Copyright, Designs and Patents Bill [Lords]

§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

I beg to move, That the Bill be now read a Second time.

The Bill, which comes here from another place, is, as every hon. Member can see, lengthy and complex. It has 285 clauses and eight schedules. Its subject matter—copyright, designs and patents—is highly technical. It will probably be a great disappointment to some hon. Members to know that, as far as I am aware, it is devoid of any party political controversy. It is, nevertheless, a Bill of great significance to many people. Its effects will be felt to a greater or lesser degree by almost every sector of the economy. It will affect the music industry—composers, musicians, music publishers, record companies—which generates more than £1,000 million each year. It will affect those engaged in the publication of books and newspapers. It will affect the design effort in British industry. It will provide a legal framework for broadcasting and cable transmission. It will also affect the computer software industry, the film industry, the pharmaceutical industry and many more industries.

The effects of the Bill are not confined solely to business and industry. It has implications for education, the library service, the theatre and even the Great Ormond street hospital. It takes within its compass the artist painting at his easel and the designer of a semiconductor chip, the local operatic society in the village hall and the signals beamed from a television satellite.

I am sure that we are all agreed on the need to promote and protect creative talent. The House has to begin by accepting that a man's idea is as much his personal property as his more tangible assets, such as his house and his car. In some respects, indeed, a man's ideas are an even more important part of his personal property. That concept underlies all intellectual property law, whether it is copyright protection for artists and authors or patent protection for inventors. By establishing a property right in the idea, the law gives protection against those who would steal another man's ideas.

§ Mr. Roland Boyes (Houghton and Washington)

As the right hon. and learned Gentleman well knows, one of my major interests is photography and the interests of photographers. The Bill has a quite severe effect on photographers in certain areas and I hope that the right hon. and learned Gentleman—not necessarily in his speech, but later—will look into that. The Lords did change some parts of the copyright to enable a photograph to enjoy the same rights as literary works, but I should particularly like the right hon. and learned Gentleman to look at clause 30, the new wording of which would destroy the livelihood of many photographers, clauses 73 to 85 on moral rights and clause 156 on territorial waters. All those clauses greatly affect photographers. All I ask of the right hon. and learned Gentleman at the moment is that when 526 the Government put amendments in the Bill they will try to give as full protection to photographers as to any other artists or thinkers.

§ Mr. Clarke

I accept what the hon. Gentleman says. He is right in saying that I could have added photographers of all kinds to the list of people that I just described as being affected by the Bill. We have to get the balance correct between the rights of the photographer, those who employ the photographer, those who commission photographs, those who publish them, and so on. Some extremely difficult issues are raised. The hon. Gentleman will know, as he has probably followed the debates in another place, that it is difficult to get the balance right between the conflicting interests. Important issues for photograhers will be raised in Committee when we get to those sections of the Bill that deal with ownership of copyright or the so-called moral rights of the photographer, which I will come back to in a moment when I deal with the moral rights of authors and others covered by the Bill. As the hon. Gentleman's intervention underlined, we are talking in every part of the Bill about a person's basic property rights in his own ideas and his own artistic work.

Our system of legal protection for ideas has served us well, ensuring dissemination of ideas with a proper degree of protection for the innovator. But it has become apparent recently, particularly in copyright and design protection, that the law needs looking at again, especially in the light of technical developments that have taken place in various fields and were not always anticipated when the law was drawn up.

The Bill is the result of a very long period of consideration and consultation with all the interest groups affected, dating back to the Whitford report of 1977. Since then we have had three Green Papers and the 1986 White Paper, entitled "Intellectual Property and Innovation". The Government have changed certain ideas about policy even since the White Paper. Before coming to this House, the Bill was extensively considered in another place and a number of amendments were made there after further consideration of its details.

The Bill sets out to restructure the law on a more logical and consistent basis than the existing legislation and in a way which takes account of the advances made in the past 30 years. Where possible we have tried to anticipate future developments. The House will not wish to come back to this subject for some time, having passed such comprehensive legislation. Our overriding objective—hon. Members who have the pleasure of serving on the Committee will sometimes find this difficult to achieve—has been to ensure a fair balance between the need to encourage creativity by providing strong protection, and the justifiable desire of society and consumers to have access to and the use of the products of creativity. We are seeking to ensure a balance between protection and fair competition. We are seeking a system with bureaucracy reduced to a minimum. The Bill seeks to provide the means for those with ideas to get a fair reward for their work, without placing unfair burdens on the public at large.

The Bill is in seven parts, and I can be of most help to the House by briefly describing their main contents.

Part I is by far the biggest, making up more than half of the Bill. It sets out the law of copyright in a more ordered and logical way than the existing statute, the Copyright Act 1956, which is to be repealed. Part I is subdivided into no fewer than 10 chapters. Chapters 2 and 527 3 cover clauses 16 to 72. Chapter 2 sets out the rights which the copyright owner is to enjoy, of which the most fundamental is contained in clause 17: the right to prevent copying. The rights are extensive and we recognise that they must be tempered. There is a balance to be struck between the rights we are asking Parliament to grant to creators to encourage creativity and the effect that the full exercise of those rights may have on others. While it is right that copyright owners should be able to exploit their works to the full, it would not be right to confer rights which could be used oppressively. So chapter 2 protects the copyright owner.

Chapter 3 sets out a series of exceptions from copyright. These will ensure that copyright considerations do not unduly obstruct research, education, the library service or public administration. All these are areas where we think that the House will judge that the public interest is that the work may be used within clearly defined limits, without recourse to the copyright owner.

§ Mr. Michael Grylls (Surrey, North-West)

My right hon. and learned Friend mentioned that a reason for the Bill was to bring up to date the law as it affects some of the newer industries, and that is absolutely right. Is he aware that clause 63 seems to have a loophole which would allow for software theft, which has been estimated at about £50 million a year, by allowing firms to rent out software after a year? Will he agree to consider that in Committee? Many people feel strongly that if it is not put right it will restrict and damage investment in both computers and computer software industries. I am sure that my right hon. and learned Friend, of all people, would not want that to happen and that that is not his intention. If he would undertake to consider that, it would be greatly appreciated.

§ Mr. Clarke

My hon. Friend raises a serious and difficult issue. The Government are not altogether satisfied that we have the balance right. This part covers the so-called rental rights whereby after a given period someone can be free to hire out a product without recourse to the copyright owner of that product. We are all used to that in our daily lives with videos. Perfectly legitimate businesses have sprung up which rent videos which are somebody else's copyright, without anybody thinking that that gives rise to hardship to the copyright owner or that there is anything illegitimate about it. Businesses may spring up to rent compact discs which are almost indestructible. People will borrow them, make a perfect copy and return them without paying the full cost to the manufacturer or the composer. My hon. Friend raises the equivalent case for computer software designers. If after a year software can be hired out, once again a copy can be made without paying the full price to its author. It is extremely difficult to get the balance right. We do not want creators to exploit their copyright to an onerous extent on consumers who may want access to it, but strong reservations are held about the Bill as it stands.

My hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry will take the Bill through Committee and he has been in charge of the main policy issues. He will certainly continue to consider the matter and it is his duty to get the balance right in the end. He tells me that he is meeting the British Computer Society next 528 week to discuss the implications for those who design computer software and he will consider my hon. Friend's point. As the Bill passes through the House we shall have to consider it carefully to ensure that the results are correct.

§ Mr. Tim Smith (Beaconsfield)

Does my right hon. and learned Friend think that the difficulties that he has identified in clause 63 may result from the fact that the period of protection given by record rental is only one to two years? As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) suggested, perhaps we should consider a longer period, for example seven to 10 years.

§ Mr. Clarke

A period of one year is specified in the Bill and we could have an interesting debate on the proposition to extend that. I am sure that that will give rise in Committee to debates about how long music remains exploitable from the date that a record is made. Different considerations may arise for computer software and videos, and it would be nice to draft a clause that served the public interest properly for all times of copyright subject to rental right.

Consideration of the protection period is only one possible approach. Ministers have already canvassed a variety of propositions in our discussions and we look forward to having further propositions canvassed in Committee.

Chapter 4 introduces another new concept to our copyright law—the so-called moral rights of authors. The authors of certain classes of copyright works and the directors of copyright films are to have the right to be identified as the author or director and the right to object to distortions and mutilations of their works. Obviously, it may be damaging to the reputation of an author, photographer or any artist if his work is used in a deliberately distorted or mutilated form. His reputation is damaged by the use of something that began as his work. There are two versions of these so-called moral rights. They are usually known in jargon as the paternity right and the integrity right, and they will help authors and directors to establish and defend their artistic reputations. The introduction of moral rights, together with other technical amendments in the Bill, will also allow us to ratify the latest text of the Berne copyright convention. That is the most important of the international copyright conventions and it is our declared intention to ratify the Paris text once the Bill is on the statute book.

Chapters 9 and 10 cover clauses 148 to 169 and contain technical provisions and various definitions. My hon. Friend the Member for Orpington (Mr. Stanbrook) is about to rise. Having seen what he said in business questions last Thursday, I can anticipate the point that he is about to raise.

§ Mr. Ivor Stanbrook (Orpington)

I commend my right hon. and learned Friend's foresight. The clause does something which the House of Commons should not possibly allow: it deprives the House of its right of control over its property. Therefore, it breaches that fundamental principle of our constitution which provides that the House of Commons is independent of the Crown and should not in any way allow the Crown to control its proceedings.

It would make a mockery of our traditional claim of right by Mr. Speaker at every opening of Parliament, for the independence of the House of Commons with regard 529 to its own domestic affairs. I hope that my right hon. and learned Friend will say that at the Committee stage this part of the Bill will be amended so as to leave intact the integrity of the House of Commons.

§ Mr. Clarke

I am glad that my hon. Friend the Member for Orpington has not yet moved on to another point. He is still dealing with the one that he helpfully raised in business questions last Thursday. We have become aware, and I am grateful to my hon. Friend for raising this, that the effects of clause 157 on the House and on another place could well be undesirable. Discussions have been taking place between officials of my Department and of the House, and I can say to my hon. Friend that we shall soon be in a position to table amendments, which I am sure will meet his legitimate concern. I can say yes to my hon. Friend's final question.

I expect that other representations on the Bill will not be so easily met. It is a feature of the Bill that on most issues that it raises there are two conflicting arguments coming from two conflicting interest groups, and hon. Members will tend to divide their support. With regard to the interests of the House, I am glad to say that we are all on the same side and we can meet the concern of my hon. Friend.

Part II is concerned with performers, who are a distinct category of creative talent. Under the existing law performers have no copyright or statutory civil right in their performances. The Performers' Protection Acts from 1958 to 1972 treat the making of unauthorised films, sound recordings, broadcast or cable transmission of performances as a criminal matter only.

It is far from satisfactory that the only protection for a performer is to contemplate a criminal prosecution of someone making unauthorised use of his performance. It was criticised by the Court of Appeal in a recent case concerning film performances by the late Peter Sellers. Although Peter Sellers' widow was successful in that case, the Court of Appeal pointed out that the present state of the law was far from satisfactory.

Part II retains the existing criminal provisions but supplements them with a clear statutory framework of civil law for the protection of performers. New rights are also provided for those with whom the performer has an exclusive recording contract, since they are also adversely affected by unauthorised or "bootleg" recordings. All this will put the law on a more sensible and enforceable basis for performers who are adversely affected.

Parts III and IV deal with designs. The protection of designs has been a very difficult and contentious issue for many years. We believe that we are now near to striking the right balance in the Bill. We start from the basic premise that all original designs deserve limited protection. It is not only wrong if a new product can be copied in its entirety as soon as it comes on the market, but it discourages the design effort needed to make a new product if a competitor can in any case copy it straightaway. We are, therefore, providing a new right for original designs, which will give protection against copying for a five-year period and a right to remuneration for a further five years after that.

But as with copyright, so with design right. The right must not be one that can be used oppressively or unduly against the interests of the consumer. We must not stifle fair competition, particularly in spare parts. Because spare parts have to fit the product for which they are intended, 530 they must to some extent be a copy of the original design. An unfettered design right could be used by the manufacturers of original equipment to ensure that only they could supply spare parts. That would give rise to a near monopoly for some spare parts, which would be wrong.

On the other hand, it would be equally wrong to allow totally free copying of all spare parts. The Bill will, therefore, allow copying where there is no design freedom for either functional or aesthetic reasons. When I say that there is no design freedom, certain basic things have to be put into a spare part if it is to fit and match the product for which it is intended.

Where there is full design freedom, competitors will have to create their own designs. That will apply to all articles, whether or not they are spare parts. The result will be that copying will be allowed where necessary, and where competition can still occur, but designers will be protected from those who would copy when there is no need for them to do so.

The Registered Designs Act will be amended so that protection will be available only for truly aesthetic, stand-alone designs. Competitors do not need to be able to copy such designs to compete effectively. The term of protection for registered designs is to be increased from a maximum of 15 years to 25 years. All this will ensure that design effort is encouraged without stifling competition, or leaving consumers open to the exploitation of a monopoly position.

We are making changes in parts V and VI to open up the intellectual property system and make it more accessible to its users. The restrictions on who may act for inventors and other applicants in dealings with the Patent Office are to be lifted. The constraints on mixed practices—for example, of patent agents and venture capital advisers—will be relaxed. At present, patent litigation is conducted in the High Court. Many small and innovative firms find that High Court proceedings are so expensive and complex that their patent rights are effectively worthless because they cannot afford to enforce them.

It is of course pointless for Parliament to pass legislation that makes it so expensive to pursue a remedy in the courts that no one cart use it, except the very large firms that are adversely affected by some unfair competition. Because only the High Court has jurisdiction, inventors find that sometimes they cannot afford to seek the protection of the law. Similarly, small firms sometimes find it difficult to defend themselves against a large competitor that brings an action against them for an alleged infringement of a patent. I am glad to say that we have established in clauses 267 to 272 the basis of a patents jurisdiction in the county court. We believe that this will significantly reduce cost and complexity, thus enabling smaller firms to compete on a more level footing with larger companies.

The House may be aware that a Bill introduced in the previous Parliament sought to lift the licence of right provisions of the Patents Act 1977 as they applied to patents for pharmaceuticals granted under the Patents Act 1949. That Bill,. which had Government support, fell on dissolution and we have taken this opportunity to reintroduce its provisions.

Finally, part VII contains a number of miscellaneous, but none the less important, provisions. The Government, and I trust the whole House, are firmly opposed to counterfeiting and piracy and we want to stamp out those 531 practices. Those who steal other people's property or who hitch a free ride on the reputations of established businesses will not get any support from the Government, or this House. We know that several British firms suffer from piracy of their products, and often it is the most blatant imitation of their products where the quality of the original is nowhere near matched by the inferior imitation that is put on the market.

Clause 279 introduces substantial new criminal provisions which will prove an invaluable weapon in the fight against product counterfeiting. In particular, I am glad to say that we are taking the opportunity to make the fraudulent use of a trade mark a criminal offence, which will make it very much easier for companies to defend themselves against cheap copies from overseas, particularly from the far east. These changes, taken with the improvement in the sanctions against copyright piracy and bootlegging in parts I and II of the Bill, will, I hope, eliminate these very real threats to legitimate industry.

The Government are continuing to press the case for the European Community Trade Marks Office to be sited in London. In my opinion, it is clearly the best location. Clause 281 provides the necessary statutory authority for financial assistance to be given to the office if sited here.

§ Mr. Iain Mills (Meriden)

I am sure that my right hon. and learned Friend has seen the new site of the office where we intend to house the Trade Marks Office at St. Katharine's by the Tower, but has he seen it recently?

§ Mr. Clarke

I have been there recently. I know that my hon. Friend has been leading a campaign on the matter for some time. The Government wholly support it and we are seeking to impress on the Commission and other members of the Community the case for establishing the European Trade Marks Office in London. There is no doubt that the various contenders are all offering financial support for the office, whether it be in London, Munich or Madrid. For that reason, I am sure that my hon. Friend will welcome clause 281, which gives us a statutory authority to match the financial provision that is being offered by rivals.

My brief review of the Bill's provisions would be incomplete without at least a passing reference to clause 280. Great Ormond street hospital is to enjoy a perpetual right to a royalty in respect of certain types of exploitation of "Peter Pan". The Bill ensures that sick children in Great Ormond street will continue to benefit, in spite of the fact that the copyright in the play bequeathed to the hospital expired at the end of 1987.

The Bill does not contain any provision for a blank tape levy. I expect that some of my hon. Friends will be disappointed by that. Whether there should be a levy on blank tape, to provide an income for owners of copyright who think that they are deprived of revenue because copies are taken of their work, has aroused strong feelings for some time. There have been frequent changes of mind by most of those involved. However, we have finally decided that it would be wrong, indefensible and going beyond the principles of the rest of the Bill to try to introduce a blank tape levy that the Government would impose on purchasers of tape and distribute to aggrieved copyright holders.

Although I accept that copyright is difficult to enforce against people who use blank tape to copy, imposing a levy 532 would go beyond the principle of the Bill, which is that we are passing legislation providing legal protection for the intellectual property of the creative artist. It is a step beyond that to say that if the creative artist has difficulty in enforcing copyright, somehow we must levy a new tax to provide a compensating fund that will be distributed to artists who feel aggrieved. If we had a levy, it would involve the Government in the collection of a whole new tax to provide the copyright owner with a financial reward. A new bureaucracy would have to be set up to collect and distribute the proceeds of the levy. The administration cost of any such scheme would almost certainly be disproportionate to the amount of money that was raised.

We were also unhappy about the rough justice element of the levy proposals. Not every blank tape is used to record copyright material, so a levy would be an unfair imposition on many people. Many of those who look to benefit from the levy would be happy to see an element of rough justice imposed on those from whom the money is to be raised, but all attempts to compensate for the rough justice element did not prove workable. Even if one had had a system that enabled some people to have a rebate on the levy if they could demonstrate that they were not copying copyright, they would have been put to the needless inconvenience of making a claim for the rebate. That would have been particularly hard for the blind and visually handicapped, who make extensive use of blank tape in their everyday lives.

We are also not sure whether the whole benefit of the levy would have gone to the performers and the record companies that had a legitimate interest in pressing for it. A levy could have been marked up in the retail chain, with the result that the burden on the consumer would have been considerably more, with those in the retail chain standing to gain almost as much as those for whom the levy was intended.

For all those reasons, the Government have decided not to proceed with the levy. I accept that it is a matter of balance, which is why the Government changed their mind collectively once or twice, as did several hon. Members. But we have come down firmly on the side of the consumer against a levy proposal that we believed was not on all fours in principle with the remainder of the Bill and would have been a costly bureaucracy, creating some unfair burdens on purchasers of blank tape.

As a consolation to my hon. Friends and Opposition Members who might still be attracted by the levy, we have undertaken to table an amendment to the Bill outlawing so-called anti-spoiler devices, which override signals intended by the copyright owner to prevent copying. Copyright owners are seeking to protect themselves against the problem that they face by devising spoiler devices, which would stop anybody using blank tape to copy the original article. As technical advances are made, it is predictable that people might try to put on the market anti-spoiler devices, so that copies could be made of material that the vendor intended should be proof against copying. If the copyright owners are successful in producing spoiler devices, we shall be content to amend the Bill to make sure that the sale of anti-spoiler devices is rendered illegal.

As I am sure I have adequately shown, the Bill is extremely long and sometimes complex, but it has implications for almost every walk of life. I am sure that those attending the debate realise that this aspect of 533 intellectual property is as important as any other sort of property. It is important to a modern economy that we protect human creativity properly.

People in this country will continue to have ideas, with or without the Bill, but if we are to get the best from those ideas we need an environment in which they can flourish. The Bill provides a framework of legal protection, which should cultivate and nourish creativity. It will provide a fair balance between the providers and users of intellectual property. It will set out the law in a much clearer way than before. It takes account of the rapid pace of technological advance. It makes the intellectual property system more relevant and accessible to the needs of British business. In short, the Bill will encourage creative talent, enterprise and fair competition. I commend it to the House.

§ Mr. Bryan Gould (Dagenham)

As the Minister claimed, the Bill is a welcome, not to say courageous, attempt to reform a complex and difficult area. I think that everybody recognises that the present state of the law is unsatisfactory. out of date and needs reform. For example, the Copyright Act 1956 has been described by a High Court judge as labyrinthine. No one will disagree with that. Whether the present Bill, with its 285 clauses and eight schedules, can easily he acquitted of the same charge we have yet to see.

It is clear that the ground has been prepared carefully by Governments of varying political persuasions over a long period. As the Minister said, perhaps the beginning of that process was the Whitford report of 1977. There have been Green Papers and a major White Paper since then. At various stages, Governments and others have changed their mind on important matters that arise in the attempt to reform. I make the modest prediction now that further and, indeed, substantial changes are yet to come, perhaps not least on some of the matters that the Minister touched upon in his speech.

It may be asked whether all that effort is worth while. The answer that we in the Opposition give, which I am sure is the same as the Minister's, is that of course it is worth while. It is an extremely important industry. It is sometimes difficult to define, but it is undoubtedly important. Estimates of its economic importance vary. A useful small study was carried out by the Common Law Institute of Intellectual Property. I think that Jennifer Phillips was the author. It was published in 1985 and was called "The Economic Importance of Copyright". Jennifer Phillips' estimate was that the copyright industries, which she defined very narrowly and modestly as industries that directly and substantially depend on copyright for their commercial viability, accounted for 2.6 per cent. of gross domestic product, which meant that in importance they exceeded both the motor car and food manufacturing industries. It should be noted that that definition excluded the functional design aspect of manufacturing and the rapidly growing computer service industry. A more generous view of the importance of the industry was taken last year by the Confederation of Information Communication Industries, which estimated a total turnover of over £20 billion, which it put at over 7 per cent. of GDP.

Perhaps the most important aspect of the industry is not just its current importance to our economy, although that is substantial, but the potential that it holds for our 534 future economic development. I think that there are few people who would look to a successful British economy without seeing that economy developing in the direction of new technologies, particularly information technology, computers and data processing, as well as building on our well-known successes in the older and better established copyright industries such as publishing, films, music and so on. In other words, it is important—we in the Opposition recognise this—to make it clear that we see a future for the British economy that is not the low-tech, no-tech future that the Chancellor of the Exchequer notoriously, on one occasion, professed to see as the way forward. We shall perhaps carry the whole House today in recognising that great efforts are required to ensure that our future lies in the high-tech, science-based industries—industries that call upon the talents and skills of our people.

If we are to do that, of course we have to provide an appropriate legal framework so that those ideas can be developed. We must ensure that the research is done. We must give priority to the spirit of inquiry and to the pursuit of knowledge which has served us so well in the past. However, we must do more than that. As the Minister said, we must establish a climate in which such enterprise can flourish. Let me widen the debate for a moment. We need not just a legal framework but Government support and the provision of resources. In that context, today's news that the Science museum has at long last been compelled by Government parsimony to propose entrance charges—the last of the south Kensington museums to do so—sits ill with the Minister's commendable concern for providing the right framework for the development of scientific and other knowledge.

The proper regulation of copyright involves a great number of difficulties, most of which the Minister identified, and we entirely agree with him on them. However, our interpretation may differ a little at times. The first problem is that the whole business of developing knowledge, conducting research and taking the fruits of that research has become increasingly international in nature. The sale of the products of the older industries—the publishing, film and music industries—is increasingly international, and the use of computers and information technology means that it is yet more difficult in today's climate to grapple effectively on a national basis with the problems thrown up by the unfair or illegal exploitation of people's property in an international context. That is why we welcome the emphasis that the Bill places on the need to ensure that not only do we establish our own legal framework but that this country—traditionally a pioneer in these matters—shows the way to others and ensures that they can follow that way. That is why we welcome the Minister's declaration of intention on the Berne convention and strongly support his proposed measures to stamp out some of the abuses that arise, not so much in this country—although they do arise here—but overseas.

The confederation estimates that copyright piracy alone costs more than £500 million per annum. My friend's in the Open university are very clear that there is an extremely fruitful and profitable trade open to them through the sale of their excellent educational materials around the world if only they could be sure that those materials would not be pirated and sold off with no return to them. Because that happens, they are denied that lucrative market. It is important that we should establish not just a domestic but an international framework in 535 which such abuses can be dealt with. It is also correct to say that the problems of copyright are matched entirely by problems of patent protection, which is why we very much welcome the measure on counterfeiting.

The real problems in regulating copyright arise from a number of difficulties peculiar to the kind of property that we are discussing. The first of those problems bedevils much of the Bill and no doubt accounted for many man and woman hours of drafting and deliberation. It is the problem of defining the property that we are trying to protect. In 1709, it was possible to say of the first modern Copyright Act, the Act of Ann, that it was for the encouragement of learned men to compose and write useful books. It is not only the sexism of that description that is outdated. While the principle remains the same, we have now moved into an era in which the products of human skill and ingenuity take many different forms. We preserve those products in many different ways. It is not just the printed page but the computer disk, not just the work of art but the sound or video recording to which we must now give the protection of the law of property. New technology and fresh developments in knowledge have produced new forms of property, and one of the major problems to be dealt with in the Bill is the definition of that property and those whose interests in it deserve protection.

New technology has thrown up another range of problems. It has ensured that that new form of property can be passed from hand to hand, traded in and exploited and can have its benefits appropriated in a whole range of ways which were not available 20 years ago and which are certainly not possible for other forms of property. The technology that has made this property and the benefits to he obtained from it almost infinitely capable of reproduction—the photocopier, sound and video recordings, the personal computer and the floppy disk—places in the hands of each of us, at virtually no outlay and with very little chance of detection, the means of taking the benefits of property created by and belonging to others.

We come now to the most interesting aspect of the Bill, from a more general point of view. The developments to which I have referred have brought even the Government to the realisation that there are problems that simply cannot be left to market forces alone. Let us be clear that the Bill is a massive exercise in intervention in the market. We approve of that; we are glad that the Government have recognised the need to intervene. However, it is worthwhile accepting and identifying the respects in which the market does not solve the problems. The point that I make is very similar to the one that the Minister himself conceded; it is the language that is different, and perhaps less acceptable to Conservative Members.

The market at present, if left to its own devices, poses two main and contradictory dangers. First, there is the danger that if excessive protection is provided to private ownership of the property of ideas, it will frustrate and inhibit the advance of knowledge to the very general disadvantage. In other words, it would allow the person who got there first to prevent the rest of us from following and it would allow restrictive practices to arise and to become a bar to further inquiry and the development of knowledge. Clearly, left to itself, the market is incapable of resolving that difficulty.

536 On the other hand, an inadequate protection of property rights would mean that there would be an inadequate return—perhaps none—to those prepared to invest time, money, skill and effort in the advancement of knowledge or the perfection of talents. That would prejudice the continued production of such property. The very property whose production the market was meant to stimulate would therefore be jeopardised.

We are dealing with a clear case of market failure. The need for intervention shows clearly that the market has its limitations—both in the individual's and in the public's interests. It also reveals one further element in the market, sometimes concealed in the more far-flung rhetoric of Conservative Members—the fact that the market is not a God-given or natural law institution that operates with a hidden hand to dispense justice or exercise moral judgments but a man-made social institution, created by rules that we, among others, make and have made. It is an institution that depends for its operation on rules to do with people's property rights, the sanctity of contracts and so on. The Bill is no less welcome for the fact that it makes that aspect of market operations clear.

The Minister concluded by referring to one possible candidate for inclusion in the Bill that did not make the final draft. The problem illustrates the difficulties to which I have just referred. On occasions, the market breaks down. It simply fails to reward those who produce the valuable property in a given area. Over recent years we have paid particular attention to the problems of the music industry. I want to say a word about that in a moment, but there are similar breakdowns in other spheres. In some cases, but not all, the Government have recognised the problem and have tried in varying ways to deal with it. There are problems in respect of photocopying and the copying of software; the hon. Member for Surrey, North-West (Mr. Grylls), who intervened in the Minister's speech, pointed out that clause 63 gives cause for concern. There are problems about the recording of video productions and broadcasting cinematic films on television.

In all those cases the market breaks down in that, often because of a technological intervention, it fails to reward those who produced the property. Either the reward is never paid or it goes to somebody different. The Government are rightly aware of the danger that the incentive to go on producing is lost. Therefore, some means has to be found of rewarding those who are responsible for production so that production continues.

The view is widely held that the problem occurs most acutely in the music industry. It is easy sometimes for hon. Members to underestimate the importance of the music industry to the economy. I have the advantage of having been a lifelong fan of what is called, sometimes pejoratively, pop music. If over recent years my interest has flagged slightly, it has been rapidly revived by the insistence of my teenage children on playing such music loudly in our home. So in a sense I am compelled to continue my interest. Mostly it is an enjoyable pastime.

Pop music is not just the preoccupation of many younger citizens but is of considerable economic importance. The industry sold over £2 billion worth of goods in 1985. One in four of worldwide hit records originates in this country. The industry has produced overseas earnings of £400 million. It employs 26,000 people. In many respects it is a breeding ground for new 537 small businesses and for new talent. It is exactly the sort of industry which the Government have always proclaimed they wish to help.

The Government understand the problems which home taping cause for the music industry. It is difficult to quantify exactly how great the problem is, but I suspect that most of us are aware personally of instances where records are taped for the use of people who might in other circumstances have bought the records themselves. Sometimes, perhaps more justifiably, the purchaser of a record will tape it so that it can be played in a cassette recorder in a car, for instance. That is equally a denial of the return to which the producer of the music is entitled.

The Government cannot at this point say that they have changed their mind on the fundamental of the debate, which is that at one point they recognised that there was a substantial loss, difficult to quantify to the last pound, which unfairly prejudiced not only individuals and firms within the industry but the overall future of the industry. If the problem exists—as the Government were prepared to recognise in the Green Paper and in the White Paper—it is likely to get worse because the technology which created it will develop.

We already have compact discs. We will have digital audio tape. The rental business is flourishing. When the Bill was given a Second Reading in another place, the noble Lord Winchilsea and Nottingham painted a graphic picture of what he had seen in Japan, where people in huge numbers go to super-stores where they borrow for a small fee compact discs to record on their own cassette tapes; then they return the discs for other people to do likewise. No doubt that business will spread to other countries.

The problem has been recognised by the Government and it will get worse. In their White Paper the Government proposed the solution of a levy on blank tapes. No one would dispute that in many respects that is objectionable. We understand exactly what the Minister had in mind when he talked about the rough justice of that solution. But he did not adequately address the problem of the rough justice which is suffered by musicians and others who produce the music. That solution is also objectionable because it would prejudice various people such as the blind and educational institutions. If it is pursued, special arrangements would have to be made for some categories. We agree with the Minister's view that the collecting arrangements leave something to be desired. Certainly we would examine critically any solution which meant that money was passed back to major record companies but did not find its way to those who deserve the support and on whose efforts the future of the music industry depends. If a means were found of making a return to the producer of music, we would want to ensure that it encouraged small and new performers of innovative music and the parts of the music business which are inadequately rewarded but whose ingenuity has to be stimulated and encouraged if the industry is to have a future economically and culturally.

We share the objections to a levy on blank tapes. We do not want a system which merely makes Madonna richer but does not do anything for the creation of music. Having marched themselves up to the top of the hill, having reached the top of the hill, having got a clear view of the problem and having accepted that it is a difficult problem with which the music industry needs help, the Government cannot say. "We are turning our back on the problem; we shall march back to the bottom of the hill and leave things exactly as they are." The Government cannot go away 538 from it without attempting to deal with the problem. Apart from the interests of the music industry, the Government seem to have no intention of changing the law or of ensuring that the illegal taping done by millions our fellow citizens is brought to an end.

I do not dispute for a moment that it is a difficult problem, not just as it affects music. I urge the Government to recognise that they have a responsibility which they have not yet discharged. In Committee and on the remaining stages of the Bill we shall do what we can constructively to help the Government to reach at least a partial solution. I suspect that in this and other areas perfect solutions are not available and are not on the agenda, but the Government cannot be allowed to get away with offering no solution.

Let me now point to a further instance of the difficulties which arise in the Bill. The Minister drew attention to the provisions which attempt to deal with the issue of a design right. That has exercised many of us in the House and. indeed, people outside the House and in the other place. The problem arises because of the uncertain state of the law, which was left even more uncertain by the decision of the House of Lords in British Leyland v. Armstrong and by the intervention of the EEC Commission in the case of my constituent, the Ford Motor Company.

The problem is how to protect what is called in the Bill a design right. Although it is dealt with generally in the Bill by clause 198 and succeeding clauses, a particular problem arises in respect of spare parts. Let us be clear that. that is the case. On the one hand, a range of manufacturers, such as Ford and Hoover, take one view while, on the other hand, the specialist manufacturers of spare parts. quite understandably, take a different view.

The principles are very familiar. On the one hand, we need to protect the consumer against market abuse, but guard against excessive protection and, on the other hand, we must ensure that the originators and designers of products are given fair protection so that they continue to furnish the market with their products.

I assure the Minister that I do not intend to be critical, because we have no better solution to offer, but the Government's answer is a partial protection of design right, as contained in clause 198 and succeeding clauses. It is fair to say that the definitions have caused some difficulty. They caused extensive debate and difficulty in the other place, particularly in respect of what have become called the "must fit" and "must match" requirements—for example, the treatment of constituent parts of the whole item, such as a dinner service. We believe that the Government understand the problem and have made a genuine attempt, in good faith, to deal with it. However, as the Minister showed, the phrase "striking the right balance" is likely to figure largely in our deliberations on the Bill.

§ Mr. Andrew Hunter (Basingstoke)

Before the hon. Gentleman leaves this point, will he comment on the proposition put forward by the Confederation of British Industry and others to the effect that design copyright should not be excluded, but should exist alongside design right?

§ Mr. Gould

There are some obvious difficulties with design copyright, because it is a more extensive concept than design right. It swings the balance in favour of protection, as against free entry to the market. Those are 539 some of the points that Opposition Members—and members of the Committee—wish to look at carefully to strike the right balance. I made the point that, in the attempt to strike that balance, the Government have not convinced us that they have identified the right criterion. Whether a design must fit or must match another article is not self-evidently the issue which should decide whether a design secures protection or otherwise. What we are inclined to argue—we shall certainly return to this issue in Committee—is that it may be that the Government have approached what is undoubtedly a difficult problem from the wrong viewpoint. I offer the thought to the Minister—my hon. Friend the Member for Sedgefield (Mr. Blair) will wish to develop it in Committee—that it may be more effective and constructive to look at the problem in the same way as do other countries with similar problems. It is a problem of fair competition and of dealing with restrictive practices, rather than a problem relating to the protection of property rights

The Bill bristles with specific problems, but we accept that the Government have made an effort to resolve many of them. There is much in the Bill to be welcomed, which is why we do not propose to vote against it. We recognise the importance and value, for example, of the chapter on moral rights. That is a welcome change. That chapter provides moral rights for all kinds of authors and film directors. In view of earlier events in the Chamber this afternoon, one could wish that moral rights were provided also to the authors of the resolutions of the national executive committee of the Labour party. We have a moral right to ensure that the terms of such resolutions are not distorted when they are reported to this House.

We welcome also the attempt to grapple with new problems—for example, computer-generated designs, works of art and program. It is refreshing to see this legislature getting to grips with that problem ahead of anybody else in the world. We are the first legislature to recognise the advent—not here yet, but coming—of artificial intelligence.

We recognise also that a special balance has to be struck where the needs of education institutions are involved. We believe that the Government, broadly speaking, have that balance about right in respect of schools and libraries. However, that will not preclude us from tabling amendments that may improve those provisions.

I have mentioned already that we welcome the change in the law with regard to counterfeiting and the creation of a new criminal offence to deal with the wrongful use of trade marks. I am glad to offer again my support for the campaign in which the hon. Member for Meriden (Mr. Mills) has taken the lead, but in which we have both been involved. It is a campaign to establish a Community Trade Marks Office in this country. I had hoped that the Minister would have been able to offer, not only more information, but perhaps a slightly more optimistic assessment of our chances of obtaining that institution in Britain.

Some of our noble Friends in another place deserve credit for what has been become known as the "Peter Pan" clause. Given the perpetual nature of the rights obtained by the Great Ormond street hospital, it is an appropriate description of that clause, which we support.

I have said enough to show that there remains much that needs to be scrutinised critically, for example, clause 540 63 which was raised earlier. We argue again that the provision of a one-year protection for computer software programs is not likely to be enough.

§ Mr. Boyes

The Minister has given me an assurance that photography will be carefully considered by the Under-Secretary of State for Industry and Consumer Affairs, the hon. Member for Coventry, South-West (Mr. Butcher), in Committee. I understand that my hon. Friend will not be dealing with the Bill in Committee, but will he mention to our hon. Friend the Member for Sedgefield (Mr. Blair), who will be leading for the Opposition in Committee, that among the many things that have been mentioned as needing special scrutiny are several important clauses on moral rights, relating to photography? As many hon. Members, who have their photographs taken up and down the country know, photography is an important profession. It is important that we look carefully during the Committee stage at what has been taken away from photographers, as well as what has been given to them. I hope that my hon. Friend will give me that assurance.

§ Mr. Gould

I am in the happy position of being able to respond to my hon. Friend with the same generosity as was shown by the Minister. I can give him an assurance on behalf of my hon. Friend the Member for Sedgefield that, when he takes the Bill through Committee, he will give attention to this important point, along with the others we wish to scrutinise.

In conclusion, we give a general welcome to the Bill. We do not think it is a perfect Bill by any means. Its imperfections are evident. It may be that, despite our best efforts, the imperfections cannot be adequately remedied. However, we shall do what we can to ensure that they are given proper debate and scrutiny. We shall play our part in trying to remedy the defects that we can identify. It will be our intention to ensure that the Bill, despite its existing values and virtues, emerges as a better Bill than it is now. If we can get proper answers to some of these difficult questions and make this a better Bill, we shall have done something for the intellectual life and economic future of this country.

§ Sir Geoffrey Pattie (Chertsey and Walton)

This is an important Bill on an important subject. It is such an important subject that it is regrettable that there are not more Opposition Members present. I accept that the title, Copyright, Designs and Patents Bill, is not likely to cause a street demonstration in the United Kingdom. However, it is no exaggeration to say that income to major companies in this country from licence fees and royalties is important, and will become increasingly important. It may be the difference between the success and failure of a commercial enterprise.

The Copyright Act 1956 is widely recognised as being in need of replacement. It has protected broadcasts since then, but that was before Telstar was launched. It restricted the circumstances in which photocopies could be made, but it predated the launch of the plain paper copier. It covered computer programs, but when it was passed a computer was virtually the size of a house and could perform only simple arithmetical tasks. So the Bill is here 541 to replace a 32-year-old Act which has done its best, labyrinthine though it may have been, to protect emerging technologies.

I pay tribute to the officials in the Department of Trade and Industry and in the Patent Office, who have laboured long and hard on the White Paper, for putting up with me and for preparing the Bill.

My first concern about the Bill is whether it adequately prepares the way forward to cover developing technologies. The speed of change in the past 32 years is as nothing compared with what is happening now. People to whom I have spoken in the computer industry have said that if, for any reason, they had to leave that industry for even only three years they would have to retrain completely. I am worried that the language of the Bill is still the language of the 1956 Act, although lip service may have been paid to new technology.

For example, nowhere in the Bill—I stand to be corrected—can I find a definition of computer software, which I should have thought was an important item to be defined in 1988. I understand that in the information technology industry work is being done on what might be described as the legal implications of information technology. Such work should be broad enough in scope to embrace evolutions in technology. No one expects the Government to go in for futurology to such an extent that they can anticipate what technology may throw up in the next 10 or 15 years, but somehow the Bill must find a way of providing a framework to cope with problems as they develop. Perhaps the Secretary of State will be able to do that by order.

In recent years there has been a need for private Members' measures, such as the one introduced so successfully by my hon. Friends the Members for Corby (Mr. Powell) and for Luton, South (Mr. Bright). However, I question whether we should rely on private Members' activities, important and successful though they are, given that we are introducing legislation as fundamental as this. If new technology is to be fully protected, several subtle issues must be dealt with, and they do not appear to have been addressed in the Bill.

For example, is a program stored in a computer an idea because it is intangible in form? How should access to software be defined to prevent unauthorised copying and unauthorised use? There is a danger that unless the Bill is significantly amended to deal with the areas I am discussing we shall create a legislative Maginot line, around which future technological developments will flow with ease.

I want to examine one or two of the terms used in the Bill. The term "adaption" is used. Adaption means Infringement by making adaption or act done in relation to adaption. That definition is extremely narrow and must be inadequate to cover the adaption of a data base by selection rearrangement or paraphrase. Not enough attention has been given in the appropriate quarters to embracing the concept of what a computer data base is. Throughout the Bill the language is orientated towards literary works—copying and reproducing them—and whether authors will receive their benefits, and so on. Yet we are talking now about technologies that need protecting. Elsewhere in the Bill the term "reprographic copying" is used. Are those terms sufficient definitions to cover down-loading? Probably not.

542 The word "electronic" is also used. It is almost a sop; in some appropriate corner, the word electronic was thrown down as an inadequately sized blanket to cover any known future device. But electronic must be only part of the story. It does not embrace all types of machine-readable information.

The hon. Member for Dagenham (Mr. Gould) gave the Bill credit for discussing computer generation, and said that we were the first legislature to examine artificial intelligence. Is the definition of computer generation in the Bill clear enough? Is there a distinction between computer-generated and man-generated? Data bases can be generated by computers, and that is the real problem for the future.

I shall not detain the House with more examples, but I am sure that the Standing Committee will need to examine these matters carefully. Copyright is a broad and simple concept. It is infringed by anyone who appropriates the intellectual creations of another. The Bill has missed the chance to state that basic principle simply, but it should contain powers to add by secondary legislation new forms of infringement. If the Secretary of State had such powers, he would be able to define new forms of infringing acts as advances in technology called for them.

Technological change is not the only impetus towards reform. The 1956 Act got into a rare mess over industrial designs. It is inconceivable that when the House passed that Act any hon. Member thought that he or she was establishing a regime for the protection of exhaust pipes, but, for reasons too complicated and arcane to go into here, functional designs such as exhaust pipes have fallen within copyright and received protection for the lifetime of the designer plus 50 years. That is far too long, and something must replace copyright as the means of protecting functional designs.

The White Paper promised a new form of protection lasting 10 years, with the provision that in the second five years licences should be available as of right. That was a reasonable compromise, although many thought it was a fair-weather umbrella giving protection only during the early part of a product's life, when there is no market for spares. The Bill includes what are known as the "must fit" and "must match" exceptions—the antithesis of the well-known maxim in copyright circles: if it is worth copying, it is worth protecting.

The Government must understand that this means that manufacturers of goods that require spare parts—not only motor cars but many other mechanical products, including domestic appliances—will have to load all their development costs on to the products themselves, allowing for the reimbursement that they would have received for spare parts. Spares will have to be priced on a cost-plus basis to compete. The consumer may be able to get parts for his car more cheaply, but the car will cost him more to begin with. According to a recent CBI study, if the Bill is enacted along those lines, protection in the United Kingdom will be substantially less than that available to our competitors abroad in their domestic markets.

§ Mr. Tim Janman (Thurrock)

I agree with my right hon. Friend's observations. Does he also accept, on the question of copying spare parts such as body panels, that the copiers will tend to concentrate on those parts for which there is a high demand and that the price of those body panels on more outdated models, which tend to be vehicles used by people on lower incomes, will increase 543 because only the original equipment manufacturer will still have any interest in making them available in the market place?

§ Sir Geoffrey Pattie

I agree with my hon. Friend. However, it is not the matters that are in the Bill which most concern me, but those that are not in the Bill.

The White Paper promised that the Patent Office would be hived off and removed from the constraints of the Civil Service within which it plays a role not unlike that played perhaps by Siberia within the Soviet Union. The Government have now concluded that it is not a paying proposition, because so much of its work is now diverted under the European patent convention to Munich instead it will be sent to Newport.

It would be much more to the point to hive off the Trade Marks Registry which at present forms part of the Patent Office. The two are in no way interdependent. The Trade Marks Registry makes a healthy profit from renewal fees. The registry could be left in London and the most could be made of whatever slim chance remains of having the Community Trade Marks Office in this country. I support my hon. Friend the Member for Meriden (Mr. Mills) who has slogged long, hard and admirably on the matter and I hope that his efforts are rewarded with success.

On the question of the levy, one is inevitably drawn back to consider the White Paper of April 1986. Paragraph 6.1 states: When the present Copyright Act was enacted in 1956 relatively few people had the facility to make recordings in their homes. Since then technology has advanced rapidly and inexpensive recording equipment is now readily available. Today most homes have at least one piece of audio recording equipment, typically a cassette recorder facility forming part of a hi-fi or music centre. Video recorder ownership is also widespread. In paragraph 6.3, the White Paper goes on: The copyright interests have long expressed concern that their rights are unenforceable in practice. Attempts to prevent home taping by spoiler systems have not proved feasible. Nor have the copyright owners been able to obtain what they consider to be appropriate levels of remuneration in respect of home taping through voluntary licensing schemes because consumers did not take these up in sufficient numbers. It is argued that the only way copyright owners can be remunerated is by introducing a levy on recording equipment … and/or on blank recording tape. Paragraph 6.4 goes on: The 1985 Green Paper discussed the issues involved. It commented that while home recorders had become commonplace, the benefits of the new technology had accrued solely to the general public and tape and recorder manufacturers, and that home taping was a major use of copyright material for which copyright owners received no payment. It went on to invite comments on the proposal that there should be a statutory requirement for the payment of a levy on the sale of blank tape, and perhaps also on recording equipment. Comments were invited both on the principle of a levy and on details of a suggested scheme for administering it. The first Green Paper was produced and, after consultation, the Government made their decision, which is set out in paragraph 6.6 of the White Paper: After giving full and careful consideration to all the opinions expressed in response to the 1985 Green Paper, the Government has concluded that:

1. (a) copyright owners and performers should be remunerated for the use of their material and 544 performances by those who tape them at home to the prejudice of the legitimate interests of copyright owners;
2. (b) there is no realistic alternative to a compulsory levy on blank recording tape as a means of providing such remuneration; and
3. (c) any levy scheme should give the public an entitlement to record for private purposes.

In reaching these conclusions and in determining what legislative provisions should be introduced, the Government has had particular regard to the need to put the law on a sensible and—as far as possible—enforceable basis, as well as the need to balance the interests of copyright owners and performers with those of the public at large. While it has no wish to deny consumers the convenience of modern recording technology, the Government considers that copyright owners and performers—and not merely the manufacturers and importers of blank tape and recording equipment—should obtain some economic benefit from home-taping. It should be noted that a number of other governments have reached the same conclusion. Thus, legislative provision for a levy on blank tape has already been introduced in the Federal Republic of Germany, France, Portugal, Austria, Finland, Hungary, Iceland, Norway and Sweden. The introduction of a levy is also under active consideration in a number of other countries. Paragraph 6.7 continues: The Government does not accept the suggestion that private copying should be legalised without any provision for a levy. It is likely that this would be incompatible with the United Kingdom's current obligations under the Brussels text of the Berne Convention and with the Paris text of that Convention which the Government intends to ratify. The fact that rights cannot be enforced at present is not a justification for their removal; rather it is an argument that the law should be amended to ensure that the owners of rights are able to derive benefit from them. Paragraph 6.9 states: It has been argued that whilst a levy might have been justified a few years ago when the record industry was in difficulties, the industry is now profitable and does not need further subsidy. However, the levy will be neither a subsidy nor compensation for lost sales or reduced profitability: it will be a payment of the right to use property—namely the right to make recordings of copyright material for private purposes—and will thus be totally independent of the profitability of the record industry (or indeed the financial standing of composers, lyricists and performers). One could ask what external legal event, what judgment by the House of Lords and what further additions to the Berne convention have happened since April 1986. The answer is none. There has been the arrival of the Secretary of State for Trade and Industry who is not legally qualified.

§ Mr. Kenneth Clarke

Yes, he is.

§ Sir Geoffrey Pattie

I meant that he is not legally qualified in a practising sense. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster is not only highly qualfied, but is learned in the best sense of that term.

When I was a law student at Cambridge, I used to read those journals in which people would say, "Go away and consult the authorities on this matter." They did not mean the local authorities, but, in contract, Cheshire and Fifoot and, in real property, Megarry. My right hon. and learned Friend does not claim to be an authority on that subject, but he has formed a judgment about the rough justice and believes that it falls on the other side of the line to that which the Government upheld in April 1986. I do not agree with that. The hon. Member for Dagenham said that he would not press the House to a Division and, with the absence of his hon. Friends, I can well understand that. However, if he had done so, I would have been unable to 545 support the Government's proposal on the levy, although I like many aspects of the Bill. This is an important principle and one must recognise that differences of opinion exist.

I have enumerated the countries that have already taken the view that a levy is a sensible way forward. We await—goodness knows when—a Green Paper from the European Commission. We appear to have been waiting for it for rather a long time and, when it arrives, we suspect that it may well recommend a levy. With the Department of Trade and Industry's harmonisation campaign for 1992, one must have the uncomfortable feeling that, at some stage, there will be a need for the Government, whether in 1992 or 1993, to come back to the House and put the matter right.

In the past 10 days there have been some changes in the Government's position. They have been known to amend their view. Such changes used to be called U-turns, but that is a rather unfashionable term now. However, as a result of its complexity this subject has understandably become something of a U-turn charter. Differences have occurred between the Green Paper, the White Paper and the Bill. On the fair dealing provisions, the Secretary of State has taken one view, changed his mind and then considered changing it back again. I am not criticising him, because these are difficult issues.

As the hon. Member for Dagenham said earlier, we are likely to see various changes not only to some of the parts that have been specified today, but of the sort that I hope will make this legislation as good as it needs to be because of the reliance of British industry, commerce and business on the protection of our intellectual property.

§ Mr. James Wallace (Orkney and Shetland)

The right hon. Member for Chertsey and Walton (Sir G. Pattie) said that he would probably not support the Government on the levy on blank tapes, so he might be considered to be a dangerous Member to put on the Standing Committee. However, it would be disappointing if he were not appointed, because he obviously has considerable knowledge of this complex subject and this detailed and complex Bill.

I give the Bill a general welcome. Its updating of our copyright law is generally welcome on both sides of the House. It is clear that, although the Bill as a whole will not be contentious, some parts of it will generate some contention and discussion. Hon. Members who have spoken so far have already identified the areas which will give rise to debate.

The right hon. Member for Chertsey and Walton referred to the difficulty of coping with what is inevitably a continually changing scene. We must make laws today for events and developments in the year 2000 that we cannot imagine now. The very nature of intellectual property means that today's legislation will have to be continually updated. We are dealing with a continually developing market, with new technologies and new ideas emerging all the time.

I want to deal with various items in three categories—those which we welcome, those on which the Government have probably not gone far enough or on which the position is somewhat unclear, and the levy on blank tapes, on which the Bill is unacceptably silent.

546 In common with other hon. Members, I welcome the strengthened measures against counterfeiting. The provision for the continuation of the "Peter Pan" royalties to the Great Ormond street hospital will be welcome throughout the House. They are no substitute for adequate funding for the National Health Service, but they form an important part of that hospital's income and their continuation is welcome.

Contrary to some previous speakers, I generally welcome the steps that the Government have taken on the so-called "spare parts" provisions. I hope that the Government will stand firm on the inclusion of exemptions to the proposed unregistered design rights—the so-called "must fit" and "must match" exemptions, despite the considerable argument and pressure which there will no doubt be.

A considerable number of jobs are at stake among car body panel manufacturers. My impression from what the Minister said was that designs that were subject to exemption were such that they did not involve much in the way of inventive mind or imagination. Therefore, I do not accept the CBI's argument in its circular that no protection could mean no new products. We are not dealing with areas where there is considerable imagination and inventiveness. The competition that could be engendered through such exemptions could lead to benefits to the consumer and to the safeguarding of many thousands of jobs in the motor spare parts industry.

Let me deal now with areas where the Bill is not entirely satisfactory. The inadequate protection for computer software programs in clause 63 and the single year of protection given to record rentals have already been referred to. Record rentals have not yet caught on in a big way in Britain, but I understand that in countries such as Japan that is a big industry, particularly since the arrival of compact discs. The amount of record rental arid recording there is substantial.

As the Minister said, how long music is marketable is a matter of judgment, but there is a general feeling in the record industry that one year is not long enough. It does not give adequate protection to people who have invested their creative skills and talents in producing music and I hope that, as the Bill progresses through the House, some longer period of protection will be given.

Clause 36 and the special provisions for the photocopying of material for local education authorities is another area that I should like to see amended. As I understand the present position, there is a voluntary agreement between the local education authorities and the copyright owners—the co-called copyright licensing agency licence—where it has been accepted that education establishments may copy up to 5 per cent. of a book per annum. Under clause 36, that would be reduced to 4 per cent. per annum, in quarterly batches of 1 per cent. The dates are not always helpful to local education authorities since at least one quarter will largely cover the school summer holiday. The Convention of Scottish Local Authorities would like a compromise on that. Five per cent. would be preferable, but if there are considerations in the Berne convention which limit it to 4 per cent., it might be easier and more helpful to local education authorities and schools if that could be done in two half-yearly batches of 2 per cent. That would overcome the problem where at least one of the quarters would largely fall during a holiday.

547 I have received representations from constituents on the Bill as it affects broadcasting, following some discussions in the newspapers on the extent to which interviewees have a copyright. People in broadcasting to whom I spoke earlier today feel that the position has not yet been satisfactorily clarified. Obvious areas of concern are where a reporter goes into the street with a microphone and takes off-the-cuff remarks from people and programmes such as those of Roger Cook involving consumer investigations where interviews are often of a hostile nature with someone trying to protect practices in which they have been engaged and which may not always meet with public approval.

There is still some doubt whether such interviews can be repeated after an initial live broadcast or whether the person who gave the interview has a copyright of the recording which, if he exercised that right, would prevent any further broadcast of the interview.

We would all regret seeing any unnecessary restraint on journalism, and the view in the industry is that the present position is not satisfactory. It has been suggested that there can be an implied consent by the interviewee. That will not be clear in a case when someone has said something which he would rather not have said and if an albeit honest statement might put that person in a bad light. Implied consent or implied licence is always revocable.

The other argument was that an interview was not a work qualifying for protection under the Bill. There is a great deal of judicial authority which suggests that one does not have to do very much for one's words and utterances to become a work and subject to protection. If further clarification on that point can be given, so much the better.

Every hon. Member who has spoken in the debate has referred to the absence of any provision for a levy on blank tapes. That is a serious omission. The right hon. Member for Chertsey and Walton has alredy referred, in his quotations from the White Paper, to the Government's complete about—turn from their position two years ago. Although I was not an avid reader of the Conservative campaign guide at the last general election, I believe that it contained a commitment to a levy on blank tapes.

Earl Ferrers made a very persuasive contribution in another place when he moved an amendment in respect of a levy on blank tapes. Indeed, I suspect that he was so persuasive that he was brought into the Government team to prevent him from having another opportunity to persuade their Lordships about the merits of his argument.

I listened to the Minister's arguments about why the levy should not be introduced. We would all accept that the argument is finely balanced and we can all readily see the pros and cons. The Minister said that Parliament has given rights to singers, musicians and composers and they should not have to come to us for help if their rights are not readily enforced. We cannot accept that argument just like that. If the rights that Parliament has granted to people cannot be enforced and are not effective, it behoves us to reconsider the matter to discover whether there is anything else that we can do to ensure that their rights are protected.

The Minister said that this is a pretty rough and ready measure. We should also consider the public lending right. Considering the number of libraries in the country, very 548 few are chosen as the sample on which to base the remuneration payments to authors. That system is pretty rough and ready. However, it has been accepted that people whose skills and talents lie in creative and artistic works, be that the written word, spoken word or song, should be entitled to some return for their creativity.

It was suggested in another place that the public lending right system would raise about £7 million. Although that may be a small amount of money when we consider the vast amounts raised in taxation each year, if that money were distributed among musicians, singers and composers it would be very beneficial. Many of those people do not have large incomes. If they are to be allowed time to express ther creative talents, that extra money—albeit relatively small in terms of the total taxation take—might allow them to further their careers and talents in a way which would not otherwise be possible.

I am sure that amendments providing for a levy will be introduced in Committee and we will certainly support them. We accept that there will be problems for blind and deaf people. It is not beyond the wit of the House to find appropriate arrangments to allow for the imposition of a levy and its collection without too much bureaucracy and, at the same time, take account of those people with a special case for exemption.

I hope that a constructive approach will be taken to the Bill. I am certain that Opposition Members will table constructive amendments. I hope that the Government will listen and be prepared to concede where they believe that a reasoned and well-argued case has been made. As has already been said, intellectual property and its protection are important for stimulating creativity and enterprise. The provisions in the Bill assist that. The Bill is also of considerable economic importance for us, not least as we approach 1992 and the single European market. Subject to reservations that will no doubt be debated, we welcome the Bill.

§ Mr. Iain Mills (Meriden)

I want to describe the background to my interest in this subject. I spent 18 years in manufacturing industry, originally as a tyre designer. I am the co-holder of a number of patents. I was also a marketing manager interested in trade marks, branding and naming. I am a non-executive director of Interbrand Group plc. I give advice to Grant, Spencer Caisley and Porteus and to the Industrial Anti-Counterfeiting Group. I am vice-president of the Institute of Trading Standards Administration and chairman of the Community Trade Marks Office committee. I apologise for recounting that list, but it shows that I take a strong interest in intellectual property.

I want to thank everyone who has supported me over the past few years in our campaign to increase the interest in intellectual property. I welcome the Bill and congratulate my right hon. and noble Friend in another place, my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and Minister of Trade and Industry and his colleagues on including in the Bill many of the things for which we have been campaigning with regard to intellectual property matters for almost a decade. I congratulate everyone on bringing that about. No doubt such action was taken with 1992 in mind and induced by the Government's clear recognition of the importance of intellectual property.

549 My right hon. and noble Friend the Secretary of State for Trade and Industry said in another place: Intellectual property is of substantial economic significance. It forms the foundations of major industries …A recent study concluded that 2.6 per cent. of GDP is generated by copyright based industries."— that is just copyright. If one were to take into account industries which rely heavily on patents and designs"— and I would add trade marks— the figure would obviously be higher still."—[Official Report, House of Lords, 12 November 1987; Vol. 489, c. 1476.] As was stated earlier, intellectual property is clearly an area of enormous significance. However, until recently, it was not recognised by the nation, or the House, as having that degree of significance.

It will he difficult to achieve in the Bill all the balances to encourage this great creator of wealth for our industries. We should remind ourselves of the enormous importance of our brand names, trade marks and inventions. They are seen by people throughout Europe and further afield—and particularly in the newly developing countries—as highly attractive and extremely valuable. If there are any short cuts available to those countries to overcome the high cost and staffing difficulties of industrial research and creating brand names, images and market penetrations, the protection of intellectual property—the protection of our copyrights, design rights, patents and trade marks—will prove in the competitive years to 1992 and beyond to be an absolutely vital part of our industrial economic strategy.

We must get the balance of protection right in the Bill to protect United Kingdom interests, to allow us access to our partners in Europe into the single market in 1992. Innovation, the protection of our clever, new designs and existing designs, will be all-important.

As well as my interest in intellectual property, I have a constituency interest in the midlands and I share a constituency border with my hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry and Consumer Affairs. I accept that there is a difficult but important balance to achieve with regard to unregistered design rights between the original equipment manufacturer who has to put huge sums of money into developing products—even those that are functional—and the spare parts manufacturers. Many of us have both original equipment manufacturers and spare parts manufacturers in our constituencies.

The matter is not simple and it cannot be left on the shelf. The judgment in the other place in the case of British Leyland v. Armstrong shows that some decisions must be made. I asked those who advised me to give me some idea of how design is looked on elsewhere and I understand that copyright protection of purely functional designs is much rarer in other countries. It may be obtained for 25 years in Japan and for 16 years in New Zealand. Many of the old Commonwealth countries which have previously granted life plus 50-year protection for purely functional objects are changing their copyright laws as we have had to do so, in the light of the key decision in British Leyland v. Armstrong. In France, a registrable design can be protected by copyright.

Quite how we achieve the right decisions on this balance, I am not sure. We have to look not only at our own situation but at the fact that the European Economic Community is seen as the leader in intellectual property matters. Therefore, whatever we do in the Bill will no doubt result in repercussions, and perhaps people 550 following our example. The European Commission must be looking carefully at what we are doing. In achieving a balance we have not only our own legislation to bear in mind but our commitment to 1992 and our example to countries in Europe, and throughout the Commonwealth. Therefore, it will be a most difficult matter.

I have corresponded with my hon. Friend the Minister on this matter of whether "must match" and "must fit" will be fair to both sides of the equation, and I wish to press him further on it. I understand that the decision was made in the light of increasing competition. I have received figures from Ford showing that body panels and wings of cars are largely imported. The figure is about 80 or 90 per cent. If we reduce the amount of protection, do we not increase the amount of import penetration and, in the name of competition, encourage those people from abroad?

This may all be part of 1992 and the single market, but we need to look carefully at it, and I would be grateful for my hon. Friend's comments on how we can see the "must match," and "must fit" proposals creating more incentives for UK manufacturers to compete with European manufacturers, so that body panels are produced here. I have some sympathy with the motor industry's argument that its members would like to see this idea dropped, but I also have sympathy with the desire for further competition. While there is a case to be made for this, although that is not accepted by the car industry—the original equipment manufacturers—it may be seen as a blunt instrument in the way in which it applies, for example, to computer hardware. It worries me that, if the normal three parts of any word processor can fit, presumably there would be no unregistered design right for a part of a word processor or whatever part of the three bits that usually go together, for people such as IBM and other computer manufacturers. If I have misunderstood this, I would be grateful to he reassured, but if those parts fit or match, unless they are a registered design, there will be no protection. If the argument is that the manufacturer of such products should register all his designs, I can understand that, but to register every part of a motor car would be an enormously lengthy and time-consuming process, and while it might be possible for large manufacturers, what about small manufacturers?

I am not rejecting "must match" and "must fit," but I am exploring—perhaps it would be better done in Committee, in view of the need for brevity—whether there are any other ways out of this problem. For example, there is the change of the licence of rights to a compulsory licence. I understand that the European Commission is looking carefully at the possibility of compulsory licences, which would need the establishment of a tribunal system. This involves another part of the Bill and an extension of its powers to compulsory licences. If a manufacturer who wished to enter the market could not get a licence under this compulsory licence procedure, he could, if the manufacturer of the original products complained, go to the tribunal for judgment.

I understand and appreciate the importance of avoiding monopolies, but there is a likelihood, if we do not tackle the European dimension, that this matter will be referred to the European Court, and I would appreciate my hon. Friend's comments.

I am also concerned about the functional designs and the enjoyment of copyright for the designer's life plus 50 years. As time is now fleeing. I will press my hon. Friend 551 the Minister on this matter in Committee. There is some concern about the judgment of aesthetic designs and how eye appeal, not artistic merit, would effectively be the criterion, and the 15-year provision. I have been pressed about the design right of five years complete and a further five years under licence, leading to 10 years' protection for registered designs, and the suggestion that this should be extended to 10, 15 or 20 years, again with the possibility of a compulsory licence. These are important matters.

I understand the difficulties of my hon. Friend the Minister as, among the many briefs I am clutching, I note that the Confederation of British Industry is strong in its resolution to the matter, that the British Automotive Parts Promotion Council takes rather a different view and that the Society of Motor Manufacturers and Traders does not seem to have found common ground among its members, and is unable to advise them. I fully appreciate the difficulties of Ministers and Back Benchers in coming to hard conclusions as to the best solution. A balance, which has been mentioned today, is obviously important.

There are a number of other aspects. I am concerned—I know that this matter was taken up in the other place—about Crown powers. The Crown has been given new and extensive rights, and the defence industry is most concerned about this matter. I wonder whether these new sweeping powers are necessary and I hope that the Government will be sympathetic to an amendment on this. The five-year licence provision sufficiently protects the Crown and I am not sure about the urgent need provision suggested by Lord Beaverbrook. I would be grateful for my hon. Friend's comments on this matter, but perhaps it would be better to take this up in more detail in Committee.

I was interested in my hon. Friend's comments about the number of proposals in the Bill which affect trade mark agents, and I welcome the inclusion of privilege in the matter of trade mark agents dealing with clients. This is an important matter for them. They will also be subject, as I understand from the Bill, to becoming registered on a registry of trade mark agents. This is obviously a great advance, which I welcome. Although it may not be possible for him to comment tonight, I press my hon. Friend on how this registry would be formed. I understand from correspondence that this may not be possible now, and that it could be introduced subsequently. I have talked to a wide range of eminent trade mark agents and they are concerned that their profession achieves the highest quality of education, performance and standards. I am concerned that the way in which the registry operates allows this to happen.

I congratulate the Institute of Trade Mark Agents on its new proposals for education and qualifications, but wonder whether it would not be appropriate to have an intermediate body which may set down the basic criteria for the way in which the registry operates, such as the senatorial version of its standing advisory committee. I know that it is planning to broaden that, but I wonder whether some intermediate body might be suitable. While I am in favour of self-regulation, there are occasions when the rules should, perhaps, be set by another body. By and large, I wholeheartedly welcome the establishment of a 552 registry for trade mark agents and all agents also welcome that, provided we can achieve the best and highest degree of qualification.

I should now like to turn to some technical points. I understand that the appropriate section extends privilege to a registered patent agent in respect of any matter relating to patents, trade marks, service marks, registered designs or design right, or with respect to any question of copyright connected with any such matters; It does not appears to cover the question of passing off confidentiality. It may well be that the matter was covered in another place, but I should appreciate the Minister's comments, though not necessarily tonight. The corresponding provision for registered trade mark agents in the appropriate section appears to cover any matter relating to trade marks or service marks". It makes no mention of copyright design passing off in the same way. Part VII, which deals with the fraudulent application or use of a registered trade mark, makes no reference to service marks. If I am incorrect about that or if it has been corrected in another place, perhaps the Minister will tell the House now or at a later stage.

The appointment of county courts or patent county courts in the appropriate section which refers to related patents and designs or other intellectually related matters presumably includes trade marks and service marks. The other section provides for the inclusion of registered patent agents who may address a patent county court. Will registered trade mark agents have those same powers? I would appreciate the Minister's advice on that matter.

I have been in correspondence with the Minister about character merchandising and, as always, I appreciated his forthright and frank comments. The Standing Advisory Committee is taking a long-range view of trade mark matters. I would welcome the Minister's advice because character merchandising may well be taken up later in another Bill. I am especially concerned about the problems of trafficking, but perhaps the Bill is not the appropriate measure to deal with that. We must get this matter right, and many suggestions have been made about it. Unless we can deal adequately with trafficking there may be even more problems.

I was interested recently to be briefed by the Institution of Electrical Engineers when I found that this extraordinary and exciting Bill presents problems for it, too. I originally trained as a chemical engineer and have some sympathy for electrical engineers. The institution showed me its database and abstracts from it. I understand that under the original terms of the Bill that will be illegal. The institution was helpful in its briefing and the Government may well be sympathetic to an amendment that will help the institution to give to the scientific community quite remarkable access to abstracts from learned articles. I cannot remember how many learned articles are covered, but they are of enormous value and are used by the European Parliament, by hon. Members and by the scientific community.

The institute is anxious about the matter, and I have assured it that there will be many amendments coming from the other place and that the Minister's officials are working extremely hard. Any advice on timing would be helpful, and perhaps the Minister would be prepared to see members of the institution. I do not act on its behalf, but as an engineer I find its concern quite important.

I am a vice-president of the Institute of Trading Standards