Clause 4 - Revocation

Patents Bill – in a Public Bill Committee at 11:00 am on 15th June 2004.

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Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson 11:00 am, 15th June 2004

I beg to move amendment No. 11, in clause 4, page 3, line 7, at end insert—

'(2) In section 73 of that Act after subsection (3) there is inserted—

(4) The comptroller shall not take action under subsections (1) or (2) later than six months after the grant of a full patent unless the action falls within section 2 subsection (4).

(3) In section 74 of that Act in subsection (1) after ''in issue'' insert ''within six months of the grant of a full patent''.'.

This is another issue of great importance. Hon. Members will note that the key part of the amendment is the insertion of ''six months''. Under current law, if a small business's patent is infringed, it can approach the alleged infringer and request it to pay licence fees for exploiting an invention. However, the alleged infringer may be a larger company. Many of the issues that I raised on the Floor of the House concerned the great difficulty faced on a range of issues, but particularly patents, by small businesses, which are often a David taking on a Goliath.

If the alleged infringer is a large company, it is likely to issue a counter legal claim questioning the validity of the small firm's patent. It is estimated that about 80 per cent. of time spent on patent cases in court is spent questioning the validity of a patent, rather than on its infringement. That is because a larger company is

often backed by a team of expert intellectual property lawyers. In debate in the House, I put forward the example in which a judge put up his hands in horror at the costs involved in a fairly simple case that ran for four days; it was £80,000, I think, or perhaps a lot more—a large figure, anyway.

Large companies are often backed by a team of experts and are able to pursue matters with intellectual property lawyers who have great expertise. Such companies have the time and money to spend hour upon hour in court presenting even the most spurious arguments to undermine the validity of the patent that they are alleged to have infringed. That is of grave concern. If a small firm loses such a case, and its patent is ruled to be invalid, it may be liable to pay the other side's court costs, which is another issue of grave concern. It is therefore unsurprising that many small firms drop their infringement cases before they even get to court. In paying for a patent in the first place, a small business should have the right to assume that the Patent Office has done its work thoroughly and has ensured that there are no other such inventions in existence before establishing a patent as valid.

The amendment would introduce a six-month time limit after a patent is adopted during which any party could challenge its validity. After that, the validity of the patent could no longer be questioned in court. There would be two benefits. First, the amendment would give small firms more certainty. It would reassure them that, in using the patent process, they were acquiring for their invention a protection that really meant something and that the validity of their patent would not be challenged years down the line.

Secondly, the amendment would encourage people to keep an eye on the patent process and on which patents had been granted in their field. According to the Patent Office, 30 per cent. of money spent on research and development is wasted on developing ideas that have already been patented. Introducing a six-month limit would encourage companies to keep a closer eye on developments in their field, and thus to save money on unnecessary R and D. I would be pleased if the Minister accepted this key amendment.

Photo of James Arbuthnot James Arbuthnot Shadow Secretary of State (Trade and Industry)

This is a fascinating and important amendment that would have a far-reaching effect on the whole of the European patent system. As I understand it, not many countries, if any, allow patents to be valid even if it later transpires that the invention that was patented was in the public knowledge at the time it was patented.

The amendment would therefore make a major change to the structure of the European patent system, and would, as the hon. Gentleman suggests, encourage people to keep an eye on the patent system as patents are being granted. However, it is such a major change that I wonder whether it might not be preferable to introduce it—if it is introduced at all—after consultation with industry. Comments on the Bill that I have received from those interested in patents range from those of the Patent Reform Group, which says that the whole patent system is ranged against the

small inventor and small company and needs root and branch reform, to those of several other operators in the field, which say that, by and large, this is a good, small, sensible Bill that ought to be passed without many changes.

The change in the amendment would be so large that it needs consultation before it becomes the law of the land. At present, I am not opposed to the broad thrust of the hon. Gentleman's ideas, because a degree of protection, which is not currently available, is needed by small businesses. The costs of taking out a patent and of enforcing it are so daunting as to put off many small inventors. As I said on Second Reading, something needs to be done to protect small and medium-sized enterprises.

Finally, it is not always the small and medium-sized enterprises that are protecting the patent. Sometimes, the big guys—the big companies—exercise control in a way that the hon. Gentleman suggested the small companies should. Enforcement in this area is a reciprocal issue—a two-way street. We need to consider changes such as the one that he proposes carefully, but after consultation with industry.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Once again, this is an important area of discussion. I am sorry to disappoint the hon. Member for Weston-super-Mare, who generally moves amendments so delightfully that one feels one ought to support them, but I shall try to explain why I think the amendment is unworkable and perhaps a little unfair.

The right hon. Member for North-East Hampshire raised a point about the Bill itself, and on Second Reading he described it as workmanlike and less challenging than it could have been. However, the organisations to which he referred, and others, have been well consulted on the Bill, and discussion continues. If there is a need for substantial change in the light of what we say in Committee, there is always the possibility of bringing things back on Report. We are trying to achieve the best result for legislation that has not changed dramatically since 1977. Having said that, consultation has been excellent and the process has been well thought through. I am not expecting dramatic change, but if bodies still want to consult and discuss key issues with officials, that offer is on the table.

On amendment No. 11, a patent is not some kind of award or certificate of merit for a good idea, although it may be perceived as such. It is a powerful statutory right that allows the holder to stop other people from doing what they would otherwise be perfectly entitled to do. It goes much further than just preventing someone from deliberately copying someone else's idea: if someone patented an idea and I later developed that same idea independently, I could still be stopped from using it. It falls to Parliament to ensure that, as far as possible, those powerful rights are awarded only to, and exercised by, those who have genuinely new ideas.

There are two ways to do that. First, we can ensure that we have a robust and reliable patent granting system, which weeds out as many non-patentable ideas as possible; that is where the Patent Office comes in. I

and other Members, notably my hon. Friend the Member for Newport, West, spoke at length on Second Reading about the high quality of the work done by that organisation.

Secondly, we can ensure that a legal framework for patents does not, as far as possible, allow unjustified patents to remain in force and give people powerful rights to which they are not entitled. An important part of the patents system is allowing such powerful rights to be challenged, and not just during a short, arbitrary time frame after a patent has been granted. At any time during the lifetime of a patent, someone can be taken to court for infringing it; why should they be denied the defence that they were not infringing it because the patent was invalid? To deny such a defence would seriously restrict the public's legitimate right to innovate or simply to continue doing things that they are entitled to do.

The availability of the revocation procedure, which is open to all at any time, is an important factor in the delicate balance achieved by the patents system. It allows the removal of patents that should never have been granted and that are stopping people from doing what they should be allowed to do. That ensures that we have a patents system in which, as far as possible, only genuinely new ideas remain protected.

I should like to make two other important points, which I hope will help to explain why I am opposed to the amendment. First, the hon. Member for Weston-super-Mare talked about the difficulty endured by a patent holder when his patent is revoked. It is important to note that when a patent holder faces a revocation action, it is often not the end of the road for the patent. The court or the comptroller of the Patent Office will allow the patent holder to amend the patent if that could save it from revocation. The amendment must result in a valid patent, one that genuinely protects a new invention. There can surely be no argument with that.

Secondly, our law on the revocation of patents is harmonised with the European patent convention and applies to UK patents and European patents enforced in the UK. Adopting the amendment would mean that the UK no longer complied with the convention and that we would have to leave the European patents system. I noted from the hon. Gentleman's comments that he does not want to support what would be a disastrous move for UK businesses. I hope that on that basis, and in light of my earlier points, the hon. Gentleman will consider withdrawing his amendment.

Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

The Minister's last point was about withdrawing things and making difficulties in the European Community. I am not one of the ilk who want to withdraw in any way from the European Community, although of course there are issues to address, even with the European Community, which does not always get it right.

I welcome the support, qualified of course, of the right hon. Member for North-East Hampshire for the amendment. If people gave us more information, so that we could come back to the issue on Report, that would be very welcome. I appreciate that there is always a balance with this sort of thing.

The Minister may remember that in my previous speech on the Floor of the House I referred to some rather weird patents, one of which was to enable a ginger cat—not a black, grey or any other colour of cat—to get through a cat flap. There were 162 patents of a similar nature. I understand that one of the patents that went through was introduced by the ginger cat itself. That calls into question whether the patent should have been accepted by the Patent Office.

Photo of James Arbuthnot James Arbuthnot Shadow Secretary of State (Trade and Industry) 11:15 am, 15th June 2004

The hon. Gentleman is clearly not a cat owner, and has never had his house flooded with stray cats coming in through an unguarded cat flap. I am disappointed in him.

Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I am sufficiently told off, and I can see that there is a problem. Perhaps we should examine that patent and see whether it could be effective. Maybe the right hon. Gentleman would like to join me and see whether we could market it.

It is important that we keep the matter on the agenda, because there is still great concern about whether the larger firms have extra power and ability. It is important that the Patent Office is effective. Part of the reason for putting forward patents that went through in the past was to indicate that it is important that the Patent Office is vigilant and effective in ensuring that patents are watertight, that people are advised well and that things are done in proper order. We will wait to see whether more people approach us on that issue, but on the basis that it has been aired, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 6 ordered to stand part of the Bill.