Monday 14 January 2019
My Lords, I remind your Lordships that if a Division is called in the House, the Grand Committee will adjourn for 10 minutes.
Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018
Considered in Grand Committee
That the Grand Committee do consider the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018.
My Lords, if it is convenient, I shall speak also to the Patents (Amendment) (EU Exit) Regulations 2018—
Will the noble Lord give way until I complete this sentence? I shall speak also to the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018, which were laid before the House on 28 November. I shall give way to whichever noble Lord wishes to speak first.
May I ask that these regulations be considered separately? Can the noble Lord also tell us whether they have been debated in the House of Commons? I could not find any reference to a Hansard account of such a debate in the Commons. If they have been, can he give us a reference to the debate?
My Lords, I am not aware that these regulations have yet been through the Commons, but they will in the usual way in due course. It has been agreed, and it has been advertised on the Order Paper, that we would take these three regulations—
With respect, that is only if everyone agrees—and I for one do not agree.
I notice that the noble Lord does not agree, but in line with the usual courtesies of the House, it would have been helpful if he had at least mentioned this to his noble friend the Opposition Chief Whip or even to my noble friend the Government Chief Whip.
If the noble Baroness will give way and be patient. If it is convenient to the Committee, I think that what I will do is speak to all three sets of regulations and I will then move the first one. It is then open to noble Lords, when I formally move the others, to speak to them. For the moment, I intend to speak to all three—
My Lords, this is not the most sensible way to proceed. Distinct legal issues arise in each of these statutory instruments and it would be much more sensible if they were debated separately. Having served on the Committee in which these instruments are put forward, I recognise that it is sometimes easier in terms of efficiency to take them all together. However, these instruments give rise to serious, distinct and important issues, and they really ought to be debated separately.
Can I be clear on what the noble Lord is saying? Is he saying that he will move these three regulations en bloc and make his speech on all three, but he expects the rest of us to wait until he formally moves the individual regulations before we speak to them? That does seem to be a slightly “Fred Karno” way of proceeding.
My Lords, obviously I am in the hands of the Committee and I am quite happy to do whatever the Committee finds most convenient. I did not say that I would move all three en bloc; I said that I would move the first one and then speak to all three. That is very different, if the noble Lord follows me. The only point I was making is that there is an understanding that certain things are agreed by the usual channels and that these instruments would be spoken to together. One of the usual courtesies of the Committee, but obviously the noble Lord does not wish to follow that, is that one would have a word with the usual channels, or at least the noble Lord’s noble friend.
Sit down. The noble Lord can wait a minute.
I am not giving way—
That is a terrible way to address another Member of the House. Will the noble Lord withdraw that remark immediately? This is absolutely disgraceful. I have never been treated like that before by anyone.
I will apologise to the noble Lord for that. He has probably been treated in much the same way on many occasions. I am just explaining to him what the usual procedures are. If he does not want me to do that, I will take it back and go back to the beginning—if he will give me a couple of minutes—move the first regulation, speak to that, listen to noble Lords and then do the others.
The noble Lord said that he will apologise; when will that happen?
The noble Baroness and noble Lords opposite are having fun. I will continue.
We are doing our job.
I have never been addressed in that way before by a colleague, in 26 years in the House of Commons and now 13 in the House of Lords: by someone saying, “Sit down!” in a peremptory fashion. Perhaps if the noble Lord had said, “I am not prepared to give way at this moment”, we would have understood. I was rising to say that if this Minister had any degree of sensitivity at all, and if he had been watching what had been going on the Floor of the House and in this Committee, he would have seen that we have on a number of occasions challenged these matters being taken together. I have done it myself on three or four occasions on the Floor of the House, and I have done it twice in this Committee. A number of other Members, including my noble friend Lord Adonis, have also raised the issue. If the Minister had been aware, he would have understood that. I have also mentioned it to our Chief Whip and to the noble Lord, Lord Taylor, the Government Chief Whip. If that has not been communicated to the noble Lord, Lord Henley, it is certainly not our fault.
My Lords, no communications have come to me to the effect that the noble Lord wished to take these three regulations separately. My understanding was that we would take them together, and I thought that it would be convenient to the Committee. I have now amended what I am going to say and, if the noble Lord is happy with this, I will go back to what I said originally and move and speak to the first one, and if the noble Lord and his noble friend, the noble Lord, Lord Stevenson, will bear with me, we will take all three separately. I have a number of speeches, and I can use whichever the noble Lord prefers to have first. However, he would probably prefer to have the first one, concerning the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations, which were laid before the House on 27 November.
This draft instrument ensures that the United Kingdom’s domestic rules for the exhaustion of intellectual property rights will continue to function in a predictable manner in a scenario where there is no negotiated agreement on the terms of the UK’s exit from the EU. The UK is recognised for its strong intellectual property regime—
My Lords, can the Minister expand for a moment on what he has just said? Am I to understand that these regulations, like the SIs we had in Grand Committee last Wednesday, are a government contingency planning proposal for the very exceptional circumstances of a no-deal exit from the EU on 29 March? If so, can he consider the contribution from his noble friend Lord Deben during our sitting last Wednesday? He and many others pointed out that, since the Prime Minister is now making it clear that the no-deal outcome is not her Government’s preference—she said that it is both undesirable and unlikely—what we are doing this afternoon concerns the very speculative situation which the Government themselves are opposed to. Can the Minister confirm that?
My Lords, what we are doing concerns the event the noble Lord is addressing—that is, if there is no deal. If there is no deal, we will need these regulations; if there is a deal, they are irrelevant. It is as simple as that.
My Lords, is the clarification which the Minister has so helpfully given clear in the regulations: that they will fall into desuetude in the event of no deal?
I am making it clear in my speech that these are no-deal regulations. They are described as EU exit regulations; that is the point behind them. In the event of there being no deal, they come into effect.
Exit has many meanings. It would be clearer if it said in the regulations that they will fall in a no-deal situation.
I am making it clear to the Committee that they fall—they have no effect—if there is a deal. The point of them is to deal with the unlikely eventuality of there being no deal—or if there is no exit.
We are looking for a deal. We hope there will be a deal, in which case our proceedings are irrelevant and the regulations will have no effect. If there is no deal, obviously we will need them.
If I may make a little progress, I will continue. I believe that we are recognised for our strong intellectual property regime. We were ranked third in the world by Taylor Wessing in 2016, and our enforcement regime was ranked first by the US Chamber of Commerce in 2017. UK businesses are reliant on IP rights—IP-intensive industries generated more than a quarter of UK employment and 43% of UK GDP in 2013. The IP framework is designed to provide a balance. It should reward creators of IP and encourage innovation, while balancing the needs of other businesses and consumers by managing the scope and duration of, and exceptions to, rights.
The intellectual property framework provides rights holders with some exclusive entitlements, such as the right to control distribution of a protected product. However, there are instances where this right is limited in order to promote the free flow of goods across borders.
The exhaustion of IP rights refers to the loss of the right to control the distribution and resale of the product once it has been placed on the market in the specific territory by or with the permission of the rights holder. The UK is currently part of a regional exhaustion regime which allows the movement of IP-protected goods across borders within the European Economic Area once they have been placed on the market by or with the permission of the rights holder anywhere within the European Economic Area. This regional regime enables a balance between allowing rights holders to recoup the investment in innovation while facilitating the secondary market and free circulation of goods within this area.
The UK laws which currently provide for this regional exhaustion regime need to be amended to ensure that they continue to function appropriately after exit. The statutory instruments will ensure that there will be no change to the position on exhaustion rights in relation to the parallel importation of goods from the EEA to the UK. There may, however, be restrictions on what can be exported from the UK to the EEA on the same parallel basis, but that is a matter for the EU legal system and is not something we can control.
From what the Minister just said, it sounds as though British holders of intellectual property could be at a significant disadvantage. Is that in fact the case?
Obviously, there will be changes once we move out. We are trying to set out what will happen to British businesses here. Obviously, we cannot control what happens in the EEA. There might be disadvantages. That is why we are seeking to get a deal. The regulations relate to what happens if there is no deal.
I have been the chairman of a number of companies holding significant intellectual property rights. I am very concerned that there appears not to have been any consultation on these matters. Can the Minister correct me if I am wrong and tell me what consultation there has been? When we are considering regulations that could put British businesses at a major disadvantage, it is very important that consultation should have taken place.
My Lords, I will deal with consultation when I wind up this debate after the noble Baroness and others have spoken.
Paragraph 10.1 of the Explanatory Memorandum says:
“No formal consultation has been carried”.
My Lords, there has been no formal consultation. Obviously, there have been informal discussions, as officials always have, but there has been no formal consultation by me and other Ministers. The Intellectual Property Office—
Could I finish this point? The Intellectual Property Office has been engaging with businesses across a number of sectors on the implications of exit since the referendum result.
Why has there been no formal consultation, given the interests at stake to which my noble friend has just referred? Should these regulations not be withdrawn so that there can be formal consultation and the House can take account of it before we agree the measure?
It is important that we make sure that we are capable of dealing with no deal. That is why government has taken various actions for a no-deal scenario. At the same time, negotiations should continue on what that deal should consist of to make sure that we get that right. As I made clear, the Intellectual Property Office has been engaging with businesses across the sector and will continue to do so to make sure that we get the right deal that will satisfy the noble Lord and others.
Can the Minister tell us what the results of that informal consultation have been? It is important to the Grand Committee that we know what views businesses have expressed to the noble Lord’s department.
At this stage, I am not in a position to tell the noble Lord the result of that consultation, or those discussions. What I can say is that we will continue to try to get the right deal. That is the important thing—the noble Lord and I might be at one on that point. These regulations are about making sure that, should there be no deal, we are in a position to deal with that side of things—obviously, in no deal, we cannot deal with the other side. We want to be able to deal with those things that are within our control.
My Lords, we are trying to do our job here. The Minister has confirmed that the regulations potentially put British businesses at a disadvantage, because there will a number of situations where they will not be able to export the goods they currently export. In those circumstances, we need to think carefully about these regulations. Some of the results of the consultation should be made available to us. I know that none of the businesses with which I am concerned has been consulted, including small and large. I would be grateful for some tangible evidence of the results of the consultation. This is important to us; British business will be placed at a significant disadvantage.
I may be able to help the Minister because I spoke to the IPO this morning about the second set of regulations. It is clear that there was no formal consultation with the trade body representing the companies affected by those regulations. If I were being a little unkind, it sounded as though officials got hold whoever they could to have a chat. To be fair to the IPO, it never made any claim that it had had a formal consultation. I give the Committee that information in relation to the second set of regulations because it may have been the pattern applied to all these regulations. Perhaps the Minister could clarify that.
My Lords, I thought that we were debating the first set of regulations at this stage. We will get on to second set in due course as the noble Lord wishes.
As the noble Baroness, Lady Kingsmill, and I know, there will obviously be changes for businesses as a result of Brexit. There will be different changes for businesses if there is a no-deal Brexit. These regulations are about dealing with the no-deal scenario. The noble Baroness, the noble Lord and all noble Lords would think we were wrong if we did nothing about the possibility of a no-deal Brexit. That is why we are moving a number of regulations at this stage and why we published various technical notices and made them available to industry. That is why the original drafts of the technical notices led to various improvements.
At this stage, we know that business wants, in the main, to have the status quo in the event of a no-deal Brexit, and we hope that it will also have the status quo if there is a deal. We want to see what the deal is first and get that dealt with. However, in the event that it happens, we also have to make provision for there being—
I will give way to the noble Lord in a minute, when I have finished. I can only answer points if I am allowed to complete them as they come up. We will try to get the no-deal provision set up in the manner which is best for business, to the extent that we can deal with no deal. If there is no deal, there will obviously be changes that we have no control of. The noble Baroness and I know that; everyone does. If there is a deal, as I hope, then everything is fine. I doubt that the noble Lord, Lord Adonis, would be happy but then he probably never will.
I would if we stayed in the European Union.
That is not a matter for debate on this occasion. We are not discussing that.
But it would make me very happy.
I am grateful to the Minister, who has been generous in his advice to the Grand Committee, but I have a specific question on the point he has just made. The implication of what he has just said is that his department is already preparing, in parallel, the secondary legislation that will be required if the Prime Minister’s deal does go through. Or is he saying that, if the Prime Minister’s preferred outcome does get the support of Parliament, there will be no necessity for any secondary legislation? This is a very important distinction. If it is necessary to introduce secondary legislation to implement the specific responsibilities of government under the deal that the Prime Minister now prefers, then your Lordships’ House—which is going to have to consider it in due course—should know. On the one hand, we have this set of proposals, which is speculative, but there is something that might conceivably be more advantageous, both for the Government’s business and for the proper consideration of secondary legislation by this House. Is a parallel exercise going on for what the Prime Minister herself says is her preferred and more likely outcome?
There is the Prime Minister’s deal, which I very much hope another place will agree to in due course. The noble Lord will be the first to accept that another deal might come forward. My department will be ready for that to make sure that, whatever deal comes about, we can then negotiate—we have the transition period for that—the right deal to ensure that in due course, we have the right regime in place concerning the issues we are discussing.
What we are discussing here today is that no-deal option. As I have made clear to the noble Baroness, Lady Kingsmill, and others, that no-deal option will not necessarily satisfy everyone, and we will not necessarily be able to do everything possible to make sure that businesses have exactly the same regime, as we can control only what happens here. Other things might have to be left undone, if I can put it in those terms.
What we have to do here, in debating these regulations, which relate to a no deal, is to try to make sure that we can offer to business—that is why we are putting them forward—the best possible option in the event of no deal. That is what I am trying to do today and what I will continue to do if the noble Lord—
I hate to labour the point, but the Minister did himself say that British businesses will potentially be at a significant disadvantage, and that that is what these regulations are trying to deal with. Does he not think that this ought to be debated in the Chamber—that it should be subject to a wider debate?
The noble Baroness is putting words into my mouth that I did not utter in saying that I thought British business would be at a significant disadvantage.
You said it would potentially be at a disadvantage.
I ask the noble Baroness to refrain from intervening from a sedentary position. What I said is that things will be different, and what we are trying to do is make sure that things will be as good as possible in the event of there being no deal. If there is a deal, I hope we will get the right deal so that we can see continuity for all businesses as far as possible in this area.
If the noble Baroness feels that the subject should be a matter for wider debate, that is what is happening in the Chamber at this very moment on the general subject of Brexit, business and all of that. Here we are dealing with one small point relating to how we ensure, in the event of there being no deal, that the right things are in place. I leave it to the noble Baroness as to whether she wants to go back into the Chamber and give those speeches but, when she does, I hope she will refrain from trying to suggest that I said things that I did not. All I have said is that we want to ensure that we can get things right in the event of there being no deal. That is what we are discussing today.
If I may, I will continue on the question of security of supply. Continuity of existing parallel trade into the UK from other EEA states is important across several sectors, including medicine and food. The maintenance of the current position on exhaustion rights in relation to parallel imports will help to ensure the continuation of supply for such goods as medicines in a situation where there is no deal with the EU.
My Lords, paragraph 12.2 of the Explanatory Memorandum to these regulations says:
“There may be some costs to businesses parallel exporting from the UK to the EEA”,
as a result of the regulations. Can the Minister tell us what those costs might be?
I cannot give a precise figure for those costs. My belief is that they are generally relatively minor, but I will write to the noble Lord with the details.
Beneficiaries include the NHS, which will continue to have the ability to maintain security and diversity of supply of medicines from the EEA, and to source medicines at the best price from within the EEA without being restricted by IP rights. As I mentioned, and as set out in the technical measures published in September last year, this fix is planned to be a temporary measure. The Government are considering options for what exhaustion regime is best for the UK in future while extensive research is under way. I stress that such an important decision should not be rushed. We will ensure that we have a robust evidence base and that full consultation with stakeholders is completed before any decision is made.
The instrument is extremely important to support the movement of goods and the supply of essential commodities such as medicines. It provides—
I am going to conclude this section and then the noble Baroness may intervene. It provides clarity and legal certainty for businesses and consumers by preserving the status quo as much as possible following our exit from the EU. It is a necessary and technical fix for UK laws to prepare for our exit from the EU. I give way to the noble Baroness.
I am grateful. The Minister has just referred to consultation. Paragraph 10.1 of the Explanatory Notes merely says:
“The Intellectual Property Office has undertaken information gathering with stakeholders”—
we do not know who they are—and that:
“No formal consultation has been carried”.
Why has it not been done before?
Because there are other matters that will be more important, such as getting the consultation right on what happens should there be a deal. These are no-deal regulations and we want to get them right in the event of no deal. Obviously, we will consult as the noble Baroness wishes as we seek to get the deal right in due course. I hope I have dealt with those questions and I commend the regulation to the Committee.
My Lords, before the noble Lord sits down, the question that is coming up time and again in the Grand Committee is: why was formal consultation not conducted before rather than after these regulations were made? With respect, the Minister has not given us a satisfactory answer. He said that consultation is taking place on arrangements concerning the deal, but the Government are telling the House that we may have to enter into a no-deal situation in two months’ time, so how can he say that it is more important to consult on arrangements concerning the deal than on no deal? How can he regard that as a satisfactory point to make to the Grand Committee, when we are being asked this afternoon to consider arrangements for no deal? It leads me and other noble Lords to think that we are not in a position to scrutinise these regulations at all if there has been no consultation nor the ability by the noble Lord to tell us who has been informally consulted by the Intellectual Property Office.
Before the Minister rises to answer that, I want to put a proposition to him. He gave me a rollicking earlier for talking about my conversation with the Intellectual Property Office in relation to the second lot of regulations, but what it said is relevant to the point made by the noble Lord, Lord Adonis, which is that there was so much security around these “consultations” or discussions—no doubt the concerns about security came from a political direction—that it was difficult for civil servants to have a formal consultation on these regulations. Can the Minister own up to whether that is true?
Again and with all due respect, I think that the noble Lord is possibly misinterpreting what I said.
I did not say you said it; I said the IPO said it.
What I am trying to deal with is the question about how we get a no deal. If there is to be no deal, we want businesses to be in as similar a position to their present one as is possible. I can speak only for the orders that I am dealing with today and tomorrow, but I imagine this will be true of a whole raft of orders coming from other departments. What we are trying to do is put those businesses in a position whereby they can cope as far as is possible with no deal. Meanwhile, as part of the ongoing, sensitive negotiations over the withdrawal agreement—and on this I can assure all noble Lords there will be consultation until the cows come home—we will try to make sure that all these matters can be dealt with. I give an assurance that the IPO has engaged with legal and business stakeholders as far as possible on the drafting of this statutory instrument and what it achieves, and will continue to do so on anything that is needed in the event of a deal—because in the event of a deal, I imagine we will be here again. I look forward to debating these matters with the noble Lords, Lord Warner and Lord Adonis, the noble Baroness, Lady Kingsmill, and others so that we can get it right.
These regulations relate to the no-deal option. We are trying to ensure that in the event of no deal, as with the technical notices we have put out, businesses know what the position will be. Obviously it will be slightly different from where we are at present. That is the inevitable result of no deal. But no deal is still on the table, and until we know that my right honourable friend’s deal has been accepted by another place, I am not in a position to go any further: that is why we want to prepare for the no deal.
My Lords, I did not come to Grand Committee today expecting to speak on intellectual property. I am here to do financial services but, since I spent the best part of 40 years as a European patent attorney, it is hard not to intervene a little. I remember very well from when I started my training the famous Wella case on exhaustion of rights and parallel imports from the US, and what would happen when we had the single market and exhaustion of rights within the EU. It was a very complicated subject, a wonderful training ground and, I am sure, a huge earner for the lawyers who dealt with it. As patent attorneys, we tended to stay out of things.
My Lords, I thank the noble Baroness for giving way. Could she explain to the Grand Committee—some of us are not familiar with all the details of this—what parallel exporting is and where the additional costs referred to in the Explanatory Memorandum are likely to arise in a no-deal situation?
The issue is where something has come from. You could export it under the terms of a licence, but you might have got it from some third country. In the Wella case, it was the US. It became very difficult to determine where the precise shampoo in question had come from and whether it had originated under a legitimate licence or in the US. It could become very difficult to tell when people took off the labels that said where it had come from. Those were the kinds of issues, and I can see that maybe BEIS is trying to avoid replication of some of that vis-à-vis the EEA.
However, the issue of symmetry and asymmetry—which I think is what the noble Baroness, Lady Kingsmill, is referring to—comes up time and again. As a member of Secondary Legislation Scrutiny (Sub-Committee A), I have seen it in, I guess, half the statutory instruments that have come before us. Sometimes you take the symmetrical option, which means you close things down. Where you think the EU’s logical approach will be to close down on it, we close down on it. Then there are asymmetrical cases—which I think this is, and which I think I have seen more of from BEIS—where priority has been given to continuity. The result is that businesses can benefit from knowing where they stand, at least from the UK side, but it may lead to a competitive disadvantage if their exports are not similarly protected. That is an issue.
I wonder why we have a single shot at correcting it in the event of no deal. You could have said that continuity of supply—especially of drugs and so forth—at the point of Brexit is important, and so you will make some provisional means for trade to continue. Then at some point you will have to analyse it and close it down. I have been reading it only very quickly here, but that does not seem to be the approach taken. It looks as if a single shot is fixed in our legislation now, and I think it would give businesses cause for concern. I would have been happier to see some kind of temporary provision put in there, maybe with a sunset clause after three years, by which time we could have sorted things out. Then it would come back in another statutory instrument or in primary legislation for us to say: “Well, okay, what are we going to do? What has the EU done? Have we got some kind of arrangement with them within that three years?” Or are we going to say, “Now we understand a bit better how things have sorted themselves out, we’re going to go for the symmetrical option, not the asymmetrical option”?
I am sure that it is possible within the powers that the Government have given themselves in primary legislation for them to come back and do that, but it would have made things clearer for business and others to have that message put out there in advance, partly to get negotiations going if those were necessary and partly to say, “This is something that you all need to be thinking about”. I would be interested to hear from the Minister how in this instance such arguments have panned out—what has been said on one side, what has been said on the other and whether something is already up the Government’s sleeve to say, “Well, actually, we’ve thought about this and we are going to be coming back in three years’ time”. It would be reassuring to hear that even if in the long term we ended up deciding that it was best to stay with the way this has been adapted now.
My Lords, with great consideration, the Minister took a number of interventions on his speech and covered quite a number of points. However, a lot of issues are raised by the Explanatory Memorandum and the Commission note of 6 September 2017, which is the position paper on intellectual property rights, including geographical indications, and which the Treasury made available to me for this debate. I want to press the Minister on a number of points.
The section on the general principles under which intellectual property will be handled in a no-deal scenario, on pages 2, 3 and 4 of the note, all the way through uses “should” rather than “will” in respect of the mutual recognition and enforceability of rights. Perhaps I may go through them because these are all very important points. Under the first general principle, which is intellectual property rights having unitary character within the European Union, the paper states:
“The holder of any intellectual property right having unitary character within the Union and granted before the withdrawal date should, after that date, be recognised as the holder of an enforceable intellectual property right … In the specific case of protected geographical indications, protected designations of origin and other protected terms in relation to agricultural products … this principle should also imply that the United Kingdom puts in place, as of the withdrawal date, the necessary domestic legislation … The implementation of this principle should include, in particular, the automatic recognition of an intellectual property right in the United Kingdom on the basis of the existing intellectual property right having unitary character within the Union”.
Under the second general principle, it states:
“Applications for intellectual property rights having unitary character within the Union … should be entitled to keep the benefit of any priority date in respect of such pending application”,
and that, in respect of applications for supplementary protection certificates for an extension of their duration,
“a person should continue to be entitled to obtain in the United Kingdom a supplementary protection”.
This carries on in respect of a whole number of further rights. The Grand Committee and the House would obviously wish to be assured that those rights will continue, but my understanding is that whether they will crucially depends on what our EU partners do in respect of those rights if we leave with no deal. In respect of all these reciprocal rights and their enforceability, I completely understand that the Government are putting in place the necessary changes to UK law for us to do our part to ensure that rights are enforceable and recognised, but where the EU paper uses “should” in respect of all these rights, can the Minister tell us what is likely to happen after the end of May? What situation does he believe will apply if we leave the European Union without a deal?
I am not an expert like the noble Baroness, Lady Bowles, who may indeed be able to give a view on this, but it seems that we have no control over that at all, and that, crucially and solely, that depends upon the action of the European Union itself. These aspirations—which are set out in the Commission paper of 6 September and in the statements the Minister has made to the Committee about there not being an interruption in the recognition and enforceability of these rights—absolutely crucially depend on what the European Union does after the end of March, not just on what we do. Therefore, a vital issue for the Grand Committee and for the House when it discusses these regulations is to know what we expect the European Union to do. If in fact we have no reason to believe that the European Union will continue to play ball in the mutual recognition of these rights and their enforceability, do not all the concerns that my noble friend Lady Kingsmill raised apply in spades? It does not matter whether we agree to all these regulations and do everything that the Government want; all that could be superseded by an inability to have these rights enforced or recognised because the European Union itself will not undertake to do so after the end of March.
I would therefore be extremely grateful if the Minister responded in respect of each of these general principles and specific cases set out in the Commission paper of 6 September, telling us what he thinks will happen, or—because he may not be able to tell us if it is unknown—what discussions there have been with the European Commission on its likely stance in respect of all these issues if we leave the European Union at the end of May without a deal?
I would like also to make another point which follows on from what the noble Lord, Lord Tyler, said, and his remarks to the Grand Committee last time. There continues to be in respect of these regulations, the other regulations we are considering later this afternoon and all the regulations the House will consider tomorrow, a fundamental issue of legitimacy. We are being asked, and the Minister is inviting us today, to agree to regulations which will make provisions in respect of there being no deal at the end of March. The question we have a right to ask is: what is the legal and moral basis for that preparation taking place? It is not good enough for the Minister to say that the serving of Article 50 and the passage of the European Union (Withdrawal) Act are sufficient, because it was firmly understood by the House when that notice was served and when the European Union (Withdrawal) Act was under consideration by your Lordships that we would not be going into a no-deal situation.
I wonder whether the noble Lord has been paying particular attention to Part 2 of the Explanatory Memorandum, which refers to a number of statements made by the then Minister of State for Universities, Science, Research and Innovation, Sam Gyimah. These statements are intended to reassure the Grand Committee and your Lordships’ House in precisely the sort of terms that the Minister is now referring to. I wonder whether the present Minister takes the same view as the previous Minister, or indeed whether the previous Minister has changed his view. To make the statement at paragraph 2.1:
“In my view there are good reasons for the provisions in this instrument, and I have concluded they are a reasonable course of action”,
may well now be out of date, since we all know that that former Minister takes the view that the proposal that a no-deal solution could in any way be appropriate for our country is absolutely absurd. Should there not have been an updating of this note so that the Grand Committee could at least be informed about the current view of the current Minister? I suspect that the previous Minister now takes a different view.
The noble Lord makes an extremely important point, and not just in respect of paragraph 2.1. I have before me the whole of Part 2, which has a whole series of statements made by the Minister of State for Universities, Science, Research and Innovation, Sam Gyimah, to the effect that in his view,
“the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018 does no more than is appropriate”.
But, as the noble Lord says, that Minister is no longer in office, so it would be appropriate for the noble Lord, Lord Henley, to tell us whether the new Minister for Universities, Science, Research and Innovation also subscribes to those statements. I should also point out to the Grand Committee that Sam Gyimah is no longer the Minister of State for Universities, Science, Research and Innovation precisely because he resigned in protest at both the Prime Minister’s existing deal and the possibility of the Government’s contemplating no deal.
Not only has there been no consultation on these regulations; the Minister is not even able to tell us whom the Intellectual Property Office spoke to. At the moment, the only person we know the office has spoken to so far is my noble friend Lord Warner—because he phoned it. The Minister was not able to tell us of anyone else who had been spoken to. He told us that, in an inversion of all the established practices, the consultation on these regulations will take place after they have been approved by the House, not before. The Minister who said that these regulations are proportionate and appropriate has resigned. He resigned specifically because he is not prepared to proceed with Brexit or contemplate no deal. There has been no formal consultation with any other partners. The Government cannot tell the Committee who has been informally approached.
We have no statement from the existing Minister of State for Universities, Science, Research and Innovation that these regulations continue to meet the requirements of the EU withdrawal Act. I would be perfectly happy for the Committee to adjourn while we ask Sam Gyimah whether it is still his opinion that these regulations are proportionate and appropriate. I suspect that it is not, given the statements he has made in the media over the last 24 hours about the huge risks, dangers and costs to the country of Brexit, and a no-deal Brexit in particular. It is a no-deal Brexit that the Government are asking the Committee to approve this afternoon.
The other vital point is that, not only do we have good reason to believe that the business community is worried about these regulations and concerned about the costs, but the relevant Ministers no longer even subscribe to the views they gave when the regulations were being drafted. However, we do now have the benefit of the view of the House of Commons on no deal. Last Tuesday, before we considered these regulations, the House of Commons, for the first time, specifically debated and voted on the issue of no deal. In its amendment to the Finance (No. 3) Bill, it rejected the contemplation of no deal by 303 votes to 296. That is not only a majority of seven against no deal; it was one of the largest votes the House of Commons has conducted on Brexit in any respect. The Grand Committee has good reason to believe that these regulations are being brought forward in defiance of the will of the House of Commons, because that House has said that it is not prepared to contemplate no deal.
In the briefing for her speech today, the Prime Minister said that she now thinks that no Brexit is a bigger risk than no deal. I am perfectly prepared to take that risk; some of us think it is well worth taking. Indeed, we are trying to encourage the Government to enter the supremely risky and dangerous territory of no Brexit. We know how risky it is; we do not need to conduct impact assessments because we are in it at the moment and it is a perfectly tolerable state of affairs. The Government describe it as a risk but, in the last 24 hours, the Prime Minister told us that the risk of no deal is declining. That is the Prime Minister’s judgment, and the House of Commons voted only six days ago, by 302 votes to 296, not to have no deal. We have had no consultation whatsoever on these regulations. In the debate on the no-deal proposition last week, the Exchequer Secretary to the Treasury, Robert Jenrick, said:
“As I made clear, the Government do not want or expect a no-deal scenario”.—[Official Report, Commons, 8/1/19; col. 269.]
If the Government do not want or expect a no-deal scenario, it is wholly within their power to rule one out. The Minister, who is an extremely distinguished and effective member of the Government, could make a contribution to that cause today by withdrawing these regulations in response to what appears to be the overwhelming opinion of the Grand Committee.
It looks like we are on, my Lords. There is a great deal that one could say about the way in which the need arises for this SI and indeed for the others in this series. Today my noble friend Lord Tyler has called them “speculative”; last Wednesday I think he was slightly more scathing and called it a possibly wasted exercise, while the noble Lord, Lord Deben, was even more forthright, saying that we could be,
“conniving in what is manifestly a total nonsense”.—[Official Report, 09/01/18; col. 203GC.]
I have some sympathy with that statement, given that no deal, as the noble Lord, Lord Adonis, has explained, is now not the will of the House of Commons. At the same time, though, my noble friend Lord Tyler also referred to the report by the Constitution Committee, The Legislative Process: The Delegation of Powers, which made explicit reference to the critical importance of effective and timely scrutiny of Brexit-related secondary legislation. So I reluctantly accept that we still have to give it proper scrutiny in these circumstances but, whatever the merits of the statutory instruments, the least that we can do is debate them on the Floor of the House in the main Chamber, and I will be supporting that proposition if it is put later.
Each of the statutory instruments is important in itself. Even if they are only preparatory to no deal, in practice they may be indicative of longer-term government and IPO thinking, and may well be intended to take effect even if we have a deal and the transition period comes into effect. I have an enormous amount of sympathy for what my noble friend had to say about the time limitation and the need for a sunset clause, and for what the noble Baroness, Lady Kingsmill, said about it not being explicitly stated that the regulations do not come into effect if indeed there is a deal. There is a large gap in the middle of the regulations.
In the short term, these regulations are a partial solution to the problem of the UK no longer being inside what is called “Fortress Europe” for the purpose of the exhaustion of intellectual property rights. If there is no deal and the exhaustion SI comes into force on exit day, the effect is to implement, as the Minister explained, a modified version of the current regional EEA exhaustion regime. It would ensure that, post Brexit, once a product has been legitimately placed on the market in the EEA, it can continue to be resold into the UK without the rights holder preventing that. What we are doing is unilaterally allowing EU 27 goods already placed in the market there to be exported to the UK. That may be good news for parallel importers but it is not such good news for parallel exporters. It is clear from the Government’s small print that these exporters may well need to seek permission to gain entry into the EU. No wonder it has been called a one-way exhaustion regime.
What are the Government doing to mitigate the situation? It is clear—the discussion earlier elucidated this—that there has not been any formal consultation on this one-way regime. Indeed, it calls into question the statement about the lack of an impact assessment and what the Minister said in his letter about the draft regulations not changing current policy or imposing new liabilities or obligations on any relevant persons. If an exporter has to seek the consent of the rights holder on exporting into the EU 27 after a no-deal Brexit under the regime set out under these regulations, surely that will have a significant impact on that business.
The Explanatory Memorandum and the no-deal notice on exhaustion do not, however, deal expressly with the issue of international exhaustion. What is not certain is whether the ruling in the Silhouette case—I can give the reference if the noble Lord’s officials would like it—and the cases that followed it will apply post Brexit to this modified exhaustion regime. Some commentators have said that after Brexit our courts would have to follow previously established UK case law establishing international exhaustion rights. I do not believe, given the considerable discussion in the legal profession about the impact of this SI, that it does provide legal certainty, as the Minister asserted earlier. This could result in goods first placed on the market anywhere in the world—whether in an EEA or non-EEA member state—being resold into the UK. That international exhaustion regime could have a massively detrimental effect on our retailers, especially in terms of online sales. What do the Government’s intend and why have they not dealt with this issue expressly?
Of course, if there is a deal, under the draft political declaration the UK would have the freedom to establish its own regime for the exhaustion of IP rights. In the unlikely event that there is a Prime Minister’s deal, can the Government confirm that regional exhaustion provisions are also the longer-term solution for exhaustion vis-à-vis the EU post transition too? Or do they envisage that their current review and research will look at exhaustion across the board internationally, so that the regime even for Europe could be changed to what it was pre our membership of the EU: an international exhaustion regime? Can the Minister give some clarity on the work being conducted by the IPO on a future exhaustion regime, and its current thinking? That is absolutely essential, certainly given the representations made to me and colleagues about this statutory instrument.
Several other IP-related matters are not covered by the statutory instruments before the Committee, and this is the appropriate point at which to raise this issue. The Government have some pious words in their document, IP and BREXIT: The facts. For our future relationship with the EU,
“the UK looks forward to exploring arrangements on IP cooperation that will provide mutual benefits to UK and EU rights holders. Such arrangements will all require negotiation with the EU and we look forward to discussing the possibilities with them, including on trade marks”.
What do the Government have in mind if the Prime Minister’s deal does go ahead? What can rights holders and creators look forward to? Surely nothing better than we have currently as a full member state of the EU.
As the noble Lord, Lord Adonis, pointed out so pertinently, none of the draft statutory instruments addresses what will happen to geographic indicators, and the Government provided little advice in the technical Brexit papers issued last autumn. What are the Government’s intentions regarding protecting these rights holders? How can that happen and what co-operation is needed—even in these circumstances—from the EU currently?
Despite being mentioned together with European trademarks in last autumn’s IPO’s technical document, Trade marks and designs if there’s no Brexit deal, the SIs do not address what will happen to design rights. Will these continue to be protected in the UK as well? One of the crucial aspects for designers is not only exhaustion—as with other exporters, they will be adversely impacted—but the question of whether, if the UK is no longer in the EU, we will have the equivalent of a Community design right which covers a much broader set of design characteristics, albeit for only three years. The IPO has said in its document that there are plans to introduce such a right, but why not with these SIs? No deal will have just as big an impact on designers as on trademark owners. Should we not also have in front of us here and now the equivalent of the trademark SI: an automatic UK translation of a Community design right?
Then, there is the very important aspect of rights of representation by IP advisers, trademark attorneys and the like. What is the position in the event of no deal? What discussions are the Government or the IPO having on this important subject?
Finally, I am rather baffled by the fate of the draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations, which the sifting committee, the European Statutory Instruments Committee and our own Secondary Legislation Scrutiny Committee considered should be dealt with by the affirmative procedure. When will this draft SI come before us? It deals with a number of extremely important aspects of IP, some recently coming into effect, such as portability of online services—which will be lost—database rights, collective management of copyright and orphan works. The Government published a technical notice, Copyright if there’s no Brexit deal, which covers these and the necessary amendments to primary legislation. Why is this draft SI not before us today?
Many questions arise from this SI and the others, and I very much hope that the Minister will be able to answer them.
My Lords, it has been a lonely journey to the heart of the intellectual property policies in this country. The noble Lord, Lord Clement-Jones, and I have been stepping together on this route for a number of years. It is really nice to see so much additional expertise brought to the table and shared with us. We have got off to a slightly ropey start, but I do not think anybody could argue that we have failed to reach the heart of the arguments now. I pay due regard particularly to the noble Baroness, Lady Bowles, who is a living legend on these matters and brings expertise from her work in previous lives, and to my noble friends Lady Kingsmill and Lord Adonis. Together with the noble Lord, Lord Clement-Jones, they have displayed the sort of expertise and knowledge we need when we address these issues.
I have only four points. I think they largely cover what my noble friend Lord Adonis, the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Bowles, have said, so I will not repeat them at length. They raise issues of some substance which make me worry that the SIs in this area—this is the first of three but, as we have heard, there are more to come—are the equivalent of poking a wasps’ nest with a stick. An awful lot of rather difficult and worrying issues need to be addressed, and we have very little time to look at them. Whether there is a deal or no deal, these will not go away. They will need to be addressed, and we should think very hard about how we do so. I agree with the noble Lord, Lord Clement-Jones, that we ignore it at our peril.
A number of speakers have asked whether these draft regulations change current policy or impose new liabilities or obligations and, if so, to what extent. I listened carefully to the Minister as he got into his stride, and I do not think he really answered the question he raises for us in his letter, circulated on 7 January—I understand a copy is in the Library—which asserts that the regulations,
“do not change current policy”.
As mentioned on a number of occasions, there has been no formal consultation, some unreported discussion, no impact statement and no calculations. Yet out of this, a one-way ticket has been offered to exporters who bring intellectual property into the UK. No opportunity has been given to our fellow citizens working in the UK and producing goods they wish to export to the EU, who have no certainty that there will be any ability to benefit from parallel arrangements. This question seems not to have been answered so far by the Government and needs to be addressed properly if we are to go forward.
The noble Baroness, Lady Bowles, mentioned the asymmetry of the arrangement that the Government have come up with—absent discussion, a costing or an impact statement—and suggested that there may be more downside to this than has been said. Her suggestion of a sunset clause is a very good idea and may be something the Government should think harder about before they come back with an SI on the Floor of the House.
My third point is that made by my noble friend Lord Adonis in his careful consideration of the European Commission’s statement of September 2017. The pinning of all our hopes on a deal that may be negotiable in the future is not a satisfactory business proposition; it will send shivers down the community we are talking about here, a community of creators and intellectual property persons working in one of our most productive areas of activity, on which we pin great hope in the industrial strategy. Yet that is what it is: without any certainty on a regional basis, let alone on the international points made by the noble Lord, Lord Clement-Jones, the climate for those creative industry specialists working in intellectual property and seeking to export it seems extremely damaging. I hope that the Minister has something more to say about that.
Finally, on the legal issues, the Silhouette case comes up for all three SIs before us—it makes a good case for us considering them together, but we are not doing that. The legal issues are worrying. The legal note that I wish to refer to suggests that the basis on which this has been considered is somewhat whimsical. The argument is that it is possible that courts will not follow the Silhouette case in this area. That seems an unreasonable basis on which the Government should make regulation. If that is the case, the narrow question, raised by the noble Lord, Lord Clement-Jones, is whether the Silhouette case will necessarily become part of retained EU case law under the EU withdrawal Act 2017. We need certainty on this; if the Minister is not able to give us a clear view at this stage, I would be grateful if he could write to us on this point, because it is the key issue for those concerned.
The note says that even if the case law does fall within the definition of retained EU case law—so there is a doubt about this—it is relevant only to retained EU law which is unmodified on or after exit day. I would be grateful if that complicated idea could be unpacked, because I do not understand it. The note, which is supposed to be an explanatory memorandum for us, then says:
in other words, it is making an argument to us that it hopes we will accept,
“the retained EU law on exhaustion of rights will be materially modified on exit day, as a result of the amendments in the Exhaustion SI, because the Government is changing an EEA-wide exhaustion regime of which the UK is currently part, to a one-way”.
That makes the point that this is a one-way ticket, which is a very difficult argument to make to those affected by it. To cap it all, the unforeseen consequences listed at the end of the statement are quite horrendous:
“The UK Courts will have to follow the case law which established the principle of ‘international exhaustion’”—
a point made by the noble Lord, Lord Clement-Jones; this is a very big step away from where we are—under what is called,
“the implied licence theory in the UK”.
I suspect that lawyers listening to and reading this will be gratified to hear that a dripping roast is being created by this new SI. The document goes on to say that,
“rights-holders will not be able to prevent goods first placed on the market in a non-EEA country”,
to be brought into and resold in the UK. This was the question raised by my noble friend Lady Kingsmill, about what damage would be done to existing operators of intellectual property. The UK market could be,
“affected by cheap goods from countries where genuine goods are sold more cheaply … Consumer confusion may also arise in the UK, where genuine goods are sold under the same mark but are in fact different (e.g. toothpaste and chocolate)”—
I am sure there are many other examples. It continues:
“An international exhaustion regime is a much greater threat to UK retailers and manufacturers … In a worst case scenario intellectual property rights-holders will no longer be incentivized to produce goods for the UK because prices have been driven down”.
These are very worrying concerns for anybody who might be affected by this. I think the Government are skating on very thin ice with this issue. They have not made the case that this does not change current policy; it certainly does and it is a one-way ticket which is not satisfactory for those involved.
My Lords, as always, I thank all noble Lords for their contributions, and hope I can deal with all the relevant points. As always, I will offer to write on those which I find harder to address, and hope noble Lords will be content with those letters.
I remind the Committee of exactly what we are doing. This order, since we are now dealing with them as three orders, is a result of the withdrawal Act, an Act which has been through both Houses and sets out powers precisely so that the Government could make contingency measures in the event of there being no deal. That is why we have brought forward the Intellectual Property (Exhaustion of Rights) Regulations that we are debating: to deal with that no-deal situation. As I and others have made clear on other occasions when dealing with EU exit regulations, of which there are quite a number, they are contingency measures designed to deal with the possibility that there is no deal. We expect that there will be a deal, but at this stage, in advance of debates in another place and other matters, it would be an irresponsible Government who did not make appropriate plans to deal with no deal so as to provide business with a degree of certainty.
The Government are therefore considering various options for the future. We are undertaking research and consultation on what would be the most appropriate exhaustion regime for the future, but that is for another day. We will deal with that in due course, but it is not what we are debating this afternoon. That will take time, and I do not believe there is a compelling reason to rush to an alternative system until we have seen the evidence and listened to what businesses and consumers have to say.
The Minister may say that, but he has to answer the question about why the international exhaustion regime is not ruled out in the current SI, a point that both the noble Lord, Lord Stevenson, and I have raised. It is explicitly not ruled out, and that is the uncertainty contained in this SI.
I do not think I can take it any further. As I have made clear to the noble Lord, this is dealing with no deal and it would be wrong to set that out in the no deal. We can now consider the various options and come forward with them in future—as the noble Lord would wish me to do—after we have considered that with appropriate businesses and consumers.
I am not giving way until I have finished this sentence. As I have made clear—I think I have already said this—this is going to take time and I do not believe there is a compelling reason to rush.
My Lords, without putting too fine a point on it, I am arguing that in a no-deal situation it needs to be clear that the international exhaustion regime does not apply. That is not clear. The noble Lord, Lord Stevenson, read out some legal analysis, and I have had the same analysis. The concern is that, although it is stated that the regional regime will come into effect regarding our relationship with the EU, there is no statement on any other application of an exhaustion regime. It is therefore quite possible, in the opinion of many IP lawyers, that the international exhaustion regime that existed before our membership of the EU could again come into effect, and the Silhouette case would not apply. That needs to be addressed.
I will get to the Silhouette case later on. Although I will comment on it briefly, it might be that I need to write in greater detail.
Going back to the SI before us, it is clear that it maintains the status quo as far as possible. Regulation 2 ensures that the domestic exhaustion framework remains the same after exit. That delivers as far as possible a continuation of the current regional exhaustion regime. That is the legal clarity we can provide the moment. I cannot take the noble Lord any further, other than to say that we have been clear that this is a temporary fix and we will revisit it when we have gathered the evidence we need.
My Lords, I have one final intervention on this point. The noble Lord can take us no further—he is effectively requiring us to make a leap of faith on this SI.
No, I do not believe it is a leap of faith. It provides the clarity that business needs, in the form of a temporary fix. Thereafter—the noble Baroness, Lady Bowles, also asked about this—we will be much more able to consult fully on this instrument than was possible at this stage. At that point, we can take things further.
I will deal with one or two other points. The noble Lord, Lord Adonis, is not in his place so I do not think I need to deal with his points, but if he likes I will write to him on the question of whether “should” should be “would”, for example. The noble Lord, Lord Tyler, referred to comments made by previous Ministers. I assure him that, as always, Ministers speak with one voice and will continue to do so. Those statements reflect the view that the Government still hold.
The noble Lord, Lord Clement-Jones, asked about an impact statement and how it can be said that no impact on business is expected. An impact assessment is intended to look only at the impact of the legal instrument to which it is attached. This instrument does maintain the status quo within the UK and we therefore believe that there will be relatively little impact on business. There will, obviously, be some impact on parallel trade from the UK to the EEA and that will depend on the action of EU rights holders and, more broadly, on what the EU chooses to do on the issue of exhaustion. Those decisions are not within the scope of this instrument, so it is not possible accurately to reflect their impact in the assessment.
My Lords, one could easily quarrel with that statement. The regime set up by the SI is, as described by me, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Bowles, an asymmetric or one-way exhaustion regime. How come that is not covered by an impact assessment?
My Lords, I repeat what I said: this is designed, as an exit SI, to deal with leaving without a deal. We want to maintain the status quo and therefore anticipate the impact on business to be relatively small. I will complete what I am going to say before I take interventions.
I am not giving way to the noble Lord until I have finished my point. I have a right to make this speech in my own manner. I will then give way to the noble Lord and to the noble Lord, Lord Stevenson.
I accept that there could be some impact on parallel trade from the UK to the EEA. That will depend on the actions of the EU rights holders and, more broadly, on what the EU chooses to do on the issue of exhaustion. Those decisions are not within the scope of this instrument, so it is not possible accurately to reflect those impacts in the assessment. I now give way to the noble Lord, Lord Warner.
I am grateful to the Minister. I have listened to this for about an hour and he keeps using the same arguments. We are going to come to these issues again on the second SI. If I give him some notice, he may be able to think of some better arguments than those he has used so far. I find it almost impossible to understand what he is saying. If there has been no proper consultation with the industry, how can he say that this has minimal impact on it? That seems to be a contradiction in terms. What is the basis of the Minister’s impact assessment if there has been no formal consultation?
I come back to the point I raised earlier: were not the hands of the civil servants tied, in terms of their ability to talk to people about these issues, before this SI was formulated—a straight yes or no? Were they constrained in their discussions with the affected industries before these SIs were drawn up?
My Lords, I reject any suggestion that officials have been constrained in what they can do. The point I was trying to make is that we are talking about two things. We are talking about what happens in the event of us leaving without a deal. If we do, we need to set certain things in place, which is what these regulations do. Meanwhile, we will continue to negotiate as part of the whole withdrawal process to get the right deal. We will then get the right things in place. At that point, further instruments will no doubt come before the House—I look forward to debating them—and those will follow full, frank and proper consultation with all concerned. There has been a degree of consultation on these regulations, but they deal purely with a no-deal situation.
I am grateful to the noble Lord for giving way. I was going to try to be helpful, although he may not welcome the intervention. When we have had similar discussions on SIs and similar confusion and annoyance have been expressed on all sides about the fact that consultation has not been done in the usual manner and statements have not been provided, the Government have used the argument—the noble Lord did not use it on this occasion—that the de minimis provision is that the department has made an estimate, which is presumably accepted by Ministers, that the burden of the costs that will fall on the industries affected by the SI is less than £5 million. Is that the case with this arrangement—yes or no?
I cannot remember whether that is the case with this set of regulations, but the noble Lord is right that, obviously, we do not consult on SIs with an impact of that order. My understanding is that he is correct, in that there is little or no impact in the case of these regulations. That is why most businesses to which I have spoken are broadly in favour of the regional exhaustion regime.
My Lords, although the Minister has characterised these regulations as simply putting in place the status quo, he will recognise that business will not consider this the status quo. That is entirely the reason behind the argument that an impact assessment should have been done and that proper consultation should have been carried out.
I accept that the noble Lord is right that business would consider a no-deal situation to have major implications. In relation to this issue, I believe that what we have set out in our no-deal regulations will have very little impact. That is the type of clarity that we are trying to give business.
The point about the impact assessment concerns me. The noble Lord, Lord Bates, who is eagerly awaiting our later exchanges, knows that I have been here before. Forgive me if I am paraphrasing the Minister, but what seems to have been said is that, when the impact assessments are done, they relate to the impact of the legal instrument. That impact is often deemed to be relatively minimal. However, if you deal with the consequences on business of the legal instrument, the impact is much larger. I always thought that the whole point of impact assessments was that they dealt with the predictable consequences. The regulations that we are dealing with may be simple to understand, because there is not anything for business to do, but their impact means that businesses may have to compete on an unlevel playing field. There is a direct consequence of the legal instrument but that would appear to be excluded. That does not really seem to be the right way in which to measure it.
Maybe as a relative newcomer, I cannot start saying, “You’ve got to do your impact assessments differently”, but this issue needs to be looked at in the round because it can be used in a completely disingenuous way. I know it has been churned out this way under pressure, but this could continue throughout every statutory instrument, whether it is to do with Brexit or not. It is a laughing stock, really. I think about how some MEPs used to criticise EU impact assessments, but I never found anything that was just to do with the assessment of the legal instrument; they always dealt with consequences. So why do ours not?
I am not sure I can take the noble Baroness and noble Lords any further on this point, other than to remind them what the regulations do. They relate to the no-deal situation and to ensuring a degree of certainty, which all businesses would like, in that eventuality. I leave it at that.
Before the Minister moves on, I would like to say that the whole—
I have not given way yet. If the noble Baroness will wait for me, I will now give way to her.
My point is that the whole situation seems to be pretty hypothetical. We are trying to consider what the regulations should be in the event of a no-deal situation, but we do not think there is going to be a no-deal situation. We are also trying to assess the impact of this hypothetical situation without having adequate consultation with those very businesses on which it is going to have an impact. It seems as if we are in Alice in Wonderland, sitting here discussing hypothetical situations. I recognise that the Minister is in difficulties on this point, and it is very hard to be on the Front Bench when you are having to defend hypothetical situations, but the drift of the matter is that we are really wasting everyone’s time, are we not?
I do not accept that. What we are trying to do by passing no-deal regulations is to ensure a degree of certainty for the businesses we are talking about. That is why we are dealing with the hypothetical situation, and I am perfectly happy to do that. I am also happy to say that I think it unlikely that there will be no deal, but the noble Baroness and others would think we were being irresponsible if we did not prepare for the eventuality of no deal. That is all we are doing.
I move on to a further question raised by the noble Lord, Lord Clement-Jones, on the exhaustion of rights and whether we should agree to the proposal when British businesses cannot export parallel goods to the EEA. Again, there may be restrictions on the parallel export of goods from the UK to the EEA, and the noble Lord is quite right to point out that that is a consequence of leaving the EU. However, businesses wishing to parallel export goods to the EU will have to check with rights holders whether they need permission so to do. The SI seeks to provide a continuation of the status quo most closely, and would likely therefore have the least economic impact while, as I said earlier, the Government consider the impact of any future change.
I turn to the Silhouette case. We are talking about a ruling from the Court of Justice of the European Union, and it may be that I need to write in greater detail on this subject. That ruling from the CJEU is required to implement a regional exhaustion regime, but there are unclarities—if I may put it that way—as to when the Silhouette case will become retained EU case law under the withdrawal Act. EU case law before exit will continue to apply to the interpretation of EU-derived domestic law after exit under the withdrawal Act. EU case law before exit relating to the effect of this law will, obviously, continue under Section 6(3) of the withdrawal Act. Again, with these SIs, we provide the legal clarity that is needed. However, because anything that comes from the Court of Justice of the European Union frequently requires a little extra clarity, if the noble Lord will bear with me, I would prefer to write in greater detail to him on the Silhouette case in dealing with those points.
My Lords, I accept the Minister’s offer, because that was quite a confusing response. Precisely because a no deal is envisaged, there is the question of whether CJEU case law will continue—whatever we say about it—with regard to other exhaustion regimes which may or may not spring up. It would therefore be useful to get a letter from the Minister after this SI has been debated.
My legal eagles will be hard at work on producing just such a letter for the noble Lord, and I hope it will provide him with a degree of clarity—to the extent that that can be provided.
The noble Lord also asked about our plans for IP in the future relationship. As we made clear in the White Paper, arrangements on future co-operation on IP would provide important protections for rights holders, giving them confidence and a secure basis from which to operate in and between the UK and the EU. As part of this, the UK will seek to remain within the unitary patent system and the unified patent court. The political declaration states that as part of the future framework, the UK and EU should provide for,
“the protection and enforcement of intellectual property rights to stimulate innovation, creativity and economic activity”,
and co-operate on areas of mutual interest. Obviously, the specifics of that will be a matter for detailed negotiations on the future partnership.
The noble Lord also asked about provisions concerning designs and international systems for trademark and design protection. The instrument before us today focuses on trademarks, specifically EU trademarks and domestic trademarks derived from EU legislation. An instrument setting out our intentions for continued protection of unregistered community designs and international trademark and design rights will be laid in due course. The noble Lord mentioned the draft SI on copyright, and I can give an assurance that we are working hard on the instrument and will bring it forward as soon as possible.
My Lords, can the Minister confirm that they will be no-deal SIs on the same basis as the other three SIs being put forward today?
If it is necessary that there be no-deal SIs, then yes, there will be a no-deal SI. I am advised that that is the case, so there will be scope for the noble Lord to have another debate on this issue. I look forward very much to that happening. Whether my noble friend Lord Bates looks forward to that is another matter, but he has other matters to deal with.
Finally, the noble Lord, Lord Stevenson, asked about the practical benefits that this SI proposes: why should we agree to this proposal when the EU could get flooded with parallel imports from the EEA? The approach simply ensures that what happens currently will continue after exit day, and allows for IP-protected goods in the secondary markets to continue to be imported from the EU, including medicines. This will ensure continued consumer confidence and resilience of the supply of goods into the UK. That will be the continuation of the current situation; there is no reason to anticipate any increase in parallel traded goods after exit.
I hope I have dealt with all the points that I tried to deal with; I have also given an assurance that I will write on other matters. I beg to move.
My Lords, it might be helpful, as this is the first instrument that the Committee has considered this afternoon, if I remind the Committee that the Motion is to consider the draft instrument and that it will be the subject of an approval Motion before the House in any event, whatever the decision of the Grand Committee. I also remind the Committee that a single voice of not content will negative the Motion.
The Question is that this Motion be agreed to. As many as are of that opinion will say “Content”; to the contrary “Not content”.
Patents (Amendment) (EU Exit) Regulations 2018
Considered in Grand Committee
That the Grand Committee do consider the Patents (Amendment) (EU Exit) Regulations 2018.
My Lords, I beg to move that the Committee considers the draft Patents (Amendment) (EU Exit) Regulations 2018, which were laid before the House on 28 November.
Intellectual property plays a vital role in the UK’s knowledge economy, and this will continue to be the case after our departure from the European Union. Ensuring strong and balanced IP protection and enforcement is central to the Government’s aim of encouraging businesses to innovate and develop new ideas and technologies, which forms part of the industrial strategy. Our IP system is consistently rated one of the best in the world.
I am very grateful to the Minister for giving way. Can he tell us—the same issue came up with the previous regulation—what consultation there has been on the regulation?
I will answer that in due course. The noble Lord will have an opportunity to speak after my speech, and we might make better progress if I take it in that manner.
The regulations are part of the work being delivered by the Intellectual Property Office to ensure that the IP system for the UK continues to function effectively in the event of no deal being agreed when we leave the EU in March. This is essential to ensure a smooth transition for business and provide maximum certainty and clarity.
The draft instrument before the Committee today uses the powers provided by the European Union (Withdrawal) Act 2018 to address deficiencies in UK patent law which would arise on exit. The majority of UK patent law is domestic in origin or derived from various international agreements, so will not be affected by leaving the EU. Only a few specific areas of patent law are governed by EU legislation, and it is those areas which the draft instrument is intended to address.
I shall focus in particular on supplementary protection certificates, which are a special type of IP rights connected with patents. Noble Lords may recall that SPCs were created in the 1990s by way of EU legislation to deal with a growing issue affecting pharmaceutical and agrochemical products. Before such products can be made available on the market, the regulatory body must be satisfied that they are safe for use in order to authorise them for sale. As this process is extensive and often lengthy, it can stop the innovator enjoying the full period of exclusivity which a patent on such products normally provides. The aim of the SPC system is to limit the effect of that by providing up to five and a half years of additional protection to an authorised product after the expiry of the patents. This arrangement gives the maker of the product more time to recoup the costs involved in research and development, which is especially important in relation to pharmaceuticals.
The association representing British manufacturers in the field, the ABPI, has estimated that bringing a new drug to market costs more than £1 billion. SPCs therefore play an important role in encouraging innovators to develop new and more effective medicines by helping to cover those costs and providing additional revenue to put back into research. The framework for SPCs is set out in EU regulations 1610/96 and 469/2009 which will be retained under the withdrawal Act.
Unlike other EU IP rights, SPCs granted under the EU legislation take effect at the national level. This means that it will not be necessary to convert or replace existing rights at exit as UK SPCs will continue to be in force. However, it is still important to ensure that the framework remains functionally the same so that the scope of the right is unchanged and users of the system can have confidence in how it operates. The draft instrument therefore makes only technical changes to the retained EU regulations so that the SPC system can continue to operate effectively. For example, the EU regulations currently state that only authorisations which have been granted in accordance with certain EU directives can be used as the basis for an SPC application. After we leave the EU, UK authorisations would not count under this requirement. The instrument therefore makes changes so that the UK authorisations are covered. This will include any authorisations granted centrally by the European Medicines Agency which are converted into national authorisations at exit.
Similarly, the term of an SPC is determined based on the time between applying for patent and the grant of the first marketing authorisation in the European Economic Area. Again, amendments make sure that a UK authorisation can still form part of that calculation so that the term of an SPC is based on a calculation which everyone is accustomed to. Some of the amendments in this area are contingent on changes that will be made to the regulatory regime for medicines in the event of no deal, in particular to the paediatric extension which rewards carrying out additional testing to see if the product can be used to treat children. The transitional provision will ensure that the pre-exit conditions on when the extension can be granted will continue to apply to extensions already approved and applications in progress.
In addition to SPCs, the instrument will make some technical changes in other areas of patent law which are also governed by EU legislation. Where a patent and a plant variety might overlap in the protection they provide, the EU directive on biotechnological inventions allows the holders to seek a compulsory licence if they are unable to agree terms between themselves. The instrument will ensure that the UK transposition of the directive continues to provide that ability to the holders of UK rights. The instrument will also amend EU regulation 816/2006 to retain the ability to obtain a compulsory licence for manufacturing a patented medicine in the UK for export to a country with a public health need. The regulation relates to the flexibilities provided by the WTO TRIPS agreement which the Government continue to support.
Finally, there are miscellaneous adjustments to the Patents Act 1977, the Patent Rules 2007 and the Copyright, Designs and Patents Act 1988 to reflect the fact that the UK will no longer be a member state or a member of the European Economic Area. In conclusion, these regulations form a small but vital part of ensuring that the intellectual property system continues to function if a no-deal outcome arises. I commend them to the Committee.
The noble Lord said that he was going to cover the issue of consultation later in his remarks and he urged me not to intervene. He has not covered the issue of consultation at all. Would he care to do so now?
My Lords, I did not say that and the noble Lord should not put words into my mouth. I said that when I come to respond at the end, I would deal with the point. No doubt the noble Lord would like to intervene to make the point and I have now listened to it. I will respond, if the noble Lord would like to stay until the end of the debate, to it at the end of the debate.
My Lords, I do not think that that is a satisfactory response at all. Our consideration of this regulation, which we are just about to engage in, crucially depends on the Minister telling us what consultation has taken place. It is not good enough for him to say that he will speak at the end of the debate when we raise the issue. I have raised the issue because I wish to respond, as will other Members of the Grand Committee, to what he has to say about the consultation that has taken place.
The noble Lord intervened more than once during the previous debate. I had a number of responses to give to him but sadly he did not think it necessary to stay until the end.
I am not giving way.
I was in the Chamber.
Will the noble Lord sit down? I have not given way to him. The noble Lord can make his point when I have given way.
My Lords, it might be for the convenience of the Committee if I were to put the Question so that the debate can then continue.
My Lords, I do not think it is for the convenience of the Committee, because the noble Lord has just made a direct allegation that I was not present in my place to listen to his response. The reason is that I was speaking in the debate on the EU withdrawal agreement in the Chamber. I have made the point to the Whips, including on our side, that it is highly unsatisfactory for the debate to be taking place in the Grand Committee on regulations concerning exactly the same matters as are being debated in the Chamber. It is not possible, even for the noble Lord with his considerable abilities, to be present in two places at once. It is because I wished to participate to the debate—it is a discourtesy to the House that I am not able to be present for most of it, because I am fulfilling my duties in the Grand Committee—that I was not here. I hope the noble Lord will withdraw the remark he just made, which appeared to imply—maybe because he was not aware that I was in the Chamber—that I was not fulfilling my duties. After he has noted that I was not here because I was in the Chamber, I think he needs to answer this point to begin with. Otherwise, I will continue interrupting until he actually gives us some information on what consultation took place on this regulation—before we can properly consider it and whether we think the consultation that took place was adequate.
My Lords, I quite understand that the noble Lord was in the Chamber and therefore not able to be there at the end. I merely made a statement of fact that he was not there and that therefore I was not able to respond to him. I similarly make the quite straightforward statement that I have spoken on this, for which I hope the noble Lord is grateful, and I will respond in due course to the points made. I hope the noble Lord will understand that the wide-scale engagement he would like, as we discussed on the earlier amendment, was not possible on a draft no-deal regulation of this sort. I can give the assurance, as I gave on the previous order—this is the important thing—that there will be a proper consultation in the future. The noble Lord should bear in mind that at the moment we are making sure there is a degree of certainty for businesses in the eventuality that there is no deal.
No; there is no need for noble Lords to get up. I will sit down and give way to the noble Baroness or the noble Lord when I am ready, but I am entitled to speak and give way as I wish.
We will consult as appropriate on whatever the future regime might be, deal or no deal. We are trying to get things right in the eventuality of there being no deal. It is quite right—
Can the noble Baroness wait just a moment? I am still speaking. It is quite right that we make appropriate contingency plans. I now give way to the noble Baroness, then I will no doubt give way to the noble Lord, Lord Warner, who is itching to get to his feet.
I was actually trying to be a little helpful. In the notes on this matter, there is a little more detail about the consultation than on the previous one. They say a consultation was taken with “informal discussions”—informal is always questionable—
“with a small group of selected individuals with expertise in the relevant areas, or in patent law generally”.
I read that to suggest that the consultation was with lawyers, as opposed to people directly affected by this. I wonder if the Minister could make that clear. If it is with lawyers, they will be looking at it on the basis of the law as opposed to the impact on businesses. Once the Minister has clarified who and what it was, I could then understand the impact. In paragraph 12, the Government assert that there is,
“no, or no significant, impact on business”.
If there has been a proper consultation, that is fine and perhaps one has to accept that impact. But at present an informal discussion,
“with a small group of selected individuals”,
does not sound to me like the kind of consultation that is going to give anybody the possibility of saying there is,
“no, or no significant, impact on business”.
Perhaps the Minister would care to clarify.
May I intervene to be helpful to the Minister? He might wish to consider withholding his remarks about consultation until he has heard what I have to say a little later about the consultation process—if we may venerate it with such a description. I think he might want to hear those before he commits himself too far on what consultation has taken place.
The noble Baroness, Lady Kingsmill, suggested that it was only lawyers who were consulted. There is nothing wrong with lawyers—I speak as one myself—but others were involved too, including a number of business stakeholders, a representative from the BioIndustry Association and other representatives from the pharmaceutical and generic industries. I imagine this will be confirmed by the noble Lord, Lord Warner, when he speaks; I am looking forward to his remarks. All I can say is that that has happened, but obviously the consultations will continue so as to ensure we get the right process for the future, deal or no deal. At the moment we are dealing just with contingency planning should there not be a deal. I think I have moved, and I think I have now sat down.
My Lords, I hope to throw a little light on the subject of consultation during the course of my remarks, which I am afraid will be slightly lengthy. My remarks are based upon a briefing I have received from the BioIndustry Association They relate to its concerns about both the impact and the process by which these regulations were drawn up and consulted upon. Again, I use the term “consulted” in a very loose way.
Before I get down to the business of what the BIA’s concerns are, I want to make a couple of general remarks which came out of our debates in Grand Committee last week about the previous set of regulations, and out of our discussions this afternoon about the first set of regulations. They are two issues which we keep coming back to time and time again. I hope that, for the rest of the proceedings, the Minister might refrain from continuing to run the argument that these documents do not reflect any change of policy. I shall set out the arguments as to why there is a change of policy here. Last week there was a set of policy changes in the regulations that were produced. I understand why there may have been a change of policy, given the circumstances in which these regulations were pursued, but it would be helpful to informed debate for the Government to stop saying that there is no change of policy because there palpably is a change of policy in many of these sets of regulations.
That is request number one to the Minister. The second concerns the Minister saying that somehow these regulations were only hypothetical and relate to a set of circumstances which may not occur. We raised this last week when he was not here and we were dealing with another Minister. The truth is that this is a set of regulations the Government of the day have drawn up and put in the public arena, and they have an impact on the people who may or may not be affected by them. As I said last week, as an ex-civil servant I know that even if these regulations are not used for the purposes for which they have been drawn up, they will be tucked away in a Whitehall cupboard. That is the reality. If we get down to some of these issues subsequent to Brexit day, they will still be there, they will still be a resource which will be drawn upon, and I would be willing to bet a large sum of money that they will be used to some extent in drafting another set of regulations.
The point that we have been trying to make to Ministers, singularly unsuccessfully, is that there are concerns about how they may be used and how the outside world may interpret the Government’s attitude in these areas in the future. That is why it is very important to challenge the Government when there are defects both in the assessment of impacts and in the inadequacy of the consultation process.
My Lords, in the light of what the noble Lord has said, does he not think it extraordinary that paragraph 12.3 of the Explanatory Memorandum says:
“An Impact Assessment has not been prepared for this instrument because … it is designed to maintain the status quo”,
when the point that he is making very powerfully is that the regulation does not maintain the status quo since it envisages a no-deal scenario that, for the industries and businesses affected, is anything but the status quo?
I totally agree with the noble Lord and will set out my reasons for doing so in relation to this particular set of regulations. The concerns that the BIA has about this set of regulations relate to paragraph 55, which is all about the number and date of the earliest of any EEA authorisations which lead to the granting of a UK authorisation. The effect of that setting of the date on the supplementary patents certificates, which are the extensions for patents of medicines that provide additional patient life, is to compensate for the period of market exclusivity lost during the essential regulatory approval process. So the market authorisation sets the date for the five-year market exclusivity arrangements that apply to medicines.
This starts to get a bit complicated so I will keep to the wording of my brief. The SPCs can provide up to five years of extra protection, and the precise period of the additional protection is determined using the first regulatory marketing authorisation date currently within the EEA. The amendment to which I have drawn attention, which is set out on page nine of the regulations, would maintain this EEA-wide stipulation for UK supplementary patent certificates despite the medicine covered by the SPC being subject only to a UK market authorisation—that is, it could not be marketed in the UK until approval by the UK-based MHRA. This would have the SPC’s duration aligned with those granted elsewhere in Europe on the basis of first authorisation in the EEA even if the UK authorisation was much later.
In so far as one understands why the Government are doing it this way, it appears that they are seeking to encourage life sciences companies to launch medicines in the UK at the same time as they launch them in the EU/EEA. The BIA fully understands what the intention is; it just does not agree that it will have the effect that the Government think it will. The BIA says that in reality many of its member companies are saying that the regulation is more likely to delay further the launch of a medicine in the UK and is adversely affecting the global reputation of the UK as a location for the life sciences industry.
Is not the point that the noble Lord is making rather wider than that? He seems to be saying that if either the Government or the body to which he refers are right, this regulation changes the position in which we are. In other words, we do not need to argue whether it would have this effect in one direction or the other; all that we need to argue, to make the point that I think we are all trying to make, is that it is just not good enough to say, “This regulation doesn’t change the situation”. It manifestly changes the situation whether the Government are right or the BIA is right.
The noble Lord is spot on. That is exactly the point that I am making. I want to develop the argument a bit more and relate it to the problems around consultation, or the lack of adequate consultation. I have a lot of respect for the BIA, particularly following my time as a health Minister when I had a lot of contact with it. It is not an excitable group of people who write and complain to the Government at the drop of a hat but a responsible trade body that any Government of any complexion would do well to take notice of. Moreover, the BIA is concerned about the lack of process and consultation on a regulation that will have a huge impact on its sector and on NHS patients:
“A strong intellectual property framework is essential if the UK wishes to have long-term sustained investment in R&D, remain a globally-attractive location for international investment and grow UK companies in the UK”.
I think we are all agreed that those are desirable things. However:
“Due to other regulatory requirements in the event of ‘no deal’, the exclusivity term for a medicine in the UK would be reduced as a result of the Article 3 amendment”,
in these sets of regulations compared to the rest of the EU. The threat of,
“a shortened data exclusivity period has adversely impacted global companies’ views of the UK”.
Companies have told the BIA—here I will quote what they have actually told the BIA—that a product will,
“never be launched in the UK before the EU”;
“has moved further down the priority launch market”—
one company has told the BIA that the UK has moved from the first tier to the third-tier launch market for upcoming new products—and that the international reputation of the UK as a place for global pharmaceutical companies to undertake business has been damaged at the very time Brexit is already having an adverse impact on the UK’s global reputation. These are the points that a very responsible trade body is making about this specific set of regulations.
My Lords, I think the noble Lord is making a case which is of great concern to the Grand Committee, not least because of the impact on jobs and investment. Can the noble Lord, with his knowledge of this sector over many years, give the Grand Committee some indication of what he thinks the impact might be on investment in the UK in the pharmaceutical sector if the scenario he is envisaging and these no-deal regulations were to take effect?
According to the BIA, which is a cautious body that keeps its finger on the pulse of the sector very well and in my experience always represents that sector extremely accurately, it is concerned about the impact of this approach on patients’ access to new medicines and the effect on jobs of a decline in using the UK for the growth of innovative products in the bioindustry sector. It says:
“Eroding intellectual property protection whilst also seeking global free trade deals sends a signal to industry that the UK Government may further erode protection as it seeks to quickly conclude deals. This would further impact the industry in the UK and future inward foreign investment”.
That is what the industry is saying, it is not what I am saying. I am repeating to the Grand Committee what the sector and the industry are saying, having been involved in this set of regulations. The BIA and the industry are also concerned that the proposal has simply not been properly consulted on:
“The suggestion that the government might take this approach first appeared in a Technical Notice at the end of August”,
2018. The BIA,
“raised concerns with Ministers and the MHRA. The MHRA stated that concerns should be included in responses to their ‘no deal’ consultation which concluded on 1 November (the consultation did not ask specifically about exclusivity)”.
So the Government did not actually consult on the point of exclusivity. That is the view of the trade body which is responsible in this area. This is why I urged a bit of caution on the reassurances that the Minister might want to give until after I had spoken. This is what the industry is saying. The statutory instrument,
“was tabled on 1 December, when follow-up discussions from the consultation were still ongoing. There has been no formal consultation”,
on this issue, which undermines the validity of the regulations.
The sector is saying that it was not consulted on the specific items in the regulations and that is as a result of its contact with the MHRA, the regulator.
In its response to the MHRA no-deal consultations, the BIA, together with the ABPI, stated:
“We are also concerned that the proposal for data and market exclusivity for marketing authorisations is not being consulted on”.
It has made that clear beyond peradventure. I do not know who the IPO spoke to. It may have been one individual company—that is what my intelligence from the BIA suggests. By any stretch of the imagination, it was simply not a proper consultation with the sector that is most affected and which is genuinely concerned that the regulations will have a massive adverse effect on the life sciences industry in this country.
In its response to the consultation, the MHRA stated on 3 January that there would be a review within two years. However, by that time some UK patients will not be able to receive the medicines that they would have if the UK was a member of the EU and there will have been a significant impact on the UK industry as well as on the global industry’s perception of the UK. This is what a responsible trade body is saying has been the effect—
This is too long.
I am sorry if I am taking up a bit of time. I have heard longer speeches and I have been interrupted a few times.
My Lords, I have rarely heard in Grand Committee a speech of greater concern to a major industrial sector and to patients, so I hope that the noble Lord will in no way be influenced by Government Whips telling him to curtail his remarks when those remarks are of such importance to the country.
I am grateful to the noble Lord for his support. I have never been much of a one for taking notice of my own party’s Whips let alone the Government Whips.
The Minister should pause these regulations and conduct a proper consultation before taking them forward. The Government should delay the process until they have heard what the industry has to say about the impact of these regulations on the UK life sciences sector.
My Lords, I am concerned about the consultation element. I am interested in the difference between the wording in this SI and the one that we are going to discuss later. This one says that,
“the Intellectual Property Office held informal discussions with a small group of selected individuals”.
The one that we are going to discuss later says that,
“the Intellectual Property Office held informal discussions with a small group of trusted individuals”.
Does this mean that the selected individuals are not trusted or that the trusted individuals are not selected? This seems like careless drafting, which reveals the fact that there was no proper consultation of any kind.
I say to my noble friend that it is not acceptable to talk about consultation if one of the major bodies concerned was not consulted. It is also not acceptable to talk about consultation when it is informal with selected groups. I run a business and one thing it does is give advice to people. If I said that my advice was based upon a series of people whom I had selected informally, that advice would not be well thought of. I have to say: “These are the people that I have chosen, in order that they should be a broad range, covering all the issues we are dealing with”. I do not select them on any other basis. If my noble friend does not explain on what basis these people were selected, he has to accept that all sides of the House will be other than certain whether it was on the basis of coverage rather than support.
I take the noble Lord’s point entirely. However, having pointed out the inadequacy of the consultation programme, it also throws into complete disrepute the idea that there was no, or no significant, impact on business or the public sector and they have therefore not bothered to make an impact assessment. When the consultation process has been so manifestly inadequate, it is impossible to say that there has been no impact.
The noble Baroness makes an important point. I want to follow this line because if the consultation itself does not cover the industry, and those others whom you would expect to be covered, it is not likely that the Grand Committee can reasonably expect to accept the concept that there is no effect or problem. We can only do that if we are sure that the consultation has been widespread, properly chosen and the rest. Will my noble friend explain who was consulted with, why some people who are obviously necessary consultees were not consulted, on what basis that choice was made and why these were informal discussions? This is surely a very important SI and there should have been formal discussions.
Secondly, there is a problem in all these SIs which we have to remind the Minister of each time. It is suggested that we can allow these SIs to go through because they are very unlikely actually to be used, because they are based on the principle of a no-deal exit from the European Union. That may be true, but it does not excuse us from ensuring that the SIs are as good as they could be. They might be used, unless the Minister is going to say that they are not going to be. At the moment, they could be used and we have to apply the same intellectual rigour to these as we would to any other SIs.
The noble Lord is making a powerful point. Did he note the remark made by the Minister in the debate on the last regulation: that the reason why there had not been full and proper consultation on the regulations was because the department was so preoccupied with consulting on and framing arrangements for the Prime Minister’s deal? We are being told that the regulations which we are debating to make provision for no deal, and which the House is expected to approve, are being inadequately consulted on and—as is clear from the remarks of the noble Lord, Lord Warner—inadequately prepared precisely because the Government are so overloaded with making arrangements for the deal. If the Government’s priority is the deal, rather than a no deal, is it not right for them to withdraw these regulations, and the option of no deal? The Minister made the frank admission to the Grand Committee earlier this afternoon that the Government have not had the resources and capacity to conduct proper preparations and consultation for no deal.
I do not think that I ought to follow the noble Lord down that road because otherwise there will be a complaint that one is somehow not keeping to the fact, but of course what he says is entirely true and I agree with him. However, the point is that we as a Grand Committee must not take any less notice of these SIs on the basis that they might not have to be implemented or indeed even that they probably will not have to be implemented. There are two reasons for that. One is that they could be implemented because that is what we are doing; we are making law. The second reason is the point made by the noble Lord, Lord Warner. In future, even if they were not implemented, in other contexts the fact that we had agreed to them would be used as a mechanism for suggesting that whatever is then being presented is perfectly all right because the Grand Committee of the House of Lords had been through them and they are only repeating them. That is the same kind of argument which says, “We are not actually changing anything”.
That leads me to my third point, which is simply this. If we are unhappy about the nature of the people who were consulted and if we also feel that we ought to know who they were and the circumstances in which the consultation took place, it is also true that we need to question the outcome. It is clear that those who know about it think that this particular SI changes the situation very significantly, but the suggestion is that there are no new obligations or burdens on private, public or third sector bodies and does not require refamiliarisation—a word which I am fascinated to discover and would ask the Minister to explain what it means in order that I get a measure of it. However, if you get the consultation wrong you then get the outcome wrong and therefore you cannot say that there is no need for an impact assessment. The section on impact assessment is thus also very serious.
I direct the Grand Committee to paragraph 12.2:
“There is no, or no significant, impact on the public sector”.
The fact is that if there is no deal and this has to be implemented, there would be a huge impact on the public sector and that impact would be very expensive.
This is another point that I want to raise with my noble friend. There are no costs in this document. We are not told how much it is going to cost. The way to get around that is to say that it is not going to cost very much so, “we do not have to tell you”. However, one of the falsehoods of the whole Brexit argument is the suggestion that we are somehow going to make money out of it, whereas every time you look at any of these things, it means that the United Kingdom is setting up a system to do what historically has been done effectively on a Europe-wide basis. That all costs money and I want to know, as a Member of this House, how much it will cost. It is not acceptable that because we may not have to do it, we do not have to be told how much it will cost.
Perhaps I may further the point that the noble Lord is making. We have now established pretty well that the consultation process was at best flawed but much more likely so limited as not to be taken seriously. From that has come the idea that there is no significant impact, which in turn has led to it being said that no specific action is being proposed to minimise regulatory burdens on small businesses. The weakness of the consultation process at the very beginning has worked its way through to saying, “Bad luck for small businesses”, and indeed, I might say, large businesses.
That is absolutely true. It all adds up to my last point, which I feel is the most important point of all. The Government keep on talking about no impact, but of course in this SI, they cover up the fundamental impact, which is that the benefit that used to be enjoyed by those to whom this applies because we were part of the European Union will be removed. That is a huge impact. When the Government talk about no impact, they are really saying that as long as you confine your activities to the United Kingdom, there will be a little arrangement which will, roughly speaking, be the same as the arrangement that we had in the United Kingdom when we were part of the European Union. That is what we are saying.
That is an entirely different situation, because it means that we do not have the advantages which we had before. I know that that is an integral part of Brexit, and it is one of the reasons why I oppose Brexit so strongly. It is unacceptable not to measure those impacts. It is unacceptable to produce an SI which suggests that there are no impacts when you are saying that if we exclude the biggest impact of all, there are no impacts. That is, at the very best, misleading.
I say to my noble friend that anyone in this country who reads this impenetrable stuff as carefully as we have all tried to will realise that there are two hidden falsehoods in the whole activity. The first is: let us pass it because it will never be used. The second is: when we talk about impacts, we will refuse to talk about the impacts which really matter, which are the impacts which disadvantage British people and make us less able to handle competitive situations, deal with our patients and work in the way in which we can at the moment. We, the Government, are not prepared to measure that because then the public might say, “My goodness, this does not sound a very good idea”. So they do not tell them the figures, the costs or the disadvantages, because it would undermine their position.
I am grateful to the noble Lord and agree with every word he said. Rather more elegantly than I, he made the point I was making about the high impact that these changes, if implemented, would have on British people, jobs, access to medicines and so forth.
In this debate, we are making some fairly serious accusations about the Government and their failure to hold a proper consultation. I hope that the noble Lord will join with me in not allowing that debate to include blaming the Civil Service and the IPO, because they are as much victims as everyone else. They are operating in a system which has not properly allowed them to carry out the consultation that they might have made in normal circumstances. I should not like them, reading Hansard, to think that we are accusing them of dereliction of duty. I hope that he will agree.
I entirely agree, but I add to that list the Minister because, like every other Minister, he has to defend all this nonsense. He has to defend a decision which the Government made. The Minister responsible has resigned because he saw what it meant. This Minister has to defend that. I do not think that is fair on Ministers. I do not think it is fair to say to a Minister: “You have to explain why there was no proper consultation; why when it says impact it means ‘impact (none of the important impacts but just those we have chosen)’ and when it says ‘costs’ it gives none because it excludes all the big costs which really matter. So no one can make any decisions about this, but it is all right because it may never be implemented”. I know it is very unpopular with the Whips and with Ministers but frankly, this Grand Committee has got to draw the attention of the public to the fact that these SIs are based on a wholly improper, wholly wrong concept. They are not just a transition operation. They fundamentally change the way in which many industries are going to operate. They fail to list the real costs, they have not consulted those who know and they have done a cosy little arrangement which this House and this Committee should not accept.
Before the noble Lord sits down, in the concluding remarks of his extremely powerful speech he referred to part 2 of the Explanatory Memorandum, which is where the Minister makes the appropriateness statement in respect of the scope of the regulations. He noted that the Minister, Sam Gyimah, who made all three statements in respect of the Equality Act 2010, in respect of the regulations being appropriate and in respect of whether they are in order with regard to the legislative powers conferred on the Government by the European Union (Notification of Withdrawal) Act 2017, has since resigned, and because of Brexit, the very policy enshrined in the regulations for which the Minister was giving these authorisation statements.
Further, in his resignation letters and subsequent statements, the Minister has expressed his extremely deep concern about Brexit in principle, and in particular the no-deal Brexit, the very subject of the regulations about which he was making the appropriateness statements which are before the Committee. Would the noble Lord agree that not only is this unprecedented—in my experience and maybe in his—but that it raises a huge concern: should we be proceeding with these regulations at all without either a statement signed by the current Minister and/or Sam Gyimah giving evidence to us on whether the concerns he has expressed about a no-deal Brexit might lead him to review the statements he has made on behalf of the Crown in part 2 of this Explanatory Memorandum?
I do not want to embarrass any Ministers, including the noble Lord who is here. I want to exclude Ministers, both past and present, for a kind of corporate nonsense which the Government have presented and which is supported by a surprising number of people across the Benches. I think this Committee has a responsibility to say to the Minister, “One could not imagine this in any other circumstances. You could not make it up, as you can see when you read the detail”.
I end by coming back to the words I put before the Committee at the beginning. In one case it was “trusted people” and in the other it was “selected people”. It was not just a joke. It was to point out that whoever had to write this stuff knew perfectly well that it did not add up, that there was no basis for presenting it except that somehow or other, the Government had to find a way of talking about these issues without telling the public the truth about impact, about cost and about the deprivation which this measure would bring to the British people if it were ever implemented.
My Lords, in my now quite long experience of the House I have found that on most occasions when policies are being tested and explained, amendments are being considered and so on, the difference narrows as debate advances. That difference can be eliminated entirely, sometimes because the explanations given by the Government turn out to meet the concerns, sometimes because the Government themselves move to meet the concerns and sometimes because the concerns are misunderstood. That is the general course. Because our job is to scrutinise there may still be resulting differences, but those differences are narrowed, not expanded.
However, a pattern is now emerging in the consideration by the Grand Committee of these no-deal regulations. In almost every case now, as the debate continues the difference widens, for three reasons. The first is precisely the point that the noble Lord, Lord Deben, has made so eloquently, which is that you are expected to believe, in the words of the White Queen in Alice in Wonderland, six impossible things before breakfast before you even consider these regulations. The first suspension of total disbelief that we are expected to entertain is that, all other things being equal in no deal, these regulations will simply make technical changes to govern the fact that we have left the EU with no deal. The problem is that all other things are not equal. The whole ground has shifted underneath the very activities, and the national interest and the companies, that are at stake.
That could not have been clearer than in the remarks of my noble friend—as I continue to call him; I know he now sits on the Cross Benches but he and I were Ministers together for many years so he will always be my noble friend—Lord Warner. I dare say that my noble friend, whom I hold in extremely high regard, knows this sector better than anyone in the House except possibly my noble friend Lord Darzi. He has huge, detailed knowledge from a long period of time as a Health Minister. My noble friend has reported to the House two issues of extraordinary import. The first is that the impact of the actual changes in these regulations will be profound for the industries concerned and for those who need to use their services. The second is that most of those directly concerned were not consulted at all.
That leads to the second big issue that has now arisen time and again in the Grand Committee: the consultation has been exiguous or non-existent despite the fact that the issues concerned are hugely important. The noble Lord, Lord Deben, who is one of the most forensic debaters in the House, noted to brilliant effect the use of the weasel words in respect of consultation in the Explanatory Memorandum regarding the,
“selected individuals with expertise in the relevant areas”,
who the Intellectual Property Office chose to consult.
They turn out to be lawyers. I have nothing against lawyers; my noble friend Lady Kingsmill is a distinguished lawyer. It is fine that lawyers should be consulted, but others should be consulted as well. I do not think it is for the Government to select who should be consulted. We are a democracy where everyone should have that right. Indeed, the Cabinet Office rules on consultation were long laboured over by successive Governments: there should be 12 weeks of consultation on regulations that should be published, and so on. We are told that that cannot happen in the case of these regulations because we do not have 12 weeks. Well, we would if the Government were not engaging in this ludicrous no-deal planning that means that there are not 12 weeks to start with. That argument is entirely circular.
The Explanatory Memorandum looks to me to be worse than my noble friend and the noble Lord have said, on top of these informal discussions with a small group of selected individuals. Incidentally, I may say that the Minister was unable to tell us at the beginning who were they were; he said he was going to tell us when he wound up, so we are still awaiting the names of those selected individuals. They do not appear to have included any of the significant companies and experts that my noble friend Lord Warner knows.
I will repeat this fact because it is of great importance to the Grand Committee: the only person who we know with certainty has been consulted by, and has spoken to, the Intellectual Property Office so far is my noble friend Lord Warner, because he tells us that he phoned them up and gave them his views. There has been no information from the noble Lord, Lord Henley, or from anyone else as to who the others were. We have now a lengthening list of those who were not consulted, but we do not know who was. That is an extraordinary state of affairs for the Committee.
I want to be fair to the IPO. It arranged to have a conversation with me at my request and it was perfectly straightforward. It of course had to preserve the confidentiality of what it had done—after all, it is answerable to Ministers and I would not have expected anything less. My information from the BioIndustry Association is that it thinks that the consultation—in so far as it was a consultation—was with one member, possibly a lawyer, of one company. The consultation is looking fairly thin. It may not be much more than that one member as far as this specific set of regulations is concerned. We do not know the extent to which IPO accumulated a collection of individuals for a range of regulations—that is quite possible—but by no stretch of the imagination can one see a formal consultation over a longish period, somewhere near the Cabinet Office recommendations, of the industry and sector, because the trade body for this sector was excluded. The Association of the British Pharmaceutical Industry may not have been properly consulted either, but I have not had time to check with it.
My Lords, my noble friend has made an extremely grave allegation. Would the Minister care to say whether he is correct that precisely one person in one company was consulted about these regulations? I would happily give way to him if he would like to contradict that statement, because it seems to be of immense importance.
I will be responding in due course.
I think that the Grand Committee will be extremely concerned to have information on this point. If what my noble friend has said is the case, it would be a situation without precedent in my experience: that on matters of significant impact on a major industrial sector, precisely one person in one company has been consulted and the relevant trade bodies were not even given the opportunity to express their views.
What is more, that one person was selected but clearly not trusted.
I was going to leave this to the end and I suspect that any intervention I make will just prolong these proceedings, but for the sake of assisting the noble Lord at this stage, I can assure him that consultation participants on the technical view of the draft instrument included the BIA, the ABPI, the IP Federation, the Chartered Institute of Patent Attorneys, the British Generic Manufacturers Association and the agrochemicals industry.
I flatly reject the idea that the BIA was consulted on the exclusivity aspects of these regulations. That is the assurance that I was given by it and I put it on the record in my speech.
My Lords, we seem to have a serious situation where the Minister has just said that one body of central relevance to these regulations was consulted and my noble friend Lord Warner has flatly denied it. Would the Minister like to elaborate on what he said; otherwise, it might be a matter for other authorities to examine.
The exclusivity point is for another regulation on the MHRA.
The exclusivity point is a key element in these regulations, as I made clear. If the Minister looks at Regulation 55, he will see that. I made it absolutely clear—I am not usually noted for obfuscation —that on the subject of exclusivity there was no consultation of the BIA. I cannot be any clearer than that. If the Minister has evidence that the BIA was consulted on the exclusivity point, I would be happy to withdraw that and apologise as graciously as I can, but the information it gave me was that it was not consulted on that point, which is at the core of this set of regulations.
My Lords, I am not sure if it is helpful to continue this discussion. That point is for another regulation, not the ones we are discussing at the moment. We will, no doubt, get to that one—and to that point—in due course. I am not making any accusation that the noble Lord has misled the Committee and I do not think I have misled it. I have made it clear who was consulted and I was hoping I could deal with that in my closing remarks as that might have been a neater and tidier way of dealing with these matters. I will leave it there.
I wonder if the Minister could help me out. I have been listening to the speeches since I came back from the Liaison Committee. In the light of what we have just heard, is the Minister still pressing ahead with this statutory instrument? Would it not be better for him to withdraw it and clear up some of these points before we consider it again?
My Lords, I will continue with these regulations: I have moved them. No doubt the noble Lord will say, as he and other noble Lords have done with other regulations, that he is not happy for them to be considered by this Committee and they can then be considered in another place. However, we are having a useful discussion at this stage, which I want to be part of, and we should complete what we are doing and deal with as much as is relevant to these regulations as we can. I will continue to do that and I will listen to the noble Lord, Lord Adonis, conclude his speech. The noble Lords, Lord Clement-Jones and Lord Stevenson, and other noble Lords will no doubt wish to intervene. I will then respond to that, as is right, proper and normal. It is up to noble Lords to decide where they wish to take things after that. However, we wish to get this through, to provide continued certainty for this body and to assist the whole life sciences industry, the importance of which the noble Lord, Lord Warner, has just reminded the Committee.
My Lords, a situation has arisen where there is a serious difference of view, to put it mildly—
A difference of fact.
A difference of fact, as my noble friend has just said, between the Minister and my noble friend Lord Warner, who has just pointed out to me that paragraphs 1 and 2 of Regulation 55 specifically concern exclusivity. This is the precise issue which he said should have been consulted on and on which the companies and trade associations concerned say they were not consulted. I simply note that, but this issue needs to be explored more fully before these regulations go to the House itself, as the situation at the moment is clearly unsatisfactory. The Minister, who is deeply honourable in these matters, would not wish this dispute of facts to be unresolved.
Is the noble Lord not being a bit unfair to the Minister? Is the real problem here not the word “informal”? The Minister’s problem is that, if you have a formal consultation, you know precisely who was consulted and on what points. As I said in my own speech, if you have this curious thing called “informal” consultation, no Minister is able to answer these questions because you do not know what was said in any of the discussions. That is what is wrong with this consultation mechanism. The noble Lord is being unfair to the Minister, who can only say what is passed on to him, because this was not formal. There was no formal report, so we have no idea and nor does he.
The noble Lord makes a very good point. The Minister himself played no part in this process. All he can do is read out messages passed to him by officials. I do not hold him responsible in any way. Nobody was suggesting for a moment that he was personally responsible for engaging in this consultation and has therefore given misleading information to the Grand Committee. The point is that the House needs to know the truth.
I will make one remark on what the noble Lord, Lord Deben, said. He said it is hard to be precise about what happened if conversations took place during informal, as opposed to formal, consultation. However, there is a difference between informal consultation and no consultation whatsoever. The point made by my noble friend Lord Warner is that it appears not that there was informal as opposed to formal consultation, but none whatsoever. No conversations took place between the relevant trade bodies and companies, and the authorities responsible for drawing up these regulations. That is what he said, and it is of huge moment to the House. Using the word “informal” does not excuse these consultations being non-existent, which is the issue before the Grand Committee.
I return to the third thread of concern we have about the whole way in which these statutory instruments are being conducted. First, they depend on us believing the impossible proposition that no deal is not itself going to make a fundamental difference. The second issue we are constantly wrestling with is the inadequate or non-existent consultation. The third is the inability of Ministers to answer the points raised in the debate. That has been a running theme in these discussions. What happens—I dare say this will happen again when the noble Lord, Lord Henley, responds to this debate—is that the Minister restates the case for the statutory instrument that he made at the beginning. He selectively answers one or two points—to give him his due, he has just given a list of organisations that he said were informally consulted; it may or may not be accurate, but we need to establish that—but most of the points raised in the debate are not answered at all by the Minister. To be fair to him, the Minister himself played no part in this consultation and is simply having to read notes given to him by officials, who may themselves have been at some distance from the consultations that took place.
We are then expected to approve these regulations. Because of the inadequate arrangements for the scrutiny of statutory instruments—a point made very eloquently by the noble Lord, Lord Tyler, in earlier debates—we then have no further recourse. We cannot do what happens with primary legislation in this House, which is that we have a Committee stage, we can move amendments and probe the Government further, and the Government are under an obligation to come back to the House with further information. None of that happens. The only recourse we have is to seek to repeat this debate by referring the statutory instrument to the House and hoping—we then have no ability to amend it or to move amendments—that when the Minister comes to make the next speech in the House, he will respond to the points raised in the Grand Committee.
That leads me to an important point about how we handle these statutory instruments when they go to the House. On each of these statutory instruments that we have been debating and doing our best as Members of the Grand Committee to scrutinise, a lot of concerns have been raised but not met by the Government. I see that my noble friend Lord Foulkes is a member of the Liaison Committee and the Procedure Committee. He is a real power in the land in this House. Most of us are never admitted to the inner sanctum of these bodies, but he is. It is extremely important that Ministers write to Members of the House setting out their response to all the issues raised in the Grand Committee before the House comes to debate these regulations, so that we can then properly consider the adequacy of the Government’s further response. Let us consider the vital issue of consultation, which has been raised by my noble friend Lord Warner, on which I do not think the Minister is going to be in much of a position to comment, because he is dependent on notes passed to him by officials who are one stage removed from the consultation anyway. The House would expect a full statement to Members on what happened in the consultation—who was consulted, on what basis, what they said and what the Government’s response was—before this statutory instrument is debated in the House.
We need some mechanism—perhaps it is the Liaison Committee. Perhaps my noble friend Lord Foulkes, who takes on many public responsibilities, should take it upon himself to see that this process is conducted in a timely and adequate fashion before the House debates statutory instruments. I do not know whether my noble friend would be willing to take on that responsibility, but I am volunteering him. Otherwise, he may have a suggestion which we can then make as a Grand Committee for who should undertake this responsibility.
I shall pretend to be a Minister and say that I shall look at that very carefully.
In the want of a better solution, I shall recommend to the Government that my noble friend Lord Foulkes should take this on, because on the basis of the debate that we have had so far, we will not have confidence that this procedure will be conducted unless there is an impartial referee to see that it has taken place.
I turn to a new issue of substance in the regulations. Many members of the Grand Committee will have been briefed, as has my noble friend Lord Warner, by those directly concerned by the issues raised in the regulations and whether, as the noble Lord, Lord Henley, said, they do indeed make minimal changes to the existing regime, allowing for the fact that we are in a no-deal situation. I draw the Grand Committee’s attention to and ask the Minister to respond to arguments being put before Members by Bristows, a law firm which specialises in patent law. It has raised a serious concern about the regulations, specifically the adjudication mechanism. I set that concern before the Grand Committee and hope that the Minister will respond.
Bristows states that the amendments have potential ambiguity in the following respects. They provide that a declaration of invalidity of a supplementary protection certificate may be submitted to the “comptroller or the court”, in the words of the regulation, with the court being the unified patent court if the basic patent is subject to the unified patent court’s jurisdiction under Schedule 4 to the Patents Act 1977. However, under Schedule 4, the UPC has exclusive jurisdiction for invalidity actions of a supplementary protection certificate based either on a unitary patent or a European patent. Therefore, Bristows argues, the court referred to in the context of the “comptroller or the court” in the draft statutory instrument, when interpreted in the light of the Patents Act 1977, will, for those supplementary protection certificates, be the unified patent court.
Further, as stated in Schedule 4 to the 1977 Act, the unified patent court should have exclusive jurisdiction in such cases. “However”, Bristows asks,
“what is the impact of the reference to ‘the comptroller’ in the expression ‘the comptroller of the court’? Does this leave this national UK authority … with jurisdiction as well as the UPC? The natural meaning of the Statutory Instrument … suggests that there remains additional jurisdiction in the hands of the Comptroller as well as the Court … even if this was not intended. In consequence, it may remain possible for SPCs based on unitary patents to be invalidated in the UK”.
This looks to be a serious concern. I freely confess to the Grand Committee that, not being a patent lawyer myself— my noble friend Lady Kingsmill is, so she may be able to add to this—I do not entirely understand the impact of this concern, but Bristows believes it may be serious. The Grand Committee would be very grateful to an answer to Bristows’ concerns when the Minister replies. If he cannot give one in detail today, perhaps he can include it in his written response to members of the Grand Committee after the debate.
Maybe I should start with the last thing; I understand the point but I have not investigated it myself, so I cannot say whether it is a concern or not. However, the gist of it is that if something is a unified patent it should go to the Unified Patent Court if and when that continues, and, if it is a UK matter, it should be a matter for the UK.
I want to go back to supplementary protection certificates, which has always been an issue of great angst and has always made me happy that my own professional practice was to do with electronics and computer architectures and a long way from drugs—although I am, perhaps uniquely, one of those people who qualify on both sides of the divide between engineers and chemists. It is a difficult issue and therefore there is all the more need for consultation. There are conflicting arguments as to what works legally, what works usefully and economically, and what works simply.
The way it has been done here, the instrument aligns the maximum term for this patent-like right to continue to that which would be applicable in the EEA so that it would all expire at the same time. Was that decision taken to make it simple, in particular because of the decision made about parallel imports, so that you were not having to cross-check whether there were different rights applying at the time of the parallel imports? We have already had a discussion about parallel imports and whether that was a good idea. One comes back to the same situation that we have already visited. I am not sure what the starting point is; I am asking whether it was the decision on parallel imports and whether, if we suggested that perhaps that should be time-limited, even if not in this instrument, we should do something quite quickly to make it so. Would that then adjust what was done by the supplementary protection certificate because it follows that you would? When you come to look at the economic terms, there are lots of things to balance: whether you want a longer term of protection, who is paying for it and what benefits there are to the industry and the country. These are very nuanced and difficult, and there are always protagonists on both sides. Normally, I tend to be one of the protagonists against extensions; you should have to fight hard and justify them. However, that is all the more reason for having a much wider and longer exposure of all these rather difficult issues that one needs to come to grips with. I therefore agree with those noble Lords who have been poking around to see how good the consultation has been because these are serious issues. But, as I said, my question comes back to the fact that it is a bit chicken and egg: was the parallel import decision taken first and did everything else follow from that?
My Lords, we have to conclude after the debate so far that this SI is holed below the waterline and the Minister will have some difficulty in preventing it sinking. He will have to write a pretty good letter by the time this comes to the whole House to see that it goes through when it comes to a vote there. The powerful speech made by the noble Lord, Lord Warner, has exposed the business issues involved in this, I was interested to hear what the noble Lord, Lord Adonis, said about the legal technicalities on this, and of course the impeccable logic of the noble Lord, Lord Deben, and the noble Baroness, Lady Kingsmill, on the consultation and the impact assessment is unassailable. The Minister will therefore have a great deal of difficulty in persuading us to approve these regulations, whether here or, eventually, in the House.
I am grateful to my noble friend who is a patent expert. My expertise in intellectual property extends to trademarks and copyright but it is very useful to have her unpacking of some of these issues as well. What particularly concerns me about the substance of the SI is not just that it is in the eventuality of no deal but that it has all the signs of something that was planned to take effect at the end of the transition period if the Prime Minister’s deal was going to take effect. This looks as if it is a longer-term arrangement. I think it was enshrined in the White Paper, or at least the outlines of it were, and that makes it of particular significance to get right. If there is any kind of deal then I suspect that this is what will be put into effect. It therefore has a double significance and is not just a fix for this purpose which has not been consulted over and which is not acceptable to a major trade body. I have dealt with the BioIndustry Association and I have a great deal of time for it and respect for the expertise that it embodies. The fact that there has not been adequate consultation over something that is potentially a long-term solution makes this even more questionable.
I am sorry to interrupt the noble Lord further but I want to give a bit of support to what he is saying. In my remarks I drew attention to the fact that the MHRA, the UK pharmaceutical regulator, actually tried to suggest to the BIA that it should wait for a review in two years’ time. That looks remarkably like the timetable for the end of the transition period, so I want to give some support to the arguments that the noble Lord is making.
I thank the noble Lord for that intervention because that is exactly the impression that I had got.
To add to the Minister’s woes, I want to go off into a completely different subject that he himself raised at the very beginning: the issue of the Agreement on a Unified Patent Court and the unified patent. The unified patent has come up; the Minister has mentioned it and it was included in the technical note in September. There is a big issue surrounding the Agreement on a Unified Patent Court and the unified patent. If the agreement is ratified by Germany and comes into force ahead of any exit date, the UK will need to work out how to remain a member of the UPC or withdraw from the system, which could have a significant impact on business. Of course at this stage it is not clear if the agreement will come into effect at all, but if it does and if, as a third party country, the UK then wants to take part, is it not clear—I have a 39-page legal opinion on this subject—that we, the UK, will have to acknowledge the supremacy of EU law and the ECJ as part of signing up to the UPC agreement? What kind of “taking back control” for Brexiters will that be?
What advice have the Government received on this matter? I heard what the Minister had to say: he made the very positive statement that we were going to sign up. Have the Government had any further observations on the UPC agreement and the unified patent? How do they envisage UK legislation dovetailing with both systems, assuming that it is ratified?
My Lords, this has been a good debate that has raised lots of issues. I think the noble Lord, Lord Clement-Jones, is right that there are real questions to be asked here, although I feel that we are experiencing a bit of a split focus here. It is like being part of the film “The Matrix” because there seem to be two different levels of debate going on. There are the particularly narrow questions about the statutory instrument as presented, with which I think there are some substantial difficulties, but there are also the wider issues about why we are doing all this and the way that we are doing it. The noble Lord, Lord Deben, and others have focused on the absurdity of a situation where we are trying to persuade ourselves that, despite our best instincts, despite all the training that we have had here and despite everything that we do every other day of our lives, we are quite happy to sit here and wave this through just because it might not happen. That seems to be Alice in Wonderland rather than “The Matrix”, but perhaps they come together in a curious way which I have yet to experience.
The noble Lord, Lord Clement-Jones, commented on the unified patent court, which is an intriguing area of public policy which has yet to have its full ramifications explained. He is absolutely right that the UK has committed itself to ratifying the UPC and intends to join up. I am sure that the Minister will confirm that when he comes to respond. Of course, with that comes the continuing role of the ECJ, because all judgments of the UPC, although there will be a platform of it operating here in London in property which has already been bought and refurbished in premises on a lavish scale which may not have been seen by the press yet, but I am sure that when they are there will be a bit of a scandal, will be absolutely redolent of the way in which the European continuing engagement will have to operate. That is because so many people hold unified patents and will need to have them defended in ways which are important not only here but in the six other areas where the court will be operating. But that is part of the further discussion and debate along with the consultation issues which I agree need to be bottomed out at some stage, but perhaps not today.
I may just stunt the time taken up by other speakers by looking at the other four SIs which are due to be discussed shortly by the noble Lord, Lord Bates, and others. I am sure that he will have read through and inwardly memorised the rather clever phrasing used by HM Treasury which I recommend to the department as it might wish to use it in the future and thus avoid some of the confusion. It states:
“HM Treasury has not undertaken a consultation on the instrument, but has engaged with relevant stakeholders on its approach to Financial Services legislation under the European Union (Withdrawal) Act 2018, including on this instrument, in order to familiarise them with the legislation ahead of laying … The instrument was also published in draft, along with an explanatory policy note, on 31 October 2018, in order to maximise transparency ahead of laying”.
That is wonderful phrasing and I congratulate the Treasury on having found a way out of an apparently insoluble problem. If it can defeat the noble Lord, Lord Adonis, and his assembled minions, obviously it will be well ahead of the game.
My Lords, I am grateful to my noble friend for giving way. Does he not think that the best way of maximising transparency, which is a laudable objective that the Grand Committee shares entirely, would be to have an ordinary consultation under the Cabinet Office procedures of 12 weeks where people can make formal responses? The Government then evaluate those responses and publish their response together with all of the consultation responses before the debate in the House rather than what the noble Lord, Lord Henley, is proposing, which is that the consultation should take place after the House has approved the regulations.
Will he further say how, in this new Alice in Wonderland world in which we work where consultations take place after Parliament has agreed the regulations on which we are consulting, how he thinks that Parliament is then intended to take account of the consultation? In the world of the noble Lord, Lord Henley, where we consult on the regulations having passed them, if the result of the consultation with the trusted and selected individuals or the selected and trusted individuals shows that there is a need for further substantial revisions to the regulations, what are we supposed to do? What procedure does my noble friend have in mind for how we then rescind these regulations and produce new ones? Does he not think that it would be better if we could come out of Alice in Wonderland and go to the world that applied before Brexit started, where we had good, orderly government and consulted on major changes to legislation before we brought about those changes rather than afterwards?
My Lords, I regularly spend most of my day with Alice in Wonderland because I think that it is a wonderful place to be. The noble Lord will be surprised to learn that I agree absolutely with every word he has said. The only difference between us is that I do not think I need to repeat it every time.
Finally, I wish to draw two points to the attention of the Government. The first is that we have to be clear about the damage that will be done to the UK’s pharmaceutical industries along the lines of what the noble Lord, Lord Warner, said. I hope that we will get a letter from the Government confirming or denying some of the points which were made in that exchange. Secondly, this is a minor point but it is worth exploring and asking questions about. In paragraph 4.3 there is rather confused wording about the extent and territorial application of this SI. Although it applies to the United Kingdom, bits of it, which are not specified, do not apply to the Isle of Man. Activities have been taken up so I would be grateful for a side note because this needs to be responded to today.
My Lords, I confess that I cannot begin to answer the noble Lord’s question about the Isle of Man, and promise to write on that and the other issues I did not manage to cover. I note what he says about the advice that my department—the Department for Business, Energy and Industrial Strategy—should take from Her Majesty’s Treasury. As with all departments, we always listen carefully to what our colleagues in the Treasury say, and this time will be no exception.
I was not intending to intervene in the middle of the debate, but I did, and so to get back to this question of consultation and how we set about this with these regulations—which I repeat are only to deal with the no-deal possibility—I think the noble Lord, Lord Adonis, would be the first to agree that we would be irresponsible in not having done something should that eventuality arise. I give way to the noble Lord.
The Minister has been very kind and polite, and I am most grateful to him. Talking about the impossibility of dealing with things, I—like the noble Lord, Lord Deben—have some sympathy with him, and even more with his civil servants behind him. In today’s Order Paper, there are 38 affirmative instruments waiting for consideration by the Joint Committee on Statutory Instruments, 65 affirmative instruments waiting for affirmative resolution and 18 proposed negative statutory instruments made under the European Union (Notification of Withdrawal) Act 2017. Is it not irresponsible to be pressing ahead with this, with no proper scrutiny on things such as conservation, animal health, veterinary surgery, pesticides, employment rights, construction products, insurance distribution, maritime transport, motor vehicles, plant health, air quality? I could go on and on. We are rushing them all through. Is that not irresponsible? Is that not a waste of the Minister’s time and the time of the well-qualified people behind him, in anticipation of something none of us really want to happen? Would it not be better if the Minister came to his senses now, withdrew this order and, along with all his other colleagues, said, “We are not going to take any more of these orders through the Grand Committee and the House of Lords because it is a total waste of time and totally irresponsible”?
My Lords, I am always kind and polite to the noble Lord. I know he is a delicate flower and does not want me to be too hard on him.
I appreciate there are a lot of no-deal regulations and that we are asking a lot of the Joint Committee on Statutory Instruments. The noble Lord has served on that wonderful committee, as have we all, and it does a very good job, as do the other committees that have this duty. We are satisfied that they have enough time and resources. I think the House feels that it too has enough time. This can be discussed by the usual channels. We are having a very useful debate this evening and I am looking forward to continuing that process. It is difficult, but equally it would be much more irresponsible not to be moving regulations or producing them for the eventuality that there was a no deal, because the noble Lord will be aware that as a result of Article 50 and various other acts of Parliament that have been through both Houses, if we do not reach an agreement by 29 March, we leave the EU without a deal. This order, the previous order and other orders are designed to provide that certainty businesses need, and we will continue to move the appropriate orders.
Will the noble Baroness let me finish? I will then give way. She must not be quite so enthusiastic.
As is right and proper, we will then move them so that we can be in that prime position.
My Lords, it surprises me that the Minister is not concerned by the extent of the statutory instruments still to be debated, because the question must be asked: why on earth are we rushing through them at this late stage? There have been two years in which we could have been prepared; there were two years when the possibility of a no-deal outcome was on the cards. Why on earth are we and the noble Lord’s civil servants being expected to race through with inadequate research and consultation now at such a late stage when there have been two years when these things could have been prepared?
My Lords, I simply do not accept that point. The fact is that we are doing them now and giving them proper scrutiny, as the noble Baroness, her noble friend and other noble Lords would accept. There will be other opportunities to debate this and other regulations.
One more point very briefly—
My Lords, I am on my feet, and I will give way to the noble Baroness when I wish. I will now give way.
May I just say that we have been at this for getting on for four hours? If we proceed at this pace with the number of statutory instruments that we have still to debate, we will never get through them and there will be a vote before long to say that there will be no no deal. So what is the point of all this? I referred earlier to Alice in Wonderland; it seems even more peculiar.
My Lords, the noble Baroness is getting on to wider questions. I cannot remember whether it is in Alice in Wonderland or Through the Looking Glass, but I am a mere pawn on the chessboard of life. I believe that we are having appropriate discussion on the order and I think that it is right and proper that, since we have started, we should continue. I look forward so to doing and, as I said, there will possibly be other opportunities as well. I think we should continue with that. Others, who may be the kings, queens and bishops, will then discuss what is the proper procedure, but at the moment, we are considering the Patents (Amendment) (EU Exit) Regulations, which relate only to no deal. We do not want to broaden it out to other things; others can discuss that issue.
Let me return to the debate and the consultation. As I made clear earlier, the IPO sought the views of a group of individual stakeholders—I shall not go into the slightly different words that my noble friend cited from different letters—and consulted them in their personal capacity to identify any issues with the drafting and raise any concerns with the approach. As I made clear, legal experts—there is nothing wrong with lawyers; the noble Baroness, Lady Kingsmill, is one of them, as am I—and business representatives were present. It was a helpful and constructive review of the draft and it was understood that the regs were designed to maintain continuity. I repeat for the sake of the record that at that meeting, as I understand it, there were representatives from the BIA, the ABPI, the IP Federation, the Chartered Institute of Patent Attorneys, the British Generic Manufacturers Association and the agrochemicals industry. If I can add to that list and give further details, I will certainly include that in any letter I write to noble Lords.
On letters, I believe—I am open to correction—that in advance of these regulations I wrote to the noble Lord, Lord Stevenson, and to the noble Lord, Lord Fox, from the Liberal Democrat Benches. I do not know whether I should have taken that wider and written to others. I will consider that with each order I deal with, as appropriate. I also make clear, on the lack of consultation, that we were not preoccupied with the deal. The IPO had sufficient resources to take both deal and no deal in parallel. It was necessary across Government to treat no-deal preparations sensitively when we were in the middle of negotiating a proper deal. From the perspective of business, retaining the regulations means that both the process for applying for an SPC and the scope of the right for which it is granted would be the same after exit as before.
I turn to the post-exit concerns of the noble Lord, Lord Warner. I appreciate that after exit day there may be new drivers for policy change. I think it was the noble Lord who talked about the possible time it may take to get a UK authorisation compared to now and the potential effects. I hear the noble Lord’s concerns, but we should understand the issues when the time comes then properly consider the right policy solution at that point. As I have already said, I would expect that to involve the more usual open and constructive discussions with stakeholders and interests in this area that the IPA usually enjoys. I can assure the noble Lord and others that our intention would be to fully engage with the BIA, the IP Federation and other similar bodies.
I just want to clarify for the Minister that the damage to the life sciences will be wider as a result of Brexit, but the point I made in my speech was that it is the result of the approach to exclusivity and SPCs in this set of regulations. It is not a wider set of damage. It is a damage to the industry and the sector arising from this set of regulations.
The noble Lord is right to point to the importance of the life sciences sector, and I am grateful he did. One should also re-emphasise—I would be grateful if the noble Lord would do so—just how important the life sciences industry is to us and what a great state it is in at the moment. The noble Lord will be aware of the recent stage 2 of the sector deal in life sciences that we published along with that sector. I am sure the noble Lord very much welcomed the fact that a major multinational—one based in Brussels, for that matter—announced at that stage that it was investing a further £1 billion over the next five years in research in the UK. Obviously Brexit is not putting off certain parts of the life sciences industry, and I am sure the noble Lord will welcome that.
I do not share the noble Lord’s view that there is a policy change. The SI maintains precisely the current calculation of the SPC duration, and at present it is calculated from the first marketing authorisation in the EEA, which includes the UK. After exit, without the provisions we have set out in this SI, the duration of an SPC in the UK would be calculated from the first authorisation in the EEA—but that would not include the UK. That would be nonsensical and is exactly the sort of deficiency that Parliament gave Ministers carefully limited powers to fix within the withdrawal Act. We believe we are complying with the powers we have within the withdrawal Act. That is what the SI does. It shows that after exit, SPCs within the UK will continue to be calculated from the first marketing authorisation in the EEA or the UK, and the status quo is maintained.
Finally, I turn to the point made by the noble Lord, Lord Adonis, about the Explanatory Memorandum. He said that there was little impact. If a measure has a net impact to business of less than £5 million then obviously a full impact assessment is not required. The £5 million threshold, as the noble Lord will be aware as a former Minister, is set out in the better regulation framework guidance, and measures below the threshold must be accompanied by a proportionate analysis. The analysis is summarised, as the noble Lord will be well aware, in paragraph 12.3 of the Explanatory Memorandum.
I used the word “finally” but, if noble Lords will bear with me, I will have one or two more “finallys”. I turn to the concerns about the unified patent court. We have set out our proposals for the future relationship with the EU, including exploring continued participation in the UPC and the unitary patent. In the political declaration, the UK and the EU have agreed to co-operate in areas of mutual interest relating to intellectual property, including patents. The future of the UPC and the unitary patent will be a matter for negotiation. It is therefore rather too soon to be setting out the further dovetailing legislation.
The noble Lord, Lord Clement-Jones, also set out the points made by the law firm Bristows. We are aware of the point that Bristows has made. The patents legislation contains a number of references to the comptroller and the court, and all those references will be modified in the event of the UPC coming into force. The patents legislation will fully recognise the jurisdiction of the UPC.
I apologise to the Minister but actually it was not the Bristows opinion; the 39-page opinion that I mentioned is actually from Brick Court Chambers, and it is very comprehensive. It makes it very clear that if we are to sign up, or to continue with our intention to sign up, we will have to recognise the jurisdiction of the European Court of Justice and there will be no getting out of that. That is what makes this so ironic in the circumstances.
I look forward to reading the opinion that has emanated from Brick Court Chambers in due course. I was responding, I thought, to the points that the noble Lord had made about Bristows.
That was the noble Lord, Lord Adonis.
I apologise to the noble Lord, Lord Adonis. I will no doubt study, as will my officials, both the Bristows letter and the opinion from Brick Court.
Before the Minister sits down, he has very kindly said that he will write to respond to a number of the points that he has been unable to deal with. Those points are going to be crucial for the House itself to consider when this regulation goes to the House, particularly the points about consultation that were raised by my noble friend Lord Warner.
I ask that the Minister sends his reply and full statement in response to the debate to all Members of the House together with a copy of the debate itself because of the very unsatisfactory arrangements under which the proceedings of the Grand Committee are now reported. They are no longer in the main body of Hansard, a change that I find inexplicable. I do not know when it happened. It must have been beyond the oversight of that shrinking violet, my noble friend Lord Foulkes. It would never have happened if he had noticed it; he must have been shrinking on that particular day. If the Minister could send his full response, with the full proceedings of this debate, to all Members of the House it would be extremely useful in informing noble Lords before they consider these important matters.
I think that the noble Lord would not expect me to respond quite as positively as he wishes. It might be an overuse of paper to write to every Member of the House. I will write to the noble Lord and other appropriate Peers, and make sure that a copy of my letter is, as always, available in the Library. The noble Lord and I understand that procedure well. A copy of this debate will be available in Hansard. Even if it is not the same Hansard in which reports of the Chamber appear, I understand that it is still Hansard and open to all noble Lords to read. If we want to be really modern about these things, it is also available for the noble Lord to read online.
I have two points before the Minister sits down. First, I do not think he replied to my point about whether there was any intended alignment with the supplementary protection certificates and parallel import points. The Minister may wish to come back to me on that. Secondly, the unified patent court and its relationship to the ECJ has been mentioned. That is inevitable. The unified patent court is an international court. The European patent is not an EU invention—it is external to it—but it has been agreed under the convention to which the UK is a party that it recognises the judgments of the ECJ. As I understand it, our own Intellectual Property Office would therefore have to take those judgments into account. Whatever convolutions there may be, we will not get away from the influence of ECJ decisions, whether or not the unified patent court comes into being.
My Lords, I will write to the noble Baroness on both those points.
My Lords, a moment ago the Minister mentioned writing to “appropriate Peers”. I have never before heard a Minister in the House using the phrase “appropriate Peers”, presumably as opposed to inappropriate Peers. I suspect that, in the Government’s view, I am probably an inappropriate Peer. Particularly in the light of my noble friend Lord Warner’s remarks about “selected and trusted” consultees, I hope we are not going to start introducing the concept of selected and trusted Peers who are to be made privy to the Minister’s responses to these debates. I strongly suggest that all noble Lords receive his letter, together with the account of the proceedings of the Grand Committee. If he is not able to give that assurance, will he take this matter up with the Leader of the House and let noble Lords present in Grand Committee today know soon what the Government intend to do on this? I and other noble Lords may wish to take this matter up with the Leader of the House and with my noble friend the Leader of the Opposition. It goes to the rights and privileges of Members when the whole House considers these matters.
This is one occasion where I can give a categorical assurance to the noble Lord, because he merely asks what I meant by “appropriate”. I define it as meaning that I will write one letter to all noble Lords who have taken part in this debate and make that available in the Library of the House, as is the normal convention. By that means, all those who have taken part in the debate will have a copy of my responses to the noble Lords, Lord Warner, Lord Adonis, or Lord Clement-Jones. It would be easier if I wrote one letter to all “appropriate Peers”; that is, Peers who have spoken in this debate.
My Lords, I am grateful to the Minister for seeking to define “appropriate”, but I do not think that Members of the Grand Committee think that his definition is adequate. Our job is to advise the House as a whole, but there may be a feeling in the Grand Committee that other noble Lords should receive this letter so that they are aware of the gravity of the issues raised about the whole future of the life science industry, which the noble Lord, Lord Warner, referred to, and the importance of taking note of those issues before the House comes to consider them.
I am grateful to the noble Lord, because obviously he always considers what is important to the House. He will no doubt make sure that that letter of mine, which will be available in the Library of the House, is made available to everyone else whom he thinks it is right should see it. I cannot go further than that, but it would not be right to write to every noble Lord on this regulation.
The Question is that the Grand Committee do consider the Patents (Amendment) (EU Exit) Regulations 2018.
My Lords, I must remind the Grand Committee that a single call of “Not content” has the effect of negativing the Motion. With that in mind, I put the Question again. The Question is that this Motion be agreed to.
Trade Marks (Amendment etc.) (EU Exit) Regulations 2018
Considered in Grand Committee
That the Grand Committee do consider the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018, the Patents (Amendment) (EU Exit) Regulations 2018 and the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018.
My Lords, intellectual property plays a vital role in the UK’s knowledge economy, and this will continue to be the case after our departure from the European Union. Ensuring strong and balanced IP protection and enforcement is central to the Government’s aim of encouraging businesses to innovate and develop new ideas and technologies, which forms part of the industrial strategy. As I said in the debates on earlier regulations, our intellectual property system is consistently rated as one of the best in the world. These regulations are part of the work being delivered by the Intellectual Property Office to ensure that the system governing intellectual property rights in the UK continues to function in the event of no deal being agreed when we leave the EU in March. This is essential to ensure a smooth transition for business and to provide maximum certainty and clarity.
It is possible to obtain trade mark protection in the UK under the domestic regime and in the European Union under the European Union trade mark regulation. The majority of UK and EU trademark law is harmonised. Much of our domestic legislation derives from EU directives, which were implemented through the Trade Marks Act 1994. The EU trade mark regulation offers the possibility of retaining EU-wide trademark protection in the form of a single registration at the EU Intellectual Property Office. This system runs in parallel to our domestic system, so prior to exit, protection in the UK may be obtained by registration under both the EU and UK systems. After exit, protection in the United Kingdom for trademarks registered under the EU regulation will be lost. The draft instrument before the Committee today uses the powers provided by the withdrawal Act to address deficiencies in the UK trademark law which would arise from exit. EU directives providing for harmonisation of national law relating to domestic trademarks are also aligned in many respects with the EU regulations providing for EU-wide trademarks.
I shall focus in particular on how the Government are ensuring the continued protection of EU trademark rights in the UK on exit. Noble Lords may recall that the EU Intellectual Property Office was established in 1994 as the Office for Harmonisation in the Internal Market before being renamed in 2016. Its goal is to help further harmonise EU trademark law and provide an EU-wide trademark right. Around 1.3 million EU-registered trademark rights are at present in force. These EU trademark rights have protection in the UK. Indeed, many products and services in this country will bear the names of registered EU trademarks and are owned by UK companies. If we do not act, the protections afforded to those rights will be lost. Many of those in this Room will be familiar with the brands which use these types of trademarks, from food and drink retailers to global clothing firms, luxury car manufacturers and everything in between.
The draft instrument further explains the approach that will be taken for EU trademark applications which are pending registration at exit day, of which there are an estimated 85,000. Those with such pending applications will be able to file a new application in the UK claiming the earlier filing date of the EU trademark application. To claim the earlier filing date, an application must be submitted to the UK Intellectual Property Office within nine months of exit. The IPO has ensured that businesses and trademark practitioners have been made aware of these changes through technical notices. It will provide full business guidance once the draft instruments are made.
The framework for EU trademarks is set out in EU regulation 2017/1001, which falls within the definition of retained EU law under the withdrawal Act and will be revoked its entirety in the UK on exit day.
My Lords, I am going to complete this sentence and then I will give way to the noble Lord.
The instrument ensures that replacement domestic rights will be provided to those who own EU trademarks on exit day. It gives certainty and confidence to businesses who rely on their trademark rights in the UK. I will now give way to the noble Lord.
I am grateful to the Minister. He referred to the fees for filing applications, the very large number that will be pending and those which will need to be converted. An issue of real concern that has been raised by those who have looked at the regulations is what those fees will be and whether the fees for filing converted applications will be the same as the normal trademark application fees. Can he tell the Grand Committee what the position will be in terms of the fees that will be charged?
My Lords, again, I was going to deal with that at the end. There will in fact be no costs to business associated with our creation of new UK rights. However, because the UK comparable right will be independent of the EU trademark, there will be a charge for businesses in relation to future renewal. Businesses that wish to maintain their protection in the UK will need to renew their UK-comparable trademark at an average cost of some £300 for a registration period of 10 years. Applications for EU trademarks that are pending but not yet registered at exit day will need to be examined under UK law. The normal UK fee, whatever that is, will therefore apply to those applications. We have committed to respect the relevant filing dates for those applications under this instrument.
My Lords, on future renewal fees, what are we talking about when we refer to the future? Is it beyond the transition period or within it? How are we defining “the future”?
My Lords, if the noble Baroness will be patient, the trademark is renewed every 10 years. When it is renewed, a fee will be paid. That does not change.
The instrument provides that these new UK rights will be fully independent UK trademarks which can be challenged, assigned, licensed or renewed separately from the original EU trademark. Such new UK trademarks will, however, retain their original EU filing date and therefore any other relevant dates that were filed as part of the original application.
Finally, there are miscellaneous amendments to the Trade Marks Act 1994 and the Trade Marks Rules 2008 to reflect the fact that the UK will no longer be a member state or a member of the European Economic Area.
In conclusion, these regulations are a small but vital part of ensuring that this part of the intellectual property system continues to function if the no-deal outcome arises. I hope that on this occasion, noble Lords will support the draft regulations. I commend them to the Committee.
Before the noble Lord sits down —
I have sat down.
He has not sat down, in the sense that he is perfectly capable of answering a question before he concludes his remarks.
He again has not dealt with the question of consultation, which as he knows is of huge concern to the Grand Committee. We would be grateful if, before we come to our debate, he could set out what consultation has taken place, so that we can discuss whether we think that consultation has been adequate.
One small point struck me, not having looked at this before we commenced proceedings. I fully understand the transfer of the pending applications and the ability to file a new application and have it allocated the earlier filing date that the European trade mark had. I do not see any legal difficulty with that, but I wonder if there is a legal difficulty in allowing that to claim the priority date of the EU trade mark, in the sense that it would operate under the Paris Convention, which we and many other countries are party to. I used to take great pleasure in reminding the EU that the Paris Convention of 1883 predated the EU treaties and that they sometimes could not do things. But I wonder whether there has been any advice on that, because there is a discontinuity.
To take a parallel example, in the United States, if you file a continuation in part, there are careful rules so that you can ensure that the priority claim can go all the way through in a continuous way. I wonder whether, through the changing from a European Office to the UK office, there is a discontinuity here that would mean that priority date was challengeable. If there was a later priority date UK-only national application from an applicant not from the United Kingdom but from another country that was party to the Paris Convention, would there be a clash of rights? It is a question that should appeal to lawyers looking at these things. I cannot answer it without having a longer think, so I am asking the Minister whether he can advise me what advice he may have had on that.
My Lords, my noble friend has asked an important technical question, given her long-standing expertise in this area. As with the patent statutory instrument, this does appear to be a solution for trademarks, or to take advantage of the European community trademark. It appears to be a solution devised not just for a no-deal situation, but with a deal or the transition period in mind as well. Again that gives this particular statutory instrument a greater significance because it might be there for some considerable period of time in the event that a deal was reached. Moreover, as the noble Lord, Lord Adonis, has pointed out, similar issues regarding consultation and the impact assessment arise in connection with this statutory instrument as well.
It was interesting to hear what the noble Lord, Lord Deben, had to say about the difference in wording between the different Explanatory Memoranda. Asking a,
“small group of trusted individuals with expertise in trade mark law”,
almost means that the question is asked of people who are not going to give you the wrong answer.
Quite frankly, the really important aspect of this is the impact on business. On the impact assessment, the homework has been done in such a way that it answers the question by bringing the impact under £5 million. I cannot believe that that will be the total cost to business once you have added together all the issues such as the legal advice that will need to be taken and the red tape involved. I know this is a solution that is designed to be constructive but there are inevitably going to be costs. Frankly, the importance of brands being what it is, the actual costs involved to business are going to be quite high. I cannot believe that the figure is not going to be higher than £5 million.
The same issues apply to this statutory instrument as much as they do to some of the earlier ones. However, there are other technical questions. My noble friend has asked one set about the priority date, but another important question is which court will have jurisdiction if the validity of the original EU trademark is challenged in the future. We cannot leave business in a state of uncertainty. Then of course the UK trademark comparable right will be a stand-alone right. Does that mean that in those circumstances an applicant will have to challenge a trademark’s validity both in the UK and in the EU? What is the answer to that? One right derives from another. As a result of that, does someone wishing to demonstrate the invalidity of a trademark have to go to two jurisdictions? If that is not an additional burden on business, I do not know what is.
There are a number of questions to be asked here. We have come back again to the circularity of a quick fix that could have long-term consequences and where the procedure, process, consultation and impact assessment have been grossly unsatisfactory.
Before the noble Lord sits down, he has great familiarity with the sector, as does the noble Baroness, Lady Bowles. Does he think there are similar concerns in the sectors affected to those referred to earlier by the noble Lord, Lord Warner, that organisations and companies intimately affected by these regulations have not been consulted because they do not count within the,
“small group of trusted individuals”,
referred to in paragraph 10.1 of the Explanatory Memorandum?
I cannot answer that question. I think that these have been drawn up in an attempt to be constructive. I do not think the initial thought was that these were going to create difficulties for business. The trouble is that at the end of the day any business, when it is looking at its intellectual property, is going to prefer to stay in the EU rather than come out, so there is a fundamental aspect of this which is not business-friendly. I can see what the noble Lord is driving at, but this measure is an attempt to be constructive in circumstances where it is very difficult to get a decent result.
My Lords, on that point, I have spent the last 50 years of my life earning my living as a result of intellectual property. It is almost impossible to explain to noble Lords and the Minister how fundamental the harmonisation of intellectual property and the clear, clean flow of revenues generated by it is to the financing, never mind the issue of recruitment, of material for film, television and associated industries.
My Lords, we welcome back my noble friend Lord Puttnam, who has been too far away. He has just been trying to finance a film, so he speaks with some detailed recent knowledge on these matters. He makes a broader point which is that the losses we are incurring as a result of these changes are very significant indeed and are not taken into account in any of the costings we have seen on the table so far.
We have had a number of contributions. The noble Baroness, Lady Bowles, was right to remind us of the fundamental Paris Convention of 1883—soon to be updated, I think—which will possibly have a larger role to play in the post-Brexit scenario, should there be one. We have to build into that the very odd demarche taken by the Government in this SI, which is to solve a problem caused by the country losing the ability to trade in the way that my noble friend Lord Puttnam has said across all boundaries and simplifying all the arrangements by bringing in an additional right for those who are trading into the UK from outside when it is not at all clear, and almost certainly not the case, that the UK in a separate environment will be offered that. I do not really follow the logic of that. It came up, as was said, in an earlier SI. I would be grateful if the Minister could respond with a bit more context on why this generous gesture, very asymmetric in its approach, is being made now and in a way that will complicate any future negotiations and discussions.
I have two further issues, one of which was mentioned by the noble Baroness, Lady Bowles, which is that there are some complicated transition arrangements outlined in the Explanatory Memorandum. Paragraphs 7.10, 7.11 and 7.12 make reference to some of the problems that will occur with court cases being considered at the time of exit. The different EUTMR regulations and the proceedings and rules for that do not sit well with the existing arrangements in the UK. I do not think it needs a detailed response today, but I would be grateful for a note on that when the Minister comes to consider whether he might write to us. As for the continuing role of the ECJ on such determinations—particularly when cases have to be raised in two territories, as noted by the noble Lord, Lord Clement-Jones—how are these going to be resolved? Have they any plans for how that might happen in practice? I look forward to hearing his response.
My Lords, I will try to be brief and as always I will offer to write to all appropriate noble Lords. I think the noble Lord, Lord Adonis, knows what I mean by appropriate.
Appropriate. The noble Lord will be aware that I trust all noble Lords implicitly and explicitly.
On consultation, I again make clear that the IPO has been engaging with businesses on the implications of exit, and in particular on trademarks, since the referendum result. It has also consulted with specific stakeholders on the technical detail of this instrument. It prefers to fully consult whenever possible but, due to the unique nature of EU exit and sensitivities around negotiations at the time of drafting, we felt the best course on this occasion was to limit consultation.
The noble Lord, Lord Clement-Jones, asked what happens if there is a deal and what the point of the regulations are. I repeat that the regulations will only come into force in the event of a no deal. If we secure a deal with the EU, the provisions on intellectual property in the withdrawal agreement will come into effect, and that means EU trademarks will continue to have effect in the UK at least until the end of the transitional period. During the transitional period, it is likely that revised regulations will be drafted which will take into account the result of further negotiations reflecting the future economic partnership.
I will touch on possible costs. The noble Lord, Lord Clement-Jones, doubted that the costs could be less than £5 million. The annual revenue cost has been estimated at between £2 million and £2.7 million, based on a 60% renewal rate in the UK between 2008 and 2017. I would prefer to write to the noble Lord in greater detail on that.
The noble Lord made an interesting remark a few moments ago about the fact that he had chosen to limit the consultation. I wonder, after the discussions this afternoon and last week, on what basis the Government are operating on consultations? They are clearly not operating on Cabinet Office guidance on consultations. What guidance has actually been given to civil servants on carrying out consultations on behalf of Ministers? I think that the Grand Committee would like to see the basis that the Government are using for consulting on these regulations.
Who are the trusted individuals?
With due respect to my noble friend, I am not so worried about that at the moment. I may become worried when I see the basis on which the consultations are taking place. I think the Grand Committee—and I in particular—would like to see what system the Government are using for consulting on these regulations.
My Lords, I can make it clear that, throughout all these SIs, the Government have been engaged in what one might call a cross-government approach to consultation, to make sure that we get things right. We obviously cannot consult in the way that we would normally do when there is more time. However, as I made clear on the first and second orders, and now this, there has been a degree of consultation between the IPO and others. If the noble Lord will bear with me, I will expand on that in a letter. The important thing is that we are just dealing with the no-deal option here. When it comes to further arrangements, more consultation will obviously be necessary. I know that the noble Lord has particular concerns. He has come to see me and has been talking to my officials. In the event of there being a deal, we will want to make sure that we continue with those discussions to make sure that we get this right.
I am sorry to be difficult, but I am still trying to grapple with this. Are the Government actually leaving it to the civil servants to decide how to do the consultations individually, regulation by regulation? Or is some kind of guidance being used for this raft of regulations? Can we be clear whether there have been any directions or guidance to them, or have they been left to make up their own arrangements according to each set of regulations?
I ought to make it clear that the IPO discusses these matters with DExEU to agree an approach. We want to make sure that there is a similar approach across Government. I can expand on that in any letter I write to the noble Lord. It is not just a matter for this department or that one, as the noble Lord would put it. I am now going wide of my brief, but there is a degree of consistency when dealing with the no-deal regulations to make sure that we get this right. I see that the noble Lord, Lord Stevenson, is itching to get to his feet, so I will give way, but I agree to write to the noble Lord on this point.
I have read similar passages in the SIs from the Treasury which were due to—but will not be—discussed this evening. They reflect a different approach, which the Minister mentioned he would feed back to officials in due course. He talked about an all-of-Government approach to this, but that has not been borne out by what we have in front of us. I will be interested to see the letter which explains what is happening, particularly in relation to the department for which he is responsible. In fairness, that is all he can answer for, but if it is possible to add to that a wider brief about what is happening more generally, Ministers in other departments would find it interesting.
The second point is that I am sure these issues are not being raised on the particularity of these SIs alone. Surely they are being raised because what we are concerned about here is that the Government cannot do their job properly in regulating for the future if they do not have the trust and enjoy the confidence of the sectors that they are engaging with. Here we are in a situation where some advice is being taken from some people, and some are being labelled as “trusted” while others are therefore labelled as not trusted. I do not think this is a very good basis for going forward, and I wonder if the Government might like to reflect on that.
My Lords, I will certainly look at what the Treasury is recommending. As I say, we have consulted DExEU. I can certainly give an assurance that all those whom we consult will be trusted. I am sure my noble friend Lord Deben would be the first to admit that he was possibly being mischievous when he tried to imply, merely because the word “trusted” appeared in one Explanatory Memorandum but not in another, that there was some element of a lack of trust by this Government. If any noble Lords think that is the case, I would thoroughly refute it.
The Minister said just now that the reason why he could not be confident of the extent of the consultation was the shortness of time. As I understand it from the Explanatory Notes, the major issues that were going to be addressed in this particular statutory instrument were laid out in the technical notice produced by the IPO back in September of last year, so there have been four months where presumably the main issues have been subject to consultation. That is not really a shortness of time; there was quite a lot of time in those four months for the consultation to take place. When he is addressing this issue in his letter, I wonder if he will be able to address why he thinks that the shortness of time in this case has caused so much difficulty in making the consultation as full and comprehensive as it should be.
I will certainly address that in my letter and ensure that the noble Lord receives it.
I turn to the question of jurisdiction. The noble Lord, Lord Clement-Jones, asked which court has jurisdiction if the validity of the original trademark is challenged. We have made provision as to how pending proceedings before the UK courts on exit day will be dealt with: they will continue on the basis of the EU regulation. New cases brought after exit day will be dealt with by courts in the individual remaining member states.
Lastly, I turn to the point made by the noble Baroness, Lady Bowles, about the Paris convention, a point that I think she described as appealing to lawyers. Well, here is one lawyer that it does not appeal to because I do not particularly understand it. Again, it will have to be dealt with in subsequent correspondence but I am advised that the UK application will in addition enjoy the priority right claimed by the EU trademark application. I hope that helps, but if I can expand on that matter then I shall do so.
I was about to move the Motion but I can see that I am not going to be allowed to, so I will give way for one last time to the noble Lord, Lord Clement-Jones.
I am deeply grateful to the Minister. I did not really think that his answer on the jurisdiction point was completely comprehensible. I hope he is going to include it in the letter that he writes because I am not sure about the exit date that he was talking about. He seemed to be saying that a different jurisdiction applied post the exit date as opposed to pre the exit date. I must admit that that is not entirely clear to me because the comparable right, which is derivative, is designed to spring up precisely after the exit date. I would really like to see a full explanation in his letter.
For once, my Lords, I thought the noble Lord had said that my explanation was completely explicable but I imagine that he said it was inexplicable, so I will certainly include that in the letter that I write. I beg to move.
The Question is that the Grand Committee do consider the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018.
My Lords, I must remind the Grand Committee that a single call of “Not content” has the effect of negativing the Motion. With that in mind, I put the Question again.
Committee adjourned at 7.44 pm.