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Lord Lyell: I support my noble friend Lord Attlee in his eloquent presentation of the proposed new clause. However, it has been brought to my attention that the industry may be worried by an additional levy.

I understand that in many cases the cost of presenting a major patent can be in the region of 3 million US dollars. A 1.5 per cent levy would not seem very much. But 35,000 to 40,000 US dollars on every application made would soon mount up. I begin to worry a trifle that this could be a needless irritant. Perhaps I might refine my noble friend's amendment by suggesting that it might be feasible to limit the slight extra levy to those found to have infringed a patent.

At the same time, my noble friend has brought forward an amendment that seeks to bring the law of patents back towards the small man, to whom I referred at an earlier stage as David versus Goliath.

5.45 p.m.

Lord Sainsbury of Turville: This amendment, proposed by the noble Earl, Lord Attlee, and the noble Lord, Lord Lyell, would insert a new Section 71A in the Patents Act 1977 which would allow the Secretary of State to establish a levy on all patent applications in order to raise moneys for a fund, referred to as a "special litigation fund", to assist patent holders with the costs of infringement proceedings in certain circumstances. These special circumstances are listed in proposed Section 71A(4).

I think that the amendment is very premature. Such a significant change to current legislation can be made only following a full and proper consultation process. The Government have been keen to ensure that proposed new legislation is subject to proper

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consultation so that its advantages, disadvantages and long-term effects can be explored in sufficient detail to ensure that it will fulfil its intended purpose and function. Unfortunately, that is not the case with this proposal, on which there has been no consultation whatever. Before producing this kind of legislation, surely we need to undertake consultation because this idea is difficult, although important. We have started to look at the issue, but it is early days.

The difficulties that some patent proprietors experience in enforcing their patents has been the subject of much discussion in recent times among those involved in the innovation and intellectual property fields, and has even attracted some interest in the press. While it is fair to say that the problem has now been recognised, there is still much argument over how best to solve it. For example, some experienced practitioners in the patent field do not think that a special litigation fund, whether or not supported by such a levy, is a workable solution. Committing to one option such as that proposed in this amendment, without fully exploring and comparing it with alternatives, would be a failure to act responsibly and could lead to all sorts of unforeseen difficulties downstream.

In addition to the lack of consultation on this proposal, there is also the need to ensure that any provision is compatible with our commitments under European and international law. If access to such a special litigation fund were restricted to patent proprietors who are UK nationals, such a preferential treatment of UK nationals over others might infringe our commitments under the agreement on Trade-Related Aspects of Intellectual Property Rights, the TRIPS agreement. Restricting access to such a fund to UK nationals would also raise EU state aid implications.

Of course, this amendment is limited to raising funds for litigation from a patent levy. Were a litigation fund thought to be a good idea, and the solutions to any problems identified found, there are many ways that funding might be forthcoming. For example, funding could come from participating patentees directly, or from government funding for supporting business in various ways, instead of a levy on patents. Although the provision that would be added to the Bill by this amendment is only an order-making power and thus would not ever have to be used, its very existence could nevertheless preclude a proper consideration and evaluation of the right way to provide the funding. This could have a damaging effect on our ability to decide what is the best approach were support of this type to proceed.

I can reassure noble Lords that the Government are taking steps to address the difficulties of enforcing patents. Several provisions of the Bill are designed to help with enforcement of patent rights. In addition, negotiations on a proposed EU directive concerning the enforcement of intellectual property rights, which will also address some of the difficulties in this area, are at an advanced stage. Adoption of the directive may well take place before May. Moreover, the Patent Office, through its Patent Enforcement Project, has

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recently accepted a tender for a study on the feasibility of a fund of the type proposed by this amendment. This work is therefore at an early stage, but a proper and full evaluation of all the factors is the right way to proceed.

We do consider that there is an issue here. It will come as no surprise to noble Lords when I say that we are on the side of David against Goliath, but we need to be certain that David is truly being bullied by Goliath and so we need to look carefully at the best way to help David if it turns out that there is a serious problem here.

For these reasons, the Government are unable to accept the amendment at this stage and I strongly urge the noble Earl to withdraw the it.

Earl Attlee: The Minister referred to lack of consultation. That never prevents the Government from tabling legislation. I have only to think of the provision on clandestine entrances in goods vehicles, which was introduced as an amendment on Report in the House of Commons and not debated at all. We discussed it in the House of Lords, but there was no consultation about it and the industry was very upset. Although I understand the need for consultation, it is not necessarily a reason for not doing anything on the matter.

Why has the Minister not thought of consulting on the matter? He has consulted on the Patents Bill and the implementation of the EPC, which is obviously very desirable. If, in less than a couple of weeks, I can come up with the idea of some sort of special litigation fund, it is surprising that the Minister, with the benefit of all his officials, has not thought of consulting on the issue himself.

The Minister mentioned the obvious point about the difficulties, in terms of competition law, of supporting UK nationals. We might want to support European patents; the Minister touched on the European directive on intellectual property rights, which we hope will be welcome. He also touched on the possibility of the Government, through the DTI, funding such cases. The attraction of my amendment is that we would get away from the Government and the Secretary of State picking winners. The activity would be for the Patent Office on its own, judging the merits of a patent and whether it needed to be protected.

I shall read what the Minister said very carefully and in due course decide what I shall do with my amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 14 [Amendments, repeals and revocations]:

Lord Sainsbury of Turville moved Amendment No. 22:

    Page 8, line 7, leave out subsection (3) and insert—

"(3) Article 6 of the Patent Office Trading Fund Order 1991 (S.I. 1991/1796) is revoked."

On Question, amendment agreed to.

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Clause 14, as amended, agreed to.

Schedule 2 [Minor and consequential amendments]:

Lord Sainsbury of Turville moved Amendments Nos. 23 and 24:

    Page 12, line 1, leave out paragraph 6 and insert—

"(1) Section 22 (information prejudicial to defence of realm or safety of public) is amended as follows.
(2) In the heading, for "defence of realm" there is substituted "national security".
(3) In subsections (1) and (5)(a), (c) and (d), for "the defence of the realm" there is substituted "national security".
(4) In subsection (6)—
(a) in paragraph (a), for the words from "inspect and authorise" to "in connection with it" there is substituted—
"(i) inspect the application and any documents sent to the comptroller in connection with it;
(ii) authorise a government body with responsibility for the production of atomic energy or for research into matters connected with its production or use, or a person appointed by such a government body, to inspect the application and any documents sent to the comptroller in connection with it;";
(b) for the words from "that Authority" to the end there is substituted "a government body or a person appointed by a government body carries out an inspection which the body or person is authorised to carry out under paragraph (a) above, the body or (as the case may be) the person shall report on the inspection to the Secretary of State as soon as practicable."" Page 12, line 29, at end insert—

"In section 41(10) (method of enforcing in Scotland certain orders made by comptroller), for "a recorded decree arbitral" there is substituted "an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.""

On Question, amendments agreed to.

Schedule 2, as amended, agreed to.

Schedule 3 agreed to.

Clause 15 [Commencement etc]:

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