from the World Intellectual Property OfficeWIPObut is rarely taken up because of its non-binding nature?
Ministers say that they want to help SMEs enforce their patent rights, but some small businesses claim that they have not been given the tools to do so. This week, the Patent Office will spend £250,000 launching the "Intellectual Property BOOM!"an initiative to raise businesses' awareness of intellectual property rights. However, if the procedures in place are not sufficiently robust and relevant, the expenditure of that money is probably not justified.
I would also like more explanation from the Minister of why the Bill has been brought forward before the patent enforcement project has been completed. The
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project was due to report at the end of November, but that was moved to the end of March, then delayed until the end of April and now it will not report until the summer. The project was part of assessing the need for a Patents Bill. Even when it reports in the summer, a long consultation process will be necessary, possibly lasting a further three years. I suggest that the Minister should be concerned about that prospect.
"conduct a feasibility study of a proposed new institutional arrangement which would help SMEs protect their intellectual property."
The initiative is looking at the possibility of establishing a fighting fund to help SMEs finance legal action when their patents have been infringed. Why has the Bill been brought forward before the conclusions of that study are published in the summer, because it will be an important contribution to the efforts to help small firms?
I am aware of the announcement made by Lord Sainsbury in the other place in response to concerns raised by my noble Friend Lord Razzall about the system that the Government have chosen to help small firms enforce their patent rights. Nevertheless, it would be helpful for the Minister to repeat those arguments today, as some firmssuch as those involved in the patent reform groupdo not have confidence in the proposed system. A further comment by the Minister would help us to see why the Government have chosen to adopt that system.
It was said at the beginning of the debate that the Bill was nothing to be concerned about, but it does raise issues of great concern. For example, clause 1 would insert a new section 4A into the Patents Act 1977 to bring us into line with the European patent convention. According to the Government on Second Reading in the other place, clause 1 would make it clear that any method of medical treatment, such as a new surgical technique, cannot be patented, and that is welcome. It also provides a less complicated method of obtaining protection when a new use is found for a medically active substance that has a known use or uses. Those provisions mean that scientific discoveries that are for the public good or part of human knowledge cannot be tied up by patents to make them unavailable, in the same way that inventions can. That is also to be welcomed.
However, the patenting of substances or compositions using methods of treatment or diagnosis of human or animal bodies is allowed. That is an area for concern. Do current provisions provide sufficient protection against the potential monopolising of certain benefits that might stem from the human genome project? A report published by the Nuffield Council on Bioethics in July 2002 concluded that research into AIDS, cancer and malaria is being held up because patents on human genes are granted too readily to pharmaceutical companies. Although patents covering DNA sequences are often justified to reward innovative science, some experts feel that too many restrict research.
It is, therefore, possible that the patents system is not fulfilling its key system of encouraging developments that benefit the public. The Nuffield report expressed fears that companies were being granted exclusive rights
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over the use of genes in diagnosis, research and treatment, thus preventing other scientists from working on other aspects of the gene. Can the Minister clarify how the amended legislation will ensure that the tests are more rigorously applied to the granting of patents involving DNA sequences, so that knowledge and substances are not tied up by the granting of broad patents?
I hope that the Minister can also clarify the situation on the changes that will update section 22 of the 1977 Act. Section 22 concerns information in patent applications that might be prejudicial to the defence of the realm or the safety of the public. Schedule 2 to the Bill proposes to substitute the term "defence of the realm" with the phrase "national security". According to the Bill's explanatory notes, that update is designed so that
"the comptroller can make directions in any circumstance where there is a need to protect the national security interests of the United Kingdom."
Given that the phrase "national security" is much wider ranging than the term "defence of the realm", can the Minister clarify why the Government feel it necessary to make that change? How will the Government ensure that details of patents are not withheld without suitable justification?
In conclusion, the Liberal Democrats welcome the Bill as a vehicle for giving British inventors key intellectual property rights under revised international treaties, but we are concerned about some of the proposals to help small businesses enforce their patents rights. The Government must justify their actions further in Committeeand I look forward to thatand pledge to keep the issue under review, so that cost does not act as a barrier to the enforcement of rights by small firms.
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