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Lord Lyell: In the Bill there are, quite rightly, continual references to what I call "the bible"—that is, the 1977 Act. Perhaps the Minister will be able to explain today—or perhaps at a later stage, because it might be unfair to expect him to do so today—a difficulty that I have with the word "satisfaction". Starting at Section 60 of the 1977 Act and ending at Section 75, I read through every provision dealing with infringements—an issue which forms an important part of the measures being introduced by the Bill—and

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only in Section 63(3) does the word "satisfaction" appear. It appears only once in that whole part of the 1977 Act.

I wonder why the words "to its or his satisfaction" and "to its satisfaction" occur in the proposed new subsections to Section 63 of the 1977 Act, which deals with relief for infringement of partially valid patent. Does the word "satisfaction" have something to do with the scale or size of the enterprise that might be protesting about an infringement of its patent—in other words, the small man against the giant corporation? Why does the word "satisfaction" appear in Section 63(3)? It is incorporated in the proposed new subsections, but what is the reason for it?

Have I been remiss? I probably have been, in that, as the Minister said, I have probably missed out something that is in the European Patent Convention 2000. It is 27 years ago since the 1977 Act was introduced, but I am curious why the word "satisfaction" appears only once.

It may also appear in Section 58 of that Act, but I had better not go back. I have probably said enough. Perhaps the Minister will assist me.

Lord Sainsbury of Turville: This situation arises where the court or the comptroller finds that a patent is infringed but is partially invalid at present. In those circumstances, damages for infringement may be awarded on the condition that the patent is amended to cure the partial invalidity. In the case of a European patent, Clause 3 gives the patent holder the option of curing the partial invalidity by amending the patent using the new central limitation procedure at the EPO.

Clause 3 is designed to recognise the new procedure available at the European Patent Office for limiting the scope of a patent. This new procedure will be an optional way for the holder of a European patent to overcome a finding during an infringement or Crown use proceedings in the UK that his patent is partially invalid. It is important that the comptroller or the court here in the UK can consider the effect of that limitation on those proceedings.

However, the proposed amendments to Clause 3 would seem to undermine the ability of the court or comptroller to be sure that the central limitation of the patent has cured the defect identified during the proceedings in the UK. After all, central limitation may have taken place for any number of different reasons not connected with the UK proceedings. It seems wrong if the court or comptroller is not able to be satisfied that the partial invalidity identified in UK proceedings has been cured by the central limitation. Furthermore, the proposed amendments would introduce an inconsistency with existing Sections 58(9) and 63(3) of the 1977 Act, in which the courts or the comptroller are able to satisfy themselves that an amendment done in the UK cures the partial invalidity.

So I hope that it is clear that when we refer to "satisfaction" we mean the satisfaction that the comptroller may have that the use of the European

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Patent Office limitation cures the invalidity. In that sense, I do not believe there is any confusion as to what "satisfaction" means. In the light of that explanation I hope that noble Lords opposite will feel able to withdraw their amendments to Clause 3.

3.45 p.m.

Lord Lyell: The Minister has been extremely kind. He mentioned the new concept of central limitation—did I hear it right? Under Sections 58(9) and 63(3) of the 1977 Act, which have existed for a good number of years, why, in the case of partially valid patents, is it taken for granted or understood—as we used to do our Latin 50 years ago or more—that the Patent Office will be satisfied in all cases? I was mildly suspicious—in the nicest possible way—about why satisfaction occurred in the case of partial validity and not elsewhere in the other sections. Is it something to do with central limitation?

Lord Sainsbury of Turville: That arises because of the ability now to make certain that a change in a patent operates across Europe using this mechanism. If that mechanism is used, it is important that in the UK the comptroller can satisfy himself that that limitation, which may have been done for other reasons, remedies an invalidity of the UK position. The issue arises because of that ability to make a change apply across Europe. It is necessary in those circumstances for the comptroller here to make certain that that correction applies to the situation that he is considering.

Lord Lyell: I am very grateful and shall read with care and devotion what the Minister has said.

Earl Attlee: I am extremely grateful to my noble friend Lord Lyell, who has the advantage of knowing the 1977 Act intimately because he was in my position all those years ago. Fortunately for me, we are giving the legislation a 27-year service rather than starting from scratch. I am grateful for the Minister's explanation, which I shall read carefully. Subject to the usual caveats, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

Clause 3 agreed to.

Clauses 4 to 6 agreed to.

Schedule 1 agreed to.

Lord Triesman moved Amendment No. 4:

    After Clause 6, insert the following new clause—

(1) In section 23 of the 1977 Act (restrictions on applications abroad by United Kingdom residents), in subsection (1), after "an invention" there is inserted "if subsection (1A) below applies to that application,".
(2) After that subsection there is inserted—
"(1A) This subsection applies to an application if—
(a) the application contains information which relates to military technology or for any other reason publication of the information might be prejudicial to national security; or

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(b) the application contains information the publication of which might be prejudicial to the safety of the public."
(3) After subsection (3) of that section there is inserted—
"(3A) A person is liable under subsection (3) above only if—
(a) he knows that filing the application, or causing it to be filed, would contravene this section; or
(b) he is reckless as to whether filing the application, or causing it to be filed, would contravene this section.""

The noble Lord said: Initially, this group of amendments may look complicated, but the idea behind them is, I hope, very simple. Essentially, the amendments bring about some helpful deregulation of the provisions of the 1977 Act relating to patent applications involving sensitive matters.

The 1977 Act places certain restrictions on patent applications that contain information that may be prejudicial to the defence of the realm or to the safety of the public. However, the restrictions place an unnecessary burden on many people who may wish to file an application in another country. Of the 25,000 or more applications made to the Patent Office each year, only 100 or so relate to such sensitive information. In brief, it is not a high proportion, but none the less it is an extremely important group. Moreover, experience shows that that small number of applications originates from a small number of highly specialised applicants who fully understand the sensitivities of the information with which they are dealing. Indeed, those applications are invariably dealt with by a select group of professional agents who also understand the need for restrictions on disclosure of information in the applications.

Section 23 of the 1977 Act requires a UK resident who would like to file an application for a patent abroad to first file an application in the UK and then wait for six weeks or obtain the permission of the comptroller to file overseas. That causes the greatest burden on professional agents or representatives who are based in the UK but who have foreign clients. For example, highly respected UK patent agents must have regard to that restriction when acting for United States or Japanese clients wishing to file a patent application at the European Patent Office.

Given the small number of patent applications that might contain sensitive matter, it is only right that the present restriction is limited to where it is really necessary and a sensible precaution. The new clause would amend Section 23 to ensure that the need to file first at the UK Patent Office or get the comptroller's permission applied only to applications that contain sensitive subject matter. In all other cases, no restrictions will be placed on UK residents filing applications in other countries.

We understand that there may be concern about how to identify applications that contain sensitive subject matter. However, anyone in doubt can continue first to file at the UK Patent Office or to seek the comptroller's permission. Moreover, further protection is provided by limiting the application of the criminal offence presently found in Section 23(3). The offence would apply only to those people who have filed abroad knowing that they are contravening the section as amended or who do so recklessly.

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I move the amendment in that light. It is linked to the other amendments grouped in the Marshalled List. It deals with what industry in general—the industries most affected in particular—has found to be unreasonable and over-burdensome restriction. It is a way of ensuring that sensitive material is protected without extending the restriction unnecessarily. I beg to move.

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