It is not the case that that would never happen but overall it may be of some reassurance to the noble Lord that much consultation has taken place on this. If there were clear indications that the examples he gave were to lead to a chilling effect, that would certainly have arisen during consultation.
However, the noble Lord made a fair point and we will review the consultation. I will write to the noble Lord again if we can furnish him with some extra, new information. It is not the Government’s intention to criminalise businesses that use products based on copied designs incidentally in the course of their business but do not profit from any trade in those particular products.
The noble Lord, Lord Stevenson, raised the issue of applying Bugs Bunny to various products and how the law would work. This is probably the first time that anybody has said that Bugs Bunny is a complex issue, but he is and it would be best if I wrote to the noble Lord on the details of that particular point. The noble Lord also asked why it is a proposed offence to copy “exactly or substantially”. It is our intention that very minor modifications—possibly imperceptible ones—should not excuse deliberate copying and the sanctions that would follow. The noble Lord asked if the offence was “appropriate and proportionate”—I think he used those words. We recognise the concerns about proportionality and that is why the defence has been carefully crafted. We do not believe that it will lead to countless people being placed in custody, as can be seen by my previous references to Germany in this particular debate.
In fear of pouring fuel on the fire of the points made on the last amendment by my noble friend Lord Clement-Jones, making comparisons between unregistered designs and copyright and its criminalisation, I will reiterate our position on this. A comparison to copyrighted material, which is also unregistered but attracts criminal sanctions, is unhelpful because the protection for copyright lasts 70 years plus the lifetime of the author. This makes it unlikely that copyright will have expired, and infringement is therefore much more likely to be the result of copying. The shorter period of protection for unregistered design, together with the difficulty of knowing when those design rights came into existence—a point that I made earlier—means that it is more difficult for third parties to be sure they are not infringing. The introduction of criminal sanctions for unregistered rights could lead to a negative effect on business and innovation.
Furthermore, copyright protection is denied to the shape and configuration of industrial designs by Section 51 of the Copyright, Designs and Patents Act 1988. Applying criminal sanctions to an unregistered design right would criminalise some copying that would not be caught under the law of copyright. I am sure that the noble Lord will have some further points to make on this matter but I thought it wise to raise the subject again.
The noble Lord, Lord Stevenson, asked whether the issue of criminalisation was too complicated for magistrates and juries. Provided that it is limited to registered designs, we believe that the criminal courts can decide whether a design has been copied exactly or substantially. Similar issues arise in copyright, as the noble Lord will be aware. The noble Lord also asked why new Section 35ZA includes community designs and asked whether this would cover designs from the European Union. It does, because EU designs have effective rights here in the UK.
The noble Lord, Lord Stevenson, asked whether it is right that the use of a copied design is caught by the provision. The activities which constitute using a design under the offence reflect the definition for use of design contained in Section 7 of the Registered Designs Act 1949. Innocent acts are protected under the clause because it contains the test of knowing, or having reason to believe, that a design is copied.
The noble Lord, Lord Browne of Ladyton, was particularly concerned about those he described as “rich and powerful people” using the threat of criminal sanctions against small businesses. That is a fair point, but I draw on the UK’s experience in relation to other intellectual property rights, which have also been retrospectively subject to criminal sanctions. Although there is no quantitative evidence, the introduction of criminal sanctions for piracy and counterfeiting provides no indication of a chilling effect on creativity, copyright or brand development—trade marks—in the UK. They are generally acknowledged to be in robust health, with the number of trade mark applications at a historic high according to unpublished figures from the Intellectual Property Office.
Finally, I think it would be useful to provide a further response to a point made by the noble Lord, Lord Howarth. He asked how the Government defend setting up more criminal offences. I certainly do not propose to start discussing the wider criminal justice system today—I hope the noble Lord will forgive me for that—but the important point is that there are compelling reasons why we believe this new sanction is right, which I trust I have set out in my response.
I reiterate to the Committee that we believe it is right that deliberate, wide-eyed copying of registered designs is punished.