New Clause 1 - Compulsory binding technical arbitration for new and existing patents

Part of Patents Bill – in a Public Bill Committee at 3:00 pm on 15th June 2004.

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Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry 3:00 pm, 15th June 2004

The hon. Gentleman raises a legitimate point of concern, but I counter it by saying that if no attempt is made to do what I suggest, that gives Microsoft or IBM a completely free rein. I do not believe that there are not people—probably ex-employees of the likes of Microsoft and IBM—who are in a position to make an independent judgment.

The hon. Gentleman offers a poor argument for not trying. The counter to it is that it would, effectively, concede that the big guys always win because they have the ability to bankroll the litigation to the point where the small guy has to back up and go away. That is the concern. As 95 per cent. of useful inventions come from small businesses—to repeat a statistic—this is not a fringe issue, but central to what patents are all about.

A binding opinion would give smaller firms greater certainty. If an alleged infringer still decided to go to court even after expert opinion had found against them, the patent holder would have the comfort of knowing that the judge could take that expert opinion into account. The judge will, of course, make his own independent evaluation, but at least he has an expert view to draw on. An alleged infringer who did not have

a real case, but who had the resources to question the validity of a rival's patent, would be deterred from going to court in the first place if an independent judgment suggested that he would lose. The alleged infringer would not automatically be guaranteed to win simply because they had the resources to take things to the nth degree. That point might be relevant to the hon. Gentleman's intervention.

The new clause would help to even the balance. We think that it is worthy of serious consideration, and that is what we are asking the Government to do. I am not going to force a Division, and I do not think that the Minister would expect me to, but he should accept that this is a serious proposition. Also, if the patent enforcement project has validity, the Government should at least consider its recommendations. It is a problem that we are considering the Bill before the consultation has reported. I do not wish to detain the Committee, but it might have been more desirable had we dealt with the Bill after the consultation. Nevertheless, the Government can, perhaps, take that it into account, so that small firms are in a better position as a result.

Another option has been suggested. Instead of setting up the compulsory binding expert arbitration, a fighting fund might be provided for small and medium-sized enterprises. If they were able to draw down on such funds, that would even up the imbalance. In his report ''Making Patents Useful to Small Firms'', Professor William Kingston of Trinity college, Dublin suggests that an obvious source of funding would be the subsidy paid to the national offices by the European Patent Office, which he claims is currently running at Euros 250 million. I am not sure whether he is being facetious, but I am less attracted than him to that proposition because all it would do is set up a fund that small businesses can draw on to even up the balance.

The proposal that there should be expert binding arbitration is a move in the right direction. We should ask, ''How good is the intellectual property?'' rather than, ''Who has the deepest pockets?'' That is the crux of the argument. Can we not ensure that the Bill allows justice and fairness and does not give the spoils to the bigger operators, so that they can put the small guy out of business?