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Mr. Sutcliffe: With the leave of the House, I would like to respond to what has been an excellent debate. As the hon. Member for Esher and Walton (Mr. Taylor) said, it has been a learned and informed debate on issues that do not automatically appear in the constituency casework or postbag of most hon. Members. Nevertheless, it has been an interesting debate and contributions from both sides were excellent.

The right hon. Member for North-East Hampshire (Mr. Arbuthnot) said that it was not the most political Bill ever to come before the House, and I agree with him. However, it is important, as hon. Members said, that the "pa-tent" or "pay-tent" system—we have decided that we can call it either—is important for all the reasons that have been given.

We need a robust patent system, which is essential if we are to maintain and encourage a long-standing tradition of innovation—crackpot or otherwise—in the United Kingdom. As the hon. Member for Esher and Walton pointed out, when we talk about innovation, we are not just talking about having a bright idea but about having an innovation culture in which bright ideas are successfully exploited. Successful innovators—whether James Watt with his steam engines in the 18th century or Owen Maclaren and his light-weight folding pushchairs 200 years later—have always been able to take their bright ideas on to widespread success. We have heard other examples in the debate.
 
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We all agree that, first, our patents system must be robust enough to protect properly the people and companies with the creativity and drive to make innovative technical advances. Those are the advances that—large or small—continually improve the quality of life for us all.

Secondly, the patents system must be accessible. All innovators must be able to protect and exploit their new products or processes—whether it is a multinational pharmaceutical giant, a new university spin-off company or a lone inventor who has hit upon a great new idea. Having a system that is, as far as possible, harmonised with international patent agreements will help our innovators protect their ideas abroad too. Thirdly, the patents system must be balanced enough to ensure that the public at large continue to benefit from new products and processes and can challenge patent rights when it is fair to do so.

I am pleased that this Government are introducing the important changes in the Bill. The major reforms made to the patents system by a previous Labour Government in 1977 have served the UK well over the past 27 years and we are now updating them. This will ensure that our legislation remains in tune with innovators' needs and with the international framework in which our patents system operates.

I want to say a few words about the development of this Bill. We carried out a thorough and wide-ranging consultation, starting in 2002. We heard from lone inventors, small and large businesses, patent professionals, lawyers and judges. That helped us to refine significantly the proposals for inclusion in the Bill. Throughout the process, we met representative groups from right across the spectrum of patent users and we continued to listen to their views. In another place, we heard arguments on measures in the Bill where it was felt that stakeholders' concerns had not fully been met and we amended the Bill accordingly. I hope that it is clear that the Bill, right from the outset, has been developed in a spirit of co-operation and constructive debate. I am grateful to the right hon. Member for North-East Hampshire for thanking the noble Lords in the other place for their contribution in sending the Bill to us. I also thank him for thanking the Bill team and others who contributed to the process.

We have to be effective in ensuring that the Bill develops. I look forward to participating in the Committee. Many concerns were raised and if I do not respond to them now, I shall write to hon. Members before the Committee starts. I hope that we will consider the issues in the spirit of co-operation demonstrated so far. If it appears that things need to be done differently, I will be prepared to consider doing that. I expect the hon. Member for Esher and Walton, who spent time as a Minister in the Department of Trade and Industry, to make a learned contribution. He was responsible for many innovations and I pay tribute to his work in the Department and to his well-balanced approach. He perhaps put the argument more cogently than I did—

Mr. Ian Taylor indicated dissent.

Mr. Sutcliffe: I thank the hon. Gentleman for that.

The right hon. Member for North-East Hampshire explained that the European patent convention was revised in 2000 and asked whether a Bill will be
 
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necessary every five years; I hope not. We decided that it was time to modernise the EPC some 27 years after negotiations were completed. The European Community is considering accession to the provisions in the EPC, in which case future changes could be achieved under the European Communities Act 1972.

Negotiations are taking place in Brussels among EU states on a European Community regulation to establish a Community patent. That will be a single patent valid throughout the entire territory of the EU, in much the same way as existing Community trade marks and design rights are. At the most recent Competitiveness Council meeting in March 2004, agreement on the regulation again proved elusive. The negotiation stalled on the language regime for the translation of Community patents and the legal status that such translations should have. Beyond that, agreement has still to be reached on what form a centralised Community jurisdiction for dealing with patent disputes will take. We will continue to do whatever we can to get the stalled negotiations restarted.

The proposed Community patent should not be confused with a European patent granted under the 1973 European patent convention, which in effect is a bundle of national patents using a single one-stop granting procedure, administered by the European Patent Organisation. The right hon. Member for North-East Hampshire mentioned the USA and Japan. That worried me, given the Euroscepticism on the Conservative Benches. The USA and Japan are single nations that use only one language—English or Japanese—but the EU is a collection of nation states. I am sure that he is not suggesting that we make all EU states use one language. That would not give due recognition to each state's sovereignty, which I understand is important to the Conservatives—at least to some of them.

The right hon. Gentleman also mentioned the cost of patenting. We will be pleased when negotiations on the Community patent succeed because that will reduce costs. We also support the London agreement, which will significantly reduce translation costs for all users of the European patent system. We look forward to its implementation, preparations for which are under way in the UK.

Hon. Members mentioned small and medium-sized enterprises. We fully understand the difficulties encountered by SMEs. Finding out how to help them has been difficult, but we are building on research. The hon. Member for Weston-super-Mare (Brian Cotter) mentioned the patent enforcement project. That is a sign of our commitment to explore what we might be able to do in addition to the Bill.

Brian Cotter: The Minister will expect me to say this, but I remain concerned that the report was put off from November to March and then to April. It has now been put off until the summer, and even then the process will carry on. It is a grave concern that the report did not come out before the Bill.

Mr. Sutcliffe: The point is well made, but the hon. Gentleman will want us to get it right when we publish the research. The viability of a patent defence union that could help SMEs in particular to enforce their patents is being considered. The result of that will be available soon.
 
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I was asked why we have decided not to provide for additional or punitive damages. I am aware that the difficult issue of flagrant infringement of a patent engenders strong feelings on both sides of the argument, but there is by no means unanimous support for a provision to allow such damages to be awarded in patent infringement disputes. Indeed, the Opposition in another place argued that the availability of such damages would do two things. First, every claim of infringement would include a claim for such damages, leading to more legal wrangling and raising litigation costs even further. Secondly, trying to show that the other party had behaved badly would make an amicable settlement even less likely. It is not the time to introduce additional or punitive damages into patent legislation. Moreover, other proposals in the Bill are designed to help patent holders, especially SMEs, in the enforcement of their patents.

The right hon. Member for North-East Hampshire asked about the employer-employee relationship and said that existing provisions are illogical. That is why the employee compensation provisions are being amended to cover outstanding benefit from patented inventions as well as from the patent itself. I am sure that we will return to that in more detail in Committee. I am pleased to note that most employers, for the reasons set out, are making payments. It is understandable that they would support their employees who contribute to the well-being and development of their businesses. The changes to employee compensation are intended to make the process simpler, not more complex. It will no longer be necessary to deal with the difficult and subtle distinction between benefits derived from the invention being patented and the benefits derived from the patent itself.

My hon. Friend the Member for North-West Leicestershire (David Taylor) intervened on my hon. Friend the Member for Newport, West (Paul Flynn) on software patents. It is worth saying that inventions that implement software have been patentable for decades, in both the UK and across Europe. The Bill makes no change in that respect. Software per se is not patentable and that will remain the case, although it is protected under copyright. I think that the hon. Member for Esher and Walton made the point that there are other benchmarks to consider, not just those relating to intellectual property. Novel software with an inventive stage that makes a technical contribution is already patentable and will remain so. The EU is considering a proposed directive on the patentability of computer-implemented inventions. One aim of the proposal is to clarify the status quo with respect to software patents, neither broadening nor narrowing the field of what may be patentable in relation to computer-implemented inventions.

My hon. Friend the Member for Newport, West made an emotional and well-thought-out contribution on behalf of the Patent Office, which is situated in his constituency. He made all the right points about the quality and skills in the office. It was the first to achieve the International Organisation for Standardisation 9001:2000 certification status. In combination with the way in which it operates, it is clear that the Patent Office develops its staff.

My hon. Friend was right to raise our aspirations. The right hon. Member for North-East Hampshire said that the Bill is workmanlike and devoid of emotion. My
 
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hon. Friend, in his inimitable way, talked about the power of dreams. No doubt his wonderful Welsh phrases delighted the Hansard Reporters. It is worth pointing out that we have 1 per cent. of the world's population and fund 4.5 per cent. of the world's science, produce 8 per cent. of the scientific papers and receive 9 per cent. of the citations. That is an excellent track record that shows how the UK innovates and has led in so many ways.

The Patent Office was careful when it changed its IT provisions and made its decisions on outsourcing. As an Executive agency and a trading fund, it has the ability to decide such changes for itself. The awards mentioned suggest that it is flexible in the way in which it operates.

Hon. Members raised many issues. The time that is left does not give me the opportunity to cover them all—


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