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Patent Office

Volume 24: debated on Friday 21 May 1982

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Gummer.]

12.50 pm

Orpington is full of inventive geniuses and small businesses. It is also the home of the printing, publishing and sales departments of the Patent Office. I need no excuse to draw attention to the need to ease ministerial inhibitions on the Patent Office so that it can improve the service that British trade, industry and inventors require from it.

I welcome my hon. Friend the Minister for Consumer Affairs to the oversight of the Patent Office. I am pleased that it is now the responsibility of a Minister of State, though I regret that the debate has been forced on my hon. Friend so early in his tenure of office. It follows parliamentary questions that I put to my right hon. Friend the Secretary of State for Trade on 1 February and 3 March this year.

The Minister will be aware that, in return for the payment of fees, the Patent Office provides three basic services: the granting of patents, the registration of trade marks and the registration of designs. I am concerned about all three services and especially about the effect of their shortcomings on small businesses, but in the short time available to me I intend to concentrate on the administration of the patent system.

The system was devised centuries ago to encourage, by granting freedom from competition for a limited period, the making and disclosures of inventions, the development of inventions and their introduction to the market as new products and processes. In other words, the system is calculated to encourage both primary and secondary innovation.

My right hon. Friend the Prime Minister recognised, in a speech to the parliamentary and scientific committee on 25 February 1981, that we had a long way to go before we would be giving proper recognition to our inventors. She said that scientific excellence is admirable, as are engineering competence and technological capability, the successful formation of new businesses and the creation of wealth. But, said my right hon. Friend, most to be admired are those rare, gifted persons who can do all of those things.

My right hon. Friend said that underlying many of the difficulties facing our innovators is the supercilious and dangerous attitude that some sections of society display towards engineers and entrepreneurs. She added:
"The only long-term solutions to the distressing level of unemployment which this country now faces are more products which will sell and more business. We need more firms of every kind; some will result from larger organisations adapting themselves to an increasingly competitive world; some will be small firms providing new services, or old services in a new way; and above all some will be new technology-based firms.
That the new technologies will create new jobs, millions of jobs, there is no doubt. What I am doubtful about is whether we in the United Kingdom will have our proper share. It is my purpose to see that we do and we should. We have the skills and the inventiveness. The Government's job is to do all that it can to make the necessary changes easier to bring about.
We must develop in those in Government service respect for the risk-taking businessman so that I hear fewer complaints about cumbersome procedures, masses of paper and a lack of urgency when firms try to obtain development planning permission, try to register a company or seek help with a research and development project."
In wanting fewer complaints about a lack of a sense of urgency when a firm tries to register a company or develop an idea, my right hon. Friend the Prime Minister might have exemplified the delays and other difficulties encountered in trying to register a patent or a trade mark. There are bottlenecks at the examination stage and also at the stage of printing the patent to be granted.

The recently published annual report of the Comptroller-General of Patents, Designs and Trade Marks for 1981 said that 29,556 applications were awaiting full examination at the end of the year—an increase of 2,322 on the previous year. The Rayner report on the Patent Office, a copy of which the Minister's predecessor was good enough to place in the Library at my request, notes, at page 18, that the possible backlog of patent examination in 1984—continuing the current rate of accumulation of arrears—is estimated at 2½ years' work at current levels of manpower and output. The New Scientist on 29 April 1981 said that the output of a patent examiner, which used to be an average of two and a half reviews of applications per week, has dropped to two and that the Patent Office has been forced to extend the maximum pending period for a patent application from 3½ years to 4½ years. This examination, the so-called substantive examination, does not normally take place until after 18 months have gone by after the application was filed and early publication of its specification has taken place. The backlog of patents awaiting printing and granting is believed to be more than 14,000. With only 500 to 600 being granted each week, the backlog must necessarily take a very long time to be overhauled unless more printing capacity is brought into play.

I am well aware that there are ad hoc arrangements for taking the proven most urgent cases out of turn for grant but that is only a palliative—a sort of first aid directed at the problem—and is no substitute for a speed-up in granting all cases, including those which are only moderately urgent, as soon as they are in order for grant.

Without grant, money-raising is inhibited, as is the licensing or sale of a patent and the assertion that patent rights exist. All this is very frustrating for inventors and damaging for the national economy.

The House is, of course, well aware of the manpower constraints under which the Patent Office, in common with other Government offices, has been operating. The Comptroller-General, in his report for 1980, said that
"persistent undermanning had impaired the efficiency of the Office."
In his report for 1981, he states again that shortage of staff has caused problems, with consequential increases in arrears of work. He says that at the end of 1981 the approved complement was 1,392 but that the actual number in post was more than 40 fewer. I should like to know from the Minister where those vacancies exist. This is a shortage which presumably is due more to recruitment problems than to ministerial restraints or financial constraints and, if there are any vacancies at the Orpington office, I hope they will be filled quickly from local applicants.

The fee-earning services of the Patent Office are required to break even each year and appear actually to make large surpluses, totalling, according to my calculations, £13½ million in the last six years. The provision of adequate staff to carry out the services required by the clientele of the Patent Office is not therefore something which causes a net increase in Government expenditure. On the contrary, this revenue-earning service should be encouraged to earn more revenue.

No one can sensibly quarrel with the general Government policy to reduce the total size of the Civil Service, so as to reduce the total claim which the central Administration makes on the country's resources. However, it is wrong to reduce manpower to the serious detriment of services where the public interest is served and the consumers need it and are willing to pay for it.

An example of such a service in relation to the Patent Office would be the maintenance of a collection of English translations of those European patents—United Kingdom—granted in foreign tongues. Many patents originating in other European countries and granted to cover this country, and perhaps other European countries, dominate the activities of traders and industrialists here. A central holding of those granted in their own language, translated into English, is a good example of a service which is better done centrally than peripherally. It would put an end to the wasteful exercise of each interested company having to make its own translation. Many patent agents are able to cope with French or German, but that does not apply to the majority of patent searchers.

The Minister ought to have the staff available to carry out this useful and highly beneficial exercise. All he has to do is to call in such translations from the patent owners abroad. I am sure that he accepts the desirability of requiring such translations. The necessary machinery is in sections 77 and 78 of the Patents Act 1977, waiting to be triggered as soon as the handful of clerical staff needed to administer the scheme can be assembled.

The Minister's predecessor, in his written answer to me of 1 February, said that he was satisfied that steady progress was being made towards modernising the Patent Office and increasing its effectiveness. I hope that the Patent Office will soon be able to slot in the holding of translations of foreign language European patents supplied by their foreign owners as a result of these improvements to its procedures.

In this connection I should like to see a wider range of indices of the efficiency of the Patent Office included each year in the annual report. Examples would be the average number of patent applications reviewed by an examiner each week, the average delay before substantive examination takes place, the average delay between an application being found to be in order and the patent being printed and granted, the number of non-standard letters issued each week—put at one per examiner in 1979 by the Rayner team—and the average number of patent specifications printed each week now that there are two streams going through under the new law.

The written answer of my hon. Friend's predecessor also referred to further computerisation of Patent Office operations. Future capital investment within the Patent Office is a matter of concern, with surpluses on current account being siphoned off into the Treasury each year. This operates like a tax on inventors. Such surpluses seem likely to be the rule so long as the financial objective is to break even in every 12-month period. The Rayner report referred to manifest difficulties being experienced in operating the Patent Office within the present public expenditure framework. It wanted to see capital reserves built up.

Has the Minister any proposals to lay before the House in furtherance of that recommendation? In particular, has he any proposals under which the financial objective would revert to that which seemed to work very well some years ago—namely, a break-even taking one year with another in four-year cycles?

I referred to the statutory publications of the Patent Office—the annual reports of the Comptroller—General. I now wish to touch on another—the reports of patent and other cases decided by the comptroller or by any court or body, being cases which the comptroller considers to be generally useful or important. I am told that some decided cases of importance to practitioners are not appearing in the reports, or are not reported as soon as might be desired. Some are not placed promptly in the open-access boxes in the Patent Office library, or, to give it its proper name, the Science Reference Library. That library is, of course, the concern of the Department of Education and Science and the Patent Office is, perhaps unfairly, criticised for delays in handing over to the library judgments of topical concern to patent agents and the patent Bar.

This leads me to the dissatisfaction which is often expressed with the working of court procedures for litigating patent disputes. The present procedure appears to be complex, unwieldy, time-consuming, expensive and unpredictable. With the opportunities for forum shopping that will be presented after the enactment of the Civil Jurisdiction and Judgments Bill, to which the House gave Third Reading a few minutes ago, and the ratification of the European convention on jurisdiction and the enforcement of judgments which will presumably soon follow, some parties to patent litigation may choose to litigate abroad rather than here, to the disadvantage of British industry.

I hope that we shall soon have a new body to keep civil procedure under review, in accordance with the report of the Law Commission for 1980–81 and the recommendations of the Review Body on the Chancery Division of the High Court, chaired by Lord Justice Oliver, which were published in Cmnd. 8205. The Lord Chancellor has indicated the Government's acceptance of the recommendations of the review body. For the patent system, we need reforms which are probably beyond the scope of the existing patents procedure committee, as this sits infrequently and is concerned mainly with minor adjustments.

Returning nearer home, can the Minister say anything about the implementation of the Rayner recommendations relating to the printing, publishing and sales branches of the Patent Office in my constituency, to whose management and staff Rayner paid well-deserved tribute? I should be interested to learn of any progress with the Property Services Agency on smoothing the work flow by changing the physical arrangements at the Orpington office.

I could go on about room for improvements in the patent system at greater length.

As there is a little more time available, I should perhaps mention some additional matters. There is, for example, the tighter wording of the strict time limits imposed by the 1977 Act which have caused hardship to some applicants. There is also the need for wider cross-indexing and fuller classification of patents to enable industry to locate the patents that it has to avoid or those which contain wanted new information. There is also the need to remedy the failure to correct past errors in the cross-indexing of the names of all joint inventions in cases where they were indexed under the name of the first of the joint owners.

I welcome the reorganisation that I believe is now in train in the trade marks registry. This will strengthen the Government's case for the Community's trade marks office to be located in London. In sum, the Patent Office does a very good and worthwhile job for the country. I hope that the Minister will help it to do even better.

1.11 pm

I thank my hon. Friend the Member for Orpington (Mr. Stanbrook) for his kind remarks. This is a matter in which I am glad to be involved. If we did not already fully recognise the extent of inventive genius in Orpington, we certainly do so now. I congratulate my hon. Friend on bringing the whole of this matter before the House. It is opportune at a time when we are hoping to negotiate to bring the European Community trade marks office to London. That would be a great asset.

I share my hon. Friend's view that we should give greater recognition to our inventors and inventions. We are fortunate in this country in the way in which we develop inventive skills. I find that this is one of the major reasons why so many overseas companies are anxious to open laboratories and factories here. We have the precious capacity to develop high technology and to train technical workers in our laboratories. It is not surprising that other countries should want to tap that.

I agree also that we need to develop more opportunities for people here not only to invent but to have good, sensible access to other people's inventions as quickly as possible. It would be tragic and damaging to our business if we allowed delays to hold up development of new techniques when they become available. That is one reason why I am so glad to be discussing this subject with my hon. Friend today.

I welcome the constructive comments of my hon. Friend. The Patent Office was reviewed in 1980 by a team under Sir Derek Rayner as part of the Government's general review of the efficiency of the Civil Service. The review found, as we would have expected, that the professional capacity and knowledge of the staff were very high and that the office enjoyed a very good standing both in this country and abroad. But the review also commented on the severe backlog in processing patents and trade marks and on the increasing cost of the work of the office. My hon. Friend is right. This is a matter for serious concern. As a Minister new to this work, it is something that I shall follow up to see whether I can do more to help.

A number of measures have already been taken to tackle these problems. Others will follow over the next few years. For example, I am now able to report that the office is dealing promptly with all requests for searches that it receives and that it is steadily reducing the backlog of requests for a full examination. The backlog was reduced from over 30,000 at the end of October 1981 to 27,470 at the end of April 1982. That is still a very large number outstanding, but there has at last been some reduction.

The office has streamlined its procedures for granting and publishing new Act patents and the output of publications has increased from 36,000 in 1977 to 51,000 in 1981. The backlog of new Act grants should be cleared by early next year. Therefore, there are signs of progress, even if they are not enough. The office hopes to be able to cut future publication costs by about £1·5 million per annum from a present total of £5·5 million, so again there is an improvement.

The position on patents is improving steadily, but that on trade marks is not so happy. The office has increased the number of examinations and registrations affected, but there is still a serious backlog, which we cannot deny. However, changes are under way. A new structure has been proposed for the branch and, together with other changes being planned, that should go a long way towards solving the branch's problems.

The various changes require extensive consultation, not least with the office's customers. The standing advisory committees on patents and trade marks have played, and continue to play, a constructive part. I am deeply indebted to them for their valuable contribution. However, such consultations take time, although we are doing everything possible to speed them up.

My hon Friend asked several detailed questions. I appreciate that it is essential to have sufficient staff for the job. He asked me how there could have been 40 recent vacancies when we recognise the need to get on with the work. On 1 April 1981 the number of approved staff was 1,392. The approved figure for 1 April 1982 is 1,340. Therefore, the 40 apparently unfilled posts were the result of phasing out. I assure my hon. Friend that posts were not being left unfilled.

My hon. Friend asked about the Orpington office. I understand that eight posts seem to be unfilled. Those posts are presently occupied by those in posts in other parts of the Department. Therefore, we are discussing not unfilled posts, but posts that are presently being used in another part of the service. They are all part of the same service, but they are in a different location. Later we expect to transfer those posts—but not the holders—to the Orpington branch.

My hon. Friend was correct to say that each year the Office has made a profit. That profit goes to the Treasury. That is the present arrangement. Under the present cash limit system, it is not proposed to change it.

My hon. Friend was also right to talk about translations and to ask whether a central system would be an improvement. Several industries have told us that there are problems and have suggested that we should use the legal provision in the 1977 Act to provide a central register.

We do not have any hard evidence of difficulties. The Science Reference Library, to which my hon. Friend referred in another context, provides a service for industry, but I understand that demand is low. There is certainly no pressure for the service to be expanded. If my hon. Friend has evidence of a need, I shall be glad to receive it. To operate such a scheme centrally would require at least 10 extra staff, and about 25,000 files would have to be laid open to inspection. Unless the need is greater than we believe it to be, surely our staff are better used in reducing the backlog.

My hon. Friend asked about capital investment. He is correct in what he said. We are consulting, but it is not a major problem at present. It will become a problem with the change to the new computer system. We shall examine the issue when that happens.

We do not think it necessary to set up a trading fund. Concentrating on the implementation of the various recommendations by the Rayner Committee on improving efficiency should be the first priority.

Questions about court proceedings are for the Lord Chancellor.

My hon. Friend asked about the printing, publishing and sales branch at Orpington. We are moving steadily through a four-year programme of implementing the Rayner recommendations. We are not at the stage of examining that part of the work. Perhaps we shall never have to make changes at the Orpington branch office, but if it is necessary it will occur much later in the programme. I ask my hon. Friend to reassure the staff. I shall keep in touch with him when necessary.

There is no doubt that the office has been going through a difficult period. I am confident that it is winning the battle. As a result of the impetus of the Rayner review and the good working relationship between the Patent Office and its customers, in the next few years we can hope for the emergence of a modern and streamlined organisation well able to cope in an efficient and cost-effective way with the demands made upon it.

It has been important to discuss this matter, and, I congratulate my hon. Friend on bringing the subject before the House.