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Lord Hodgson of Astley Abbotts: My Lords, the Minister has explained the purpose of the order in his usual equable and persuasive style, for which we are grateful. However, although he has presented the matter as de minimis in many ways, I cannot help but feel that there may be more to it than at first meets the eye.

My concerns are in no way diminished by reading the proceedings in another place, where Miss Melanie Johnson, the Minister's colleague, spoke to the order at length in Committee. Her speech, which has now been echoed by the Minister, can be paraphrased as follows. The UK Patent Office is an efficient and strong performer—witness the Charter Mark grant for four consecutive years—but it is overwhelmed by work. She did not say whether that was because the office has been starved of resources and not recruited sufficiently, or whether it was because of the natural inventiveness of the British people—but we can let that pass. So, she said, we have to find a new way of providing help at no additional cost, which we can do by employing the Dutch and Danish patent offices. She concluded that that is excellent, first, because it is value for money; secondly, because it will maintain a rapid response rate to applicants; and, thirdly, because it will show us to be good Europeans and internationalists. So far, so reasonably logical.

But when answering questions from the committee she threw it all away. She remarked that the UK Patent Office carries out 15,000 searches and 12,000 examinations per annum. She said that the two offices in the Netherlands and Copenhagen—as the Minister has now told us—would carry out 400 searches in the first year and 750 searches in the second year and no examinations at all. So behind this brave proposal, which is trumpeted as a huge step forward, we have something that will cover only 2.7 per cent of the searches in the first year and 5 per cent in the second year and will give no help at all as regards examinations.

Further, as the Minister correctly pointed out, even to achieve that minimal help the UK Patent Office has had to set up substantial elaborate administrative schemes with regard to quality control, standard operating procedures, language tests and, above, all, as the Minister said, with regard to a buddy system whereby each applicant dealt with in Holland or Denmark has a UK patent officer as a buddy. That must represent a huge duplication and waste of effort.

It is hard to see how this proposal makes sense on an operational, administrative or financial basis. So what could be the basis behind the proposal? It could be the forerunner of a much larger, more far-reaching and

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ambitious idea. We can discover whether that is the case if the Minister is prepared to give the House clear and unequivocal responses to three questions.

First, does a UK citizen applying to the UK Patent Office to have his or her invention patented have the right to insist that it is done within the UK or can he be forced to accept processing in Holland or Denmark? Secondly, do the powers being granted in this regulation permit the Comptroller-General of Patents, Designs and Trade Marks to contract out to any country in the European Union provided he is satisfied with the quality standards being offered, or is it permissible to contract out only to Holland and Denmark? Noble Lords should note that I refer to powers in that regard, not proposals. Thirdly, by what date does the Minister expect the UK Patent Office to have recruited sufficient additional staff to be able to take back the 5 per cent share of applications from Holland and Belgium for processing within the UK?

If the answers to those questions are, respectively, "no", "yes" and "I do not know"—that is, no, a citizen cannot insist on processing within the UK; yes, he may go anywhere within the EU; and I do not know when the UK Patent Office will have recruited sufficient staff to bring back all processing within the country—a bigger issue may be at stake; that is, that this is a first step in the Government subsuming the UK Patent Office operations within the European Patent Office. After all, that has already happened in Holland, which is why that country has surplus capacity to offer us for the reasons the Minister laid out.

There is another straw in the wind with regard to this matter. While preparing my remarks for this debate I looked at an article on the front page of yesterday's Financial Times. I am sure that the Minister has seen the article; he probably wrote it. The article is headed,

    "Inventive employees could be awarded royalties".

But that is not the critical paragraph, which comes later. It states:

    "The proposal comes in a consultation launched by the DTI and the Patent Office as part of moves to bring the UK into line with changes to the European Patents Convention. Patent laws in Britain have not been significantly updated since 1977".

This idea is not necessarily a bad one. After all, as I believe the Minister pointed out, it would result in a single patent giving an inventor protection in 30 European countries simultaneously. However, it would be wrong for the Government to slide in such a proposal under the cover of a minor, not to say minimalistic, change involving Holland and Denmark only. If a strategic change of that kind is in prospect, the Minister ought to withdraw the statutory instrument we are discussing and resubmit it with revised explanatory notes. The House can then debate it properly in the full knowledge of what is in prospect.

Last night I had the privilege of listening to a lecture in Oxford on the five tests for entry to the euro given by Mr Ed Balls, one of the Minister's colleagues. He

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said that transparency was a key policy for the Government. I look forward to hearing from the Minister how transparent he is prepared to be.

Lord Razzall: My Lords, it is obviously for the Minister and not for me to respond to the speech we have just heard from the Conservative Front Bench. I am somewhat puzzled by the conspiracy which the noble Lord, Lord Hodgson, seems to spot within the terms of the order. I am particularly puzzled by it as the Explanatory Memorandum that Her Majesty's Government circulated with the order makes quite clear what their policy objective is:

    "On a global scale, this points to an obligation on patent offices to work towards increased co-operation with a view to reducing duplication of effort and moving in due course towards mutual exploitation of each other's work".

Her Majesty's Government make no secret of the direction in which patent procedures and, indeed, hopefully, patent law, are moving. That is their policy objective. As someone who has over the years been involved in that field on a professional basis, I welcome that policy objective. I agree with the noble Lord, Lord Hodgson, that if we reach the stage where there is a significant further development in that area, we ought to have the opportunity to debate it within this House. However, on behalf of the Liberal Democrat Benches, I welcome the policy objective. Indeed, all practitioners in the field would undoubtedly welcome it as anything that can be done to eliminate the duplication of effort and cost that results from having to make individual patent applications in different countries is obviously to be welcomed.

However, as regards the terms of the order, I should like to probe the Minister on two points. First, I believe that the Explanatory Memorandum makes clear why the Patent Office is going down this route; namely, that there is now a significant mismatch between demand and examiner capacity. The reason for that is that it appears that the Patent Office has recruited and trained many examiners who then get a much better paid job in the private sector or in patent organisations. The Minister ought to confirm that the Government will keep an eye on that matter vis-a-vis the Netherlands and Denmark which, after all, are nice countries in which to live. It would be unfortunate if we continued the practice of training many examiners who then obtain better paid jobs in the Netherlands or Danish patent offices. If that situation continues, it rather defeats the objective of the proposed scheme. I hope that the Minister will confirm that his department will keep an eye on relative pay scales in that area as they could constitute a potential problem.

Secondly, on the general issue, perhaps the Government could confirm when they intend to conduct a review of how the scheme operates and when they will produce a report on how it operates in practice.

Lord Sainsbury of Turville: My Lords, I am grateful for the comments that have been made. The issue we

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are discussing constitutes a significant development for the Patent Office. It is important that people should understand the thinking behind the measure.

There is a backlog in this area, for the reasons that have been clearly set out. In terms of providing a service to industry it is important that that backlog is dealt with as quickly as possible. This is one—but only one—of the ways in which that should be done.

In answer to the noble Lord, Lord Razzall, I say that we must put even more energy into ensuring that we increase the numbers of people whom we recruit and hold on to them. That is fundamental to tackling the main issue. We have made some steps in relation to pay to bring that about, but it is difficult to increase numbers rapidly because of the large training element.

Some examinations are in fact being contracted out. Contracts have not yet been signed with either the Danish or the Netherlands office, but it is proposed to contract out 250 searches to the Danish office in the first year, rising to 500 searches in the second year. For the Netherlands, it is proposed to contract out 150 searches or examinations in the first year, rising to 250 in the second year. As the noble Lord rightly said, however, that is minor in comparison with the scale of the problem. Above all, we need to drive up the number of people so that we do the work in this country. The order should not be seen as doing anything more than giving added flexibility to deal with the problem in the light of the most important consideration, which is to improve the service that we give our customers.

The noble Lord, Lord Hodgson, asked three questions. He asked whether people had the right to insist that the patent was done in this country. The answer is "No", but we will make certain that the quality is the same throughout and allocations will be made in line with that. He asked whether the contract could go to any country, to which the answer is "Yes". Finally, he asked by what date we would be able to withdraw. We believe that there will be a possibility of that in two years, but that depends on being able to achieve the necessary recruitment.

None of this has anything to do with moving operations to the European Patent Office. Our Patent Office is one of the strongest in Europe. One problem with getting a further new European patent, which is actually highly desirable, is that many countries are deeply concerned that, in those circumstances, all the patent work would come to the United Kingdom, because the advantage of the English language is enormous for many businesses. The measure should be seen as standing on its own and creating useful flexibility to deal with the problem of the backlog.

The order is only a starting point. The Patent Office has still to finalise preparations with the Danish and Netherlands offices. If all parties are content with those preparations, work could begin in a matter of weeks and Patent Office customers would then start to benefit from an increased flow of work. The international co-operation issue is for the medium and longer term, but there is every prospect of significant

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developments in that direction. Such developments will be of great benefit to innovators seeking to protect their ideas across the world.

The draft order is a significant measure that will provide increased flexibility for the Patent Office, improve the service it can offer customers and prepare for future international co-operation.

On Question, Motion agreed to.

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