Select Committee on Regulatory Reform Second Report


7 Compliance of the proposal with Standing Order No. 141(6) criteria applying to the proposal as a whole

Use of delegated legislation

226. We consider that all seven of the proposals appear to be appropriate for delegated legislation.

227. The provisions of the proposal have in effect been 'stripped out' of the Patents Bill. The Department states that the proposal is intended to incorporate the 'formal' requirements of the Patent Law Treaty into UK law, while the Bill will enact the substantive requirements.

228. The majority of the proposals are not controversial, and are quite appropriate for the regulatory reform order procedure. The existing proposal to amend section 22 of the Act is more contentious but, as mentioned in paragraph 215 above, the Department no longer intends to pursue this proposal in its present form.

Adequate consultation

229. The Department published a consultation document on the proposals on 25 February 2003, and made it available in paper format and on the Internet. The consultation period expired on 30 May 2003. The Department explains that the consultation document was sent to all persons and organisations on the list of consultees on patents issues which it maintains, including all member organisations of the former Standing Advisory Committee on Industrial Property (SACIP) and the judges of the Patents Court, and to all governmental and quasi-governmental organisations in order to request clearance of the proposals.[128] The Department believes that the consultation document was published in accordance with the Cabinet Office Code of Practice on Written Consultation. A list of the consultees is at annex A of the explanatory statement, and the results of the initial exercise have been summarised in the explanatory statement.[129]

230. The Department believes that there was "broad general support" for the proposals. It believes that a number of reservations which were expressed derived from a misunderstanding of the exact nature of the proposals (particularly with respect to third-party protection). It rejected a number of suggestions for closer harmonisation with the formalities requirements of the European Patents Convention and the Patent Cooperation Treaty (PCT) as outside the scope of the draft order.[130] But it has accepted recommendations which had the effect of standardising the level of care which had to be demonstrated when applying for resuscitation or reinstatement of an application or the restoration of a ceased patent.

231. The Department undertook a further consultation exercise on an amended proposal in early September 2003. Although the two responses received following this further consultation were made available to the Committee, the Department omitted to refer to the consultation in the explanatory statement. We consider that, for the benefit of the House, the Department should have included, in its explanatory statement, an account of the further consultation exercise on its amended proposals, the results of that exercise and the conclusions the Department drew from it.

232. We gather that the Department considered the lack of response to the further consultation to indicate that the consultees were happy with the revised proposals. As this was not made explicit in the explanatory statement, we considered that we should satisfy ourselves that this was indeed the case. As the responses to our requests for their views have shown, a number of respondents to the initial consultation were far from happy with the proposals, even as revised.[131]

233. The Department has regretted the fact that these representations were not made before it laid the proposal before Parliament. It is nevertheless the case that the representations, which were in many cases made to us and copied to the Department, are valid representations made within the statutory period for Parliamentary consultation. As such, the Department is obliged to take them into account in drawing up a draft order and explanatory statement for second-stage scrutiny.

Payment of fees

234. The proposal contains one provision which imposes a new fee regime for patent applications. The combined search and preliminary examination fee is to be replaced by a two-part fee system, comprising an application fee and a search fee. The filing fee (presently set at nil) is to be abolished.

235. The provision in the proposed Order requiring the payment of a new application fee falls within the ambit of Standing Order No. 141(6)(e) (i.e. a provision requiring a payment to be made to a government department in consideration of services to be rendered). We consider that it is appropriate for the order to make provision for a new fee to be charged for a patent application.

Elucidation

236. Article 8 inserts new section 20A, which provides for the reinstatement of applications. New section 20A(1) refers to an application for a patent being refused as a direct consequence of a failure to comply with a requirement of the 1977 Act or the Patents Rules. We were unclear as to why the word direct was included. The Department has indicated that the language used in new section 20A is imported from article 12 of the PLT, which provides some guidance as to what is meant.[132]

Fair balance

237. Overall, the Patent Office believes that this proposal, which removes a number of burdens but also re-enacts several burdens and imposes some new ones, strikes a fair balance between the public interest (the efficient running of the Patent Office in the interests of all applicants, third parties and the general public) and the interests of those affected by the burdens.

238. As we observe above, there is a doubt as to whether the provisions of proposal F meet the proportionality test. Therefore there must also be a doubt as to whether the provisions of the order, taken as a whole, meet the fair balance test. While we consider that the provisions of the proposal, with the exception of those relating to proposal F, meet the fair balance test, we cannot conclude that the provisions of the present proposal meet the test.

Costs and benefits

239. The Department has prepared a regulatory impact assessment, giving a cost-benefit analysis of the effect of the proposal. This is available at annex E of the explanatory statement.

240. The Department's overall conclusion is that the financial impact of the measures is likely to be neutral, and that their overall impact on business is likely to be beneficial to all sectors. The only financial impact which the proposals will have are in areas where fees will be charged for Patent Office services, such as the standard administrative fee for the correction of a mistake, which will be extended to cases where erroneously-withdrawn applications are reinstated.

241. The area where the changes are likely to be most beneficial is in the resuscitation or reinstatement of applications, where previously an error could be fatal to an application and lead to the loss of the resources invested in the development of the inventionand benefits. In addition, the Department argues that there are considerable benefits to UK-resident applicants in the harmonisation of formalities requirements, as they will be able to file the same application on all PLT-compliant jurisdictions. This will reduce preparation and administration costs.

242. Then Department also notes that the UK played an active part in negotiating the PLT, and is prominent in arguing for international harmonisation of patent law. It argues that for the Government to fail to make the necessary changes in domestic law which would enable it to ratify the PLT would be politically damaging.

Subordinate provisions

243. The Department proposed that the schedule to the order, which sets out the categories of technology which are deemed to be sensitive for the purposes of the secure filing of applications, should be amendable by means of a subordinate provisions order. Article 23 of the draft order designates the provisions in the schedule as subordinate provisions. The Department has now recognised that part 1 of the schedule is not appropriate for amendment by a subordinate provisions order, and has indicated its intention to amend article 23 so that the provisions of part 2 of the schedule are alone designated as subordinate provisions.

244. The Department proposes that subordinate provisions orders made in respect of the Schedule should be subject to the negative procedure. It considered that the negative procedure represented "the most efficient use of Parliamentary resources", given the technical nature of part 2 of the schedule.[133]

245. Standing Order No. 141(6)(n) requires us to report to the House our opinion on whether the provisions designated as subordinate provisions in a draft order should be so designated, and if so, to what parliamentary proceedings any subordinate provisions order should be subject. While we consider that it is appropriate to designate the provisions in part 2 of the Schedule as subordinate provisions, we are not yet persuaded by the Department's argument that any subordinate provisions order should be subject to the negative procedure.

246. We note that the provisions of the Patents Bill [Lords] provide for the repeal of the schedule to the order, and for the Secretary of State to prescribe the list of technologies contained in part 2 of the schedule by statutory instrument instead. We further note that the Department's proposal to remove its proposed amendments to section 22 of the 1977 Act will render the schedule redundant. We do not therefore intend to comment further on the subordinate provisions aspects of the proposal.


128   Explanatory statement, para 3.07 Back

129   Explanatory statement, paras 7.01-7.07 and annexes B and C Back

130   Explanatory statement, annex C, para C11 Back

131   See above, paras 193, 197 and 201 Back

132   Appendix B, annex 1, para 7 Back

133   Appendix B, annex 1, para 9 Back


 
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