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Grand Committee

Tuesday, 18 June 2013.

3.30 pm

The Deputy Chairman of Committees (Baroness Pitkeathley): My Lords, I remind the Committee that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bell has rung and resume after 10 minutes.

Intellectual Property Bill [HL]

Intellectual Property Bill [HL]3rd Report from the Delegated Powers Committee

Committee (3rd Day)

3.30 pm

Relevant document: 3rd Report from the Delegated Powers Committee

Clause 20 : Reporting Duty

Amendment 25F

Moved by Lord Stevenson of Balmacara

25F: Clause 20, page 18, line 1, after “to” insert “job creation and”

Lord Stevenson of Balmacara: My Lords, this group of amendments all relate to the proposed reporting duty placed on the Secretary of State in Clause 20 in relation to the creative industries. We welcome this proposal but the amendments, taken collectively, do two things: they build on the proposals in the Bill and they offer some alternatives for the focus of the reports that are to be made to Parliament.

Your Lordships will recall that the seeds of this debate are to be found in the discussions held on the Enterprise and Regulatory Reform Bill last Session, in particular the amendments put down to the Bill in Committee by the noble Lords, Lord Jenkin of Roding and Lord Clement-Jones, and others, which led the Minister to convene various meetings and, after discussion, to agree to introduce this proposal. Discussions of this type always make for better legislation, do they not? However, rereading the debate reminds me that then, as now, our aspirations were for a rather more expansive report than is currently proposed.

Like the Government, our amendments start from the position that IP is a hugely important component of this country’s economy. As the letter sent to the Times last March signed by members of the Creative Coalition Campaign said:

“Copyright is the central intellectual property right that underpins the creative and knowledge economy. Films, music, games, books, could not get made in their present quantity and quality without a robust system of copyright. It provides the legal foundation for the ability of companies to license or sell works, and to invest and to innovate”.

As we heard during the discussion of the ERR Bill, IP is at the heart of our economic success in this sector. The creative industries support around 1.5 million

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jobs and create more than £36 billion annually to UK GVA, calculated by the DCMS creative industries group. As a result of our belief in the importance of the creative industries, we believe that the annual report should not be limited, as the Government propose, to a view from the IPO, interesting though that undoubtedly would be. Surely the effect of the annual report should be a much broader review of the state of the copyright industries in the United Kingdom. The test is whether such a report will provide sufficient material to provide a discussion of how we are doing as a nation. It is not sufficient merely to hear how the IPO is doing in relation to its role of balancing the interests of intellectual property holders with the wider interests that the public may have in the extensive benefit that can be received from the early dissemination of information, knowledge and material.

In our view, it will be necessary for the annual report to cover plans for changes to legislation relating to IP and copyright; details of the expected impact on job creation; progress in supporting innovation; the impact of policy on economic growth more generally in the United Kingdom; engagement with other related government departments; engagement with stakeholders and details of lobbyists who have been in contact with the IPO; information concerning consumer behaviour and habits regarding the use of and access to copyright-infringing material and the subsequent economic impact; information containing manipulation of the internet search market; the impact of voluntary and non-voluntary action in tackling copyright infringement; and information about cross-border co-operation between our own jurisdiction and jurisdictions in the European Union and elsewhere. That is a long list, but it makes the point that what is needed is not so much a single point of view from the IPO but a broader conspectus of the current and future situation in this vital sector of our economy.

A report along the lines we are suggesting in these amendments will be an important first step in making our copyright industries a central part of our economic focus and ensuring that Parliament becomes better informed and can debate properly our progress. As my noble friend Lord Howarth of Newport said on Report on the ERR Bill, welcoming the Minister’s commitment that an annual report should be published by the IPO:

“It may not reach the top of the bestseller lists, but it is right in principle that the public should have the opportunity to be informed about what the current issues are and what developments in policy are or may be”. —[Official Report, 6/3/13; col. 1597.]

I beg to move.

Lord Jenkin of Roding: My Lords, along with a number of other noble Lords, I have several amendments in this group to which I would like to speak.

The noble Lord, Lord Stevenson, has reminded the Committee that the origin of some of this was in the debates on the Enterprise and Regulatory Reform Bill. One of the things we debated at some length was how far the IPO had a role to protect and promote the interests of intellectual property owners. With respect to my noble friend, we had an answer that was half dusty and half satisfactory. The dusty point was that

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he was not going to accept that the IPO should have that role and that was why we proposed having a director-general.

I am intrigued to see that the noble Lord, Lord Stevenson, has tabled what looks like exactly the same amendment as my noble friend Lord Clement-Jones and I tabled on that Bill.

Lord Stevenson of Balmacara: If I may help the noble Lord, I asked his permission—this is an intellectual property Bill, after all—and I thought that he had granted it. If he has not, I must apologise because I wanted to have exactly that point raised as it is on the agenda later on. I thought that if he would not do it, I would.

Lord Jenkin of Roding: I am most grateful to the noble Lord for his e-mail. I did not interpret it as asking for my permission because no permission would be needed. I treated it as a matter of courtesy that he was letting me know that he had tabled a similar amendment.

At this point I should say that I am in some personal difficulty today. I am speaking on the Energy Bill later and I ought to try to get back to the Second Reading debate as swiftly as I can. I will do my best to listen when the noble Lord, Lord Stevenson, moves that amendment but I am sure that he will understand if I have to desert the Committee for the Chamber.

Returning to Amendment 25F—I have amendments in the same group—the encouraging point in my noble friend’s reply in the debates on the ERR Bill was that he described himself as the Minister with the duty to promote and encourage intellectual property. We have taken that to heart. So I say at once that we welcome the clauses in the Bill which now provide for the annual report because this seems to be a valuable addition to the armoury of measures which are necessary to encourage and promote intellectual property in all its forms.

The noble Lord, Lord Stevenson, was quite right to say that we think the report ought to go wider than the Government have so far envisaged. I attach a lot of importance to that. I am grateful to the noble Lords, Lord Stevenson and Lord Young of Norwood Green, who have added their names to our amendment. Perhaps I should have added mine to theirs but that would have meant that I would have to stay, which may be difficult in the circumstances.

The imposition of a duty to produce an annual report on the work of the IPO in that form is welcome. It reflects the words that were used by the IPO’s chief executive John Alty, when he gave evidence to the Committee in the other place,

“as ensuring the IP framework supported innovation and growth”.

These are now reflected in the words in the Bill. However, it does expose one of the difficulties we face and which was faced to some extent at the last sitting of the Committee. The IPO has always claimed that weakening copyright with more and more exceptions will generate economic growth. This attitude has fuelled the anxieties of those who depend on the protection of IP for their living.

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Amendment 26, to which I am grateful that others have added their names, is intended to make it completely clear that the report has to show that it is,

“the creation and exploitation of intellectual property”,

that has contributed to growth and innovation. If it is not protected, if there are too many exceptions, the incentive for people to do the work that creates and generates IP is to that extent weakened. As the noble Lord has already said, if we are a country that has to live on its wits and depend on its inventions and innovation to keep ahead of the rest of the world—in some cases I fear that we need to be catching up with the rest of the world, but that is very much part of this Government’s whole approach to these matters—we must recognise the very important role that IP plays in all this. The issues were raised very dramatically at Second Reading by my noble friend Lord Clement-Jones; I will not repeat the words but they are at col. 858.

I will deal with the other two amendments rather more briefly. The clause says that the Secretary of State should lay the report before Parliament. I do not think that that is enough. The legislation should call for a Statement, including the findings of the report and the action the Government intend to take. It should not just be lost in the tangled undergrowth of the huge tide—sorry, I am mixing my metaphors—of written reports to Parliament, of which there appear to be an increasing number. This is sufficiently important that we should require a Statement by a Minister in the House, which can of course be subject to question and answer. It will be open then to individual Members to decide if they wish to take steps to have the report debated.

Amendment 28 seeks to demonstrate the link between the role in promoting innovation and economic growth and the protection and promotion of IP; otherwise, one may find that intellectual property and rights owners’ ability to protect and monetise their rights will be seriously weakened in what it appears will be presented in the guise of pursuing economic growth. The Government are consulting on how they define and measure the creative industries in such a way that digital and tech companies will be classified as creative industries. I look forward to my noble friend correcting me, but I am concerned that, taken together, these two things could mean that the relaxation of IP rights, particularly copyright, would actually benefit the creative industries, when in truth they would benefit US-based and, increasingly, China-based global tech companies to the detriment of the UK creatives. Therefore, this amendment is intended as a safeguard for UK creatives and to ensure that the IPO takes into account how its actions affect those who create and own intellectual property.

As I have said, Clause 20 is a very welcome step forward and I would not want anything I have said to detract from that. But, as the noble Lord, Lord Stevenson, said, it needs to make it more explicit that the objectives are dependent on safeguarding the rights of IP owners.

3.45 pm

Lord Howarth of Newport: My Lords, Clause 20 requires the Secretary of State to report to Parliament annually on how the activities of the Intellectual Property

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Office and legislation have supported innovation and economic growth in the United Kingdom. I very much welcome the Minister’s commitment to the production of an annual report, but the requirement in Clause 20 is too narrow. The responsibilities of government range more widely than the wording suggests. Amendment 26A would require the report to cover how,

“legislation, the policy of the government and the activities of the Patent Office have balanced the interests of the owners of intellectual property and the wider interests of society”.

By “society” I mean not only in this country but across the world.

New inventions and techniques have improved lives again and again, particularly since the Industrial Revolution. Intellectual property laws and their intelligent enforcement are essential for the stimulation of innovation. As my noble friend Lord Stevenson said, we need a robust system of intellectual property legislation. However, I contend that it is not always the case that strong intellectual property rights—and their strong assertion—improve economic performance or are an unmixed benefit to society. Incentives and rewards to inventors, innovators, creative people and investors need to be balanced against the public benefit of wider and quicker diffusion of knowledge, and the lower prices that may result from early competition.

We should seek in policy to balance the interests of businesses with those of consumers and academics. A judgment always has to be made about the costs and benefits of monopoly, and, where monopoly is mitigated, of licensing. It has to be made on the appropriate length and breadth of a particular patent. It has to be made on whether the price in economic inefficiency of restricting the diffusion and use of knowledge is outweighed by the benefit of increased innovation. The appropriate balance will vary according to the context.

A longer duration of intellectual property rights seems more appropriate in literature and the arts than in manufacturing. There may be differences, too, with luxuries as opposed to necessities, and in the advanced world as against the developing world. We should also ask what proportion of patents in any field a business should be permitted: for example, in the field of genetic modification. I believe that there are enormous benefits to GM, but it is legitimate to ask whether Monsanto should hold patents for the vast majority of seeds planted in the world.

There are risks and disbenefits in granting patents too easily, and there are reasons to be sceptical when we look at applications for patents. There are definitional problems. What is new? What is original? The great Jewish sage Maimonides said that there was nothing new under the sun. Delacroix said of Raphael:

“Nowhere did he reveal his originality so forcefully as in the ideas he borrowed”.

True originality is indeed rare.

Much research is publicly funded. Should the first private interest to exploit that research gain a large advantage over the rest? It has been suggested, rather colourfully, that the application of intellectual property law in the 20th and 21st centuries should be compared

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to the movement of agricultural enclosures in the 18th century. Do we want intellectual enclosures or do we want commons?

A monopoly-holder protected from competition will be under less pressure to innovate again. That result is surely perverse. Monopoly-holders may move aggressively to squash budding competitors by taking lawsuits against them or taking them over. Microsoft has practised those techniques over many years. The consequence of those practices is that research and innovation have been discouraged. Research efforts can be distorted where patents exist. A competitor business may be more attracted to coming as close as it can to copying an existing patent that is seen to be a money-spinner than to developing a new product or embarking on innovation in a new area. We have seen that in the pharmaceutical field. Where there are dense patent thickets, it is particularly discouraging to new entrants and competitors.

I will say a word about genes. I was Minister for Science between 1990 and 1992. The most difficult decision I had to take as a Minister in government was whether we should allow gene patenting in this country. All my instincts and values were against it, but I was driven to take the view that we had to do it. We had unfortunately had poor funding settlements for science from the Treasury in recent years and it was difficult to see how British scientists would be able to stay in the game of the human genome project. At the same time, the US Supreme Court and subsequently the US Patent and Trademark Office had made it clear that they would grant patents for discovery of genes in certain conditions.

However, what was “discovery of genes”? It was not the invention of genes; it was precisely discovery. It seemed to me wrong that natural genes should be patentable. Knowledge of that kind ought to be disseminated as rapidly as possible for the benefit of humanity. There were vast potential benefits, obviously, in the field of health. Of course, when patenting became established, there was a headlong rush to patent. Among the companies that were successful in that competition, Myriad Genetics patented two human gene mutations that affect the susceptibility of people to breast cancer and ovarian cancer. Having secured those patents, they demanded licence fees even from not-for-profit laboratories. In that way, the existence of patents discouraged screening and discouraged the search for improved screening technologies. The medical benefits arising from the human genome project were restricted.

Yet I do not think that those businesses made more money internationally, because poor countries could not pay the higher costs that arose from the existence of patents. I therefore welcome wholeheartedly the recent judgment of the US Supreme Court written by Judge Clarence Thomas which, as I understand it, reverses the position that the court took in 1980. Sandra Park of the American Civil Liberties Union has said about the judgment:

“Because of this ruling, patients will have greater access to genetic testing, and scientists can engage in research on these genes without fear of being sued”.

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The annual report will, I hope, reflect on issues such as that. I hope that it will reflect on what policy ought to be in the life sciences now and in the future. We face the possibility of new techniques of so-called “human enhancement”—adjustments to the brain and other parts of the human anatomy—which there will no doubt be attempts to patent. The Chinese are investing enormous resources in the field of life sciences. We will want to know what the Government’s view is on appropriate policy in this field. I hope that the annual review will provide an opportunity for the Government to share their thinking with us.

What will the annual report say about graphene? Graphene is said to be the new miracle material: single-atom-layer carbon. It is the thinnest, strongest material with high conductivity and flexibility. It has potential uses in desalination, solar power, waste cleaning, packaging, super-fast computers, and super-strong and super-light composite materials. Graphene is hardly yet commercially viable, but the race is on to patent in the area of graphene. I understand that, in May, UK businesses and universities held 54 patents in relation to graphene; US businesses and universities held 1,754; and Chinese businesses and universities held 2,204. What intellectual property regime in relation to graphene will be in Britain’s and in the world’s interests? I hope that the annual report will expound on Government’s policy in this kind of area and the principles upon which they make their judgment. The business department and the IPO do not assume, I hope, that the more UK patents there are, the better. When Jonas Salk, the discoverer of the polio vaccine, was asked in a television interview who held the patent, he said:

“The American people, I guess”.

He chose not to exploit that massively important and beneficial discovery. Tim Berners-Lee did not seek to patent the world wide web and, indeed, considers that software patents stifle innovation.

Inequality of access to knowledge often compounds the evils of inequality of access to income. We should not, in this country, take a narrow view of our national interest and should not ignore the interests of the developing world, particularly where medicines are concerned. To do so would be short-sighted, even in our own interest. We do not know whether the population of the globe at the end of this century will be 10 billion or 11 billion people, although these are the sorts of projections. We should not deprive the developing world of the knowledge that will enable its economies to grow and allow them to be rescued from poverty. If billions and billions of people are to live in poverty unnecessarily, because of the restriction of knowledge to the advanced, wealthy, western countries, that would be wrong in itself and very perverse in terms of our own interest. At the World Trade Organisation, I hope that the United Kingdom will seek to remodel and liberalise TRIPS. Clause 20 should not be just about the Intellectual Property Office and legislation—the requirements of the report should relate to wider policy.

Cost-benefit analysis in this area is never easy. It needs economic far-sightedness, ethical judgment and wisdom. We need a regime that is flexible and pragmatic, not schematic, and yet clear and comprehensible. As my

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noble friend Lord Stevenson said, the annual report ought to reflect a broad view from government as a whole—not just from the business department and the IPO but very much from the DCMS, with its particular responsibilities to promote creativity, and also from the ODA, because we have responsibilities, which I have mentioned, in relation to poverty and the advancement of human interests across the world. I hope that the annual report will share the Government’s vision and analysis in these respects. That is why we need to amend Clause 20.

I will very briefly set out the reasons for Amendment 28ZA, also in my name, which are obvious. The ears of the Intellectual Property Office must be deafened by the clamour of lobbyists. The office must be pushed and tugged this way and that and be continually under massive pressures, although I am certain that it does its best to arrive at a sensible, appropriate and balanced policy amid all this melee. In a democracy, everybody is entitled to put their point of view to the IPO but everybody also ought to be entitled to know who is seeking influence. We need to be sure that policy does not echo who shouts loudest. I believe that Amendment 28ZA would strengthen the IPO and the business department in their search for a balanced policy, would encourage confidence in the intellectual property regime and would assist the Government in the very difficult task they have of arriving at an appropriate policy in relation to lobbying.

Lord Clement-Jones: My Lords, as the noble Lord, Lord Stevenson, said, the debate on the Enterprise and Regulatory Reform Bill was a very useful start to this whole discussion about the IPO report to Parliament. We have built up a considerable degree of consensus about what that report should contain. I welcome Clause 20 as a step in the right direction but the noble Lord, Lord Jenkin, put the points extremely well on Amendments 26, 27 and 28, to which I have also put my name. If we are going to have such a clause in a piece of primary legislation, we need to be explicit about the kind of reporting requirement that the Secretary of State has. I entirely agree with the noble Lord, Lord Jenkin, that those are absolutely essential requirements, particularly as regards Amendment 26, and that the report should be about the promotion of innovation and economic growth,

“arising from the creation and exploitation of intellectual property”.

After all, that is what the Intellectual Property Office is all about.

4 pm

Our discussion has diverged to some degree and I am certainly not going to follow the noble Lord, Lord Howarth, in referring to dense patent thickets or using any such language as I think we are on opposite sides of the fence. However, I agree with him that these matters need to be evidence-based. I do not resile very much from what he said about the need to achieve a balance. I also quoted him at Second Reading on this point. We cannot deny that these are monopoly property rights. They have to be proportionate and designed in such a way as to encourage future innovation and growth and to reward creators. Sometimes a balance needs to be struck and the evidence needs to be there.

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I disagree with some of the examples that the noble Lord gave but I agree that the genes example was an extremely unhelpful start to the whole issue of genetic research and work on DNA. The ability to patent certain genes was unhelpful in many respects. However, I will not go into that in any great detail.

I am concerned that the point mentioned in the Explanatory Notes, which include specific reference to developments in copyright licensing being included in an annual report—this follows on from the Hooper report—is not explicitly stated in the Bill, even in general terms.

The noble Lord, Lord Stevenson, talked about cross-border co-operation, which is very important. Indeed, the Minister encouraged us to think that the report would also include updates on the protection of metadata, which I believe will become increasingly important as time goes on. Therefore, I think there are flaws in Clause 20. I very much hope that the Minister will look sympathetically on a number of the amendments, even if he does not take on board all the precise detail of the amendment of the noble Lord, Lord Stevenson. They are all heading in the right direction and seek to establish the robust system of intellectual property that we all wish to see.

Lord Borrie: My Lords, I am delighted that the noble Lord, Lord Clement-Jones, indicated that he supports most of the proposed amendments to this clause, and that the Minister looks kindly upon them. I take the same view but I want to discuss the amendment proposed by my noble friend Lord Howarth of Newport more fully because this is the only place in the Bill so far where we have discussed the question of balance between the interests of the owner of intellectual property and those of the wider society, as he put it. This is the third day in Committee but, right from the start of our proceedings on the Bill, the rights and values of the creative industry relating to patents, designs and copyright have not been balanced with the wider interests of society. The various things that my noble friend and, indeed, the noble Lord, Lord Clement-Jones, mentioned, including the interests of society in there being more general competition and an absence of restrictive attitudes towards intellectual property, have not been considered.

One of the most vital matters, it seems—a whole area that is not being considered—is the length of time for which intellectual property rights should last. The Government have not felt it necessary—indeed, in the wording of the Bill it is not necessary—to explain why UK-registered design rights can last up to 25 years, that an unregistered design right can last up to 15 years and that a registered community design right can last for 25 years; I am relying on a government briefing paper that I have in front of me. Surely each of those things ought to be justified if one is looking at intellectual property and the way in which it fits into our desire for a prosperous Britain and creative industry, while being concerned that others who may want to be rivals in producing similar designs or objects should be considered as well—in the interests of the consumer and of the future, not just in the narrower interests which have prevailed under these years of monopoly which I have just mentioned.

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My noble friend’s amendment is clear. He gave full examples of the way in which the balance would work out. It is a vital part of the Bill, if it is to generously notice that there are things other than those with which the Bill deals.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie): My Lords, before I begin I thank noble Lords for their engagement on the new reporting duty. This has given me an opportunity to clarify the Government’s intentions for this report. Noble Lords will, I trust, excuse a relatively long response, but many important issues have been raised during the course of this debate. I also hope that my noble friend Lord Jenkin is able to stay to hear my full response and that—how shall I put it?—a different sense of energy does not intervene. Many questions have been raised, and I will attempt to answer them all at the end.

Amendments 25F, 26, 26ZA, 26A, 26B, 26C, 27, 28 and 28ZA seek to broaden the scope of the proposed annual report and detail what the contents of the report should contain. I will address the amendments in turn. Amendments 25F, 26ZA, 26B and 26C, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would require the scope of the report to include an assessment of the impact of the Intellectual Property Office’s activities on job creation, in addition to their impact on innovation and growth. A direct relationship between intellectual property and job creation is practically impossible to draw. There are many different factors that will influence whether a business creates jobs. However, where there is evidence to suggest that the IPO’s activities may have had an impact on job creation, the report will indeed state this. Amendment 26C raises other questions to which I shall return later in my reply.

Amendment 26 tabled by my noble friends Lord Jenkin of Roding and Lord Clement-Jones, and to which the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, have added their names, would restrict the focus of the report to innovation and growth arising from the creation and exploitation of intellectual property. This point was raised during the Government’s consultation. In response, the Government said:

“The report will cover IPO activities which promote growth and innovation arising from the creation and exploitation of IP but the Government cannot restrict its focus to existing industries and business models. It needs to look at how the IP framework fits with technological change and the development of new business models. The report will therefore aim to present a fuller picture of the impact of the IPO’s activities on growth and innovation”.

I will explain what I mean by the expression “a fuller picture”. The report will also therefore contain an assessment of the Intellectual Property Office’s activities on growth and innovation arising from the use of intellectual property by third parties.

Let me give the Committee an example. Last year, the Government consulted on proposals to amend Section 60(5) of the Patents Act 1977 to provide an exception to patent infringement for activities involved in preparing or running clinical or field trials which use innovative drugs. This change would allow third

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parties to carry out a limited set of activities using another person’s patent-protected product in order to develop and assess the safety and efficacy of new pharmaceuticals. Responses to the consultation suggested that current UK legislation makes the UK a less attractive location to carry out this work compared with countries with broader exceptions. This may have economic implications for the pharmaceutical and clinical trials sectors, including loss of skills and expertise if trials are run abroad. The report will need to consider examples such as these where the use of intellectual property may help stimulate growth in the economy as a whole. I can assure noble Lords that in such cases it will indicate how the Intellectual Property Office has sought to balance the interests of rights holders and users.

Amendment 26A in the name of the noble Lord, Lord Howarth of Newport, seeks to include a requirement that the report should provide an assessment of how the Intellectual Property Office has,

“balanced the interests of rights holders with the wider interests of society”.

I am grateful that the noble Lord has defined this phrase to be not just UK-focused but global in scope. I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones. This is in line with the ethos of the report—transparency.

Amendment 26C, tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, seeks to place some requirements on the detailed contents of the report. Before responding directly, I should like to take the opportunity give the Committee some detail on what the report will contain. I will add that, as with all government agencies, the IPO already produces an annual report and accounts, containing an assessment of the development and performance of the organisation throughout the year, together with financial accounts. The IPO’s future plans are contained in the corporate plan published in spring each year and agreed with me as IP Minister on behalf of the Secretary of State. This plan also contains the targets that I set for the IPO and by which its performance is to be judged.

I have described the current reports and plans that the Intellectual Property Office produces. I turn now to the new reporting requirements that are the subject of this clause. I will set out the parameters of the report and give some examples to illustrate the kind of issues that would be included in it.

First, the report will provide information on legislative changes and any pre-legislative work such as consultations. Economic estimates will be taken from impact assessments. Looking back to the previous financial year, as an illustration, this would include the copyright measures

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in the Enterprise and Regulatory Reform Act and the designs consultation that has resulted in the measures that we have already debated in this Committee.

Secondly, the report will address the Intellectual Property Office’s activities in international negotiations and cross-border co-operation. An example is the work that is being done to deliver a unitary patent and unified patent court.

Thirdly, the report will discuss policy development work that has been undertaken to address the challenges facing the intellectual property system. These will change as time passes, but copyright licensing in the digital age is a good example of a current challenge that the IPO has been working on and which, therefore, the annual report would cover next year and for as long as it remains relevant.

Fourthly, the report will highlight the main outputs of the Intellectual Property Office’s economic research programme and how they relate to innovation and growth. Recent studies, for example, have examined the incentives provided by patents and the use of alternative methods of protecting innovation. The report will also summarise the findings of evaluation exercises. The first of these was published last month and concerns the Lambert toolkit, which contains model agreements and a framework for university and business collaborations. The toolkit was developed by a working group of interested parties, supported by the IPO. The research showed that the toolkit has had a positive influence on some innovative research partnerships between UK universities and businesses.

4.15 pm

Fifthly, the report will provide an assessment of the IPO’s activities that support businesses and raise awareness of the importance of protecting intellectual property. Through its seminars, exhibitions and workshops, the IPO reaches over 25,000 businesses per year, including around 18,000 direct contacts. The report will include information on the work the office has undertaken in partnership with other organisations, such as the MusicBiz competition for young people, run with UK Music, and IP audits provided to small and medium-sized enterprises and funded by the IPO. When data are available, it will provide an assessment of the impact that such work has had. The report will also contain data that support the assessment made in the report. This will include statistics on the number of IP rights granted by the office, the use of international systems, such as those run by the World Intellectual Property Organisation, and any relevant evidence on enforcement and infringement.

Amendment 26C would specify particular issues to be reported on. Where the IPO has acted on those issues, I assure noble Lords that they will be included in the report. However, as I have already noted, the challenges facing the intellectual property system will change from year to year. It is for this reason that the clause does not specify individual issues that will be considered. For example, 10 years ago, the proposed European directive on software patents was a matter of great topical interest. If the IPO had at that time produced a report on the impact of its activities on innovation and growth, these negotiations would have

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been discussed. However, the directive was rejected by the European Parliament in 2005 and debates have moved on. If we had passed legislation at that time that stipulated specific items on which to report, the Government would have been required to report on its activities in this area every following year, even when no such activities took place. Alternatively, the Government would have needed to return to Parliament to make changes through primary legislation to ensure that the report remained relevant.

Amendment 26C would also require the report to set out the plans for legislative change for the next 12 months. The purpose of the clause is to create a duty to report, not to set the forward programme of activities for this or any future Government’s IP policies. Noble Lords will of course be aware that the Government cannot pre-empt the gracious Speech in any year, but following the publication of the legislative programme each year, plans for primary legislation, as well as any secondary legislation, are set out in the Intellectual Property Office’s corporate plan. It is therefore neither appropriate nor necessary to include these details in the annual report on innovation and growth.

Amendment 27 would require the Secretary of State to make a statement detailing the findings of the report and the actions he intends to take as a result. The clause already commits the Secretary of State to lay the report before Parliament. So it will be a Written Statement to Parliament by the Secretary of State and, each year, the report will be placed in the Libraries of both Houses. I have already referred to the IPO’s corporate plan, which sets out its future programme of work and priorities. The annual report on innovation and growth will be one of a number of pieces of evidence that feed into the business planning process leading to publication of the corporate plan.

Amendment 28 concerns the information that should be considered in producing the report. It would require that the Intellectual Property Office carry out consultations and investigations to inform the production of the report. It would also require the Government to consider any responses collected by the IPO in response to any consultations or investigations carried out for the purpose of producing the report. In particular, the amendment refers to any assessment the Government might make of the effective operation and protection of IP rights licensing in promoting economic growth. The report will focus on the activities of the Intellectual Property Office during the financial year under review and is not intended to be a Hargreaves-like review of the effectiveness of the intellectual property system. If research has been commissioned to measure the impact of the IPO’s activities on IP rights licensing, then I can assure noble Lords that the results of that research would be taken into account as part of that year’s report. At present, the Government have no plans to run consultations for the sole purpose of producing the report, but if consultations of this nature are conducted, I assure noble Lords that any responses will be considered.

Finally, I turn to Amendment 28ZA, spoken to by the noble Lord, Lord Howarth of Newport, which would require the report to include information detailing approaches made to the Government and the Intellectual

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Property Office by interested parties. The noble Lord has raised an important issue. The Government are committed to transparency, as I said earlier, and I have therefore considered how information on the IPO’s engagement with interested parties can be provided in a way that is proportionate. I have therefore asked the chief executive of the IPO to publish on a quarterly basis the names of external organisations with whom he has had meetings. I already disclose details of my meetings on the government website, as do all Ministers, special advisers and Permanent Secretaries. The extension of this practice to the chief executive of the IPO is at the forefront of efforts to increase transparency in policy development.

Lord Howarth of Newport: I very much appreciate what the noble Viscount has just told the Committee. It is very good news indeed. I wonder whether the information provided will include records of conversations, discussions or meetings that may have taken place. A link in the online version of the annual report would be sufficient to achieve that transparency, which would be very helpful.

Viscount Younger of Leckie: I thank the noble Lord for that question. We feel that we have gone as far as we can. Many of the meetings are highlighted on different websites, as the noble Lord will know. We have gone as far as we can to make the viewing of meetings transparent.

I will now address some of the questions raised in the debate. The noble Lord, Lord Stevenson, asked whether the annual report was not just a view about the Intellectual Property Office. He argued that it should be wider and suggested that it should be a report on how we are doing as a nation. The report will be the view of the Secretary of State, taking into account the extensive wider relationship that the IPO has with the creative and innovative industries. I hope that the earlier answers that I gave clarified and provided an answer to that general point.

The noble Lord, Lord Stevenson, made a number of references to the importance of the creative industries. He was right to do that. As I said during the passage of the ERR Act, the Government fully recognise the importance of the creative industries. They have also done much for UK creators, and are doing more, including supporting the design sector through the Bill. We are pressing ahead with the anti-piracy measures of the Digital Economy Act. We are also supporting the creative industries abroad through our growing IPO attaché network, which provides practical support to UK businesses by building relations with intellectual property agencies in host countries and improving the influence of the UK overseas. The UK now has attachés in China, India and Brazil, and is recruiting a fourth attaché for south-east Asia. However, the intellectual property system is not there to support just one sector. It is right that we look across the economy to its impact on a range of sectors. To that extent the noble Lord makes a fair point.

My noble friend Lord Jenkin suggested that it was not enough to report facts to Parliament, but that the report should set out proposed actions in a statement.

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As I said earlier, the report will be laid before Parliament, and publication announced by Written Ministerial Statement. I always welcome the opportunity to debate intellectual property issues with Members of the House, and it is of course open to any noble Lord to call a debate. Therefore I do not consider it necessary that we put this requirement in the Bill.

My noble friend Lord Jenkin also questioned whether exceptions would weaken the incentive to invest in intellectual property. However, exceptions can create opportunities for others, with little or no harm to the owners of rights. How does it harm an author if someone copies extracts of her work in the course of non-commercial research into it, or if blind people can read it in accessible form? The Government are introducing exceptions to create growth and value; not to transfer it between one interest group and another. The Government are looking for the right balance between many interests, as I am sure my noble friend is aware.

The noble Lord, Lord Howarth, asked how we would define what is new and what is original. In many cases, it is easier to know originality when one sees it rather than to attempt to define it. The noble Lord makes a fair point but the courts have a fairly settled approach to this so I hope that he will accept that they have the ultimate sanction on making decisions on that particular issue.

The noble Lord commented that strong intellectual property rights are not always beneficial. The Government agree with the noble Lord that a balance needs to be struck between IP rights holders and users. I know that the noble Lord has made this point in a previous debate. The report will make it clear when interests such as development are weighed against economic considerations.

The noble Lord raised an interesting point about graphene and whether the annual report would mention it. I am interested in this particular invention because when I last visited the Intellectual Property Office I was given an interesting briefing on this matter. It is one of the issues that the IPO is taking extremely seriously. However, we cannot say in advance what the report might say on individual issues, including graphene, or on particular technologies. The report will focus on the activities of the Intellectual Property Office so that, if the IPO carries out activities in an area, such as graphene, they will be included.

The noble Lord, Lord Howarth, asked how the Government would ensure that development would take place through patent thickets and he cited the example of the pharmaceutical sector. The IPO has published a report investigating the phenomenon of patent thickets and commissioned further research from academics to understand if there is a particular impact on small and medium-sized businesses. The annual report will provide an assessment of the research that is undertaken in this area. It is essential that policy is based on the best available evidence.

The noble Lord raised another interesting point concerning gene patenting and the gist of his question was whether it was right. The Government have noted with interest the judgment of the United States Supreme

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Court, to which the noble Lord referred. He will also understand that this particular area of patent law is governed in the UK by the biotechnology patents directive, a carefully negotiated consensus across Europe on this particular issue of which the noble Lord may be aware. Our law continues to develop on this matter with references to the European Court of Justice.

The noble Lord asked how we should protect health developments from businesses patenting medicines. The annual report will cover the activities of the Intellectual Property Office and their impact on innovation and growth, which I mentioned earlier, where these activities impact on other policy objectives. The report will make it clear how different objectives were balanced.

The noble Lord, Lord Howarth, also asked how the IPO considers global interests and stops the restriction of knowledge in the developing world. Our vision is that it must cover both incentives to invest in, for example, new medicines and, as part of wider government policy, access to medicines. The noble Lord also commented on the impact of international treaties, such as TRIPS. Where the Government are negotiating in these areas, I assure the noble Lord that the report will cover their impact.

The noble Lord asked whether the report will cover the Government as a whole. As a round-up, this is a report of the Secretary of State in respect of the IPO, and the IPO does not operate in a vacuum. The report will cover issues where the IPO works with other government departments.

The noble Lord raised a further issue concerning patents and asked whether patents were granted too easily and whether they stifle innovation. I am satisfied that the IPO only grants patents with a high presumption of validity. Its patent-granting process, the first in the world to achieve ISO quality accreditation, ensures that only those inventions that are new, take a significant enough step forward and are capable of industrial application are deemed to be worthy of patent protections. I hope that that is of some reassurance to the noble Lord.

4.30 pm

My noble friend Lord Clement-Jones has been patient in his wait for answers to his questions. He asked how the report will ensure that we set out a robust system for intellectual property. That allows me to return to the purpose of the report, which is to measure the impact of the previous year’s activities of the IPO and their impact on growth and innovation. This is also done separately, through its policy statements, legislative programmes and documents, such as its five-year strategy and the annual corporate plan.

The noble Lord, Lord Borrie, asked why we have not set out each intellectual property protection and how long it will last. I spoke about this issue when the Committee last met. The length of time for which each intellectual property right lasts reflects internationally agreed norms that are often agreed by treaty. I wrote about the issue at greater length in a letter that I circulated to noble Lords last week, and I hope that he has received it. If not, I will make sure that he receives a second copy as soon as possible.

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My noble friend Lord Clement-Jones asked how we will ensure that the report is evidence-based. That is a fair point. The IPO has established an ambitious programme of research to improve the evidence base on which to develop policy. This will be a significant contribution to the report. All research carried out by the IPO is conducted in an open and transparent way. It works closely with industry stakeholders and academics to ensure that the research programme is relevant and robust.

The noble Lord, Lord Howarth, asked whether the Government can go further when providing information on meetings with stakeholders and commit to providing details of the discussions that take place. He asked about that on a previous occasion and I gave an answer. I reiterate that the current practice is to record the main topic for discussion—for example, when the chief executive meets whoever to discuss copyright. The IPO, like any government agency, is subject to the FOI Act. If a request were received for more information, it would be considered in light of the requirements under the FOI Act.

I hope that I have addressed nearly all the questions raised. It has certainly been a wide-ranging debate. I have explained the Government’s intentions behind the report and provided noble Lords with details of what it will contain. Including such details in the legislation would reduce the ability of the report to adapt to reflect new challenges. Instead, we could be faced with a report that provided information on issues that were less topical unless we returned to Parliament to amend the law through primary legislation. I hope that this will provide sufficient reassurances for noble Lords. I ask them to withdraw or not move their amendments.

Lord Stevenson of Balmacara: My Lords, I thank all speakers in this shortish debate. It was of high quality and we covered a lot of ground. It was particularly good that the noble Lord, Lord Jenkin, was able to stay for it. My noble friend Lord Young quipped that in these modern times perhaps the noble Lord, Lord Jenkin, given his skills, might clone himself and appear in two places at once. I quipped back immediately that that would almost certainly be, if it is not already, a crime under the intellectual property Act. It probably will be shortly and he could go to prison for trying it. We decided that that was not worth pursuing. I am sorry about that.

The debate raised a lot of issues. I thank the Minister very much indeed for his response—it was one of the best that I have heard in this Committee or in many others. He covered the ground extremely well, picked up every point and answered most of our questions in a very satisfactory way. In terms of what we are doing—trying to probe and get a sense of where the report will be coming from—I think that we are well satisfied.

However, the point is that the legislation does not quite say what the Minister said in his response. In the Explanatory Notes are simply two lines on the report in paragraph 91, which states:

“The report will cover new legislation and policy developments, including those related to copyright licensing, as well as the services delivered by the IPO”.

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Given that the Minister spoke for some 10 minutes about what the report also contained, I wonder whether there is a bit of a gap between the written word and what we have heard. It may be possible to come up with a better formulation in the Bill, and we may want to come back and work further on that on Report. However, we are not far apart on this and, clearly, if the report does cover all the issues that the Minister listed, we would be well satisfied with that, in so far as it goes.

However, underlying the response was the nagging doubt about authorship. Who holds the pen in this report? That is the question we have to look at. The Minister, several times, said that it was okay because the Secretary of State would respond, not the noble Lord himself—as the Minister responsible for IP—or even the chief executive of the IPO. Later on, he changed that and said that it was “a” Secretary of State. However, there is not only one Secretary of State in the Cabinet and the Government. There is another Secretary of State, who currently has responsibility for the DCMS—although, if the rumours are to be believed, not for much longer—and who of course speaks for creators, appears at meetings speaking on intellectual property and sometimes appears with the Minister when the Minister is in his guise as intellectual property tsar. It is fairly obvious from those who attend these meetings, and I have heard a number of reports of them, that a differential approach comes across. It is impossible for the Government to have a single voice on this when the responsibilities are split. One point that has come through, in all the presentations that we have had this afternoon, is that the Government are not currently speaking for the balance of the two aspects. There is a sense here of an uncompleted need to address this issue. We might well come back to it.

The second point is that, within our debate, we picked up on a theme that has emerged in all our Committee sessions and which may run through to the end of this Bill. There is a growing unease about the way the balance is struck between the needs and rights of creators against those of wider society and between the rights of creators and of those who wish to exploit that creativity. I do not think we have settled it. I do not think it is possible to settle it in this Bill or without a lot more thought. I simply log that as being something about which we all hoped more would maybe come out in the report. This is an issue that we will have to address—if not now, then very quickly—in order to make the best of the way in which any future Government deal with intellectual property as an important sector of our economy.

As my noble friend Lord Howarth said, the most difficult question is about what our approach will be in terms of the economic return that can be earned by inventors, such that it does not squeeze out the benefits that will flow to those who wish to use and exploit those inventions. Are we thinking about intellectual enclosures or about commons? That is a very good formulation for a very complex problem, which I know that my noble friend has been dealing with for some time.

A third point comes out of this short debate. I apologise for going on at length but it is important to get it on the record. We are now satisfied that the sort

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of report that the Minister talked about would document very well what has happened in the Intellectual Property Office work over the year. But will it be sufficient for us to be able to address the issues of what it should be doing in future years? In other words, we have a simple written report and Written Statement—as the noble Lord, Lord Jenkin, said—simply landing in Parliament. Without the opportunity to interrogate, question and come up with ideas about what further work it might stimulate, the job will not be complete. Might the Minister think again about the point raised in the amendment of the noble Lord, Lord Jenkin, and the need not just for a report but for a Statement that could be debated? I know it is true that we can, as ordinary Members of your Lordships’ House, ask for a debate, but that is not the same as having a proper timetabled slot to look forward to, where we can consult with those outside, bring forward thoughts and events, and discuss the issue properly.

Finally, the question about how intellectual property is dealt with is so firmly in our minds that we need to think hard as we go through the rest of the Bill how we can better secure the debates that will be necessary around the wider context for this. It is true, as the Minister said, that BIS has the lead on this matter. However, without the wider community of Ministers also being engaged in it, that will not be sufficient. These are very important points to consider.

Viscount Younger of Leckie: The noble Lord’s question about who holds the pen on this report shows that everything is in the definite or indefinite article. I clarify that the Secretary of State for Business, Innovation and Skills will have the duty to report. However, the report will cover any relevant cross-cutting issues or activities, including work with DCMS or regulators such as Ofcom. I hope that that clarifies that point.

Lord Stevenson of Balmacara: I thank the Minister for picking up that point. Does it clarify it? No, but with that I withdraw the amendment.

Amendment 25F withdrawn.

Amendments 26 to 28ZA not moved.

Clause 20 agreed.

Amendment 28A

Moved by Lord Jenkin of Roding

28A: After Clause 20, insert the following new Clause—


(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.

(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.

(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.”

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Lord Jenkin of Roding: My Lords, it has long been my ambition to appear on the screen in two different places, but I think that is impossible. I have been looking to see whether other members of my family might appear on the screen at the same time. We have not achieved that. We do not set out to do that but it would be nice if it happened.

Amendment 28A deals with the long standing problem of lookalikes: products that are designed to look like well known branded products, with the intention—certainly the effect—of confusing the customer. For me, this is a very familiar problem. Many years ago I worked for what was then the Distillers Company, which had a number of very famous brands of spirits. It had a museum of lookalikes containing literally hundreds of bottles from all over the world that had been specifically designed to make them look like some of the Distillers Company’s well known brands, on which of course it had spent a great deal of money on advertising and had built up a very strong brand loyalty. One that I always remember looked exactly like a bottle of White Horse whisky until you looked very closely and saw that it was not a horse but an elephant. But from the other side of the bar you could not have possibly told the difference. There was another bottle of whisky that had “Scotland” in very large words on it and if you looked at it very closely, it said, “Label printed in Scotland”. There were hundreds of others.

This is not the first occasion that this subject has been raised in this House. On 24 February 1994, my late friend Lord Reay tabled an amendment during the passage of the Trade Marks Act about what he called unfair competition. I spoke in that debate, as did a number of other noble Lords. My noble friend Lord Strathclyde, who was then the Minister, recognised the problem but proposed no action. On 17 March 2000, we had the Second Reading of a Private Member’s Bill presented by my noble friend Lord McNally, the Copyright, etc. and Trade Marks (Offences and Enforcement) Bill, which was specifically directed at this problem of lookalikes. In the end he was persuaded to withdraw the Bill so nothing was done.

I have here—and I have no doubt other noble Lords will have seen similar things—a whole collection of what is sometimes called parasitic copying. Brands of margarine have a different word on the top but they look exactly like the very well known brands that are advertised by companies. There are shampoos, shower creams and lotions—all these things are well known. There is plenty of evidence that they do mislead consumers. My wife is a very careful shopper but on one or two occasions in the past few years she has been misled and come back home and said, “Oh, that is not what I meant to buy”, but it looked exactly like the one that she did mean to.

4.45 pm

The question of misleading consumers is at the heart of this. These products are simply cashing in on the branded product’s reputation and selling the copycat product at a lower price. The professional word that is used for that is “parasitic” copying. Why does it persist? It is, in fact, a form of cheating, yet it is widespread

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and this country does not seem to be as good at dealing with it as some of our neighbours. Why is it that successive Governments in this country have signally failed to deal with it? Why does it appear that the branded product owners have no remedy and can take no action? I will explain that in a moment.

Sometimes it is pointed out that there are registered IP rights, yet the law of passing off, which is a long-standing common law remedy, has proved ineffective in dealing with the problem. In 2006, the Gowers Review of Intellectual Property concluded that brands were not well protected against what it described as “misappropriation”. A shorter word for that is stealing. It recommended that the unfair commercial practices directive of the European Union be monitored and if it were,

“found to be ineffective, Government should consult on appropriate changes”.

Therefore, the consumer protection regulations, which implemented the directive, were introduced in 2008. However, despite strong lobbying from the interests representing brand owners, enforcement of the directive was restricted entirely to the Office of Fair Trading and trading standards. There was no remedy for those who had been wronged. Companies were not granted civil rights of action. What about the OFT and trading standards? They had a pretty regular answer: they argued that they did not have the resources to enforce the consumer protection regulations and that the matter did not have sufficient priority. One can understand that given their duties in relation to childcare, adultcare, education and all the rest of it, and the priorities they must establish in those areas. This situation arose despite the Government telling brand owners that the Government had a duty of enforcement. When I studied law at Cambridge a long time ago, I discovered a very good Latin slogan, which I shall repeat although it may be out of order to do so. The slogan was “ubi remedium ibi jus”: where there is a remedy, that is where the law is. If there is no remedy, there is absolutely no use having a law. The regulations constitute the law, but nobody enforces them.

The previous Government promised a review after two years. However, there has been, as yet, no review. The regulations have so far proven singularly ineffective in tackling the copying of package designs and all the rest, which is why I and my noble friend Lord Clement-Jones have tabled this amendment. This is an opportunity for the coalition Government to put right a very long-standing and manifest abuse in our trading system.

Amendment 28A forbids parasitic copying and would give branded product manufacturers a civil right to sue for an injunction and, if appropriate, claim damages from those who have set out deliberately to imitate their products with a view to misleading consumers. This reform is long overdue. I beg to move.

Lord Clement-Jones: My Lords, I rise to speak briefly in support of Amendment 28A. My noble friend Lord Jenkin eloquently set out the case for his amendment and there are very few points that I would wish to add. The case that consumers are being misled was strongly made out by a recent Which? report. As my noble friend said, it is clear that the CPRs—the

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consumer protection regulations—are ineffective because they are not enforced by the OFT and trading standards and there has been no review which would allow others to enforce those same regulations.

I have practised in the past as an intellectual property lawyer. Passing off is very difficult to establish in these cases but that is the basis on which you would normally expect to enforce ordinary civil actions against this kind of parasitic copying. All the evidence given to me by the British Brands Group suggests that it is extremely difficult to obtain the evidence required by the courts to show confusion, partly because consumers tend not to complain about low-priced items. It is very difficult to gather the evidence in store and courts often dismiss survey evidence as unreliable.

Another interesting feature, which the Minister might care to address, is whether or not the UK is upholding its obligations under the Paris Convention and TRIPS. Article 10bis of the Paris convention and Article 2 of TRIPS require signatories, which include the UK, to assure nationals of “effective protection” against unfair competition. Counsel has given opinion in the past that the UK is not compliant and I believe that the Gowers review gave some indication that that was the case as well. The Government have a case to answer on this question. It is a long-running sore among the owners of these brands and, as the noble Lord, Lord Jenkin, said, there is photograph after photograph of this type of parasitic copying. There is plenty of evidence that it takes place.

Lord Borrie: My Lords, the noble Lords, Lord Jenkin and Lord Clement-Jones, made a clear and convincing case for doing something about so-called lookalikes. I like the word “cheat”, which the noble Lord, Lord Jenkin, used, because it is a simple, human word, which does not rest on any statute. It is perfectly clear to people generally what cheating is. This is a form of cheating and I hope that something can be done about it.

I have seen the Which? report, which shows basic examples of lookalikes and the originals and shows how easy it is, when rushing around the supermarket, to pick up the wrong item when it looks exactly like the one you want to buy. That is very serious. The only question I have may be one for the Minister rather than the noble Lord, Lord Jenkin.

In the last session we passed a Bill establishing a grocery adjudicator. A lot of these problems arise with groceries, which are fairly widely defined in the Groceries Code Adjudicator Act. That Act provides a remedy for anti-competitive activity by supermarkets and other grocers in relation to the practices of suppliers of goods, groceries in particular. I was not very keen on the idea of a special adjudicator being set up and wondered why we could not use one of the existing bodies, such as the Office of Fair Trading, and give it a clear remit to deal with the problem. However, a special post was set up and the lady is now in office. She has a back office of some sort and deals with complaints from farmers and other suppliers against supermarkets which have done something anti-competitively. Why can one not use that particular office to deal with the problem that the noble Lord, Lord Jenkin, talked about?

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Lord Howarth of Newport: My Lords, it is not only a form of cheating but a form of free-riding that is clearly unfair. I look forward to the Minister’s positive response to the amendment of the noble Lord, Lord Jenkin.

Viscount Younger of Leckie: My Lords, the amendment proposed by my noble friends Lord Jenkin and Lord Clement-Jones seeks to protect the distinctiveness of product packaging. The amendment relates to an ongoing concern by brand owners relating to what has been called “lookalike” or “parasitic” packaging. This is where businesses are said to mimic the packaging of brands with a reputation, whereby consumers believe that the lookalike product, normally cheaper than the branded product, shares its characteristics, such as its quality. My noble friend Lord Jenkin described the issue in similar fashion. This is considered to be riding on the coat-tails of a brand’s reputation.

The Government recognise that brands are a significant contributor to the UK economy. I can assure my noble friends that we are very much alive to the concerns of brand owners about so-called lookalike products. Indeed, the IPO has just published research that that it commissioned into the phenomenon of lookalike packaging, which we would urge all interested parties to consider. The report is publicly available and can be found on the IPO’s website. In relation to the harm that lookalike packaging does to both consumers and business, the findings were, perhaps surprisingly, fairly equivocal. In particular, although a high number of consumers felt disadvantaged by the accidental purchase of a lookalike, a substantial number saw it as an advantage. Furthermore, there is a fine line between confusing packaging and the use of “generic cues” to signal to customers. For example, the colour green can indicate “mint” on toothpaste. There is no particular business associated with this colour.

The Government are considering the findings of the report and look forward to discussing them with the industry but, as previously stated, the evidence was not convincing enough to initiate immediate action. Although the Government agree that brand owners should be entitled to preserve the distinctiveness of their products, a delicate balance exists between the proper protection of rights and the openness of the market to innovation and competition. Any proposal that changes the status quo should be considered with caution.

In particular, the Government do not agree that the amendment is an appropriate addition to the suite of protections already available to brand owners. The amendment would unduly broaden the scope of the rights currently enjoyed by owners of intellectual property relating to product packaging and upset the balance to which I have referred. In particular, the amendment would prohibit the use of packaging that tells consumers that a product has similar qualities to those of a competitor’s product, even where that is true and consumers are not misled in any way. The law already provides for the protection of distinctive packaging. Let me explain why.

First, where packaging is distinctive, it may be registered as a trade mark. It is an infringement of a registered trade mark where use of a sign takes unfair

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advantage of its reputation—the riding on the coat-tails that I mentioned earlier. Given sufficient reputation in the marketplace, this protection can apply to even simple examples of packaging, such as the colour purple, which Cadbury currently has protected as a trade mark for chocolate products.

Secondly, noble Lords will, I am sure, be familiar with the remedies under the common-law tort of “passing off”. The case of Penguin v Puffin is an example of the redress that is available under this tort when a competitor sails too close to the wind in mimicking rival packaging. There is a more recent example, where the threat of legal action from Diageo, the makers of Pimm’s, over the use of the term “Pitchers” by Sainsbury’s resulted in an agreement over new packaging for the Pitchers product.

A number of questions have been raised. My noble friend Lord Jenkin of Roding stated that there was plenty of evidence that parasitical lookalike packaging misleads consumers. I refer him to the report recently commissioned by the IPO, to which I alluded earlier in my speech. The study, called The Impact of Lookalikes: Similar Packaging and Fast-moving Consumer Goods, is very long—more than 400 pages—but the results cover a wide range of issues. The Committee might find it useful if I highlight some of the findings, as the issues were raised today.

5 pm

First, the study revealed that,

“a substantial majority of consumers had deliberately purchased a lookalike and, of those consumers, most of them found the experience to be advantageous. The research did not analyse why some consumers perceived the purchase to be advantageous”.

Secondly, it found:

“Manufacturer brand owners reported that lookalikes enabled competitors and retailers to take unfair advantage of the manufacturer brand owner’s research into consumer insights and packaging design”.

Thirdly, some consumers do believe that similar-looking products have similar characteristics and originate from a similar source. Fourthly, a high number of consumers felt disadvantaged by the accidental purchase of a lookalike, but a substantial number saw it as an advantage. Fifthly, only in a limited number of categories was there an association between,

“a reduction in the sales of the brand leader and an increase in the sales of the lookalike”.

Sixthly, the report found,

“a fine line between confusing packaging and using generic cues to provide useful signals to consumers”.

For example, the colour green can indicate “mint”, as I mentioned earlier.

My noble friend Lord Jenkin also said that it was time for a review of the measures currently in place. The Consumer Protection from Unfair Trading Regulations protect the public from misleading commercial practices where the average consumer is likely to be economically disadvantaged as a result. The regulations carry criminal penalties and are enforced by enforcement authorities such as local authority trading standards departments. Enforcement will depend on local priorities and will be focused where there is an urgent need for protection.

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Civil powers to enforce the regulations were considered when they were drafted. They were rejected at that time because of the danger that such powers in relation to regulations with a very broad, principles-based application could lead to a great deal of costly and burdensome litigation before the courts. Such actions would also need to be based on consumer detriment resulting from the presence of lookalike products on the market. The evidence at the time was not conclusive. The previous Government undertook to review this decision and the Government are now reassessing the position in the light of the recently published IPO research.

My noble friend Lord Jenkin also asked why we cannot follow the model of any of our international counterparts, which is a fair question. The report looked specifically at Germany and the United States but the findings indicated that there is no overwhelming advantage to the systems operating elsewhere, such as in those countries, that meant that they would be models for the UK to follow.

My noble friend Lord Clement-Jones referred to the recent Which? report, as did the noble Lord, Lord Borrie. The reference in the study was to the 20% of participants who had, at least once, purchased a lookalike product believing it to be the brand owner’s product. This figure refers to the totality of the purchasing history of the participants in the study. The Which? survey of 2,244 of its members, conducted in February of this year, also found that of those who had mistakenly purchased the lookalike product, 38% were annoyed by the fact and 30% felt misled. However, the survey also reported that 18% of participants had deliberately purchased an own-brand product because it resembled a branded product, some of them because it was cheaper than the branded product. Taken together, the Government consider that these measures grant a proportionate level of protection to the packaging of brand owners and that therefore the amendment is not necessary.

My noble friend Lord Clement-Jones also asked if the UK was upholding its duties under the TRIPS agreement. I can assure him that the UK is fully compliant in its obligations under TRIPS and other international agreements. The noble Lord mentioned a particular legal case that may have questioned this. If he could provide me with details of that case, I would be happy to pass this on to my legal advisers.

The noble Lord, Lord Borrie, raised the Groceries Code Adjudicator Act, and asked why this matter could not be brought into the new adjudicator set-up. The new adjudicator’s role is very specific and is confined to looking at the supply chain and the relationship between suppliers and the biggest supermarkets. I hope that that answers his question. With that in mind, I ask my noble friend to withdraw his amendment.

Lord Jenkin of Roding: My Lords, I listened with great interest to my noble friend giving his answer, and I hope I shall be forgiven when I say that I have not read all 400 pages of the IPO report. From his description, it seems to provide “not conclusive evidence”. I am moved to say to my noble friend that, yes, of course some customers will be happy that they bought a

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lookalike product because it was cheaper. However, why did it have to look like the branded product? Why could not the own-label product be designed not to give the impression that it is riding on the coat-tails of a well known branded product? Of course some consumers will buy it deliberately because it is cheaper. I find that evidence very misleading. Consumers have bought a lookalike because it looks like the thing that they have always bought but is cheaper, so they like it. Why buy a lookalike? Why do supermarkets not design their own product? The answer is that it would not sell. There would not be a market. Lookalike products are crucial to their marketing. That is cheating. However, I will look very carefully at what my noble friend said, and perhaps take advice from some of the people who have more time than I do and have read the 400-page IPO report. In the mean time, I beg leave to withdraw the amendment.

Amendment 28A withdrawn.

Amendment 28AA

Moved by Lord Young of Norwood Green

28AA: After Clause 20, insert the following new Clause—

“Director General of Intellectual Property Rights

(1) The Copyright, Designs and Patents Act 1988 is amended as follows.

(2) In Part VII (miscellaneous and general) at the beginning insert the following new section—

“ Director General of Intellectual Property Rights

(1) The Secretary of State shall appoint an officer to be known as the Director General of Intellectual Property Rights (“the Director General”).

(2) The Director General has a duty to—

(a) promote the creation of new intellectual property,

(b) protect and promote the interests of UK intellectual property rights holders,

(c) co-ordinate effective enforcement of UK intellectual property rights, and

(d) educate consumers on the nature and value of intellectual property.

(3) In performing those duties, the Director General must also have regard to the desirability of—

(a) promoting the importance of intellectual property in the UK,

(b) encouraging investment and innovation in new UK intellectual property, and

(c) protecting intellectual property against infringement of rights.””

Lord Young of Norwood Green: My Lords, I am sure that noble Lords will recall that on 29 October last, the All-Party Parliamentary Intellectual Property Group produced a report, The Role of Government in Promoting and Protecting Intellectual Property, which urged the Government to get a grip on how IP policy is made. The chair, John Whittingdale MP, said in a press release:

“The current system of creating intellectual property policy just isn’t working. IP needs a champion within Government, who will recognise its significance and who will have the influence to co-ordinate policy across different departments. From trademarks to patents, design rights and copyright, UK companies depend on their IP rights to succeed and thrive. In this difficult economic climate it’s especially important that Government backs British businesses on IP. We hope that Government will take note of our proposals”.

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In Committee on the ERR Bill, a number of noble Lords called for the creation of a new post of director-general of intellectual property rights, who would have a duty to promote the creation of IP and to protect it where it exists. We have retabled—with permission—the original amendment, which states:

“The Director General has a duty to … promote the creation of new intellectual property … protect and promote the interests of UK intellectual property rights holders … co-ordinate effective enforcement of UK intellectual property rights, and … educate consumers on the nature and value of intellectual property”.

The problem with the present situation, in which we have a Minister—the noble Viscount—and an executive agency, the IPO, is that the IPO may be an efficient registration body for the registration of IP rights but is not, and has never purported to be, a champion of IP. On the contrary, it sees its role as the passive one of holding the balance between creators and users. As the noble Lord, Lord Jenkin, said when he proposed the original amendment, the creators and owners of IP must have someone in government to speak up for them. That was what the amendment was intended to establish.

When he spoke in the original debate, the noble Lord, Lord Jenkin, commented that he had had a lot of support for the proposal from around the industry. He quoted the BPI, which argued that the director-general should be accountable for ensuring a framework for IP that would promote investment in new content, protect the investment from theft and counterfeit, and educate consumers on the importance of UK intellectual property to jobs, growth and the export strength of the United Kingdom.

Intellectual property across copyright, trade marks, design rights and patents is at the heart of the success of a modern knowledge-based economy. It is not sufficient to have one department, one Minister and one executive agency to try to do it all. There should be Ministers and expertise embedded right across Whitehall. If you add in the need to educate people about IP and how it works, the case for a DG in this area seems very strong indeed.

The UK is a world leader in intellectual property. We all agree that how the Government develop IP policy is vital for our economy. The Government should match this ambition and champion IP as much as possible. The IPO cannot remain a passive registrar of IP. It clearly needs to be more overtly a champion for IP. The United States has obviously benefited from having an IP tsar, otherwise known as the Intellectual Property Enforcement Coordinator, who is responsible for national strategy and reports directly to the White House. We offered a similar title to the Minister in an earlier debate, but he seemed unwilling to put on the robes or adopt the persona. I did not think that he looked like Ivan the Terrible; Peter the Great had a more constructive role, both literally and metaphorically, given Saint Petersburg, if I recall. I am sure that the Minister knows that such wonderful casting opportunities do not come too often. This is the second time I have asked him.

Having said that, creating a director-general of intellectual property rights to sit within the Intellectual Property Office and serve as a champion of IP rights

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within and across government would increase the influence of the Intellectual Property Office across government and also strengthen the hand of the Minister responsible for IP. As the Alliance for Intellectual Property says:

“We believe such a post is needed to ensure that this success is properly recognised, celebrated and built upon to ensure its contribution to growth, employment, culture and society is properly maximised; for IP to be championed in a way it is in other nations”.

I beg to move.

Lord Clement-Jones: My Lords, as someone involved in the All-Party Parliamentary IP Group report of last year, which the noble Lord, Lord Young, mentioned, it would be churlish of me not to take part briefly in this debate. The white horse which I see the noble Lord now sitting on had a pretty good trot during the passage of the Enterprise and Regulatory Reform Act 2013. I do not really wish to reopen the issue with a semi-Second Reading debate on the role of the Minister and the idea of an IP tsar.

It has been quite interesting over the past six months, and is really important, that the Government and the IPO have demonstrated that they have intellectual property holders’ concerns at heart. We are of course in Committee but, in the previous debate, the noble Lord, Lord Stevenson, talked about achieving a balance. Here the noble Lord, Lord Young, is talking about unequivocally championing IP. I am very much at the end of the spectrum: although, as the Minister picked up, I am very keen on having an evidence base, I am still an unequivocal champion of IP so I found what he had to say very attractive.

The issue for me is not so much structures as attitude, increasingly. “By their fruits shall ye know them” is the key to all this. Are the Government going to implement the Digital Economy Act? Are they going to limit the exceptions to those that are really needed in the fields in which they are being introduced? Will they produce the right kind of report about innovation, growth and intellectual property? What is their approach to protecting intellectual property rights in broad terms? A lot of it is about attitudes rather than structures.

Many of us would love to see an IP Minister with the same hat as the Creative Industries Minister. Given that that is a cross-departmental matter, I suspect that it is never going to happen but I believe that the connection between intellectual property and the creative industries is extremely important and should be represented in a single-focus Minister. That would be a great step forward.

I have met the very impressive United States intellectual property tsar, Victoria Espinel, who has a valuable role in the American Administration. However, I am not sure that an intellectual property tsar would play quite such a valuable role in the UK system. I say that despite the fact that I signed up to the relevant amendment but, hell, we can always change our positions. The more the Minister keeps doing what he is doing, the less we will see the need for not an inspector-general but a director-general of intellectual property. However, he probably still has some way to go to convince us that the Government and the IPO really have the interests of the creators of intellectual property at heart.

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5.15 pm

Lord Howarth of Newport: My Lords, it grieves me to part company with my noble friend Lord Young of Norwood Green but I cannot agree with him on this matter. Of course, I agree with him that the Government and their appointees should back British business, but not to the exclusion of other interests and responsibilities. Of course, I agree that intellectual property should be championed, but I do not agree with him that it should be championed as much as possible.

In an earlier debate, we reviewed some of the unhappy consequences that followed the decision to allow patenting of the human genome. If a new public functionary called the director-general of intellectual property rights is to be created, it seems to me that that official, acting and speaking in a public capacity created by the Government, ought to maintain a balance in his approach to the whole question of intellectual property rights. He should champion the creation of new intellectual property rights where it is appropriate but he should also recognise where the limitations ought to be and where the public interest needs to be balanced.

I shall certainly not weary the Committee by repeating the arguments that I deployed in our earlier discussion about what should be covered in the annual report, but many of the arguments that I suggested should apply there also apply to this proposal. In any case, I think it is unnecessary to create such an appointment. It seems to me that the chief executive of the Intellectual Property Office himself ought to take this wide and balanced view. If his remit from the business department is narrower than that, none the less, the noble Viscount, in his capacity as Intellectual Property Minister, speaking and acting collectively on behalf of the Government as a whole, ought always to have regard to that wider range of interests and a balanced approach to policy.

Lord Borrie: My Lords, I want to intervene in a small way. I had a certain nostalgic feeling when reference was made to setting up a director-general of intellectual property because I was once the director-general of fair trading for some 16 years and I enjoyed that. I enjoyed the fact that the legislation that applied to me directed everything in a sort of pyramid set-up, whereby I was at the top of the pyramid and everybody else was down below. That was rather enjoyable, but surely my noble friends who have put forward this amendment must realise that it is terribly dated now. In the 1970s and 1980s, as each old-fashioned nationalised industry became privatised, a director-general was set up—for example, of Ofgas, Offer or Ofcom. They were all set up as sort of clones of the director-general of fair trading with specialised functions. However, roughly from the 1990s, into this century, all these offices have been remodelled on what I might call more private enterprise bases, whereby there is a board, a chairman and a chief executive. The same person can no longer be both chairman and chief executive in either private enterprise or the public sector.

Bodies that have been set up in recent years to do a job of this sort, to act as offices to receive public concerns and complaints and to bring forward policy, have been set up in the more modern way. If I may put it in simple terms, previously there has been an “Office

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of” something or other. Now there is the Financial Services Authority—or, rather, the Financial Conduct Authority—and the new competition body is not called the Office of Fair Trading or “Office of Competition” but the Competition and Markets Authority. It has a board, a chairman and chief executive. I am simply saying to my noble friends that I am not sure that I care for this amendment anyway, for the reasons given by my noble friend Lord Howarth, but it is technically not an up-to-date way of doing it.

Viscount Younger of Leckie: My Lords, Amendment 28AA would create a new statutory role of “Director General of Intellectual Property Rights”, with a duty to promote intellectual property rights. A very similar amendment to the Enterprise and Regulatory Reform Bill was proposed by my noble friends Lord Jenkin, Lord Clement-Jones and Lady Buscombe, who is not in her place today.

The functions of this new role are already being carried out. As Minister for Intellectual Property, I have a role to champion the IP system as a whole. That includes the vital role of not only protecting the interests of IP rights owners but considering the different interests of future businesses, consumers and other users and creators of IP. A balanced IP system promotes strong and competitive markets, and encourages innovation and creativity.

My role as IP Minister is to create and sustain the best possible balance. I am supported in this role by the IPO, whose objectives I set through its annual corporate plan. The IPO is responsible for promoting innovation by providing a clear, accessible and widely understood IP system that enables the economy and society to benefit from knowledge and ideas.

In particular, I am supported by the chief executive of the Intellectual Property Office, who is a director-general within the Civil Service. The chief executive is appointed by the Secretary of State. He or she is directly accountable to the Secretary of State, to me as the responsible Minister and to the Permanent Secretary as the principal accounting officer. The chief executive is responsible for the administration of the relevant statutes, in this case the Patents Act 1977, the Copyright, Designs and Patents Act 1988, the Trade Marks Act 1994 and associated legislation. He or she also advises the Secretary of State on all aspects of national intellectual property, related EU and international legislation and on relevant policy issues. It seems to me that these are precisely the tasks that one would expect a director-general of IP to perform, and we have a director-general doing them.

We have heard the suggestion that a director-general for IP owners is needed to convince holders of IP rights that the Government are supportive of their interests. The Government have already introduced or supported a wide range of beneficial measures, from enhanced R&D tax credits and incentives for animation to longer copyright for music performances, and from easier access to justice through the courts to encouraging a new IP crime unit in the City of London Police to tackle online IP crime. It is clear that we have done much for IP-intensive industries, as my noble friend Lord Clement-Jones acknowledged in the Grand Committee on the ERR Bill. I appreciate his general

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support today—when compared, perhaps, with his views during the passage of the ERR Bill—and I am grateful.

The need for balance in IP policy has been recognised for many years. For example, when the current Copyright, Designs and Patents Bill was debated in the other place in 1988, the former honourable Member for Sedgefield, Tony Blair, said the following:

“The difficult balance that we have to strike … is between ensuring that industry has a proper incentive to invest and recognising that the consumer must be protected against the lack of competition that will inevitably come from copyright protection. If we protect industry too much the consumer will suffer through the abuse of monopoly, and if we give too little protection to industry it will lose the incentive to invest. Our task is not to choose between the interests of industry and the consumer but adequately to balance those interests”.—[Official Report, Commons, 25/7/88; col. 38.]

I am most grateful to the noble Lord, Lord Howarth, for clarifying that point earlier in this debate.

The duties of the proposed director-general are significant in what they do not include. There is no duty to consider the impact on consumers, other businesses or the advance of research. He or she need not have regard to the benefits of competition, and the development of high-quality evidence does not appear to have been given priority. These are not optional extras but important considerations in their own right. Although the Government understand the intention behind the amendment, we do not believe that this additional role is necessary. In addition, I am not fully convinced that a role that does not acknowledge the balance of interests necessary to good intellectual property policy would benefit creators, rights owners or the UK.

The noble Lord, Lord Young, raised some important points, some of which I may have addressed earlier. He suggested that the IPO is efficient at registering but does not champion IP rights. As I mentioned earlier, the Intellectual Property Office is under my control as Minister for IP. I do not know about my transition from Ivan the Terrible to Peter the Great but reiterate that I am a proud Intellectual Property Minister. However, importantly, I do not agree that it is my role to champion current IP rights holders over future ones or to have one set over another.

The noble Lord, Lord Young, questioned what the IPO has done to support rights holders and IP businesses. As I mentioned earlier, the IPO is taking a wide range of actions to help business. I refer noble Lords to my lengthy letter last week, which set out some of these activities on business support and enforcement. I have here—which I can wave, Chamberlain-style—a copy of the IPO achievements for 2012-13. Noble Lords are most welcome to read it.

The noble Lord, Lord Young, asked if intellectual property should be embedded in considerations across departments in Whitehall. Having the IPO as the centre of IP expertise and policy in government, to which departments can turn, helps to facilitate this. Furthermore, IPO policy officials actively reach out to other departments—DCMS and the Ministry of Justice, to name but two—on cross-cutting intellectual property issues. This system works for a wide range of policy areas and is the norm.

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My noble friend Lord Clement-Jones said that the Government and the IPO must show that they have the interests of intellectual property holders at heart. He is right. The Government have done much, including extending the copyright term in music performances and the tax incentives for research and development in animation, which I mentioned earlier.

The noble Lord, Lord Howarth, said that the Government should not be championing intellectual property rights to the detriment of others; in other words, he was focusing on the public interest balance. Again, this is absolutely right. The IPO acts in the public interest, running the IP system in order to maximise innovation and creativity in the widest possible sense.

I hope that on the basis of the information I have provided, specifying in some depth the role of the chief executive of the IPO, as well as my own passion for the role as IP Minister, the noble Lord will withdraw his amendment.

Lord Young of Norwood Green: My Lords, I have not quite struck a consensus in Committee on this occasion. Even those who were supportive before seem to have decided that the ship was going down. Nevertheless, it has been a useful debate.

Of course, I concur with the critics, such as my noble friend Lord Howarth, who talked about the importance of getting the balance right between IP rights and public interest. I would not demur from that and I would not say that this is a perfect amendment. However, if nothing else, it has again required the Minister to define the way that, as the IP Minister, he acts within his department and with other departments. In that respect, it has been useful. It was unfortunate that he referred to Chamberlain, as his career was terminated rather abruptly, so perhaps he should choose another analogy in future when he is waving a piece of paper. Nevertheless, I take the point that he made.

The noble Lord, Lord Clement-Jones, was right to say that we will judge the Government by their actions. The reference to the Digital Economy Act brought a feeling of nostalgia and I hope that we will see it fully enacted. Nevertheless, I thank noble Lords for participating in the debate and, taking into account those responses, I beg leave to withdraw the amendment.

Amendment 28AA withdrawn.

5.30 pm

Amendment 28AB

Moved by Lord Stevenson of Balmacara

28AB: After Clause 20, insert the following new Clause—

“Future of intellectual property

Subordinate legislation to implement the government’s policy statement entitled “Modernising Copyright” published in December 2012 will not be brought forward until the Secretary of State has published, and laid before both Houses of Parliament, a report setting out the government’s long term plans for the future of intellectual property in the United Kingdom.”

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Lord Stevenson of Balmacara: My Lords, this amendment is designed to probe the Government’s intentions as regards the substantial baggage of copyright exceptions which stem from the Hargreaves report. We understand the deadline for written comments on the first batch of draft legislation is 17 July 2013, and that the IPO will be holding a series of open meetings in the week commencing 8 July 2013 to give opportunity for discussion. Although we welcome this, we have not had notification so far about the other batches or, indeed, any certainty on how many of these there will be.

Therefore, can the Minister say, first, that it is intended that the Government will make the draft legislation widely available so that the finer points of wording may be examined by parties with a broad range of expertise? If so, can he spell out the various stages remaining in this process for the information of the Committee?

Secondly, may I ask how the Government will manage the need to take a view of the impact of these regulations in the round? Will there be a debate or some other opportunity for both Houses of Parliament to get involved before the regulations are introduced? On the regulations so far published, we are already aware of some significant issues which are being raised across the industry. Can the Minister share with the Committee how the proposal to introduce an exception for private copying can be squared with the requirements of the EC copyright directive and its requirements for fair compensation for rights owners? In this context, is the Minister aware of concerns about the evidence base used for the Hargreaves review? For example, the Government justify the proposal not to provide a compensation system on the basis that the exception will cause minimal, if any, harm due to the minimal impact on sales expected to arise from the introduction of this permitted act and the opportunity that it provides for the value of private copying to be priced in at the point of sale.

The impact assessment accompanying the modernising copyright documents stated on page 15 that the research into private copying appears to confirm that pricing in is possible and is taking place. However, the research by Roberto Camerani et al, which informed the impact assessment, does not come to this conclusion and instead finds, in the case of music, that

“an assumption or view that online stores embed an additional cost into their product price for copying remains ambiguous”.

Moreover, the research concludes that, in the field of music, the researchers could not find any evidence in support of a widely held view that stores are including in their price a permission to copy. The assumption that the value of private copying is priced in at the point of sale is refuted by the research commissioned by the IPO itself, so how does the Minister justify the approach now being taken?

Draft Clause 28 in the CDPA refers to permitted private copies being made from a copy that is held by an individual on a permanent basis. This expression is not clear and is not currently recognised elsewhere as a means of distinguishing one copy in the lawful possession of an individual from another copy which might not meet the test of being a permanent copy. Can the Minister elucidate this? Will he clarify the concept of

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permanent copies, particularly when a sound recording or a film may include underlying works which have been licensed only on a limited basis for inclusion in a so-called permanent copy?

Draft Section 28B(4) of the CDPA appears to ignore how terms and conditions permitting access to copyright works increasingly relate to the application of technical protection measures. For example, programmes which can be viewed on BBC iPlayer may also be downloaded for viewing during an agreed period, not normally beyond 30 days. If customers can override the TPM contractual provisions, any terms which are intended to distinguish access to a catch-up TV service from a full video on-demand download service will be potentially ineffective. TPM measures have never been “strictly non-contractual”. Can the Minister explain how the government drafting takes this into account?

The current wording on “cloud” storage does not appear to prevent sharing from the storage. Can the Minister confirm that the draft regulations will be tightened to ensure that no one is permitted to permit anyone else to make copies of their “private” copies?

It is hard to see how the new quotation exception can apply to all copyright works, including photographs. Section 30 of the CDPA allows fair dealing of copyright works for criticism, review and news reporting but excludes photographs from the fair dealing provision. Can the Minister confirm that a similar carve-out will be introduced for photographs? The phrase “fair dealing for the purposes of quotation” does not clearly communicate in plain English the fact that uses which are normally licensed or otherwise exploited are not included. Can the Minister confirm that this can be looked at again?

The Minister will recall that when we discussed parody at length in Committee on the ERR Bill, the suggestion was made that parodists could rely on the concept of fair dealing, so that no further definition was required. This approach was strongly challenged in Committee, not least because parody is a very popular mode of entertainment in the UK and needs certainty. I accept that this is a tricky area but do not believe that the proposed new exception for parody will be sufficient if no definition or boundaries are set out in the regulations. It is also quite surprising, given the debate referred to, that no definition is being proposed to specify what would constitute “parody”, “caricature” or “pastiche”. Would the Minister not agree that it will be necessary at least to distinguish each of those from the others? To avoid further confusion in the application of any clearly defined exception linked to each of these expressions, rights owners are likely to argue that it should be made clear that when users rely upon the proposed exception, any parody, caricature or pastiche must not infringe the moral rights of the authors or performers. Can the Minister confirm that this matter might be looked at?

I apologise to the Minister for all the detailed questions, but I hope that they exemplify why more time needs to be allowed for these important changes. Unfortunately, I doubt very much whether single debates, even on a group of SIs, will be sufficient. I beg to move.

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Lord Clement-Jones: My Lords, the noble Lord, Lord Stevenson, has found a novel way of responding to the consultation on exceptions. It is not a wholly welcome process nor, I am sure, will the Minister find it wholly welcome, since I suspect that questions fired with the rapidity of bullets can only really be answered in correspondence.

I am content to see the full suite of exceptions that will be put forward by the Government, which will of course need scrutinising. I hope that that will be both a formal and informal process, so that parliamentarians will have the opportunity to engage with the Minister and with the IPO on these exceptions—not simply through the debate that we will formally have when they come to the House as statutory instruments. I can see that the motives of the noble Lord, Lord Stevenson, are pure but I am not quite so sure whether the instrument he has used is appropriate.

Lord Howarth of Newport: My Lords, I support my noble friend Lord Stevenson of Balmacara in his proposal that the Government should publish a document of some sort setting out their thinking in relation to the suite of exceptions that they propose to legislate for. It will not be satisfactory if the first opportunity that Parliament has to consider these exceptions is in the highly constrained circumstances in which we consider unamendable orders, in fairly brief time, in Committee.

It would be very helpful if the Government would lay out their thinking in a report and better still—essential, I would suggest—if Parliament had the opportunity to debate that report, so that when we come to consider the specific orders and enact legislation on them, we do so in the context of a proper understanding of the thinking and strategic purpose of the Government. The Government have some very delicate and difficult judgments to make, exception by exception, and Parliament needs to take responsible decisions. Parliament will be better educated, and better placed to make appropriate judgments on this, if we have the opportunity to go through the preliminary stage that my noble friend suggested. The report need not be quite as ambitious as the one that he proposed in his amendment, which would set out,

“the government’s long term plans for the future of intellectual property in the United Kingdom”.

That could be quite a bulky document. However, if the report is focused on the issues raised in the exceptions for which the Government are minded to legislate, it would be very helpful to Parliament and to others as well.

Viscount Younger of Leckie: My Lords, I understand that the noble Lords, Lord Stevenson and Lord Young, are keen to discuss the Government’s plans on copyright exceptions arising from the Hargreaves review and their copyright consultation. The Government have already made their vision for the future of intellectual property very clear. They have endorsed the recommendations of Professor Hargreaves after his thorough report. We want to see a framework that maximises growth across the economy, not just for industries that are users of the intellectual property framework but for everyone.

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I will set out for your Lordships a number of documents that establish the Government’s strategy for intellectual property. These include the report by Professor Hargreaves himself, published in May 2011; the Government’s response accepting the professor’s recommendations, published in August 2011; an international intellectual property strategy published in the same year, as well as an IP crime strategy covering a five-year cycle; and, most recently, the Modernising Copyright document, to which the amendment refers, which flowed directly from the Government’s response to the Hargreaves review and their subsequent copyright consultation that ran from December 2011 to March 2012. Taken together, the documents very clearly lay out the Government’s vision for intellectual property as an essential element of growth, and back up that vision with real plans for the next five years. Those plans are reflected in the IPO’s corporate plan, which I, as the Minister for Intellectual Property, have signed off.

I also remind noble Lords that the previous Government conducted many of their own reviews, such as the Gowers review, Digital Britain,Creative Britain and the 2009 copyright review. Following this number of reviews, now is the time for action and implementation, and I am pleased to say that this Government are now moving to implementation.

I am very grateful to the noble Lord, Lord Stevenson, for his engagement and interest in the Government’s plans to implement their proposed changes to copyright exceptions. This work, as the noble Lord is aware, is being taken forward not in the Bill but through secondary legislation, which we will all have ample time to debate. However, I understand why the noble Lord has raised the issue and recognise that while many are in favour of the proposed changes, some stakeholders still have concerns. Therefore, I will now try to respond.

First, the noble Lord asked for more information about the timetable for the technical review of copyright exceptions that the Government are conducting. As the noble Lord indicated, the IPO is seeking comments on the first set of draft exceptions by 17 July and has offered open meetings in the week of 8 July. This first set of technical drafts covers proposed new exceptions on private copying, parody, quotations, and changes to the existing exception for public administration. The next set of technical drafts will cover education, preservation and archiving, research and private study, and text and data mining. It is my intention that these will be published before the end of the week.

This will leave one remaining exception: that for disabilities. However, noble Lords may be aware that the UK is currently involved in discussions in Marrakech to agree a treaty on improving access for the visually impaired to published works. Therefore, it may be necessary to await the outcome of that important work before issuing proposals to update the disability exemption. I am sure that all noble Lords support this important work, which has the aim of facilitating access to books for visually impaired people across the world.

On the time available for public comment, the Government are keen to ensure that sufficient time is provided for all the technical drafts to be considered

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properly. Therefore, the same time to comment—six weeks—will be allowed for each technical draft. If any noble Lords here today wish to respond to the technical review exercise, the Government will be very happy to hear from them. In addition, I will be happy to meet any noble Lords who have a keen interest in this area.

I now turn to how, subject to satisfactory completion of the technical review exercise, the Government plan to bring the draft legislation before this House and the other place. These are statutory instruments, but the Government have committed to lay them before each House for affirmative resolution. This will provide an opportunity for Parliament to comment and to express its views. The noble Lord expressed concern about the time to debate the issues. I do not share the noble Lord’s fear that there will not be enough time for discussion on these issues. This House and the other place do not seem to shy away from debates on copyright. Copyright exceptions have already been the subject of debate on the Floor of both Houses in the context of the ERR Act and have been scrutinised by not one but two Select Committee inquires. However, I recognise the great interest in this area and, as I indicated, during the passage of the Enterprise and Regulatory Reform Act, the Government remain open to the idea of additional debates on the draft regulations if there is a desire from Members of this House and of the other place. I am happy to repeat that offer here today.

5.45 pm

I am, however, grateful to the noble Lord, Lord Stevenson, for offering me his comments at this stage. As the noble Lord himself noted, some of these points are detailed and technical, such as the definition of permanent copy. The Government will certainly be looking at this, and all other comments on the draft. Indeed, the aim of the technical review process is to devise the best language possible, so I am grateful for all noble Lords’ initial insights and suggestions on this matter. I suggest that, rather than discussing each point in detail, I write to the noble Lord separately to try to answer the more detailed points he raises.

Having said that, there are some points I would like to cover briefly here. The draft exception will not allow anyone to override copy protection measures that are applied to works. The Government understand the importance of these measures in the fight against copyright piracy, and will continue to protect them. With regard to the particular example mentioned by the noble Lord, that of storing BBC iPlayer downloads beyond the 30-day limit, this activity would not fall within the scope of the exception. This is because this type of copy is not acquired on a permanent basis. If it did fall within the scope of the exception, which it does not, then it would still be illegal to break the copy protection measures applied to it.

On the issues raised on pricing and compensation for private copying, the Government intend to publish an updated impact assessment on this and the other exceptions, and I hope that this will set out all the evidence which has been gathered on this issue. The noble Lord raised a number of points about compensation. However, I am sure that the noble Lord is not suggesting that consumers should pay twice for content that they have legitimately purchased.

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For example, if I buy my content online I will have paid for the right to make copies. Should I pay again for that right when I purchase something on which to store that content? If consumers wish to purchase a USB stick and to store their own photographs on it, should they pay a tax to do so? Should a business have to pay a tax on the photocopier paper it uses, or discs, or on any other medium that it uses to store the company’s content? I am sure that noble Lords would agree that the answer to all these questions has to be no.

It does not seem sensible to maintain the current position, where many consumers are infringing copyright on a daily basis. UK consumers and rights holders should enjoy the same rights as those in other countries including Australia and Canada. Indeed, the Gowers review commissioned by the previous Government reached exactly the same conclusions. Those conclusions, including a private copying exception, were accepted by Gordon Brown in the pre-Budget report in November 2007. Given the support of the previous Government for these provisions, I would like to work with the noble Lord, Lord Stevenson, and all Members of this House so that we can bring our copyright framework up to date. In light of these assurances and my offer to write and to meet, I hope that the noble Lord will withdraw his amendment.

Lord Stevenson of Balmacara: My Lords, I thank all speakers for contributing to this, and to the Minister for his very full response. I was not expecting detailed rebuttal on any of the points I made on individual copyright exceptions. I look forward to the letter, which I am sure will be very interesting.

The Minister has actually covered all the ground very satisfactorily. We were not aware of the timetable for the second group of copyright exceptions. Six weeks takes us to the end of July, so I assume that that will be finished at roughly the time that the House rises. That would be good and gives us time to come back to that. I understand the point about the disabilities exception, which I do not think is contested at all but should benefit from the further discussions in the Morocco environment that the Minister talked about.

We recognise that this is a process for which there are precedents. The affirmative resolution process is what it is, but I recognise that the Minister has indicated in the past, and has repeated today, that he would be happy to respond to requests for additional debates. I think that would be the way forward and I am sure that we could have a discussion on that and then discuss it through the usual channels.

I am also particularly grateful for the news that there will be some new impact statements. We did not feel that the previous impact statements, which attracted criticism all round the House, including from the noble Lord, Lord Clement-Jones, were up to the mark on what they were trying to justify. Seeing some reworked figures with proper calculations being done will be a huge success.

I think that the amendment has achieved what we wanted: to probe a little further on this area and to

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draw out the need for more time and effort to be spent on these important and good proposals. I beg leave to withdraw the amendment.

Amendment 28AB withdrawn.

Amendment 28AC

Moved by Lord Young of Norwood Green

28AC: After Clause 20, insert the following new Clause—

“Compensation for financial loss

(1) Section 97 of the Copyright, Designs and Patents Act 1988 is amended as follows.

(2) At the end of subsection (2), insert “including in addition to or as an alternative to compensating the plaintiff for financial loss a lump sum equivalent to the amount of royalties or fees which would have been due had authorisation to use the relevant rights been requested”.

Lord Young of Norwood Green: My Lords, we have argued in Committee about whether or not criminal sanctions should be introduced to the design rights field. However, even if the Government’s current proposal is adopted, unregistered design rights will remain outside the criminal courts.

It has been argued that the present civil damages regime is ineffective and provides no deterrent to those seeking to infringe IP rights—infringements which, it can be argued, impact on economic growth. The current regime offers little opportunity for organisations to claim back the true costs of the losses they suffer, apart from the often nominal unpaid licence fee, as it takes no account of the profits a person may have made on the back of their infringement. Therefore, given that the only penalty available is an ability to reclaim the fee that should have been paid in the first place, a situation is created that provides an incentive to infringe.

The Gowers report of 2006 stated that:

“Damage awards should act as a disincentive to infringement”.

The 2007 Culture, Media and Sport Select Committee report into new media and the creative industries stated:

“The deterrent effect of the present law in this respect is near zero: it should be substantial, as are some of the illicit profits being made”.

The 1997 Law Commission report, Aggravated, Exemplary and Restitutionary Damages, stated:

“Substantial numbers of consultees considered that exemplary damages do or could have a useful role to play in filling these gaps. They fulfil a practical need. We agree”.

When pressed, the Ministry of Justice points to the fact that the civil regime is there only to compensate, while the criminal regime is there to punish. However, blurring of these boundaries already takes place. In January 2010, a judge awarded exemplary damages in a civil case involving a car insurance scam. In addition to ordering the individuals in the fraud ring to compensate the companies for £300,000 of losses, the judge ordered the ring to pay a further £92,000 as a punishment. The reason, he stated, was to send a clear message that this sort of action would not be tolerated.

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights—TRIPS—requires that members provide enforcement procedures that

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“permit effective action” against infringement of intellectual property rights covered by the agreement, including,

“remedies which constitute a deterrent to further infringements”.

The EU directive on the enforcement of intellectual property rights echoes the TRIPS obligation. To satisfy the obligations imposed by TRIPS and EU law, many EU member states have adopted strong rules on civil damages for intellectual property infringements; for example, in Ireland aggravated and exemplary damages are available. In other markets, including Austria, the Czech Republic, Greece, Poland and Romania, rights holders can recover multiple damages. Lithuania provides for a form of statutory damages. These remedies are not available in the UK. In addition, Canada, the US and other countries have introduced statutory or pre-established damages.

Can the Minister say whether the UK Government believe that their implementation of the enforcement directive meets the requirement for member states to have “effective, proportionate and dissuasive” civil remedies? It is true that the courts are free to continue to apply their existing approach. A subsequent licence purchase, for example, may be deemed adequate to compensate for lost profits. Technically, this leaves the rights holder with the ability to recover unfair profits by suing the infringer. However, proving such profits can be exceedingly difficult in many cases, especially where the profit is a saved cost.

Much, if not all, of the substantive and common law that concerns the awarding of damages predates the development of the modern, digital-based creative economy. As a result, anomalies, deficiencies and inequities have become increasingly apparent, particularly for copyright interests. The amendment provides the ideal opportunity for these problems to be fixed. I beg to move.

Lord Clement-Jones: My Lords, I was not planning to speak on the amendment but the noble Lord, Lord Young, made such a good fist of the arguments that I wanted to say that this matter needs serious examination. In fact, when one looks closely, one sees that this is a relatively mild amendment because it does not really constitute exemplary damages. It simply rolls up royalties into a lump sum that otherwise could have been awarded by a court. Exemplary damages are rather tougher. Indeed, many rights holders complain that the provisions of the amendment would be inadequate when all they are going to get is just the equivalent of a royalty when, in fact, an infringement has taken place over a long period. One could go a lot further, but as a first step and as a way of stimulating discussion this is an interesting amendment.

Viscount Younger of Leckie: My Lords, Amendment 28AC would allow for the awarding of damages in copyright infringement cases that compensate a plaintiff for the infringement, as well as the additional damages allowed in some circumstances for copyright infringement. This is already catered for by Regulation 3(2) of the Intellectual Property Regulations 2006—SI 2006/1028—and damages may be awarded at the court’s discretion.

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Copyright gives the creator of a protected work the right to control certain acts, such as how and when the work is copied or when it is issued to the public. Most cases of copyright infringement fall under the remit of civil law and are dealt with by the civil courts. Infringement can be a criminal matter, particularly where it is carried out deliberately and/or it occurs on a commercial scale. The UK legal system does not generally have principles of punitive damages in the civil courts. In some circumstances this is possible for blatant copyright infringement, but these provisions are rarely used. Civil remedies in UK law are aimed at settling disputes and provide restitution and compensation, while punishment is the purpose of the criminal courts.

Intellectual property law is complicated and in many circumstances it is possible for an individual or business to infringe accidently. As a result, although it is possible to obtain additional or exemplary damages for copyright infringement in some circumstances, this is not something that the Government intend to introduce more widely. In particular, the introduction of further exemplary damages for design rights and patents would almost certainly have a negative impact on innovation, as industry would become more nervous about infringement when developing new products. Further damages would also create a perverse incentive for some individuals and organisations to take legal action that might otherwise be inappropriate.

An important principle of UK law is ensuring that the level of penalty is proportionate to the level of wrongdoing. The Government believe that furthering exemplary damages could allow for disproportionate sanctions to be imposed on those who unintentionally infringe IP and would not support rights holders, or protect or enforce their rights. Above all, we have seen no evidence that exemplary damages work where they are available in other countries.

The noble Lord, Lord Young, questioned whether the UK Government are doing enough on enforcement. I am delighted that this gives me an opportunity to provide some highlights of what I regard as a serious and important matter. The UK’s legal system convicts pirates and counterfeiters, and 80% of criminal cases under IP legislation in 2009 led to a guilty verdict. In 2009, the UK convicted nearly eight times as many copyright offenders as in 2002. The assets seized from IP criminals were £21 million in 2010-11, which was more than twice the previous year’s figure. Figures vary from year to year, understandably, but there is an increasing trend in the value of assets recovered since 2004-05.

The noble Lord, Lord Young, spoke generally about whether the current system is working. To address his first question, we simply have not seen the evidence that the UK’s penalties are ineffective deterrents. UK piracy is relatively low, and Ofcom research suggests that it is not rising. That is not to say that we are complacent. However, I ask the noble Lord to withdraw his amendment.

6 pm

Lord Young of Norwood Green: I thank the noble Lord, Lord Clement-Jones, for participating in the debate. I cannot say that we found the Minister’s

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answer totally satisfactory. We will reflect on the statistics that he gave us. I assume, as he only went as far as 2009, that we have not got any further statistics for 2009 to 2012. If he has, no doubt he will let us know in writing. We will reflect on his points and, in those circumstances, I beg leave to withdraw the amendment.

Amendment 28AC withdrawn.

Clause 21 : Recognition of foreign copyright works and performances

Amendment 28B

Moved by Viscount Younger of Leckie

28B: Clause 21, page 19, line 30, leave out from “Part” to end of line 32 and insert “, or any of its provisions, to a specified country;

(c) make provision for applying this Part, or any of its provisions, to any country of a specified description;

(d) make provision for the application of legislation to a country under paragraph (b) or (c) to be subject to specified restrictions.”

Viscount Younger of Leckie: My Lords, I will set out why the Government have tabled minor and technical amendments to this clause. The Committee will be relieved to know that my speech will be brief on this occasion.

Clause 21 is intended to simplify the way in which the UK currently meets its international obligations to extend copyright protection to works from other countries and their citizens, delivering clearer information for users. This need arises from the fact that the UK is a signatory to a number of international copyright conventions and treaties. This obliges the UK to extend copyright protection to works and performances created by citizens of other member countries, or to works that originate in other member countries. These obligations are reciprocal: UK copyright holders benefit from the same protection in those countries.

However, it became clear after the Bill was introduced that the clause as drafted would not provide the Government with the flexibility to extend as much, or as little, of the Act as is appropriate. The policy behind Section 159 is for protection to apply only where it is offered in return. This very much depends on which international agreements those other countries have signed up to, and whether they have opted out of some elements. The purpose of the Government’s technical amendments to this clause, therefore, is to better define the powers to extend only parts of the provisions of the Act to citizens and works from other countries, and where the United Kingdom is obliged to do so.

Amendment 28K is consequential and removes text that has become redundant, because the Bill will automatically ensure protection in future for works from the Channel Islands and the Isle of Man. I beg to move.

Lord Stevenson of Balmacara: My Lords, I am sure that there will be little response to the Minister’s brief but adequate explanation of these amendments. He

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also tried to write to us to explain what he was doing, but unfortunately the letter did not reach us until this morning. However, I have had the benefit of a brief read of that. It seems to us a sensible amendment, and we wish it well.

Viscount Younger of Leckie: I am grateful for the brief contribution from the noble Lord, Lord Stevenson. I have nothing further to add.

Amendment 28B agreed.

Amendments 28C to 28K

Moved by Viscount Younger of Leckie

28C: Clause 21, page 19, line 33, leave out “(4)(b)” and insert “(4)”

28D: Clause 21, page 19, line 37, after “(4)(b)” insert “or (c)”

28E: Clause 21, page 19, line 38, after “country” insert “or countries”

28F: Clause 21, page 19, line 39, leave out “Order” and insert “provision under subsection (4)(b) or (c)”

28G: Clause 21, page 19, line 40, at end insert—

“(6A) Application under subsection (4)(b) or (c) is in addition to application by subsections (1) to (3).

(6B) Provision made under subsection (4)(c) may cover countries that become (or again become) of the specified description after the provision comes into force.”

28H: Clause 21, page 20, line 18, after “(bb)” insert “or (c)”

28J: Clause 21, page 20, line 22, at end insert—

“(c) make provision for the application of this Part to a country added under paragraph (b) to be subject to specified restrictions.”

28K: Clause 21, page 20, line 29, at end insert—

“( ) In section 208(5) of that Act (which, so far as it gives power to designate any of the Channel Islands or the Isle of Man, is superseded by the new section 206(1)(ba)) omit “any of the Channel Islands, the Isle of Man or”.”

Amendments 28C to 28K agreed.

Clause 21, as amended, agreed.

Amendment 29

Moved by Lord Clement-Jones

29: After Clause 21, insert the following new Clause—

“Remote e-lending

(1) Section 5(2) of the Public lending right Act 1979 (interpretation) is amended as follows.

(2) At the end of the definition of “lent out” omit “but paragraph (b) does not include being communicated by means of electronic transmission to a place other than library premises”.”

Lord Clement-Jones: My Lords, as your Lordships know, the public lending right is the legal right of authors to receive payment for the loan of their books by public libraries. Currently it applies to the loan of books only in printed format. It does not apply to e-books, audiobooks and e-audiobooks.

William Sieghart and a distinguished advisory panel carried out a review of a number of issues and concerns on the subject of e-lending in libraries. Their report,

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An Independent Review of


ending in Public Libraries in England

, was published in March 2013. A number of recommendations were made to ensure that authors receive fair remuneration from the lending of digital, audio and e-audiobooks by libraries. The review recommended that the anomaly whereby rights holders are still not recompensed for the loan of their audio and e-books should be urgently addressed by extending PLR to cover e-books, audiobooks and e-audiobooks; that there should be an increase in the Government’s PLR funding to take this into account, so that writers and other rights holders are equitably compensated; that the provisions in the Digital Economy Act 2010 that extend PLR to on-site loans of audiobooks, e-books and e-audiobooks should be enacted; and that the Government should find space in their legislative programme, at the earliest opportunity, to enact primary legislation to extend PLR to remote e-loans.

I will say a word on the legalities around PLR. Authors who have granted publishers the right to publish their works as audiobooks or e-books will typically retain copyright in the work and will often retain the exclusive right to lend the work granted by Section 16(1) of the Copyright, Designs and Patents Act 1988. Under Section 18A of the CDPA it is an infringement of copyright in a literary work to lend that work to the public without the copyright owner’s permission. However, Section 40A of the CDPA permits public libraries to lend books that fall within the public lending right scheme. If the Digital Economy Act is implemented, the PLR scheme will be varied to include audiobooks and e-books. Until that happens, loans of audiobooks and e-books issued without a copyright owner’s authorisation perpetuate a situation in which lending rights are being infringed.

Loans of audiobooks are significant, considering that no payment is made to authors for their loan from libraries and that in many instances the libraries charge for the loans. The latest CIPFA statistics put the number of audiobook loans at 9.9 million for 2010-11 and 8.9 million for 2011-12. However, CIPFA treats e-audio separately in the 2011-12 figures and there is an additional figure to be taken into account of 287,000 loans for e-audiobooks.

In their response to the Sieghart report, the Government committed to pursuing legislation to extend PLR to remote lending in future parliamentary Sessions. They also agreed to consider commencing the relevant provisions of the Digital Economy Act. Their commitment to pursuing the legislation to extend PLR to remote lending was said to be subject to compliance with the EU copyright directive, with further funding dependent on evidence of remote loans.

What are the potential consequences if the Government do not implement the recommendations? The continuing failure to provide for lending remuneration in respect of non-print formats raises an important legal issue. While on-site e-book lending is a developing service, the ability to access audiobooks in public libraries is clearly highly valued by the public. The advisory panel heard that around 10 million audiobook loans take place each year, the vast majority of which are in hard-copy formats. Quite apart from the inequitable treatment of rights holders, the current situation also

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places the library service in a position where rights are being infringed on a daily basis. For libraries and authors, the longer-term consequences of a failure to implement the Sieghart recommendations expeditiously are clear: readers are increasingly choosing digital formats, anticipating on-demand access at the time and place of their choosing.

The Government should act upon William Sieghart’s recommendations without delay to effect the extensions to PLR envisaged by the Digital Economy Act, to provide adequate additional funding for these extensions and to fund and encourage appropriate models for remote e-book lending so that libraries can act within the law and authors can receive fair remuneration.

Since the Government are now committed to pursuing the legislation to extend PLR to remote lending, subject to compliance with the EU copyright directive, with further funding dependent on evidence of remote loans, why not use this Bill for the enabling legislation? I beg to move.

Lord Howarth of Newport: My Lords, I support the noble Lord, Lord Clement-Jones, very strongly indeed. I am very glad that he tabled this amendment. There is a palpable injustice that needs to be remedied and I can see no good reason why it has not already been done. It should be done very expeditiously indeed.

The historic authors’ public lending right scheme has always been run on a highly cost-effective basis. The cost of it has been minimal to public funds. But it has been valued very much by authors, not because it makes them rich—there is a low ceiling on the total remuneration they can receive through the scheme—but because it gives recognition to their copyright and their rights as authors. Rightly, they feel strongly about it. It is clear that the principles of the system need to be extended to e-books and should have been extended long ago to audiobooks. All the thinking has been done by Mr Sieghart and his colleagues.

To carry on with the present state of affairs is disreputable. I suspect that the constraint is seen as one of cost but even a token royalty or token remuneration would satisfy the principle, which I think is important to authors. I hope very much that the Minister, speaking on behalf of not only his department but the DCMS, will be able to encourage us today.

Lord Young of Norwood Green: My Lords, I thank the noble Lord, Lord Clement-Jones, for his comprehensive contribution, as well as my noble friend Lord Howarth. I think that they have covered the waterfront on this one. The only thing I would add is: can the IP Minister tell us what has happened to the Digital Economy Act? I look forward to his response. Basically, we support the premise that is contained in this amendment.

Viscount Younger of Leckie: My Lords, I thank my noble friend Lord Clement-Jones for his amendment. This amendment and the following one fall within the remit of the Secretary of State for Culture, Media and Sport. However, as I work ever more closely with my colleagues in DCMS where there is some crossover in policy, I am more than happy to discuss these amendments today.

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The Government recognise the opportunities presented by the lending of e-books by public libraries and recently commissioned an independent review of e-lending in libraries in England, led by William Sieghart, which my noble friend Lord Clement-Jones referred to. Noble Lords will be aware of the public lending right—PLR—scheme which enables authors and other rights holders to receive payments in exchange for their works being loaned out free of charge by public libraries.

More than 23,000 authors, illustrators, photographers, translators and editors who have contributed to books lent out by public libraries in the UK receive PLR payments each year, up to a maximum of £6,600 per rights holder. This is, in effect, compensation for the mandatory nature of the PLR scheme. Rights holders are automatically included in the scheme, although some authors waive their right to receive PLR payments.

At present, e-books, audiobooks and e-audiobooks—which I shall collectively call e-books for convenience—are outside the scope of the PLR scheme. This is regardless of whether those books are downloaded on library premises or downloaded remotely, such as at home. It is very important to note that public libraries are able to lend e-books, both on library premises and remotely, without the PLR scheme being extended. Library authorities offering e-lending reach appropriate agreements to license the lending of e-books by contracting the services of third party aggregators who liaise with publishers on rights holders’ behalf.

6.15 pm

Before I address my noble friend’s amendment, it is worth noting that loans of e-books currently represent a tiny fraction of book loans in this country. The last set of statistics on public library usage showed that there were 850,000 e-book loans in the UK in 2011-12 compared with almost 288 million loans of print books in the same period. Nevertheless, e-lending is a growing trend and we should expect library users’ expectations and demands to change. In the future, for some people, perhaps popping to the library will become synonymous with going upstairs to log on to their computer.

The Digital Economy Act 2010 contained provisions enabling the PLR scheme to be extended to on-site e-lending; that is, loans of e-books carried out on library premises. By contrast, under remote e-lending, a library user may, for example, log on to a library website from his or her home and download an e-book in that way. I apologise for labouring the distinction but it is an important one for the Committee to bear in mind.

Last autumn, the Minister for Culture in the other place, Ed Vaizey, asked William Sieghart to carry out an independent review of e-lending in public libraries in England. The report recommended that the PLR scheme should be extended to on-site loans of audiobooks and e-books by commencing the provisions in the Digital Economy Act 2010, and that PLR should be extended to remote e-loans. The government response, published in March this year, welcomes the review’s findings, but explains that it has not yet been possible to bring the provisions of the Digital Economy Act into force. However, it also says that the Government

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have now committed to considering the commencement of the provisions to extend PLR to on-site loans of audiobooks and e-books.

However, this amendment deals specifically with remote e-loans, which are not covered by the provisions in the Digital Economy Act. This was to ensure compatibility with a European directive: namely, the copyright directive. Under that directive, authors are provided with the exclusive right to authorise or prohibit any communication to the public of their works. This includes making a work available to the public by electronic transmission in such a way that members of the public may access it from a place and time of their own choosing—in other words, via remote e-loans. This right is provided for in the Copyright, Designs and Patents Act 1988.

On-site loans of e-books are subject only to the separate right of reproduction. There is a specific exemption in the copyright directive for loans by libraries. By contrast, in respect of the exclusive right of communication, the specific exemption is limited to communications to members of the public,

“by dedicated terminals on the premises”.

This is the basis upon which the Government legislated in the Digital Economy Act to extend PLR to on-site loans. Therefore, I trust that, considering the wider constraints within which UK legislation must operate, and that we must have proper regard to this matter of EU law before proceeding, my noble friend will appreciate that this area needs particularly careful consideration.

Furthermore, the implications for PLR funding need to be considered against evidence of the number of remote loans of e-books. The government response stated that,

“any increase to PLR funding would need to be considered against evidence of increased loans within the increased remote scope”.

An important step, therefore, is ensuring that there is a robust evidence base upon which to consider any future extension. This is a really important point as existing research about e-lending is predominantly American. While that provides useful indicators, the UK market is significantly different in many ways. Therefore, to offer any meaningful evidence on e-lending in the UK, the review concluded that a central project is needed to bring together all partners collaboratively.

As a result of the findings of the review, I am pleased to say that the evidence base will be improved through a research project led by the Society of Chief Librarians in collaboration with publishers and library authorities. The Government expect that the whole library sector can benefit from these results. The Government see improving the evidence base as an important step forward as e-lending is evolving extremely quickly. However, the Government believe that it would be premature to prejudge the outcome of that independent research project by legislating now.

A number of noble Lords raised questions in this short debate and my noble friend Lord Clement-Jones stated that authors’ rights were being infringed without this amendment. Non-print book rights holders are currently conferred lending rights by the Copyright,

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Designs and Patents Act 1988, allowing these rights holders to authorise or prohibit the lending of their work. The law requires library authorities to reach appropriate agreements with non-print rights holders or with other parties on behalf of those rights holders in order to license the lending of their non-print works.

Library authorities offering e-lending do this by contracting the services of third party aggregators who liaise with publishers on their behalf, which is a point that I made earlier. My noble friend Lord Clement-Jones spoke about the need to increase funding for the PLR. The funding available for PLR for 2015-16, which is the earliest at which the scheme can be extended, will be confirmed in the spending round on 26 June. Given that loans of print books and audio books are seeing a downward trend as loans of e-books are increasing, it is not necessarily the case that an increase in PLR funding would be necessary to maintain the rate per loan paid to authors.

My noble friend Lord Clement-Jones made a recommendation that the PLR should be extended and funding provided urgently, and he asked why this has not happened to date. In the response to the review, the Government have committed to considering the commencement of the DEA provisions. I can assure your Lordships that careful consideration has been given to this and I will inform the Culture Minister of my noble friend’s keen interest. The funding available for the PLR for 2015-16 will be confirmed on 26 June, as I mentioned.

The noble Lord, Lord Young, asked where the Government are on the Digital Economy Act—whether it would be implemented and when. The provisions in the Digital Economy Act aim to address the online copyright infringement resulting from unlawful peer-to-peer file sharing. The Government and Ofcom are currently implementing this system. The Government are still on track to send the first notification letters during the course of 2014. It may be that a fuller answer is required to the noble Lord in respect of his specific questions on the timing and I will endeavour to do that.

Lord Young of Norwood Green: I welcome that nugget of information but it is a nugget in that there is quite a lot more in the Digital Economy Act. I was taking the opportunity to ask generally and I quite understand that that requires a complex answer. If the Minister will write to us with more information, it will be eagerly received.

Viscount Younger of Leckie: I was attempting to give a fuller answer in that I, too, understood that it was a slightly more complex question and that is why I would like to give a holistic answer covering the noble Lord’s general point about the timing and the rollout of the Digital Economy Act.

My noble friend Lord Clement-Jones asked why we should not just provide a token amount of remuneration in respect of PLR. By EU law, remuneration must be more than merely illusory. Although the UK has a degree of discretion as to the amount, the European Commission’s case law has said that it must be real

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and reflect the loss of remuneration, so the availability of funding is relevant to any extension. My noble friend also asked what the implications were if these changes were not made. To clarify that point, library authorities can continue to lend e-books without the extension of PLR.

The noble Lord, Lord Howarth, asked whether the issue is one of cost and, if so, whether a token amount can be paid. My noble friend Lord Clement-Jones made a similar point. The financial implications must be given consideration but I assure noble Lords that the Culture Minister is giving this proper consideration even as the challenging economic circumstances continue. With this in mind, I hope that my noble friend will withdraw his amendment.

Lord Clement-Jones: My Lords, I thank the Minister for that quite complex reply. I thank the noble Lord, Lord Howarth, for his support, and the noble Lord, Lord Young. I liked his question about what has happened to the Digital Economy Act. It is one of those mysteries, like “Who killed Cock Robin?”.

The Minister seemed to be saying that it is far easier to implement the Digital Economy Act for onsite e-lending than it is for remote e-lending. If I have elicited that as a response, we can at least start sorting out the wheat from the chaff. It sounds as if 26 June is a very significant date for whether or not we are going to be able to implement that part of the Digital Economy Act. I shall put on my party clothes if, on the 26 June, we know that there is going to be something in the budget for PLR under Section 43 of the Digital Economy Act. I shall put on even more party clothes if, after four years, we start issuing letters next year under the initial obligations code. The fact that it has taken four years to implement an Act will perhaps be in the Guinness book of records, although the noble Lord, Lord Borrie, who has a great memory for these things, may remember other Acts that have not been implemented. However, it is good news on that front. It sounds as if there is some willingness to implement the Act as far as that is concerned.

I am rather baffled that the Government should commission a report by somebody extremely distinguished, with a very distinguished advisory panel, which came to some very clear conclusions about remote e-lending, and then shuffle the whole thing off into a piece of research. I am sure that that is very frustrating for all concerned. The Minister talked about the bodies that were involved, including the publishers, but the authors—the ALCS and others—really need to be involved in this process. In many respects, all this is happening behind a somewhat closed door as far as the writers are concerned, but they should be involved. Clearly I am not going to get very far with that until the results of the survey are put together.

On the legal issue, not all libraries have reached an agreement with aggregators. There will be continuing infringement until we have either proper, blanket licensing—via the aggregators, publishers or whatever—or we have something in the Digital Economy Act, or another instrument, to bring remote e-lending within PLR. The situation will continue to be very unsatisfactory. I heard exactly what the Minister said about the status

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of remote e-lending under the copyright directive. I am not an expert on that directive but I doubt whether it is beyond the wit of man to find a way through that and to find some satisfactory way of including remote e-lending in PLR if the budget is there.

However, the number of hard copy or print books which are subject to PLR is diminishing over time, so the pool of money required to compensate authors—the Minister said that £6,600 is the limit under PLR—may not necessarily grow, because there will be a compensating diminution in the number of printed books taken out as against the quantity of digital lending. I would not be at all surprised if this required no additional funding and it was simply a matter of political will to recognise that the technology is moving in a particular direction and to make sure that authors are compensated as much for the loan of digital books as for the loan of print books. However, we will not get much further today. I thank the Minister for his considered reply and beg leave to withdraw the amendment.

Amendment 29 withdrawn.

6.30 pm

Amendment 30

Moved by Lord Clement-Jones

30: After Clause 21, insert the following new Clause—

“Copyright in broadcast

Omit section 73 of the Copyright, Designs and Patents Act 1988 (reception and re-transmission of wireless broadcast by cable).”

Lord Clement-Jones: My Lords, I am afraid I have three amendments in a row. I do not know whether it will be “three strikes and you’re out”, but Amendment 30 is the second. I will first explain that Section 73 of the Copyright, Designs and Patents Act is a provision in UK copyright law that permits the immediate retransmission of the main PSB free-to-air services by “cable” in the area where the original PSB channel was broadcast. Crucially, Section 73 provides that the copyright in the broadcast, and in any work included in the broadcast, is not infringed by such retransmission. The effect of the section is to permit “cable” operators to retransmit PSB services without agreement or consent.