The
Committee consisted of the following
Members:
Chairman:
Mr.
David
Wilshire
Burt,
Lorely
(Solihull)
(LD)
Cash,
Mr. William
(Stone)
(Con)
Ellwood,
Mr. Tobias
(Bournemouth, East)
(Con)
Gray,
Mr. James
(North Wiltshire)
(Con)
Havard,
Mr. Dai
(Merthyr Tydfil and Rhymney)
(Lab)
Hepburn,
Mr. Stephen
(Jarrow)
(Lab)
Kramer,
Susan
(Richmond Park)
(LD)
McCabe,
Steve
(Birmingham, Hall Green)
(Lab)
McCafferty,
Chris
(Calder Valley)
(Lab)
McKechin,
Ann
(Glasgow, North)
(Lab)
Palmer,
Dr. Nick
(Broxtowe)
(Lab)
Prisk,
Mr. Mark
(Hertford and Stortford)
(Con)
Shepherd,
Mr. Richard
(Aldridge-Brownhills)
(Con)
Vaz,
Keith
(Leicester, East)
(Lab)
Wicks,
Malcolm
(Minister for Science and
Innovation)
Williams,
Mrs. Betty
(Conwy)
(Lab)
Wood,
Mike
(Batley and Spen)
(Lab)
Emily
Commander, Committee
Clerk
attended the Committee
Second
Delegated Legislation
Committee
Tuesday 19
June
2007
[Mr.
David Wilshire
in the
Chair]
Draft Trade Marks (Relative Grounds) Order 2007
4.30
pm
The
Minister for Science and Innovation (Malcolm Wicks):
I beg
to move,
That the
Committee has considered the draft Trade Marks (Relative Grounds) Order
2007.
Mr.
Wilshire, it is a pleasure to be here to discuss this important topic.
The order is simple. It will ensure that our system of national
registration and trade marks provides those with business in the UK
with a useful and affordable alternative to the registration of their
marks as EU Community trade marks; and it will remove the unnecessary
impediments encountered by some businesses that want trade marks for
new products.
The law
has long required the registrar of trade marks to block new trade marks
from registration if he thinks that they conflict with earlier trade
marks. That is done automatically, regardless of whether the owner of
the earlier mark is concerned by the prospective registration of the
later mark. Although the Trade Marks Act 1994 continued that regime, it
also made provision for changes to be made after the Community Trade
Mark Office had opened and operated for 10 years. That office
was established in 1996. Since then, it has been possible to protect a
trade markin the UK by registering it here, or to protect it
throughout the European Community by registering it at Community
level.
The
substantive provisions of national trade mark law have been largely
harmonised following European directive 89/104. European law requires
that Community marks be afforded the same rights and remedies as
national marks. A new national trade mark can therefore be refused if
it conflicts with an earlier mark, irrespective of whether the earlier
mark is protected at Community or national level. Those are known as
relative grounds for refusal. Although substantive trade mark law has
been harmonised, member states have discretion regarding the procedures
for achieving the rights and remedies. There are therefore differences
between the registration procedures operated by different member states
and those that apply at Community level.
Unlike the
United Kingdom, the Community Trade Mark Office cannot block the
registration of new trade marks on relative grounds. New Community
trade marks are refused on such grounds only if they are opposed by
someone with an economic interest in an earlier conflicting mark or
right. The owner of an earlier mark is likely to oppose a new mark only
if he thinks that it will cause damage to his existing mark in the
marketplace. Consequently, despite the scope for conflicts with earlier
marks being potentially greater for Community marks,
a new UK trade mark is three times more likely to be refused
registration on relative grounds than a new Community-wide trade mark.
That has had several consequences.
First, as the number of marks
protected at Community level has risen, it has become harder to
register new trade marks in the UK. Secondly, inequitable anomalies
have arisen because Community marks are not positively examined on
relative grounds before their registration. For example, the registrar
is rejecting national applications on the basis of a perceived conflict
with two or more earlier Community marks, even though those marks
appear to conflict with each other as much as they do with the new
national trade mark.
That is an unsatisfactory
situation. It is compounded by the fact that, under European law, the
owner of trade mark registered for five years or more may object to the
registration of a later trade mark only to the extent that he can show
that his mark has been putto genuine use. Under UK law, that
condition doesnot and cannot apply to objections raised before
registration by the registrar himself. The registrar must therefore
sometimes block new trade marks because of earlier marks, in
circumstances where the owners would not be entitled to
object.
There are
sometimes ways in which such objections on relative grounds may be
overcome. For example, the applicant may try to obtain written consent
from an earlier marks owner, but that takes time and money. To
avoid such obstacles, an applicant can apply for their mark to be a
Community trade mark. However, that is more expensive, and the
applicant will also expose himself to the risk of litigation throughout
the Community. It is also not right that an applicant must base his
decision on the potential obstacles that he may face, rather than on
the nature of the right that he requires.
The better solution is to adopt
a system whereby it is left to the owners of any earlier marks or
rights to object to a new national trade mark. After all, the owner of
the mark is best placed to judge whether a new trade mark is likely to
affect their intellectual property. Furthermore, they are best placed
to show that it meets any use conditions imposed by the law. There is a
potential argument that it is the owner of the mark who has most
responsibility for acting to protect his own property. The order will
introduce such a
system.
We should note
that the order provides that the registrar may continue to conduct a
search of the relevant registers for the purposes of notifying persons
about the existence of relevant earlier trade marks. The search results
will be sent to applicants for new trade marks so that they can assess
the risks of successful opposition and decide whether to proceed. If
the application does proceed, the owners of earlier marks who appear to
have an interest will also be notified.
It is intended to introduce
those notification requirements into the related trade marks rules. If
the applicant opts to proceed with his application the registrar will
notify the owners of any earlier trade marks identified in the search.
That will be done automatically. It is also intended that owners of
earlier marks protected at Community level will be given the
opportunity to apply to receive such notifications.
Accordingly, there will be a practical opportunity for the owner of any
earlier mark or right to oppose the registration of any subsequent
conflicting UK national trade
mark.
Furthermore, if
there is no opposition and the trade mark is registered, provision will
remain for the registration subsequently to be declared invalid. That
creates a more balanced and proportionate registration system. It also
aligns the national system more closely with that operated for the
Community trade mark. This should bring greater clarity and remove the
confusion on the part of businesses, which often do not understand why
the UK operates the same substantive law through different procedures
from those that operate at Community level and in the majority of
member states.
The
order has been subject to extensive consultation with rights holders,
prospective rights holders, legal professionals and their
representative bodies. Around 70 per cent. of those consulted felt that
a move to some form of search and notify opposition regime was
necessary. My Department has worked proactively with interested parties
to ensure that the order is workable and equitable to all parties. I
therefore commend it to the
Committee.
4.37
pm
Mr.
Mark Prisk (Hertford and Stortford) (Con): I, too, welcome
you to the Chair, Mr. Wilshire. I am grateful to the
Minister for placing the view and policy of the Government on the
record. After all, this is an important area. The protection of
intellectual property, including trade marks, is vital to a
knowledge-based economy. That is the case for innovative firms, whether
they are small, medium or large, but particularly for smaller firms
whose commercial future may be based on their ability to protect,
maintain and exploit the research and development in which they have
invested over a number of years. It would therefore be helpful to set
the context of the order if the Minister could set out for us the
specific penalties here in the UK for patent
infringement.
The
order, as the Minister has said, switches theonus from the UK
Intellectual Property Office, a Government agency, on to the mark
holder. The fundamental question is: which is the most efficient system
for both the public and mark holders? Is it the current system or is it
the one that is proposed in the order? The Minister has made a number
of perfectly reasonable remarks and suggestions as to why there is
benefit in his proposals. The order will, after all, bring our rules
into line with those of other registries, and it is appropriate that
those who benefit from the protection of their invention bear the
burden of ensuring that what they have done has been
protected.
There are
a number of problems. They were highlighted in the Ministers
own regulatory impact assessment, which accompanies the order and which
I know members of the Committee will have read. The first concern is
that the change, despite the Ministers warm and generous
remarks about it, represents a significant new burden for mark holders.
They will be the ones on whom the onus lies to check and to ensure that
entries on the registers will not conflict with their existing
property.
My second concern that the
switch that has been described could effectively end the public policy
decision to keep confusing marks off the register. I would welcome the
Ministers comments on that. My third concern is that the net
effect for small businesses could be an unfair and disproportionate
burden, especially if they had to monitor not only this
countrys register, but every
nations.
I
have a couple of brief questions for the Minister. First, what
assurance can he provide us and those directly affected by the order
that the public policy decision of registry policy on trade marks is no
longer needed? That is an important issue, as not only an
administrative process but a public policy issue are
involved.
Secondly,
what further details can the Minister provide about the small firms
impact assessment that has been made, so that we can be absolutely sure
that the change will not be unduly burdensome? The Minister has alluded
to the fact that 70 per cent. of those consulted supported the
principles that underlie the order, but exactly how many people were
consulted is unclear. Just as important, what balance of those who were
consulted were smaller entrepreneurs, as opposed to major
multinationals?
I am
particularly concerned to know which sectors have been consulted by the
civil servants who have checked and spoken to the industry. Clearly,
different business sectors will have different perceptions. For
example, in the biotech industry, for example, there are a significant
number of complex intellectual property issues for which infringement
and conflicts may well have more subtle aspects than in markets where
products are being developed.
I should be grateful if the
Minister provided assurances on those two fronts and put firmly on the
record that the Government have consulted effectively and that they are
clear about the public policy decision that underlies the
order.
4.42
pm
Lorely
Burt (Solihull) (LD): The Minister has clearly outlined
how most of the order would work. The main driver seems to be Community
trade marks and international trade marks, both of which provide legal
protection in the UK. Under existing UK rules, those would block any
new applications made in the UK, even when there was no significant UK
presence. However, those trade marks are not themselves blocked by
earlier UK registrations, as they fall outside the UK rules. To create
a level playing field, everyone should abide by the same rules. In so
far as the order achieves that, it is welcome.
However, I want to see a number
of safeguards, and I would like the Minister to comment on them. Under
the new proposals, the earlier owner is supposed to be notified.
However, fail-safes would be needed to ensure that that happened. When
trade marks are issued in error, mechanisms must be in place to
recompense in full the original owner at no cost to them and to remove
the trade mark from the new owner immediately. Mechanisms are alluded
to, but not detailed; I should be grateful if the Minister elaborated a
little.
After the earlier trade mark
owner has been notified, what will the window of opportunity be for
opposing the application? What will be the likely costs associated with
any opposition by the original owner? Imagine10 people all
applying for trade marks with names similar to one that has already
been registered. The original owner would have to oppose 10
applications, whereas previously the registrar would just have blocked
them.
Applications
could be made frequently throughout the year, although I understand
that that would be unlikely in practice. However, it would be useful to
understand what time burdens would arise when opposing an application.
Whether what I have said is accurate or not, the buck seems to be
passing away from the registrar towards the trade mark owners. I would
be interested to learn what savings the Government will make and, more
important, how the money saved will be redirected to protect existing
trade mark owners.
The Minister referred to the
preliminary indication, which will greatly help trade mark owners and
applicants to discern whether it will be a viable exercise to oppose.
However, if a trade mark owner had a preliminary indication against
opposing an application and still felt sufficiently moved to object,
presumably, he or she would have to pay the costs if the case was taken
to appeal. I should be grateful for the Ministers comments on
the matter.
In an
ideal world, the onus should be on the registrar to block or oppose any
application for a trade mark that is already registered. It should not
be the responsibility of the person who made the registration, who
believed that he was protecting the trade mark by doing so and that he
would not be forced to oppose such applications.
Clearly, we need a level
playing field. The World Intellectual Property Organization and
Community trade marks are outside our jurisdiction and we cannot alter
the law there. For the UK to ensure a level playing field, our rules
need to marry with international and EU rules. Our mission is to ensure
that there are adequate safeguards built into any system, so that
people who register trade marks in good faith receive adequate
protection and are not subject to inordinate
costs.
4.47
pm
Malcolm
Wicks:
This has been a useful debate and some important
questions have been asked. I will do my best to provide answers, but I
hope that hon. Members will agree to my replying in writing if I need
to follow up the details of the important and specific issues that have
been raised.
The hon.
Member for Hertford and Stortford, perfectly properly, set the context:
that Britain must become what many refer to as a knowledge economy, in
which we will live by our science and inventions, and by our wits and
ideas. Intellectual property, trade marks, patents and so on therefore
become increasingly important. Indeed, the key assets of many
companies, large and small, are not machinery but ideas translated into
trade marks and patents. We have rebadged the
Patent Office as the UK Intellectual Property Office, but it is not just
a matter of rebadging; the office is doing very valuable
work.
The order will
allow us to warn holders of existing trade marks that a new application
has been made for a trade mark in their field. As I said in my opening
remarks, our intention is to introduce the notification requirements
into the related trade mark rules. If the applicant opts to proceed
with his or her application, the registrar will notify the owners of
any earlier national trade marks identified in our search. That will be
done automatically by the UK Intellectual Property Office so the burden
will not be on an existing trade mark holder to make the effort to
search on a monthly or weekly basis. That is an important
safeguard.
I was
asked about penalties. There are penalties, which can be quite severe,
and rightly so, because a trade mark could be crucial for a smaller
company such as a bioscience companyI am talking more broadly
now about UK intellectual property. I am advised that penalties can
involve civil damages, an injunction, or criminal sanctions. Indeed, a
maximum sentence of 10 years imprisonment is possible
for infringement, which shows how seriously British law takes these
matters.
Mr.
Prisk:
I am grateful to the Minister for clarifying some
of those points. He will recognise that a small business facing a
multinational which is infringing its patent faces the difficulty of
taking a legal action, which has a cost involved and is very often
complex, before any of those penalties can be engaged. Is it not true
that without legal action no financial penalties can be charged against
someone who is clearly infringing the
patent?
Malcolm
Wicks:
I think the hon. Gentleman is right. It is a
question of the existing patent holder taking the initiative. If there
is any further information that I can give the hon. Gentleman on that,
I shall write to him.
I was asked about the
consultation. I am advised that the consultation was brought to the
attention of about 500 businesses across all fields, and therefore not
just professionals. As I think I stated earlier, over 70 per cent. of
small businesses felt that change was required. If I can add to that
information, I will do so. We certainly went out of way to notify small
companies as well as large.
On the theme of smaller or
medium-sized companies and the question of costs, one of the aims of
the order is to decrease the cost and time involved and the burdens.
Under the new regime the number of oppositions is likely to increase
from the current rate of 3.5 per cent., but it is unlikely to rise to
anywhere near the 32 per cent. of applications to which the registrar
currently objects on relative grounds. Thus the cost to business of the
additional oppositions should be more than offset overall by a
significant reduction in the cost of delayed and refused national
applications.
That is an
important balancing point. Understandably, some of the questions have
been about the existing trade mark holder. We are also concerned about
someone who wants to register a new trade mark when there is no logical
reason why it should not be registered and no one is going to oppose
it. Under the current regime they
are often refused. The main thrust of our argument is that that would
occur far less in future, which would be good for
business.
Mr.
Prisk:
It may be something that is not immediately within
the reach of the Ministers memory, but could he tell us the
IPOs estimate of the potential saving? That is not made clear
in the regulatory impact assessment. Clearly, there will be a saving
because there will be a reduced burden on the IPO. It would be helpful
to know what saving the Government anticipate from this
shift.
Malcolm
Wicks:
I do not think that we anticipate a saving as such,
but again, I will write to the hon. Gentleman. We do not think that
there will be any savings of Government resources. The measure is
intended to help the freer flow of trade marks. Again, if I have got
that slightly wrong, I will write to the hon. Gentleman on that point.
I think that the new system will be good for businesses and less
burdensome on those that wish to register trade marks when there is no
logical reason why they should not be registered. I may deal in writing
with the other points that have been raised if that is acceptable. I
hope that I have dealt with the most substantive
ones.
Mr.
Prisk:
There is particular interest to see on the record
that the Government are satisfied regardingthe public policy
aspect of the order, in the sense that the process is not merely an
administrative on. Conflicting marks on the registry have an important
public policy aspect. Is the Minister satisfied that there is no public
policy issue here? The answer may be beyond his reach now, and he may
wish to come back to us in due course, but it would be helpful if his
comments were on the
record.
Malcolm
Wicks:
The public policy objective is to ensure that while
safeguarding the rights of existing intellectual property
holdersin this case those with
trade markswe do not maintain a regime that might appear rather
stultifying to those who have new ideas and wish to register a new
trade mark. The public policy goal is to get the balance right: to help
to builda knowledge economy while ensuring that rights to
intellectual property can be registered. Is that what the hon.
Gentleman had in mind?
Mr.
Prisk:
Without wishing to stretch your patience too far,
Mr. Wilshire, the question is whether, in the
Governments view, the public policy decision that ensures that
the registrar polices conflicting trade marks is no longer needed, or
is needed but the order will deal with the problem in a different
way.
Malcolm
Wicks:
I think the order deals with the problem in a
modern way. We are moving resources and effort from the UK Intellectual
Property Office making the objectionsas I said, that happens in
about a third of cases; I think the figure is 32 per cent.to a
rather more sensible regime in which the assumption will be that a new
trade mark can be registered. A proper search will be done, but the
burden is placed on the owner of the existing trade mark, who will be
notified by the UK Intellectual Property Office. There will be an
objection only if the existing trade mark owner thinks there is a
problem about a new trade mark. There will be far fewer refusals, so in
terms of the flow of intellectual propertyin this case trade
markswe are moving in the right direction. That is sensible
public
policy.
Mr.
Wilshire, I think our proceedings may be coming to an end; I certainly
am. We have had a useful debate. I promise once more to reflect on the
questions, some of which were quite specific, and to write to hon.
Members with better
answers.
Question
put and agreed
to.
Resolved,
That
the Committee has considered the draft Trade Marks (Relative Grounds)
Order
2007.
Committee
rose at three minutes to Five
oclock.