My Lords, in moving Amendment 23, I shall speak also to Amendment 24. Amendment 23 is very straightforward. Really, it is a question for the Minister: as regards the new criminal penalties that apply to registered design rights, why has Section 110 of the Copyright, Designs and Patents Act, “Offence by body corporate: liability of officers”, which ensures that company officers are liable if conniving or consenting, not been replicated here for registered designs? I could read out the relevant offence under the CDPA but I am sure my noble friend is familiar with it. However, it seems odd that everything else replicates what is contained in the CDPA for copyright but not the application concerning the liability of company officers. Considering that so much business is conducted through companies, it seems extraordinary that that provision is not included in the Bill.
I see that there will now be a clause stand part debate. I am not surprised because this is clearly a subject that needs airing. Rather more controversially, Amendment 24 is an attempt to advocate the extension of criminal offences for infringement of unregistered designs. As we know, Clause 13 introduces a new criminal offence of deliberate infringement of a registered design right. While this is a welcome move, to be of any benefit to the vast majority of designers in this country, the Bill needs amending so that criminal sanctions also apply to the deliberate infringement of unregistered designs.
Design is of key importance to the UK economy. There are around 350,000 designers in the UK and UK businesses spend around £35.5 billion on design each year. The majority of the UK’s design community are lone, micro and SMEs, with 87% having fewer than 10 employees and 60% having fewer than four. Approximately 4,000 designs are registered annually in the UK and approximately 5,000 are registered in the EU. However, the great majority of designers rely on unregistered rights.
Each year, between 18,000 and 25,000 unregistered designs are lodged with ACID—which represents designers and was mentioned at Second Reading and in these proceedings—by its some 1,100 members. ACID’s design data bank does not add to any intellectual property rights but provides evidence of the date on which it received a design. It encourages designers to keep an IP audit trail from the seed of an idea to market reality, which provides essential evidence if designs are copied. Extrapolating from that figure of 1,100, it is therefore reasonable to assume that the majority of the UK’s designers rely on unregistered design rights, and on copyright of course.
Why, then, is the new criminal offence limited to infringement of only registered designs? Surely criminal sanctions need to apply to unregistered design rights as they apply to copyright, in order to have any real and lasting benefit for UK designers. The introduction of criminal sanctions for deliberate infringement of registered designs is a progressive step. This is the first time that criminal sanctions have mirrored copyright. While I accept that registration offers designers a longer-term and stronger right, unlike trade marks and patents, there is no extensive examination for registration, so design registration is a very different type of protection.
To register a design costs £60 per design. Regrettably for most lone and micro designers, the cost of registering every iteration of a design would be prohibitive. ACID receives between 18,000 and 25,000 designs annually, so it is clear that informed designers take their design audit trail seriously. However, to ask them to pay £60 would be a real barrier. The majority of ACID settlements have been based on unregistered design rights and the ability to provide a design audit trail held on the ACID design data bank. In its 2010 survey, 89.7% believed that design infringement was deliberate and blatant. In a further survey in 2012, 97% believed design infringement was deliberate and blatant. Given the cost, time and scale of opponents in the majority of these cases, deterrence against copying is critical. Extension of criminal sanctions to unregistered design
rights for the majority of the UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trade mark infringement.
Criminal sanctions have been available for copyright infringement since 1862 and for trade mark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Copyright is a property right. A trade mark and an unregistered design right are property rights, as is registered design. Whereas persistent copying of the first two constitutes a serious criminal offence, punishable by up to 10 years’ imprisonment, which exceeds the longest sentence for ordinary theft, currently persistently copying designs is not a criminal offence at all. This is completely anomalous. Persistently copying a 2D drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this 2D work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed, copying that 3D version would not be a criminal offence.
I fail to understand the policy decision behind this. Nearly all designs are copied from the 3D original, not the 2D drawing. How do the Government justify giving a higher level of protection to a 2D design brought than they to the 3D manifestation of that design? A telling point was made by designers when they gave an example of the scale of opponent in the three latest cases involving members of ACID. This demonstrates the inequality of arms between infringers and designers. For instance, one ACID member had a turnover of £50,000 and two employees, and its opponent in this infringement case a turnover of £8.7 billion and 78,000 employees. How on earth can a lone designer gain justice in those circumstances?
In a second case, an ACID member with a turnover of £500,000 and 15 employees was opposed by a major retailer with a turnover of £20.5 billion and 145,000 employees. I will not try the Minister’s patience much further—these are difficult cases, where members are seriously prejudiced—but in a third case, an ACID member with a turnover of £250,000 and 10 employees was opposed by, again, a major retailer with £3.4 billion turnover and 52,000 employees.
If anything, in these circumstances, there are quite honestly stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. I hope that the Minister can elucidate why this is not being done and perhaps give us some assurance that this is under consideration. I beg to move.