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Lord Hunt of Wirral: My Lords, is the noble and learned Lord still reflecting upon the points raised upon conditional fees in this House on 23rd July, in particular the notion that successful defendants should pay the costs of unsuccessful plaintiffs through the measure that he is minded to introduce? Is it proposed that defendants, including health authorities and insurance companies, should pay the success fee and the insurance premium, thus asking defendants to pay for the cases that they have won through a levy on the cases that they have lost? Does the noble and learned Lord accept that there is a great deal of support for his reforms to speed access to justice but that at its heart should be the principle of fairness in particular as between the parties?

The Lord Chancellor: My Lords, I see nothing whatsoever offensive in principle in the proposition that a plaintiff who succeeds against a defendant, who for example was negligent, should recover all the costs that he has incurred in order to get justice from the defendant, including the insurance premium and the uplift on costs.

Lord Renton: My Lords, does the noble and learned Lord remember that conditional fees were introduced

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mainly in the hope that they would reduce the cost of legal aid? Can he say whether they have done so; and, if so, to what extent?

The Lord Chancellor: My Lords, there is no intention to reduce the cost of legal aid through the medium of conditional fee agreements. What is intended is to refocus the existing legal aid budget away from those areas which can be taken out of legal aid by reliance upon conditional fee agreements.

I have to say this to noble Lords. I receive letters of complaint almost on a daily basis from Members of another place about the operation of the legal aid system. However, in the period since conditional fees have been introduced I have not received a single letter of complaint about their operation in practice.

Lord Bridges: My Lords, has the noble and learned Lord had the opportunity to study the far-reaching social effects of the contingency fee system operated in the American courts? When living in the United States some years ago it was my understanding that access to private medicine, for example, had become largely impossible for the ordinary citizen due to the cost, given the generous awards made by the American courts to litigants in medical malpractice cases. There would seem to be some lessons to be learned.

The Lord Chancellor: My Lords, I welcome the opportunity to draw again the sharp distinction between contingency fees and conditional fees. Conditional fees, which we sanction, are an uplift on what the cost would otherwise be. Contingency fees are a proportion of the recovery--perhaps many millions of dollars--which a plaintiff in a civil action in the United States of America may recover before a jury. In America there are juries in civil actions, although not in this country. I do not regard the problems that arise from contingency fees in the United States of America as any deterrent to the introduction of quite different conditional fees here.

Lord Mackay of Drumadoon: My Lords, is the noble and learned Lord the Lord Chancellor aware that these Benches welcome his decision to consider further research in this important area? While in principle we support the idea of conditional fee agreements, a number of aspects give rise to a measure of concern.

Does the noble and learned Lord agree that such research would involve conducting interviews with lawyers, both those who have acted under conditional fee agreements and those who have declined to do so? Is he satisfied that he has the necessary statutory powers to carry out such research requiring lawyers to divulge information which might otherwise be confidential?

The Lord Chancellor: My Lords, I do not envisage that the research project which I have undertaken would entail obliging lawyers to make available confidential information.

However, I encourage the noble and learned Lord to read an article in this week's The Lawyer magazine by a senior barrister's clerk explaining how more than half the tenants in his chambers have undertaken work on a

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conditional fee basis for plaintiffs in personal injury cases. He wrote that CFA work represents an opportunity and not a threat.

However, I am perfectly content to carry out a managed research project into the operation of conditional fees. When the terms of reference are settled for the researchers, I shall inform the noble and learned Lord.

Lord Ackner: My Lords, can my noble and learned friend confirm, as has been stated in the response from the National Consumer Council, that he and his department have had many meetings in which the council has expressed concern at the lack of research into how conditional fees are working in practice?

The Lord Chancellor: My Lords, I am afraid I do not recognise those meetings myself. However, all that I can say is that everything I have heard about conditional fees, including the 47,000 personal injury cases which have been carried forward under one insurer in particular, has been to the credit of the system. I have not seen a scrap of evidence to suggest that the legal profession has in any way abused its position in relation to the amount of the uplift. Noble Lords will bear in mind that the amount of the uplift can be taxed at present by an officer of the court.

Trademark and Competition Law

3.5 p.m.

Baroness Hamwee asked Her Majesty's Government:

    What steps they propose to take to protect the interests of consumers and to deal with any necessary changes to trademark and competition law in the light of current and recent cases in the European Court of Justice regarding parallel importing of trademarked goods (importing in the so-called "grey market").

The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, the European Court of Justice issued a judgment in the Silhouette case (C-355/96) Silhouette International v. Hartlauer Handelgesellschaft) on 16th July 1998. This judgment confirmed our understanding of the Trade Marks Directive, which dealt with the harmonisation of national trade mark law. As a result the market for trade marked goods in the European Union and, by extension to the European Economic Area, has been liberalised so that brand owners have no power to prevent the import of their goods already placed on the market anywhere in the European Union or the European Economic Area. They have rights to prevent the import to the EU or the economic area of their goods already put on the market with their consent outside the Union or the European Economic Area.

The Government have recognised the significance to consumers of the rights provided to brand owners by the Trade Marks Directive. We therefore fully support

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a current European Commission study of the economic consequences of trade mark owners' rights to control parallel imports into the Community.

Baroness Hamwee: My Lords, I thank the Minister for that reply. I declare an interest. The solicitors' practice in which I am a partner represents certain of these traders. Since I put down the Question the Parallel Traders Association has been launched and my firm acts for that, too. However, I was anxious to put the Question from the consumers' point of view.

Does the Minister acknowledge that notwithstanding the liberalisation within the European Economic Area to which he referred the provisions do not serve consumers well? Trademarked goods bought perfectly legally outside Europe were being sold at a far lower price than trademarked designer goods. I give as examples the sale of designer sunglasses for £50 in a supermarket but for £90 to £150 for the same sunglasses in Harrods. Football shirts were about twice the price in the stores as against a supermarket.

Will the Minister consider seriously making oral representations in the forthcoming Sebago case? It represents an opportunity for the Government to protect the rights of consumers and to make the point that trademark law is designed to deal with counterfeits, not to restrict distribution.

Lord Simon of Highbury: My Lords, I recognise two parts to the question. First, it is possible for imports to be brought in from outside the economic area, and differential pricing ensues. Any retailer has the right to fight his case if he is stopped from doing that by an importer. However, I must make it clear that normally we use the legislation on trademarks within trading areas to protect the consumer by the quality and after-service of the design. That is the point of the trademark. Therefore, there is protection for the consumer in this case. The noble Baroness referred to the Sebago case. It is unlikely that the Government will make a submission. We do not believe that any new matter will be dealt with which is not already in the Silhouette case to which I referred.

Lord Peston: My Lords, concentrating on the position in the European Union, my noble friend summarised very clearly the view of the European Court of Justice. The problem is striking the balance between the rights of intellectual property owners and the need for competition. Within the European Union, the European Court of Justice has made the issue clear and to the advantage of the consumer. However, is there not a problem in respect of which the Government and the Commission have a role to play; namely, that manufacturers might misuse their trademarks by threatening their distributors who will distribute to people who wish to parallel import in all kinds of areas? Is the Minister satisfied that such abuse needs to be controlled and that the Government need to take a considerable interest in these matters?

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