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Clause 16—(Compulsory Licences)

Volume 467: debated on Friday 22 July 1949

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I beg to move, in page 12, line 2, after "patent," to insert:

"a Minister of the Crown or."
During the Committee stage we had considerable discussion both on this Clause and on Clause 19 (1). The law as it existed for some time provides for any person interested to apply to the courts after a period of three years for a compulsory licence of right if the patentee or the owner of the patent refuses to grant the person interested a licence on reasonable terms. This safeguard which has been in our patent law for a great number of years effectively disposes of the charges which are often being levied against the capitalist system of suppressing inventions.

There was some discussion on this subject in the Report of the Swan Committee, and the Government deemed it advisable, in Clause 19 (1), to reserve to themselves separate powers to have a patent endorsed "licences of right" on their application to the comptroller. We on this side of the Committee held the view, as we do today, that such a power is really a duplication of powers already possessed in Clause 16 (1), if the Government care to make use of them. As any person interested may apply to the comptroller, why should not the appropriate Government Department apply to the comptroller in the same way and state the case in the public interest?

Earlier, the Government pointed out that by custom and usage the phrase "any person interested" related purely to a person having a manufacturing interest. It was pointed out that a Government Department would not necessarily have a manufacturing interest—it would have a public interest. Therefore, we have sought to overcome this difficulty by seeking to insert the words, "a Minister of the Crown." This would overcome the difficulty discussed upstairs about whether or not a Government Department was a person, and it also overcomes the difficulty about the word "interest," because it is obvious that a Minister of the Crown would only act in the interests of the public—using that term in its best sense. The very fact that a Minister of the Crown was applying to the comptroller, would mean ipso facto that he was applying in the public interest.

Then we have the second category of applicant, namely "any person interested," who is applying merely because he has a manufacturing interest or an interest in a desire to manufacture. In this way, by this simple and precise Amendment, we overcome the undesirable features of Clause 19 (1), which we would move to delete if our Amendment to this Clause was accepted, and we place the Minister of the Crown on exactly the same footing as any other interested person. There can be very little difference between a Minister of the Crown applying in the public interest and an interested person applying. The Minister of the Crown can only be applying on behalf of somebody who may want to manufacture if the patent could be endorsed with the words "licences of right."

The only possible abuse is that the person interested may hesitate to go to the courts under Clause 16. He may hesitate to be involved in the litigation which might be necessary. I can appreciate that the Government, realising that possibility, seek to be able to act on behalf of the small man. It is indeed a possibility that we have here a case of maintained legislation which would be far from desirable, where the manufacturer says, "I will not go to the courts and apply. I will stir up some interest in a Government Department and get them to apply on my behalf. I will get a few Questions asked in the House and I will ask Members of Parliament to write to the Government Department to ensure that the patent is endorsed, 'licences of right' under the procedure of Clause 19 (1)."

This is a power which must be used most sparingly by Ministers. It is far better if they are to have this power they should have it on entirely the same terms as any other interested person. In fact, they will only apply on behalf of persons who are interested from a manufacturing point of view, either known or unknown to the Government department concerned. If this Amendment is accepted, a Minister of the Crown, as a person, will be put on the same footing as any other person, since he will only be acting for any person interested. We should remove the danger always prevalent in present day legislation of giving a Government department far wider powers than they require—powers which under Clause 19 (1) would enable them to poke their noses into any field of activity and to insist on patents being endorsed "licences of right" at the whim of some junior official of any Government department acting on imperfect evidence without any right of appeal from the patent holder.

It is noteworthy that Clause 19 gives no protection at all to the holder of a patent. The protection is contained in Clause 16 which is successfully by-passed by the Government through the operation of Clause 19 (1). For that reason also, it is extremely desirable that this Amendment should be accepted in order to place the Minister of the Crown in the same position before the comptroller as any other interested person.

I beg to second the Amendment.

My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) has made it clear that the powers which the Government are seeking in Clause 19 can be dealt with adequately under Clause 16, and that there really is no need for the Government to take the specific powers outlined in Clause 19. Our case on this issue is strengthened when one appreciates that, under Clause 19, the Government will not be required to fulfil the conditions laid down in Clause 16. We cannot see why a Government department should have the authority to go to the comptroller and insist upon this action without having to fulfil the conditions which would be required to be fulfilled by a normal applicant under Clause 16. In those circumstances, we think that our Amendment would make for a much more satisfactory state of affairs than exists under Clause 19.

The hon. Member for Bucklow (Mr. W. Shepherd) may not have had in mind all the provisions of Clause 19 (1), which he will see provides:

"…. any Government department may apply to the comptroller upon any one or more of the grounds specified in section sixteen of this Act for the indorsement of the patent with the words "licences of right" or for the grant to any person specified in the application of a licence under the patent; and the comptroller may, if satisfied that any of those grounds are established, make an order in accordance with the application."
I think that disposes of the gravamen of his argument.

The hon. Member for Altrincham and Sale (Mr. Erroll) began by going near to, but not quite touching upon, a subject which caused much controversy in our earlier discussions; that is to say, whether it is or is not the fact that patents are suppressed. I feel that the House would agree with me that it is not desirable or necessary to embark upon that subject for the purpose of deciding whether this Amendment should be accepted.

What the hon. Gentleman does by his Amendment is to take away from Clause 19 (1) most of what is there and put it in Clause 16 (1), but he leaves out something very important which is in Clause 19 (1), the existence of which operates in the interests of the patentee. The hon. Gentleman asks why we do not insert in Clause 16 (1) the reference to a Minister of the Crown, by which he suggests that we should, at one fell swoop, overcome the difficulty about the applicant not having a public interest in the subject-matter of the application. Then, he says we have done all that we need to do by giving that power in Clause 16 (1) and removing it from Clause 19 (1).

The Amendment would, it is true, give most Departments, but not all, the right which they now possess under Clause 19 (1). The phrase "Minister of the Crown" would not include all Departments, as a matter of drafting. It would not include the Board of Admiralty, and so it would be inadequate for that purpose. The words "Government Departments" however, constitute an expression which is constantly used in legislation of this type, and which is well understood as the accepted expression to cover all Government Departments. The Amendment, therefore, is worse than the text in that respect, to start off with.

The radical objection to the Amendment is this. If it were accepted, it would mean that some Ministers and some Departments would be entitled, if they could establish the grounds set out in Clause 16, to apply to have a patent marked "licences of right." It would not enable any Government Department to apply for the grant of a licence to a nominee, and, in many circumstances, it might be very desirable to make the compulsory grant of a licence to a nominated manufacturer, which would be much less harmful to the interests of the patentee than the endorsement of the patent "licences of right."

Once the patent is endorsed "licences of right," we bring about a situation in which, upon reasonable and proper terms, "licence of right" must be granted, but it may not be necessary in the circumstances of particular cases to go as far as that. It may be preferable, both in the public interest and in the interests of the patentee, for the Department simply to appoint a particular nominated manufacturer to whom the licence is to be granted for the purpose of the use of the patent. Such a grant to a particular nominated manufacturer would leave the holder of the patent in a very much better situation than he would be if the patent was endorsed "licence of right."

12.15 p.m.

The Amendment seeks to enable the Department only to apply for the patent to be endorsed "licences of right," thereby inflicting injury to that extent upon the patentee, and taking away from the Government Department the right to apply for the relief which is much less injurious to the interests of the patentee—the grant of the licence to a particular nominated manufacturer.

In that case, litigation could proceed, because the Government Department would be applying solely on behalf of a particular potential manufacturer, and not in the public interest at all?

That is an error which underlies so many of the arguments which we hear from hon. Gentlemen opposite. It is an error which assumes that once a Government Department intervenes, the public interest is displaced through the intervention. The whole point of our vesting this power in Clause 19 (1) is to provide that the Government Department should be able to protect the public interest, and Government Departments will intervene, and will only intervene, when it is necessary in the circumstances of a particular case that public use, either complete or partial public use, should be made of the patent. The Amendment seeks to provide a more drastic remedy against the patentee and take away the least drastic one.

If I understood correctly the arguments of the hon. Gentleman, the Amendment would have precisely the opposite effect which he has in mind. It would mean that, if a Government Department with the public interest in mind makes an intervention by way of application to the comptroller, they could only ask for the drastic remedy of endorsing the patent "licences of right," and could not ask for the more modified process of granting to a particular manufacturer a licence to use that patent. We do not think that we should necessarily force upon a Government Department such a drastic step, if that Department thought that the public interest required its intervention and if it could so persuade the comptroller. We think it should be done by going half-way, but not the whole way, and, for these reasons, we think that the Amendment not only does not improve the Bill but is a little harmful of what we have in mind.

May I ask the right hon. and learned Gentleman a question on one point? If a Government Department intended to apply on behalf of one particular manufacturer, why could not that manufacturer himself apply under Clause 16?

Because a particular manufacturer is concerned with his own interests and the public department is concerned with the public interest, and that is why we give the public department the right to exercise the initiative in these matters.

Amendment negatived.