rose to move, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Registered Designs) Order 2006.
The noble Lord said: This order is all about providing the public with a designs registration system that is as quick, accessible and easy to use as possible. It will make it possible to administer the Registered Designs Act 1949 far more in tune with modern trading conditions and also in a manner consistent with the registered Community design system offered by the Community trade marks and designs office in Alicante, which grants a single unitary right across all 25 member states.
Prior to the registered Community design system becoming operational in April 2003, the UK received around two-thirds of its design applications through intellectual property agents, the remainder being received directly from individual designers or small businesses. However, the situation now is that 95 per cent of newly registered designs, which are effective in the UK, are registered at Community level. As a result, the user base of the national designs registry has reversed, with about two-thirds of the total number of applications coming from small businesses without any legal representation. There are, therefore, still recognised benefits to the businesses that do not need, or cannot afford, to register their designs at Community level in being able to register their designs in the UK alone. This is partly because prior disclosure in any member state, especially through registration, will put a designer in a strong position to resist and, if necessary, to invalidate any Community or national design registration gained by a competitor at a later date. These proposals will therefore be of considerable interest to designs applicants and to the intellectual property profession.
The procedure of applying for the registration of new designs will be simplified. Unnecessary burdens will be removed, yet care has been taken to ensure that these new measures do not undermine the interests of the public in general. In particular, the introduction of a multiple design application system will offer savings in terms of the time taken to complete an application to register a number of designs at the same time and also savings with a new fee structure to reduce the cost of registering such multiple designs.
My department has consulted widely and has met with a cross-section of individual designers, as well as with representatives of the legal profession who specialise in intellectual property. I am satisfied that these proposals are accepted as sound and that they reduce processing complexity without unduly affecting the balance between rights holders and third parties. As such, they have been welcomed by those who represent the interests of small and larger businesses alike.
Articles 3 to 5 of the draft order seek to remove burdens from the examination process by stopping the requirement on the registrar to satisfy himself that the design passes the tests of novelty and individual character. At present, only a minority of designs in the marketplace is registered. That had made examination of these grounds very problematic, as such designs are not available to be searched in the registers maintained by the national and Community authorities. This matter was compounded by the new criterion for novelty introduced when the designs directive was implemented in the United Kingdom in 2001, as practically every earlier design in any marketplace in the world must be considered. This makes it impossible for an examiner to carry out a conclusive search in all the relevant overseas territories in order to satisfy himself that a design is indeed a new one.
These problems led the Patent Office to take the decision in 1999 to limit the number of applications it examined to cases where a particular examiner was aware of relevant early designs. The uncertain and somewhat arbitrary nature of this process will be abandoned when these changes take effect because the registrar will no longer be able to refuse to register a design on the grounds of lack of novelty or individual character. This will thus remove the current uncertainty as to whether, and to what extent, any particular design was searched and determined to be new before it was registered.
Articles 11 to 14 of the draft order seek to introduce a multiple design application system so that applicants or their professional representatives may file as many designs under the cover of one application as they wish and without any administrative restrictions. This new system will largely align us with other national systems as well as with the registered Community design system.
Article 15 of the draft order deletes the prohibition on the public inspection of certain classes of registered designs contained in Sections 22(2) and 22(3) of the 1949 Act. This prohibition means that some classes of registered designs cannot be inspected by the general public for a period of two or three years after registration, even though they may be enforced against third parties during that period. It is proposed that new rules made under the Registered Designs Act will require an applicant to provide his consent for the publication of any new design filed at the registry. Such consent may be withheld for up to 12 months, but the designs will not be registered until consent has been given. Once it is given, the designs will be published immediately after registration. This new provision will also give applicants a degree of control over the timing of the publication and consequent registration of their designs to coincide with launching a new product on to the market.
Article 17 of the draft order is designed to make it easier for a proprietor to restore a registration that he has allowed to lapse due to non-payment of the renewal fee. It will have no impact on the general public other than to ensure that the proprietors of registered designs are able to reinstate their legitimate rights in a greater number of circumstances.
I thank the Members of the Delegated Powers and Regulatory Reform Committee for finding that the present proposals are appropriate to be made under the Regulatory Reform Act 2001 and for recommending them to the House. The Committee in another place has also considered the proposals. It concluded that they remove burdens within the meaning of the Regulatory Reform Act 2001 without removing any necessary protections or preventing the exercise of any existing rights or freedoms. Both committees have now unanimously recommended that the order be approved. I beg to move.
Moved, That the Grand Committee do report to the House that it has considered the draft Regulatory Reform (Registered Designs) Order 2006 [23rd Report from the Regulatory Reform Committee].—(Lord Sainsbury of Turville.)
I thank the Minister for explaining this draft order in some detail. The regulatory impact assessment states that the aims of the order are:
“to encourage more businesses to seek registration; encourage UK businesses to innovate; reduce the level of copying of new designs in the UK; make the system fairer for all applicants”.
These are laudable aims.
We notice that this system runs in parallel with the Community design system that was brought about by the designs directive. Can the Minister tell the Committee whether it is possible for a UK company to have an approved design under the UK Act and for another company to have an identical, or very similar, design approved under the EC system? If so, what happens when the other company starts to sell its product in the UK in competition with the product of the UK company? Which one is protected from the other?
We welcome the proposal to reduce the standard of care required for restoration of lapsed design registrations to match the standards in other forms of intellectual property protection.
On the proposal to end substantive examination for novelty, the order would remove a burden and would introduce some procedural clarity, albeit that there would be slightly greater legal uncertainty, because a few more invalid applications would be granted than hitherto. I have a concern that the ending of substantive examination prior to grant of approval might lead to an increase in costs for those—we hope very few— who end up in court. Have the Government considered an optional substantive examination, which could be offered at the cost of the applicant, the results of which would be binding and would therefore remove the need for subsequent litigation? It would give applicants confidence that, having made an application, they need not worry that they might yet have to contest their right to it in court.
I also note that the report of the Regulatory Reform Committee of the House of Commons indicated its support for the draft order, as the Minister mentioned, subject to slight revision to ensure consistency in the references in Articles 8 and 9 to “sections of this Act”. That revision seems to be appropriate, and was accepted by the Patent Office. We have no objection to the proposal to allow multiple applications, although we have no evidence on which to judge the savings that would accrue. There is potential for lower costs, but that depends on the level of the fees for applications.
We support the proposal to make all designs open to public inspection. Indeed, we think that the proposal could go further. The Patents Act 1977 changed patent law to open most of the Patent Office correspondence files of published patents to third-party inspection. The same measure was enacted for trade marks by the Trade Marks Act 1994. The files of Community designs are open to public inspection. There is therefore no reason to keep the correspondence files of published registered designs secret. To do so also appears contrary to the spirit of open government. We do not see why the files of designs, unlike any other UK form of intellectual property and unlike Community designs, should be kept secret. Indeed, the files should be opened to allow third parties more effectively to do the job of challenging bad registrations from which the registry proposes to resign. For example, where priority is claimed, the public should have access to the priority document and any translation thereof. Can the Minister make any commitments in this regard?
I join the noble Lord, Lord De Mauley, in thanking the Minister for the way in which he has explained quite a complicated issue. The Minister will know that I have consistently in this Room and on the Floor of the House congratulated the department on how it conducts its consultation exercises. That has not yet persuaded me that my party should abandon our policy of abolishing the Department of Trade and Industry, but it will be important that the culture of consultation survives the transfer of functions as they go to other departments.
There is only one point that concerns me about the consultation. I certainly welcome the proposition that the novelty test should be abandoned. I am slightly concerned that in the public consultation exercise the Chartered Institute of Patent Agents suggested that the registry should consider alternative approaches to the registration process, such as the Australia model, where applications are never examined unless the validity of the design is challenged in litigation proceedings. I am not certain why the Government have simply rejected that proposal, which goes slightly further than what they are suggesting. There is a slightly strange sentence in the regulatory impact assessment, which states that,
“despite some concern over the exact process of examination, they”
“agreed that the Registry should either ‘search or not search’ and that the present situation should be clarified”.
That does not seem to me to answer the question of why the CIPA recommendation has been rejected. I should be grateful if the Minister could explain that.
In general, we support the order and think that it is a very important reform.
I am grateful to both speakers for making those points. I think that the first is relatively easy to answer. Obviously, it is possible for the same design to be registered at a national and a Community level. In those circumstances, the latter design registration would be liable to be declared invalid and registering the earlier design will make it easier to enforce and protect it. If you later register a design in the Community which covers the UK but someone can point to an earlier design in the UK, it is clear that that is the one that is declared valid.
On searches, it is possible for a person to ask the Patent Office Search and Advisory Service to search prior art. That is a commercial service charged at commercial rates. However, the search extends only to registered designs, not to designs in the market place that may have anticipated the demands. So, in this particular case, there is a commercial service but it applies only to the registered designs. I think that the Australian model could not be effected without requiring primary legislation, but I will write to the noble Lord on that point. I commend the order to the Committee.
On Question, Motion agreed to.