Clause 1 - Penalties for criminal offences

Copyright, etc. and Trade Marks (Offences and Enforcement) Bill – in a Public Bill Committee at 10:30 am on 9 January 2002.

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Question proposed, That the clause stand part of the Bill.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I welcome you to the Chair, Mr. Benton. Given the way in which the Bill was dealt with on Second Reading, it seems that it is fairly uncontroversial and enjoys support throughout the House. However, I do not want to take matters for granted, so I shall recap on the essential points of this substantive clause to give members of the Committee an opportunity to respond if they wish. Unless major discussion points arise from that, I hope that we can proceed quickly.

The key point under the clause is to harmonise trade mark legislation and copyright legislation. By that, I mean legal tidying up, not the introduction of new offences. Copyright theft is a significant offence. It is not a victimless crime, and it has major repercussions. It is theft in a service-based, knowledge-based economy of large sums—about £10 billion a year, but it could be more—and an activity that has a substantial impact on consumers. In many instances, it results in the diminution of quality, but it can involve dangerous products. Examples quoted on Second Reading were of toys and the adulteration of goods that could cause serious injury. Given the disparities in the treatment of different types of intellectual property crime, the most serious aspect is that copyright crime has come to be regarded as a soft option in the criminal community.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

I have been following the hon. Gentleman's argument with considerable interest and support. Is he aware that when the European Leisure Software Publishers Association intervened in attempting to stop such copyright breaches, it found that, in 80 per cent. of the cases, not only was there a breach of copyright, but such organisations were involved in other criminal activities, including the distribution of illegal drugs?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

Yes, the hon. Gentleman is right. He has extensive knowledge of the computer industry and information technology, and I am sure that he has such information on good authority.

One of the initiatives that prompted the Bill is the growing amount of evidence from the criminal intelligence service that large-scale organised criminals, including drug dealers, are becoming

involved in the business, and that it is a relatively safe option for them If they manage to convert the proceeds of their crime into copyright pirating, the maximum sentence is two years, which in practice would probably be reduced to one year. For a major organised crime syndicate, that would not be a deterrent. Several examples have been quoted in the past of the police trying to bring to justice a major criminal who is known to them who was involved in copyright theft. Large amounts of resources being expended on a major trial and a perfunctory sentence being passed obviously sends out the wrong signals.

I shall pull together the threads. Problems arise not because of any passive intent in the law but as a result of the sequence of legislation. Copyright legislation was introduced in 1988, with a two-year maximum prison sentence. Subsequently, under trade mark law, people began to become more aware of the criminal involvement and the seriousness of the theft, so tougher sentences of 10 years were applied. The Bill is an attempt to reconcile the two.

To reassure Committee members who may be wondering why people should go to prison for 10 years for what might be a non-violent crime and whether the term is excessive, the proposed term corresponds to comparable criminal sentences, such as those for fraud. In addition, only in the most severe cases, involving major criminals, is a 10-year sentence likely to be sought by the prosecuting authority and imposed by the courts. The Bill provides for summary sentencing in magistrates courts.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

As the hon. Gentleman knows, I support the measure, but I have a question about the tariff. All too often, we pass laws that specify maximum sentences as X or Y, but in reality tariffs produced by judges, with the blessing of the Lord Chancellor or the Lord Chief Justice—I forget which—determine on a day-to-day basis the sentences that are imposed. Is the hon. Gentleman reasonably convinced that, on paper, increasing or harmonising the maximums will translate into higher sentences on the ground?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I believe that there is sufficient awareness in the prosecuting authority and the judiciary of the seriousness of the offence. I think that only in a relatively few cases will an exemplary sentence would be imposed, which is essentially what we are talking about. Hon. Members may have noticed a slight qualification. The maximum, 10-year, sentences apply only to particular types of copyright offence—the most serious, which involve large-scale importation, such as smuggling, or the manufacture of goods. Ten years is the upper end of the range. I am sure that in practice the judiciary will recognise the most serious cases and will apply the maximum sentence if it believes that a deterrent is necessary. I am happy to respond to questions about the clause.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am pleased to be debating the Bill under your firm but fair guidance, Mr. Benton. You will have noticed that no amendments have been tabled. The Bill has support from all parties and quarters of industry and from consumer

organisations, among others. It is rather like the dog that did not bark. I have received no briefings from anyone who is unhappy with it, and if other hon. Members have, I should be interested to hear about those anxieties. For once, this is a measure that has some unanimity behind it.

I commend the hon. Member for Twickenham (Dr. Cable) on having been fortunate enough to come high in the ballot and on having adopted the Bill as his baby. It is refreshing to consider a measure backed by Liberal Democrats that is not anti-business, and for that we are grateful. I know how much work can be involved in introducing a private Member's Bill. Back Benchers do not have the back-up of the civil service—nor, indeed, do Opposition Front Benchers—and a great deal of effort is involved. It is right to debate the measure in such a friendly spirit.

A glance at the Bill's sponsors shows how wide the support is. It includes several of my hon. Friends, not least the Olympian figure of the shadow Attorney-General. We can therefore firmly say that everyone, including, I believe, the Government, supports the Bill.

If it helps you, Mr. Benton, I had proposed to make several comments about clause 1, and perhaps stray slightly further than I might usually to make some general points about the Bill, and confine my remarks to those, unless points are made in later, detailed debates. I shall discuss some important enforcement issues when we consider clause 6, which seems an appropriate point. I hope that that helps you. I shall proceed on that basis.

I strike a note that might be regarded as rather churlish. On any view, the Bill should be a Government measure. Although I do not suggest that the Bill is what is colloquially known as a handout, it would have been better if the Government had

found the time to introduce the measure. They are obviously keen on the Bill, and have, quite properly, allowed officials to assist in drafting explanatory notes and the like. It is a matter of principle whether time allocated for private Member's Bills, which is limited enough already, should be used to introduce what might otherwise have been Government legislation. As I have said, no amendments have been tabled, and there have been no hostile briefings of which I am aware.

The Bill is fairly technical, and that, no doubt, explains the paucity of the number of people listening to our deliberations. It deals mainly with procedural matters and penalties, rather than substantial matters of law on intellectual property. That is not to say that we do not recognise how important intellectual property is to the country. It is a great British success story, and encompasses a range of matters. CDs, computer software and Dyson cleaners are all examples of British ingenuity that can be called intellectual property. Such property needs protection because so much money and so many jobs are at stake. There is also the issue of public safety.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

I was interested to hear my hon. Friend's remarks about British intellectual property. Does he agree that it is fortunate that we hope to pass

the Bill at a time when China has just joined the World Trade Organisation and can honour its obligations to international copyright law?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend, who is something of a boffin on these matters, makes a telling point. I hesitate to use the word anorak. He is the Opposition's Barnes Wallis on these issues. He is right, and let us hope that constructive engagement with the Chinese, for example, will ensure that piracy—much of which is a far eastern phenomenon—will decrease.

The Bill deals with criminal, rather than civil, aspects of intellectual property law. We accept that civil remedies are available and are pretty accessible to most people in the world of intellectual property. Intellectual property law is one of the big growth areas in British legal services, which are marketed across the world.

It is important that the Bill is seen to be debated properly, but it is also important that it is seen to receive the whole-hearted support of everyone in the House. That will show that Parliament takes the threat of intellectual property piracy seriously. The Bill is measured and does not try to do the unattainable. It takes a sensible approach to harmonising penalties and sorting out search warrants and forfeiture proceedings. It would make such proceedings more accessible, as long as issues of enforcement were tackled.

Some intellectual property rights owners might query whether the Bill goes far enough, but when we consider such legislation, our concern must be based on the art of the possible. I do not think that we have a sufficient answer to the question of enforcement. Much of the burden of enforcing the Bill will fall on the police or local trading standards officers, and we know how much pressure they are under already. The problems that the Bill attempts to tackle cannot be overstated, and I agree with the comments made by the hon. Member for Twickenham in his introduction.

We have heard from the Alliance Against Counterfeiting and Piracy, which might be called the midwife of the Bill. One of its briefings states:

''The Alliance firmly believes that intellectual property theft should not be treated more leniently than theft of physical property''.

That is important. All too often, it is possible for members of the public to think that the matters that we are discussing are unimportant. However, in terms of pure money value, they are frequently much more valuable than physical property, which seems at present to have wider protection.

We have all seen the briefings from the alliance, and other organisations, about the industries that they represent. The businesses that the alliance represents account for 5 per cent. of all employment in the United Kingdom, and they generated more than £80 billion for the Exchequer in 1999. Estimates of the losses caused by counterfeiting and piracy vary between £8 billion and £9 billion, and it is staggering that they do not include losses caused by counterfeiting and the piracy of business software, which I assume takes place on a massive scale.

We have also received a more recent briefing from the alliance, which covers much of the same ground. However, it also touches on an important point that the hon. Gentleman made in his opening remarks, which is the relationship between white-collar crime and more serious criminality. The European Leisure Software Publishers Association has found that evidence of further crimes was uncovered in 80 per cent. of the raids that were conducted in 2001.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend has made that point, and it bears repetition. It also reminds me of the situation that I have become involved with, because I represent a constituency on the south coast, of criminal gangs that have moved out of drug trafficking and other high-risk activities into tobacco smuggling, because the penalties for that are much lower but the rewards are almost as great. That provides another example of the flexibility of criminals in terms of how they make their ill-gotten gains. Crimes such as trafficking and trading in pirated CDs are almost as profitable to them—if not more so—than some of their other activities, but if they end up in court for committing them they are likely to face much lower sentences.

The alliance has also provided evidence from the police service in Northern Ireland about the strong links between crime and terrorism. We know that terrorism is a business, as much as it is anything else; that is certainly the position in Northern Ireland. There is powerful evidence that organisations such as the Real IRA are involved in the counterfeiting of goods such as CDs and DVDs. There is also a reference to a threat assessment by the National Criminal Intelligence Service that states that organised criminals are increasingly getting involved in counterfeiting and the theft of intellectual property.

With regard to the matter under discussion, it is important not to lose sight of specific examples, of which there are many. I will refer to only a couple of them. It is important to state that we are talking not only about money and profits, but lost jobs. We are talking also about significant threats to public heath, and to people's lives. The example of the pirated Star Wars figures highlights that; they were found to contain 50 per cent. more lead content than is allowed by health legislation, and that is very dangerous for young children.

I was also struck by examples of the growing trade, particularly in the third world, in pirated pharmaceuticals. Fake Losec, which is an anti-ulcer drug, was impounded as it entered the United Kingdom. It had been made in Italy, and its manufacture was financed by Russian mafia bosses. Zantac, which is also an anti-ulcer drug, was also being manufactured illegally.

A disturbing report was published in The Lancet in June 2001. Researchers studied the pharmaceuticals that were available in Nigeria, and they found that counterfeiting was taking place on a massive scale. Almost 50 per cent. of the samples that they examined

had not been made by the usual manufacturers. That has vast implications for the United Kingdom and the third world with regard to resistance to drugs, side effects and people dying from, and continuing to suffer from, conditions that such drugs are meant to alleviate. For all of those reasons, and many more that time does not permit us to discuss, the Opposition welcome the Bill. We hope that it will have a painless and swift passage, rapidly become law and allow all the relevant authorities to enforce intellectual property rights. I commend the Bill to the Committee.

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

I welcome you to the Chair, Mr. Benton, and wish you, all hon. Members and everyone who assists us in our work as Members and Ministers a happy new year.

On Second Reading, the Government said that the Bill would have our full support. Intellectual property crime affects businesses, consumers and society in general, and proven links exist with serious organised crime. We therefore welcome the Bill, which brings about rationalisation and harmonisation of the existing criminal provisions in intellectual property law, and we look forward to it being enacted.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.