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Earl Attlee: I have an amendment in the group, Amendment No. 20. It is slightly different. It would replace Section 61(3) in such a way that the comptroller could either arbitrate or award claims under the whole of subsection (1) and/or the Secretary of State could by order under new subsection (3A) set up a panel of independent arbitrators. That would enable real experts in the art to be brought in and allow for the panel to be independent of the Patent Office, thus avoiding a situation in which it grants the patent and then judges infringement of it. That is possibly a more effective solution than the non-binding opinions of the Patent Office.

Lord Sainsbury of Turville: The main difference between hearing infringement cases before the courts and before the Comptroller-General of the Patent Office is that, in order to have a case heard before the Patent Office, the patent holder must secure the agreement of the other party. Although infringement proceedings before the comptroller have been possible since the 1977 Act came into force in 1978, no parties have ever agreed to such proceedings. For that reason, we consulted on making exactly the same change as that proposed in Amendment No. 8—to remove the consent requirement—so that, as for other proceedings, the claimant alone may choose to bring proceedings before the comptroller. However, the proposal did not meet with approval from those who responded. That case is a good example of a government listening to consultation and changing strategy in the light of it. For that reason, it should be cherished.

There was more than one reason for the response. One reason seems to have been the lack of awareness that infringement proceedings could be brought before the comptroller. We intend to address that lack of awareness and highlight the advantages of that low-cost forum for settling disputes in a binding way. Indeed, we need to draw people's attention to the success of binding arbitration entered into with the agreement of both parties in settling commercial disputes in some other areas. Section 61(3) is in effect similar to the provision of voluntary binding arbitration.

Another important reason for not adopting the idea on which we consulted is the desire not to undermine the extremely useful procedures provided by the Patents County Court, the point that the noble Lord,

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Lord Razzall, raised. Prompted by similar concerns about the difficulty that some patent proprietors experience when seeking to enforce their patents, the Patents County Court was set up in 1988 to provide a lower-cost, more user-friendly and more streamlined forum for the resolution of patent disputes. After a slow start, progress is being made towards meeting those objectives. Any proposal to provide another forum, essentially offering the same possibilities, to handle patent infringements disputes was seen as likely to cause confusion and undermine the good process that has been made.

A final point was that any decision of the comptroller under Section 61 can be appealed to the patents court. Appeals may be considerably more likely if a party has not consented to proceedings before the comptroller. Thus, any saving in time and cost that might be gained by using the Patent Office procedure could be lost in the cost and time required for dealing with such an appeal. Adding the cost of appeal is likely to create a higher overall cost than that for a case heard in the Patents County Court. It may be better to avoid what many would consider to be an extra layer of litigation and require parties to go straight to the courts with their better range of remedies, if parties have not agreed to use the Patent Office procedures.

Like that proposal, the amendment to Section 61 of the Patents Act 1977 proposed by the noble Earl, Lord Attlee, and the noble Lord, Lord Lyell—Amendment No. 20—also proposes to change current Section 61(3) to move the requirement for the consent of both parties. It would, moreover, extend the range of remedies available to the comptroller to include all those mentioned in Section 61(1). Although the amendment would address one of the concerns about Section 61(3) raised by some respondents to the consultation, it does nothing to address the issues of increased confusion and direct competition with the Patents County Court, or adding an extra layer to litigation in this area. Indeed, it would make the Patent Office proceedings even closer to those available in the Patents County Court.

Amendment No. 20 then goes on to propose the insertion of two new subsections (3A) and (3B) into Section 61, which would provide a general power under the affirmative resolution procedure to set up the necessary procedures in the Patent Office to handle such infringement cases. The setting up of a panel of independent arbitrators is specifically mentioned as a possibility.

This provision appears entirely unnecessary. The Patent Office is staffed with public officials who are independent of the parties and capable of hearing such disputes. In addition, under Section 123(2)(g) of the Patents Act 1977, the comptroller already has the power to appoint any adviser that he requires to assist him in any such proceeding.

The amendment proposed by the noble Earl, Lord Attlee, and the noble Lord, Lord Lyell, appears to be intended to create a procedure for binding arbitration of infringement disputes before the comptroller.

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Arbitration of a dispute between two parties is usually carried out either with the agreement of both parties to be bound by the decision, or by order of a higher authority, such as a court, that applies to both parties.

The proposed change to Section 61 will allow one party only, the claimant, to launch infringement proceedings before the comptroller. The comptroller will then decide the issue and order suitable relief. I doubt whether such a procedure, which does not place the same requirement on both parties to be involved either by agreement or compulsion, can be considered as arbitration. Indeed, as I have mentioned, one might consider that the existing Section 61(3) already provides for a procedure that is a form of binding arbitration, as it requires the consent of both parties.

We are hopeful that recent and ongoing changes at the Patents County Court will be successful in providing a lower cost forum. I should say to the noble Lord, Lord Razzall, that we will keep this under review and could revisit this area if the changes do not have the desired effect.

Thus, in the light of the difficulties identified with the proposed amendment to Section 61 by the noble Lord, Lord Razzall, the noble Earl, Lord Attlee, and the noble Lord, Lord Lyell, and given my assurance that we will keep the question of the Patents County Court under review, I ask noble Lords to withdraw their amendments.

Lord Razzall: So far as concerns Amendment No. 8, I agree with the Minister's comments in regard to consultation. After all, consultation is there to find out what people want, and one then adjusts one's policy accordingly. No doubt, the noble Lord, Lord Triesman, will confirm that that is what will happen with the Big Conversation. On that basis, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 [Enforcement of damages]:

Lord Triesman moved Amendment No. 9:

    Page 5, line 36, leave out "a recorded decree arbitral" and insert "an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland"

The noble Lord said: Clause 10 provides an improved mechanism by which a patent holder can enforce an award of damages made by the comptroller of the Patent Office in infringement proceedings. However, we have recently discovered that the wording of proposed new Section 61(7)(b), as set out in Clause 10, is not consistent with changes made by the Debtors (Scotland) Act 1987. That was drawn to our attention relatively recently by the solicitors for the Advocate General for Scotland, and obviously we have had to take note of that advice. Amendment No. 9 therefore brings the wording of Clause 10 into alignment with the changes made by that Act to the wording of Sections 93 and 107 of the Patents Act.

Amendment No. 24 makes an equivalent correction to the wording in existing Section 41(10). That provision concerns the enforcement in Scotland of an

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award of compensation for an employee-inventor and also erroneously contains the pre-1987 wording. We are trying to ensure consistency across all of these pieces of legislation. In that light, I beg to move.

Lord Lyell: Before we accept the government amendment, did I hear the noble Lord right in saying 1987? I must go and check. I looked at Section 93 of the 1977 Act, which is about a "recorded decree arbitral". Did I hear that there was a Scottish Act in 1987? If he confirms that, I will of course agree with the amendment.

Lord Triesman: I would be the first to confess that I had not been an assiduous student of the Debtors (Scotland) Act 1987, but I am able to confirm that that is the right year.

On Question, amendment agreed to.

Clause 10, as amended, agreed to.

Clause 11 [Threats of infringement proceedings]:

Lord Razzall moved Amendment No. 10:

    Page 6, line 7, at end insert ", or

(c) communications which a person intended as an effort in good faith to negotiate a settlement and which contain notice of detail of facts which support a reasonable apprehension of infringement occurring."

The noble Lord said: In moving the amendment, I shall speak also to Amendment No. 12, which goes to similar points. I am grateful for the help that I have had from the Law Society of Scotland on Amendment No. 10, which makes a very simple point. The law as it is, and as it will be in future, should not inhibit the opportunity of negotiated settlements in such disputes. I am not sure what the Minister will say on the amendment. He may well say that it is unnecessary; if so, it does not mean that it cannot go in the Bill. It is simply an intention to add to the Bill a statement that efforts to negotiate a settlement shall not be regarded as a groundless threat to institute proceedings.

The threat issue is difficult and brings me to Amendment No. 12. I am told by those who practise in the area that, quite often, an attempt is made in potential disputes to drive a wedge between the client and his, her or its adviser by suggesting that there is an infringement by the adviser. Amendment No. 12 attempts to bring English law into line with what I think is Section 132 of the relevant Australian patents legislation. The Government carried out consultation on the matter, and might even have been minded to take such a route. However, they declined to do so.

I shall be interested to hear what the Minister says. Some of the justification in the Patent Office's response—in particular that no similar protection is given to professions in libel actions, so it should not be given to professions in the area about which we are talking—was a little specious. Everyone is aware that the whole structure of the patent industry—science and protection of inventions—is very different from litigation over whether the noble Lord, Lord Sainsbury, is X, Y or Z. I look forward to his response. I beg to move.

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5 p.m.

Earl Attlee: I have tabled Amendment No. 11 in this group. The new threats provisions are generally welcome, although I confess that when I started with the Bill I did not understand the need for the Section 70 threats provisions. Clause 11 provides for new subsections to Section 70 that provide a defence in threats proceedings when a person must resort to pursuing secondary infringers. The defence is that he has used his "best endeavours" to determine who was the primary infringer or importer.

Originally, when I read the clause, I thought that I knew the meaning of the term "best endeavours", and the drafting made sense to me. I now understand that the term means practically to leave no stone unturned. I do not believe that that is what the Minister intends, because it would be a very high hurdle to clear in order to avoid the risk of threats proceedings. In addition, it would hit SMEs hardest.

On the amendments tabled by the noble Lord, Lord Razzall, I am not worried about Amendment No. 10, but Amendment No. 12 worries me. Legal practitioners have the hide of a rhinoceros, and they can charge at anything. I do not think that a patentee or proprietor would be as uncouth or as unprofessional to make threats; he would use a professional. That would be fine for an SME quite properly to protect his IP rights. My fear is that Amendment No. 12 could be used as a loophole by an aggressive multinational.

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