When I was reading Hansard from another place on this matter, many noble Lords mentioned the importance of Scotland as a possible second area. It would be useful in Committee to discuss that and, possibly, the wider point of whether independence for Scotland would help to produce that—or otherwise, as I would suspect.
Exemptions in the Freedom of Information Act 2000 for continuing programmes of research, as contained in clause 20, will maintain UK universities’ excellent reputation around the world for research, without, as I think the Minister said, forcing institutions to make public research without its being completed or subject to peer review. That is also to be welcomed. There are certain provisions, however, that will need to be looked at closely in Committee, and which might have a detrimental effect on UK-based innovation. The Minister mentioned this point, and I was pleased with his accommodating remarks on the possibility of amendments in Committee. This is a concern for UK-based manufacturing.
Clause 3 extends the qualification of unregistered design rights to the functional designs of companies incorporated in countries that do not offer reciprocal protection for UK functional designs. The Minister mentioned the IP Federation, which has been particularly strong on this point. It stated:
“Under the changes proposed in Clause 3 of the IP Bill, parity no longer exists and UK manufacturers are strategically disadvantaged with additional hurdles being introduced to the manufacture of functional designs in the UK. This will directly impact those engaged in general engineering because of the importance of functional designs which are covered by UK UDR.”
It went on to state:
“The manufacturing facilities of both small and large UK-based engineering companies will be seriously impaired by extending UK UDR to foreign corporate entities. Careful consideration would need to be given to the location of manufacturing facilities as the manufacture of functional articles in the UK will be inhibited. It would become more attractive to move design and manufacturing offshore and to commercially source functional designs from businesses outside of the UK where the copying of functional designs is lawful.”
It is important for the rebalancing of the economy that we in this House do nothing that adversely affects high-value manufacturing in this country. Clause 3, as currently drafted, poses a threat to investment and manufacturing capability in the UK, and could put us at a competitive disadvantage with other parts of the
world when considering manufacturing locations. That cannot be right. I am pleased with what the Minister has said. We will examine this matter closely in Committee. I hope we can work together to introduce amendments that do not inhibit UK-based manufacturing.
As has been said, the most contentious part of the Bill is clause 13, which brings into law criminal sanctions for deliberate infringement of registered designs. I think that this will take up a significant part of our deliberations in Committee. On the one hand, as I think I mentioned earlier in my remarks, the Opposition strongly believe in the principle that a person who has created, invented or designed something should derive some protection of ownership in law, together with the right to derive benefit from that creation, invention or design, and that appropriate and proportionate sanctions should be put in law to assert that legal right. If criminal sanctions exist for copyright or trademarks, why not for design, especially when the future UK economy will rely so heavily on innovative design? This is a strong argument, especially when there is already similar protection in other parts of the IP framework, such as for copyright or trademarks. However, the introduction of criminal sanctions with the prospect of 10 years’ imprisonment is a serious matter and must be considered closely by the House.
We will be probing the Government in Committee on whether clause 13 is appropriate and proportionate, whether it would act as a sufficient deterrent to those who deliberately infringe designs—steal, for want of a better term—or whether it would unfairly criminalise those who accidentally or inadvertently copy a design. In another place, the Minister said the arguments were finely balanced. We need to ensure that that balance is well drafted in the Bill. Clause 13 is opposed by many stakeholders working in this field, such as the IP Federation, the Intellectual Property Bar Association, the City of London Law Society, the Chartered Institute of Patent Attorneys, and a number of experts and specialists, including Sir James Dyson, as we heard from the hon. Member for North Wiltshire (Mr Gray), and the Ministry of Defence.
As I said, we will consider this matter closely in Committee, but what causes me most concern about clause 13 is that, as several stakeholders have stated, criminalisation, with the prospect of up to 10 years’ imprisonment, might have a “chilling effect” on innovation. New products might not come to market or benefit the UK economy because people are reluctant to risk a criminal trial and 10 years’ imprisonment. I suspect that in Committee we will deliberate at length about the nature of innovation—whether there are great leaps forward or whether innovation is undertaken by swinging from tree to tree in the jungle or, to switch my metaphor, by standing on the shoulders of giants. We need to be careful to strike the right balance in order to protect designers’ creativity and ingenuity while avoiding the risk that no further product improvements will be made through adaptation.
There is a second concern with clause 13 that I think the hon. Member for Perth and North Perthshire (Pete Wishart) has mentioned. If the purpose of the Bill is to simplify and make consistent the patchwork, as Hargreaves calls it, of differing rights, I do not see why registered designs should be subject to criminal sanctions, but unregistered designs should not be. During the passage
of the Bill in another place, the Government could not provide a logic or rational explanation for that inconsistency. In Committee in another place, the Minister stated quite bluntly:
“The introduction of criminal sanctions for unregistered rights could lead to a negative effect on business and innovation.”—[Official Report, House of Lords, 13 June 2013; Vol. 745, c. GC409.]
If that is the case, why are registered designs different? The Minister also said that SMEs
“do not tend to register their designs”.—[Official Report, House of Lords, 13 June 2013; Vol. 745, c. GC395.]
It is difficult to see, therefore, how the Government’s proposals in this part of the Bill will strengthen innovation, prevent infringement for the vast proportion of designs in this country and deter exploitation of small and micro-firms by perhaps more unscrupulous businesses. Registered designs do not imply approval or confer an inflated status, so there is no possible legal justification to treat them differently in this regard.
Many UK businesses clearly see merit in the UK unregistered design right, which helps their competitiveness and commercial position. Why, then, should that right not be protected through criminal sanctions when the Government propose that for unregistered designs? I cannot see anything that would prevent companies from identifying unregistered designs, registering those designs for themselves and then stating to the original designer, “You’ve infringed our registered design. We will bring a criminal case against you for deliberately copying our registered design and you may go to prison for 10 years unless you pay us a large fee or assign the rights of the design over to us to exploit anyway.” How does that protect small and micro-firms or help to promote innovation? I do not think that the Government have offered an adequate explanation for this discrepancy, so we will want to scrutinise it further in Committee.
I think the whole House is united in thinking that a strong and consistent framework for intellectual property is essential if the UK economy is to prosper and thrive in the 21st century. A balance is needed to ensure that the IP regime is consistent and provides certainty, while adapting to rapidly changing economic and technological developments. A balance is also needed between protecting the rights of creators and innovators and not discouraging further innovation or possibly disrupting entrepreneurs, companies and technologies. We hope to work closely and constructively with the Government in Committee to strike those balances and ensure that the UK economy can thrive in the modern world.
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