Intellectual Property Bill [Lords]
The Committee consisted of the following Members:
Georgina Holmes-Skelton, Committee Clerk
† attended the Committee
The Chair: Before I call the Minister, may I remind colleagues that it is likely, given the structure of the day in the main Chamber, that we will have votes around about 4 o’clock this afternoon in a grouped order? Life in this place can change from hour to hour, but that is the current information I have. If there are three votes back to back, we would lose 35 minutes of the Committee’s time. The expectation must be that the Committee would want to try to conclude the bulk of its discussions by 4 o’clock at the latest. The next two items we are considering are probably the heaviest in terms of expectation of debate. Could Members therefore bear in mind that if they want to get to items later down the order, they should temper their enthusiasm now with the pessimism of the intellect to give them the opportunity later?
‘(ia) knowing that, or being reckless as to whether, making the product is an infringement of the registered design, and’.
‘(ia) the person does so knowing that, or being reckless as to whether offering putting on the market, importing, exporting or selling of the product is an infringement of the registered design.’.
‘(a) reasonably believed that the registered design was not infringed.’.
This debate is about probably the most significant feature of the Bill: the only new criminal sanction that we are introducing to intellectual property law. I appreciate your advice, Mr Havard, so I will try to bring together all the different amendments to this significant provision. Clause 13 makes it a criminal offence to intentionally copy a UK or EU registered design in the course of business without the consent of its owner. It will also be an offence to try to profit from the use of the copy in the course of business.
After Second Reading and after discussion and debates in the other place and meetings that my colleague Lord Younger and I had with stakeholders, I recognise that the introduction of a new criminal sanction raises strong feelings, both for and against. The Government believe that this policy is the right one. Designs should be protected by a criminal offence in the same way as other forms of intellectual property, but it is important to get the balance absolutely right. Since the Bill was discussed in the other place, industry representatives have raised concerns with me and Viscount Younger that the scope of clause 13 could be interpreted more widely than was intended. Members of the judiciary have recently supported their viewpoint.
While the Government believe that the offence, when considered in its entirety, will capture only intentional copying, it is important to recognise the concerns of those who will be affected by the practical application of the sanctions. We in the Department for Business, Innovation and Skills, a pro-business Department, believe that it is important to give business the certainty it needs about the scope and meaning of the new offence. The Government want to ensure that we do not deter anyone who legitimately innovates around an existing design. That is the purpose not just of our amendments; I think it is also the purpose behind the amendments tabled by the hon. Member for Hartlepool.
Neil Parish (Tiverton and Honiton) (Con): I very much appreciate what the Minister is saying. There need to be some criminal sanctions for people breaking copyright and taking other people’s ideas. I do not want to be too specific about which country, but countries in the far east have a propensity to steal intellectual property. Are we mindful of that? It is not just people in this country stealing intellectual property, but people stealing from a long way away. People are very concerned about that.
Mr Willetts: The legislation covers offences committed in this country. If the offence is in this country, the exact, ultimate ownership or location of the headquarters of the company is not the issue. The criminal sanction will apply where copying takes place within the UK or where the copied products are offered, put on the market, imported, exported or used within the UK. The offence has to happen in the UK, but the perpetrator could have his or her original purpose anywhere in the world.
Mr David Lammy (Tottenham) (Lab): The Minister will appreciate, as I did when I was Minister with responsibility for IP, that there are organised networks. I saw examples of such networks in China that work
Mr Willetts: Yes, and the purpose of the legislation and this clause in particular is to create a new criminal offence of copying a design. That is a clear strengthening of a weak legal framework. As I said on Second Reading, we believe in supporting our design industry—both small and large businesses.
With these amendments we are tackling specific concerns raised in intensive discussions with IP experts and industry representatives, such as BAE Systems, Nokia, Dyson and others—the creators of design IP in this country. The Government amendments ensure that the law is as clear as possible and that it fully achieves the Government’s aim of tackling only the blatant copying of design. Our amendments address two points. Government amendments 6, 8, 10, 13 and 14 make it clear that the copying must have been intentional. The insertion of the word “intentionally” is not intended to make the sanction more difficult to prove—the clause was always aimed at situations where there was an intention—but to allay the concerns of stakeholders that unconscious copying could be caught by the offence, which is not the purpose of the clause. We were happy to table the amendment to make the legislation clearly reflect the Government’s stated policy of ensuring that only considered acts of copying are captured. That is what the addition of “intentionally” does.
Amendment 27, in the name of the hon. Member for Hartlepool, would insert “deliberately” into the clause. I am not sure whether that is his intention—whether he is doing it “deliberately”. [Interruption.]
I think the hon. Member for Hartlepool probably intends to achieve the same purpose with amendment 27 as we intend to achieve with our Government amendments. I shall explain to him why we consider “intentionally” to do the job better than his proposed word, “deliberately”. We chose “intentionally” because it is more familiar to the courts in terms of framing the mental element of a criminal offence and so less likely to provoke legal debate than “deliberately”. I understand that intention is already recognised by the courts within the framework of IP legislation.
There is a second problem with amendment 27, which is that it appears to be directed to the part of the offence that sets out liability when a person knows or has reason to believe that the design in question has been copied. The legal test of knowing or having reason to believe is established and well understood. Qualifying it in clause 13 with the word “deliberately” does not seem to take matters further forward. We believe that the concerns of industry about unconscious copying are
Duncan Hames (Chippenham) (LD): I thank the Minister for that explanation. If we were to make this change, would it still be possible to bring a civil action in cases where the Crown Prosecution Service was not persuaded that intention could be proven?
Mr Willetts: Yes; my understanding is that a civil action would be possible. When we are talking about criminal sanctions, the view is that intent is an important element in the legislation. As I have said, we have always intended that intention should be part of the offence, and we are now making that explicit. The civil remedy would still available.
Let me turn to Government amendments 7, 9, 11 and 12, which relate to assessments of whether a product has been copied. The amendments will remove the word “substantially”, so that the clause instead refers to designs
We are proposing this change because industry has expressed concerns that the term “substantially” is not clearly defined in registered design law or criminal IP law, and there could therefore be uncertainty as to its meaning. The revised wording is more familiar to industry and reflects existing language used in the Registered Designs Act 1949, in the context of whether a design is new. Our amendments provide users with a familiar term and the courts with a more precise test than “substantially”. I do not detect anything in the Opposition’s proposed amendments that suggests that they have any difficulty with that clarification. Indeed, I hope that both the clarifications in our amendments—representing, as they do, the clear view of industry—will command the Opposition’s support.
Let me also comment briefly on amendments 25 and 28, which would introduce the idea of “being reckless” as to design infringement. The amendments would have two effects. First, they would introduce design infringement as a basis for the criminal sanction. However, infringement is different from copying. The new offence has been drafted so that the criminal sanction will be narrower and more focused than the civil test for infringement. The legal test for civil infringement refers to the concept of “overall impression” of a design on an “informed user”—a much less precise concept than the boundaries that we set out in the Bill for the proposed criminal sanction. For those reasons, including as a part of the offence a test based on civil design infringement is potentially confusing and would lead to greater uncertainty, which we fear could lead to a freezing effect on follow-on design.
Amendments 25 and 28 would also introduce the concept of “constructive knowledge or intention”. That would effectively require the court to conclude that a defendant had paid no regard to the probability or possibility of harmful consequences in conducting a course of action.
Mr Willetts: We will come to this matter when we debate the new clauses. The trouble is that proving intent is so much harder when it comes to unregistered designs, because people do not have access to clear information about what the IP is, so we are wary of trying to introduce the concepts to unregistered designs as well as to registered ones. However, we will debate that issue when we come to amendment 31, when my hon. Friend may wish to intervene again.
Amendments 25 and 28 would introduce the concept of constructive knowledge or intention, which would effectively require a court to conclude that a defendant had paid no regard to the probability or possibility of harmful consequences in conducting a course of action. Culpable criminal behaviour of that sort is already adequately covered by the clause. Knowing or having reason to believe that the design is registered—that is, owned by another person—is already a feature of the offence. Amendments 25 and 28 would therefore add an extra, unnecessary layer of complexity to the clause, which we fear would make the offence unworkable in the courts and highly uncertain for design businesses.
The Government amendments will clarify the purpose of the clause, reflecting the concerns that industry has put to us. We understand that the Opposition are also trying to tackle those concerns, but we believe that our proposals, which draw on well recognised terminology in IP law, provide the best way of doing that. I therefore hope the Committee will support our amendments and that the hon. Member for Hartlepool will not press his.
Mr Iain Wright (Hartlepool) (Lab): I wish you and the Committee a very good morning, Mr Havard. I thank the Minister for the non-grumpy way in which he set out his amendments and responded to my amendments. He was right to say that this part of the Bill is “significant”, although I would use the word “contentious”. I rise to speak to my amendments, but I also want to respond to the Minister’s points.
Two key issues about clause 13 were raised on Second Reading, which the amendments reflect. The first is whether criminal sanctions, with the possibility of up to 10 years’ imprisonment, should be applied to designs, and what legislative blocks and thresholds are in place to ensure that inadvertent, unintentional or accidental copying is not punished with hefty prison sentences. Secondly, if one accepts the concept of criminal sanctions to be applied to registered rights, surely it is logical that all design rights, whether registered or unregistered, should be included. We will debate that issue when we come to the next group.
That does not happen by chance or accident, and it does not happen immediately. Our traditionally strong IP framework has evolved and been built up over time to ensure that the UK is a global leader in creativity and innovation. We should not do anything to jeopardise that, which is why our consideration of clause 13 is vital for industry in this country. I also made the point on Second Reading that IP is a property right, and that creators, inventers and designers should have protection in law against the exploitation of their ideas. If composers and writers are protected in law, why not designers? That seems a powerful argument, so I understand the Government’s thinking.
Prior art references include documentary sources, such as patents and publications from anywhere in the world, and non-documentary sources, such as things known or used publicly. Given the intense difficulty of establishing prior art, it is possible that someone inadvertently designed something in good faith, and for relevant prior art to come to light later. That is particularly important when we are introducing a criminal sanction, especially one with a penalty of up to 10 years. There is a risk for registered designs that prior art may come to light after the person has been convicted and imprisoned. How will the Minister respond to that?
“The point of design protection must be to reward and encourage good product design by protecting the skill, creativity and labour of product designers. This effort is different from the work of artists. The difference between a work of art and a work of design is that design is concerned with both form and function. However design law is not seeking to reward advances in function. That is the sphere of patents. Function imposes constraints on a designer’s freedom which do not apply to an artist. Things which look the same because they do the same thing are not examples of infringement of design right.”
The last sentence is significant. If such cases are moved into the criminal courts, with the possibility of 10 years’ imprisonment, juries might convict on the basis of things doing the same thing and consequently looking the same, but that, as we have heard, is not an infringement of design right. The Government need to be absolutely sure of their footing, based on strong evidence. I have tabled our amendments to test the Minister on that point.
Mr Wright: I understand what the Minister is saying. He has had discussions with industry bodies, legal experts and companies, some of which he has mentioned. The one thing we want to avoid is disbarring innovation and creativity, and ultimately prosperity, in this country. He will be aware of the many concerns that remain. The IP Federation has stated that the proposals
“create a sledgehammer for the purposes of cracking a specific problematic nut. The trouble is that, in cracking the problem nut, many other valuable nuts will also get cracked or severely damaged as a consequence.”
“If there is a risk that knowledge of a registered design, combined with actual infringement, could give rise to a criminal penalty, IP advisors will advise their clients not to take that risk. Products which would otherwise have been brought to market as a result of healthy competition will be withheld. This will reduce choice for consumers.”
“Whilst it is acknowledged that the proposed criminal offence would contain defences against unintentional infringements, there remains considerable nervousness within industry that criminal sanctions may still be employed in cases where there has been no deliberate copying of a registered design…Senior executives have advised us that even a very small risk of criminal action could significantly delay decisions on product launches—particularly where a company chooses to escalate concerns to board level. In a best case scenario, this would likely entail additional costs for businesses (such as for external legal advice); however, it is possible to envisage circumstances in which executives may choose not to launch (perfectly legitimate) products in the UK market-with possible knock-on effects for employment and consumer choice.”
Will the Minister directly address the point that innovation in this country might suffer as a result of clause 13? Neither the original impact assessment nor the revised impact assessment makes that case clear; they merely state that no evidence was produced. Should there not be more rigour for something as important as possibly sending inventors to prison for 10 years?
Amendment 25 would ensure that the Bill contained a clear and acknowledged difference between copying and infringement, to which the Minister has referred. As the Bill is currently drafted, a person will be committing an offence and be subject to criminal sanctions if they copy
The Minister has tabled amendment 7 and other amendments—to which I shall respond in due course—to address that situation to some extent. However, the purpose of amendment 25 is clear. It would make a distinction in the Bill between copying and infringement. I realise what the Minister said about Apple v. Samsung, but this was touched on then. This is an important point for the Committee to consider. What is the nature of innovation? I referred to this on Second Reading. Is it giant leaps forward or leaping from tree to tree, gradually and incrementally? Is innovation evolution or revolution?
In the commercial sphere, it seems entirely reasonable and legitimate for firms to want to build on existing products, retaining the features that consumers like and
The Apple v. Samsung case is fascinating. Samsung applied to the High Court for a declaration that its Galaxy tablets were not too similar to Apple’s products. Apple countersued, but Samsung won the case here in the UK, although there were different rulings in other jurisdictions. An appeal found in favour of the previous ruling, meaning that Apple was required to publish a disclaimer on its own website and in the media stating that Samsung did not copy the iPad. The judge ruled:
“The degree to which a feature is common in the design corpus is a relevant consideration. At one extreme will be a unique feature not in the prior art at all, at the other extreme will be a banal feature found in every example of the type. In between there will be features which are fairly common but not ubiquitous or quite rare but not unheard of.”
“When I first saw the Samsung products in this case I was struck by how similar they look to the Apple design when they are resting on a table. They look similar because they both have the same front screen. It stands out. However to the informed user (which at that stage I was not) these screens do not stand out to anything like the same extent. The front view of the Apple design takes its place amongst its kindred prior art.”
That is true; however, although it is true that unauthorised use of a German registered design can be punishable by criminal sanctions, the infringement must be wilful or reckless to attract those sanctions. That is why amendment 25 would add those words to the Bill and ensure that a further safeguard was in place.
Amendment 28 would make a similar change after proposed new section 35ZA(3)(c)(ii) of the 1949 Act to clarify that when a person commits the offence, they do so knowing that, or being reckless as to whether offering, putting on the market, importing, exporting or selling of the product is an infringement of the registered design, rather than the vague and imprecise definition of “copying”. In a similar vein, amendment 29 is designed to show that it is a defence for a person charged with an offence to reasonably believe that the registered design was not infringed.
Amendment 27 would tighten up the definition and provide a greater legal lock, and make it very clear.
Amendment 26 is a probing amendment to clarify two aspects of clause 13 and the impact on business. The amendment would leave out the word “uses” and insert the word “sells” in its place. I have tabled the amendment for two reasons. First, the clause as it stands does not take into account the complex and collaborative nature of processes within commerce and industry. If a firm uses something in its production process, does the Minister think that that firm is copying? If so, would it be subject to the criminal sanctions in this clause? Clarification of that would be helpful. I propose that the Bill would be clearer if it used the word “sells” rather than “uses”.
My second consideration when tabling amendment 26 may seem perverse and contrary: to probe the Government’s thinking on third parties being liable for criminal sanctions under the clause as part of their normal business operations. The Apple v. Samsung case prompted me to think about that, but that consideration will apply to an infinite variety of products, a large number of retailers, other distribution and business-to-business companies. Will the Minister clarify whether firms that sell products—in the case of Apple or Samsung products, shops such as Carphone Warehouse—are subject to the clause? As the clause is currently drafted, I think they would be, as proposed new section 35ZA(3) states:
To my mind, that means that the directors of Carphone Warehouse and other similar retailers will be liable for criminal sanctions. Surely that will prevent competition and consumer choice. Apple could have sued Samsung and then put pressure on retailers by saying, “Look, a court case is going on in which criminal sanctions and imprisonment of up to 10 years apply, so stop stocking Samsung products.” Surely that would be a real hindrance to competition. Can the Minister confirm that that would not be the case? If that risk were there, would not retailers be reluctant to stock products, which, in turn, would restrict consumer choice and, ultimately, product development and innovation? I hope he will reassure me on that. I appreciate that amendment 26 would not insert the precise wording to which I have referred, but I hope I have explained our intention in tabling it.
The Minister spoke to Government amendments 6, 8 and 10, which would insert the word “intentionally” at various points in the Bill. I appreciate that he is trying to provide greater clarity and safeguarding to prevent the possibility of accidental or inadvertent copying infringements. However, as I have said, I think that our amendment 25 would work better and provide greater clarity. I know he probably will not accept it, but given what he said, will be consider taking a look at it? Knowing the Minister and given his remarks—and his
Government amendment 9 and, to an extent, Government amendment 11 are similar to that. I am concerned about those. Does not the wording of those amendments merely deal with counterfeits, rather than infringement or deliberate copying? Should not that precise wording be looked at again? The Alliance for Intellectual Property has suggested a form of words that is consistent with article 10 of the Community design regulation. We are willing to look at that again and, if necessary, return to it on Report. I hope that the Minister will pledge to do the same, to ensure that his intention is right.
Mr Lammy: I want to probe the Minister further on the significant introduction of intentionality, which adds a state of mind to the issues we are considering. He is right to explain that it is a well established legal concept, but the potential problem is that, in adding that state of mine, we can get into a legal hinterland with a lot of litigation attached.
There are concerns, frankly, that we should simply allow the Bill to apply to deliberate infringement of unregistered designs, which would bring it into parity with existing trade mark and copyright law. In a sense, introducing an extra state of mind, which is what mens rea does, is unnecessary. Does the Minister foresee a lot of litigation on this issue? The Committee will be taking an important step if it moves in the direction of intentionality in such a way. Are we, as it were, copper-plating the legislation?
This measure is different to copyright law as set out in section 107 of the Copyright, Designs and Patents Act 1988 and section 92 of the Trade Marks Act 1994, under which simply the intent to act is sufficient—the actus reus—as is established in criminal proceedings. I want to probe the Minister further on the introduction of intentionality and to put on record the concerns of those in Anti-Copying in Design that the Bill will make it far harder to land on those who seek to copy in such a way.
Mr Willetts: The two lines of criticism that we face are interesting. We have just heard from the right hon. Gentleman, who was himself a BIS Minister with responsibility for IP, about his concern that adding intention is too tight a requirement. He is worried that
I have to say to the hon. Member for Hartlepool, the Opposition spokesman, that we thought that there was cross-party agreement on it being right to have a criminal sanction for design that matches criminal sanctions in other parts of IP. My expert legal advice is that by the time he had introduced—were he able to—all the different amendments that he is proposing today, they would be hard to enforce in the courts. He would have put in so many extra tests and requirements, that in practice those hundreds of thousands of designers to whom we are trying to offer protection with this legislation would not have the protection to which we believe they are entitled.
We should not forget the ultimate reason for the Bill and the clause. There are small and medium-sized enterprises up and down the country in the design business that are being ripped off. Their designs do not have the protections that they require. It is right to introduce a criminal sanction, but we do not wish to do so in a way that deters legitimate business.
Let me turn to the points made by the right hon. Member for Tottenham. We believe that the use of the word “intentional” is a recognised way of handling the challenge of being absolutely clear that the action has to be intentional. That was always the intention of the clause. He referred to trademark law. Although trademark law and copyright law have provided a forerunner for introducing a new criminal sanction in design law, the rights involved are slightly different, and it is to be expected that different wording will be used. The word “intention” is recognised in other parts of the criminal law.
The Opposition spokesman, the hon. Member for Hartlepool, challenged me in several respects. First, let me make it clear that my understanding from meetings with the IP Federation and with leading British businesses is that the federation broadly accepts that we have got the balance right. I would be interested to know the date of some of the comments that the hon. Gentleman read out, because it was precisely in order to engage with the concerns of the IP Federation that we tabled the amendments we are discussing.
Mr Lammy: The point is simply that this is an economic crime. The fact of copying ought to be sufficient, without having to get into someone’s mind and go into what they intended when they were going about it. It is quite different from criminal law, where one ought to get into whether, for example, someone intended to murder somebody or killed them accidentally. The truth is that this is an economic crime, and it is quite established that in economic crimes, the actus reus is sufficient. That is why the point has been put in that way.
Mr Willetts: I do not completely follow the right hon. Gentleman’s argument. Theft is an economic crime, and we are talking about a type of theft. In many areas of criminal activity, having intention is a part of the criminal law. That is simply what we are trying to provide for in the Bill. Although I do not want to repeat myself, I think we have got the balance about right.
I will try to cover briskly, if I can, the comments made by the hon. Member for Hartlepool. He talked a little about the amendments he has tabled, which would introduce the concept of constructive knowledge or intention. We believe that culpable criminal behaviour of the sort he referred to is already adequately covered by the clause. He is worried that businesses would be pulling their products from the stores and that shops would be removing stock for fear of falling foul of criminal sanctions. That is why—this is also relevant to the intervention of the right hon. Member for Tottenham—clause 13 makes it clear that the criminal offence will apply only to businesses that knowingly use a copied design in the course of business activities to profit from that copying. If the business did not know that the design was copied, the offence would not apply. That is how we tackle the Opposition spokesman’s concern that there will somehow be a chilling effect on innovation—by saying that there has to be an intention. In turn, that is what the right hon. Member for Tottenham, from his alternative angle, disagrees with.
Mr Wright: The example I have provided was iPads from Apple, Galaxy tablets from Samsung and Carphone Warehouse. As the judge said in that case, the iPads and tablets look similar when they are sitting on the table, so would Carphone Warehouse and other retailers not say, “They look far too similar. I am going to be very risk averse in my business operations,” and thereby restrict choice? Surely there will be a reduction in innovation and consumer choice as a result of what the Minister is saying.
Mr Willetts: Our view is that, if a company uses a product that is an intentional copy of a registered design, knows it is doing so and makes a profit into the bargain, it is right that it should be caught by the new offence. That is what we are dealing with.
I will now take the opportunity to respond to the hon. Gentleman’s arguments on his amendment 26, and try to offer the Committee a practical example. His amendment would require that someone “sells” the product, rather than simply uses it. Let me give a practical example of why the amendment, like so many of his amendments, is too restrictive. Imagine someone is running a successful and profitable coffee shop using
We think the act of using a product like that should be caught within the framework. But under the amendment, if people knowingly purchased copies of products or goods to use as part of a production process, unless they were directly selling the products themselves, they would not be caught. Again, it is a matter of striking a balance, but we think that in those circumstances people who are knowingly using designs that have not been properly paid for should be culpable.
Mark Pawsey (Rugby) (Con): As somebody who used to sell coffee machines, what is the burden on the supplier of coffee machines to make certain that he is selling a coffee machine that does not bring his customer into conflicts?
Mr Willetts: Indeed. There has to be genuine intention at every stage. They have to know what they are doing. We are bringing in the amendments about intention precisely so that this crucial issue is covered. We have to be clear that it is intentional. We believe we have got the balance right.
Innovation matters. I should like to touch briefly on the argument advanced by the hon. Member for Hartlepool. He raised the issue of follow-on innovation. We understand that that is indeed part of the innovation process and we need to protect follow-on innovation. That is why we have clarified in clause 13, where the criminal sanction bites in particular, that the copy must be exact or differ only in immaterial details. That is a well understood test. Again, that is the reason why we are bringing in that clarification. It protects follow-on innovation that has extra features that mean it no longer differs only in immaterial detail.
I hope I have explained that we have struck a balance here. We do not want to make the test so rigorous and bring in so many extra requirements as to make the protection for designers unenforceable. Nor do we want to catch people who unintentionally find themselves using a product or a service where they could not reasonably be expected to have known what they were doing. We believe we have got the balance right. We have listened to the IP Federation and to British business. I hope that the Committee will support the amendments.
The Chair: Before I put the Question, could I explain that I have to go through a series of procedural activities where I have to put each of these things individually? Mr Wright has indicated that he wants some of these things to be on the record, so I cannot group them together.
(i) exactly to that design, or
(ii) with features that differ only in immaterial details from that design’.—(Mr Willetts.)
‘(ia) knowing that, or being reckless as to whether, making the product is an infringement of the registered design, and’.—(Mr Wright.)
(a) exactly to the design, or
(b) with features that differ only in immaterial details from the design.’.—(Mr Willetts.)
‘(ia) the person does so knowing that, or being reckless as to whether offering putting on the market, importing, exporting or selling of the product is an infringement of the registered design.’.—(Mr Wright.)
The Chair: Mr Wright indicated earlier that that was a probing amendment and he did not want to press it. Thank you for that—we need to make sure that we have got the record correct and that I have not omitted something.
‘(7A) In this section “design right” includes an unregistered community design and a reference to the owner of the design right is also to be read as a reference to the owner of a community design right in a design.’.
The amendment would deal with extending criminal sanctions to unregistered designs. I do not understand the Government’s logic on this issue, so the amendment is to probe the Minister on the inconsistency in handling between registered and unregistered designs in the clause. As I have mentioned, about 4,000 designs are registered in the UK each year, with a similar number registered through the European regime. However, between 18,000 and 25,000 unregistered designs are lodged with Anti-Copying In Design’s database.
Given the huge contribution of design to the economy, it seems reasonable to assume, as the evidence suggests, that the vast majority of designs in the UK are unregistered. That has a valuable place for designers in the IP framework. The Minister in the other place confirmed as much when he said in Committee that
The Minister may recall that on Second Reading I mentioned the risk that unscrupulous companies might identify unregistered designs, register them for themselves and then say to the original designer, “You’ve infringed our registered design. We will make sure that a criminal case is brought against you for deliberately copying our registered design and you may go to prison for 10 years. You can avoid that by paying us a large fee, or by assigning us the rights of that design for us to exploit commercially.” How does the clause protect small and micro-firms or help to promote innovation? The amendment would at least provide some consistency and might prevent that scenario from happening.
If the Government are intent on providing criminal sanctions for registered designs—we discussed during the previous debate how that is quite a controversial “if”—with the intention being to protect designers to the fullest extent of the law in a manner consistent with trade marks, surely they should extend those measures to unregistered designs. The purpose of the amendment is to ascertain why the Government do not propose such a consistent approach between registered and unregistered designs, given that one purpose of the Bill is to simplify the IP regime. I am interested in hearing what the Minister has to say on that.
Mr Lammy: To support what my hon. Friend said, we are living in an age that is driven by social media and the internet, which provides more and more opportunity for young people, particularly given the nature of the economy, to sit at home and apply what they have learnt through design courses and other things and innovate, but they may not choose to register at that stage. They require protection and it is surprising that, in a Bill that seeks to address the world as we see it today, unregistered designs do not seem to be recognised by the Department. It is important that the Minister speaks to that element of innovation in IP design.
We disagree with the Opposition. Clause 13 pertains to a criminal offence, and it would be hard to extend it from registered to unregistered design rights because it is difficult to establish ownership of a design protected under unregistered design rights without the accessibility and certainty of a public register. There are also technical problems with the drafting of the amendment, and it is not totally clear how it would work. It could cover both EU unregistered designs and UK unregistered designs, or only EU unregistered designs. Nevertheless, I understand that the hon. Gentleman’s purpose is to extend criminal sanctions to unregistered designs.
The Government strongly oppose the amendment because the unregistered right comes into being automatically once a design has been recorded in a
Perhaps it will help the Committee if I give another practical example. This is from the sofa industry. I am sure I will discover that there is an hon. Member here who made his career in the sofa business and can correct me, but I will live dangerously and offer the example of sofa design.
The design of a sofa could include unregistered design rights covering, for example, the legs, the base, the body or the arms. If a case about an unregistered design in a sofa were brought to a criminal court, it would need to establish whether the right actually exists—for example, which parts of the design are original—who, if anybody, owned the right in any of the protected elements, and whether there were different time scales left to run. That would be hard to do in the absence of a register. That is before I turn to the problem of whether the amendment would apply to designs protected across the whole of the EU and whether it would be necessary to track owners in different countries, which would be very complicated indeed. Essentially, we would be trying to introduce a criminal sanction in an area in which it is simply not reasonable to expect people to know whether they are infringing a right.
Mr Lammy: I follow the Minister’s point, but will he assure the Committee that, if somebody labours away to make a chair with a blade and a saw and puts it on an internet site for people to admire and casually buy it, some big multinational will not be allowed to steal and register the design, then pick on the small man? That is the point that the Minister ought to address, but perhaps he is too close to his friends in big business.
Mr Willetts: The purpose of the clause is the opposite. When Mr Havard makes a leg for a chair or puts a pattern of cane work on the seat, he cannot be expected to know whether there is an unregistered design that covers part of what he is doing. The Government, unlike the Opposition, are trying to ensure that Mr Havard does not find himself facing criminal sanctions.
We are talking about a criminal sanction, and we want to ensure that we have a reasonable test. The point about unregistered design rights is that they are not on a register, if that is not too circular. If they are not on a register, the force of a criminal sanction would be very severe. There are, of course, civil remedies for unregistered rights. The question is whether a person should be able to use the power of criminal law in a place in which it is not reasonable to expect people to know whether they are infringing a right. That is the central disagreement between the Government and the Opposition. I believe that on this matter, as on the matter we have just discussed, we have got the balance right.
Mr Wright: I mentioned earlier that there are about 4,000 registered designs every year and about 18,000 to 25,000 unregistered designs that ACID alone knows about. One of the reasons why there are so few registered designs is that there is a cost. It costs around £60 for a simple design to be registered. Does the Minister think that behaviour will alter as a result of clause 13? Is one of the purposes behind clause 13, in not having unregistered designs as part of the criminal sanctions, to push people away from unregistered on to registered and provide a revenue stream for the IPO?
Mr Willetts: That really is not the purpose. That is a very unfair allegation. What we are trying to do is very simple and reflects the advice we have had in Hargreaves and since: we are trying to provide better protection for designers. We think it is reasonable to apply criminal sanctions for the first time to protect designers but we are saying that it has to be a registered design. We think that that is reasonable. While no database is totally comprehensive, we understand that the UK and the EU’s publicly accessible, formal registers contain approximately 728,000 design registrations which are in force in the UK. So there is a lot of registered design out there.
There are the private databases too, such as ACID, which the hon. Gentleman mentioned. It is an example of an industry successfully helping itself. It is a way of bringing out more clearly the identity of unregistered designs. However, it is not a comprehensive list. It is only open to members. It has an annual cost and it is not representative of the numbers of unregistered design rights that are created in the UK. We believe that we have got the balance right. As I began by saying, we are talking here about a criminal sanction. This clause is about criminal sanctions going beyond civil sanctions. Applying criminal sanctions to an unregistered design which people cannot reasonably be expected to be aware of is to get the balance wrong.
Mr Wright: The Government have an entirely inconsistent position on this. I do not think the Minister has properly explained this and nor did the Minister in the other place. If we accept the need for criminal sanctions and we want to protect designers in this country, in order to have consistency, it should be for registered and unregistered designs. I am concerned that the small designer with very few resources will be picked on by the large companies here. I do not think that the Minister has offered an adequate explanation. We will come back to this at a later stage. I should like to reflect on what the Minister has said. I am unconvinced by his argument. I still maintain it is inconsistent and illogical but I do not want to delay progress. I beg to ask leave to withdraw the amendment.
Clause 20 amends the Freedom of Information Act 2000 to provide an exemption for information contained in the course of or derived from a programme of research. That is a welcome step, which helps to safeguard the reputation of research institutions in the UK. It helps to ensure that bits of research are not published through freedom of information legislation without going through a proper and rigorous process of evaluation and peer review, which could lead to a piece of work leading to the wrong conclusions and undermining the reputation of the researcher and his or her institution. There is little virtue in that. Clause 20 is therefore a good clause that helps the comparative advantage of UK universities and research institutions across the world.
I am grateful to the Wellcome Trust and to others for flagging up this matter. The amendment would ensure that the exemption from freedom of information legislation would include the planning stages from initial ideas; designing a specific programme; obtaining funding; preparation of experimental phase; execution of experiments; analysis of results; and preparation for publication. The additional words in amendment 33 would clarify that the pre-experiment stages of research would also be covered by the Bill. I believe that is the intention of the Government, and I hope that our proposal is seen as being helpful and constructive. I therefore hope the Minister will look favourably on amendment 33.
I have received this morning—as might other members of the Committee—a letter signed by the Royal Society of Chemistry, the Campaign for Science and Engineering, the Institute of Physics, and the Society of Biology. It states:
“The UK has a highly productive research and development sector and activity in universities and publicly-funded institutions is a key driver of this success. The UK is rightly considered a powerhouse of innovative ideas and insights that generate research opportunities and lead to new knowledge, understanding and products.”
“Should this degree of clarification not be possible, we request that it be confirmed by the Committee that the wording of Clause 20 is already intended, and would be implemented, to cover information created during the planning phase of a research programme.”
I do not know whether you plan to have a clause stand part debate, Mr Havard, but I would like to add one further thing, so that we can progress quickly. I am aware that some stakeholders have stated that the clause is equivalent to section 27 of the Freedom of Information (Scotland) Act 2002 and so provides a degree of consistency. However, while I was swotting up last night on Apple v. Samsung—I want to mention that to my hon. Friend the Member for Cardiff South and Penarth—I checked the wording of the 2002 Act. Section 27(2)(b) states that
It therefore has the additional word “substantially”, in a way that proposed new section 22A of the Freedom of Information Act 2000 does not. Can the Minister explain why that word is omitted in clause 20? Will he also pledge to provide consistency in freedom of information legislation by tabling an amendment on Report to include the word “substantially”? I am interested to hear why there is a differing approach.
Mr Willetts: I should explain that what we are doing in clause 20 is responding to a request from the Select Committee on Justice, and a request I received from the research and scientific community, that the Freedom of Information Act 2000 be amended to provide additional protection for pre-publication research by giving the same specific protection as exists in Scotland—the so-called Scottish exemption. This clause is therefore about repeating the provision that already exists for Scotland.
On the final question raised by the hon. Member for Hartlepool, there are a couple of minor drafting issues. One concerns the need to show prejudice, rather than substantial prejudice. The Scottish Act requires public authorities to show that release of the requested information would, or would be likely to, cause prejudice and thus release of the information would not be in the public interest. This terminology is inconsistent with the drafting of the Freedom of Information Act 2000 which we have in the rest of the UK, which we are amending with clause 20.
We are trying to stick within the framework of the FOI legislation that we have but, with that one minor drafting point, deliver what is called the Scottish exemption. The substance of this clause therefore creates parity with Scottish organisations already protected by section 27(2) of the Freedom of Information (Scotland) Act 2002. We believe that that is a welcome measure—it is what was urged by the research community and was debated widely in the other place.
Duncan Hames: One of the “others” referred to by the hon. Member for Hartlepool was my hon. Friend the Member for Cambridge (Dr Huppert) on Second Reading. I am glad that this is the view that he has come to. Is there any evidence supporting that analysis that might give some confidence to the rest of the Committee?
Mr Willetts: Let me turn to that, because we have two problems with the proposal from the Opposition, which we have considered carefully. I have received the letter from the learned societies—I see a distinguished representative of the Royal Society of Chemistry in the
I undertake to the hon. Member for Hartlepool, the House, the Committee and the learned societies that if at any point we find that there is a genuine problem in the real world and that academics’ lab notes are being obtained under FOI—despite the range of protections that exist in FOI legislation at the moment—that would be something that we would review and consider. At this stage, we are responding to a request from a Select Committee of this House to introduce the so-called Scottish exemption. That is our first objection: that there is no evidence whatever that this is actually a problem.
The second objection is that we think that there is a good argument for a UK-wide regime and that if we try to make subtle differences between FOI legislation affecting researchers in Scotland and those in the rest of the UK, it might cast doubt on Scottish legislation, which we think meets the purpose. We think that having one framework of FOI legislation works well, which is why, for us, moving towards the Scottish exemption makes sense. Having a subtle difference in drafting between our regime and the Scottish regime, because of a supposed weakness in the Scottish regime, would open up a can of worms in the implementation of FOI legislation. We therefore do not believe that this is necessary.
This issue has arisen at quite a late stage, and I recall the intervention by my hon. Friend the Member for Cambridge (Dr Huppert) on Second Reading. The best I can do is to say that we really will keep an eye on it, to see whether it ever becomes a problem in the research community. So far, all the evidence we have had from Scotland is that the Scottish exemption is working well. On that basis, we believe that applying that into English law, as requested by the Justice Committee, is the right way forward.
The Chair: It is not normal practice to refer to those in the Public Gallery. However, I will say that this Bill has not had substantial pre-legislative scrutiny—but then again, it has had lots of pre-legislative scrutiny, because the discussion has been around for years, it seems to me. The introduction of people’s opinions from outside in the published evidence and quotations from learned societies help us in our debates. They also help the public to do the proper thing in understanding the purpose and intention of what we do in the legislative process. From that point of view, I am quite pleased to refer to those things.
Mr Willetts: Before the hon. Gentleman sits down, perhaps I can help in one further respect. There are already protections in the Freedom of Information Act 2000 which we believe would cover the research community. I am about to refer to terms that are not legally defined, but section 43 of the 2000 Act protects trade secrets. It protects the commercial interests of any person. We believe that those protections would be available to researchers, in the unlikely event that they faced such a challenge. I hope that gives the hon. Gentleman some extra comfort.
Mr Wright: I want to reflect on both the clarification that amendment 33 would have provided and the example of the Scottish FOI exemption. We will come back to this issue on Report, but in order to make progress this morning, I beg to ask leave to withdraw the amendment.
‘(1) The Copyright, Designs and Patents Act 1988 is amended as follows:
(2) In Part VII (miscellaneous and general) at the beginning insert—
“295A Director General of Intellectual Property Rights
(1) The Secretary of State shall appoint an officer to be known as the Director General of Intellectual Property Rights (“the Director General”).
(2) The Director General has a duty to—
(a) promote the creation of new intellectual property,
(b) protect and promote the interests of UK intellectual property rights holders,
(c) co-ordinate effective enforcement of UK intellectual property rights, and
(d) educate consumers on the nature and value of intellectual property.
(3) In performing those duties, the Director General must also have regard to the desirability of—
(a) promoting the importance of intellectual property in the UK,
(b) encouraging investment and innovation in new UK intellectual property, and
(c) protecting intellectual property against infringement of rights.”.’.—(Mr Wright.)
The new clause stems from the fact that the UK needs a champion for intellectual property. IP matters, and it is growing in importance in the modern world. Things such as digitisation, open sourcing, the growth of intangible assets and investment in brands show that the world economy is changing and that the nature of economic value is altering. Assets, and the potential to derive revenue streams from those assets, are not just physical bricks and mortar or plant and machinery. That is why Twitter, with hardly any physical assets or content costs, is forecasting earnings before interest, taxes, depreciation and amortization of 30%, and why investors, rightly or wrongly, are prepared to value the company today—this morning, because I checked—at $62 a share. Twitter is now worth $33 billion.
Let us not get into the arguments about valuing tech or social media companies, but what I have described points to IP being a leading contributor to nations’ comparative advantage and future economic growth. The notion of how IP fits into and co-ordinates with other parts of Government policy and how that interacts with the wider private sector is important, yet IP is very often seen as a minor matter in Government. It does not help that responsibility is seen to be split between BIS and the Department for Culture, Media and Sport. It is welcome that the present Minister, Viscount Younger of Leckie, now at least has “intellectual property” in his title, although it is disappointing that the Prime Minister does not actually know who his IP Minister is.
It was said in the Culture, Media and Sport Committee’s report on creative industries that Google has more access to No. 10 than the IP Minister. To put Lord Younger’s exact words on the record, he said:
“Google is one of several search engines, and I am very aware of their power, put it that way. I am also very aware, I think, that they have access, for whatever reason, to higher levels than me in No. 10, I understand.”
In contrast, the United States now has an IP tsar—or, more accurately, the office of the US intellectual property enforcement co-ordinator, which is a great title—with a direct reporting link to the President. The office states on its website that it is
“dedicated to the protection of the American intellectual property that powers our economy. American entrepreneurs, business owners, and the general public are best served by an economy that fosters and protects our global competitive advantage, which must discourage intellectual property theft while protecting the constitutional rights of our citizens. Our office strives to make sure that the Federal government takes the most appropriate action to realize those goals.”
“President Obama and Vice President Biden are acutely aware that intellectual property—the ideas behind inventions; the artistry that goes into books, music, and film; the valuable trade secrets that preserve a company’s market edge—is an integral part of the US economy. Infringement of intellectual property can damage our economy and undermine American jobs. Infringement shrinks markets and opportunity, hurts export prospects, threatens health and safety, and funds criminal syndicates around the world.”
Therefore, my question to the Minister is: if the US—which is the most open, free market nation on earth and the champion of dynamic entrepreneurship and technological innovation—has such a role for protecting and championing IP, can we not have a similar role?
A year or so ago, the all-party parliamentary intellectual property group produced a report on the role of Government in promoting and protecting intellectual property. Several members of that group are also members of the Committee, and I hope they will be able to catch your eye, Mr Havard, so that they can discuss the report—it is a good report, with lots to commend in it. I was particularly taken by its recommendation for a strong IP champion. The report states:
“We are concerned that the IPO is not a champion of intellectual property and from their evidence, they do not see this as their role. This needs to be rethought. The US has clearly benefited from having an IP tsar, and whilst we wouldn’t necessarily want to go down that route, we do think the Minister needs to become a champion of IP. We would like to see a small unit within the IPO fulfilling that role or if they are unwilling to, a small team in BIS undertaking that function.”
We can discuss—as I hope we will—the merits of having a director general as an IP tsar, as the new clause proposes, or the Minister being its champion. The key point I want to stress with our new clause, however, is the need for an individual to promote, co-ordinate, educate and protect on all matters relating to IP.
Mike Weatherley: I should clarify that I did not actually pitch for the role; I, among other notable people in the Chamber at that time who had equal qualifications—or perhaps even better—mentioned that perhaps we should consider that. The hon. Gentleman mentions the options, but he has not said who the director general would report to, whether the role would be necessary by law or whether someone could be appointed in any event. I am slightly concerned by that, so will he say why this measure needs to be enshrined in law and who the director general would report to? If it should be the IPO, will he say why?
I was part of the all-party parliamentary group that, as the hon. Gentleman said, was quite critical of the way the IPO was running. I would be worried if the director general was just another role within that. It needs to be outside, although I do not think we have enough time in discussing the Bill to debate the nuances of how that should come into force. I do, however, agree entirely with the principle of what the hon. Gentleman says. Will he answer those points?
Mr Wright: The hon. Gentleman is being far too modest. His knowledge and experience make him an ideal candidate to be the IP tsar—I would have thought that the Prime Minister would want him for that role anyway, as his IP enforcer on the Back Benches. The hon. Gentleman makes an interesting point. Reporting lines are a matter that the Committee needs to consider. Should the line from the director general go to the permanent secretary, directly to the Secretary of State or, as in the US, directly to the Head of Government? That would be an interesting debate.
The point I want to make is this. Where is the champion and co-ordinator of IP across Government? At the moment, that is simply not happening and not
The Chair: Mr Turner will chair this afternoon. My only declaration of interest is that I do not have substantial property and I am not normally regarded as an intellectual—so I have obviously been the right man to chair your Bill so far.