My Lords, before I begin I thank noble Lords for their engagement on the new reporting duty. This has given me an opportunity to clarify the Government’s intentions for this report. Noble Lords will, I trust, excuse a relatively long response, but many important issues have been raised during the course of this debate. I also hope that my noble friend Lord Jenkin is able to stay to hear my full response and that—how shall I put it?—a different sense of energy does not intervene. Many questions have been raised, and I will attempt to answer them all at the end.
Amendments 25F, 26, 26ZA, 26A, 26B, 26C, 27, 28 and 28ZA seek to broaden the scope of the proposed annual report and detail what the contents of the report should contain. I will address the amendments in turn. Amendments 25F, 26ZA, 26B and 26C, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would require the scope of the report to include an assessment of the impact of the Intellectual Property Office’s activities on job creation, in addition to their impact on innovation and growth. A direct relationship between intellectual property and job creation is practically impossible to draw. There are many different factors that will influence whether a business creates jobs. However, where there is evidence to suggest that the IPO’s activities may have had an impact on job creation, the report will indeed state this. Amendment 26C raises other questions to which I shall return later in my reply.
Amendment 26 tabled by my noble friends Lord Jenkin of Roding and Lord Clement-Jones, and to which the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, have added their names, would restrict the focus of the report to innovation and growth arising from the creation and exploitation of intellectual property. This point was raised during the Government’s consultation. In response, the Government said:
“The report will cover IPO activities which promote growth and innovation arising from the creation and exploitation of IP but the Government cannot restrict its focus to existing industries and business models. It needs to look at how the IP framework fits with technological change and the development of new business models. The report will therefore aim to present a fuller picture of the impact of the IPO’s activities on growth and innovation”.
I will explain what I mean by the expression “a fuller picture”. The report will also therefore contain an assessment of the Intellectual Property Office’s activities on growth and innovation arising from the use of intellectual property by third parties.
Let me give the Committee an example. Last year, the Government consulted on proposals to amend Section 60(5) of the Patents Act 1977 to provide an exception to patent infringement for activities involved in preparing or running clinical or field trials, which use innovative drugs. This change would allow third
parties to carry out a limited set of activities using another person’s patent-protected product in order to develop and assess the safety and efficacy of new pharmaceuticals. Responses to the consultation suggested that current UK legislation makes the UK a less attractive location to carry out this work compared with countries with broader exceptions. This may have economic implications for the pharmaceutical and clinical trials sectors, including loss of skills and expertise if trials are run abroad. The report will need to consider examples such as these where the use of intellectual property may help stimulate growth in the economy as a whole. I can assure noble Lords that in such cases it will indicate how the Intellectual Property Office has sought to balance the interests of rights holders and users.
Amendment 26A in the name of the noble Lord, Lord Howarth of Newport, seeks to include a requirement that the report should provide an assessment of how the Intellectual Property Office has,
“balanced the interests of rights holders with the wider interests of society”.
I am grateful that the noble Lord has defined this phrase to be not just UK-focused but global in scope. I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones. This is in line with the ethos of the report, transparency.
Amendment 26C, tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, seeks to place some requirements on the detailed contents of the report. Before responding directly, I should like to take the opportunity give the Committee some detail on what the report will contain. I will add that, as with all government agencies, the IPO already produces an annual report and accounts, containing an assessment of the development and performance of the organisation throughout the year, together with financial accounts. The IPO’s future plans are contained in the corporate plan published in spring each year and agreed with me as IP Minister on behalf of the Secretary of State. This plan also contains the targets that I set for the IPO and by which its performance is to be judged.
I have described the current reports and plans that the Intellectual Property Office produces. I turn now to the new reporting requirements that are the subject of this clause. I will set out the parameters of the report and give some examples to illustrate the kind of issues that would be included in it.
First, the report will provide information on legislative changes and any pre-legislative work such as consultations. Economic estimates will be taken from impact assessments. Looking back to the previous financial year, as an illustration, this would include the copyright measures
in the Enterprise and Regulatory Reform Act and the designs consultation that has resulted in the measures that we have already debated in this Committee.
Secondly, the report will address the Intellectual Property Office’s activities in international negotiations and cross-border co-operation. An example is the work that is being done to deliver a unitary patent and unified patent court.
Thirdly, the report will discuss policy development work that has been undertaken to address the challenges facing the intellectual property system. These will change as time passes, but copyright licensing in the digital age is a good example of a current challenge that the IPO has been working on and which, therefore, the annual report would cover next year and for as long as it remains relevant.
Fourthly, the report will highlight the main outputs of the Intellectual Property Office’s economic research programme and how they relate to innovation and growth. Recent studies, for example, have examined the incentives provided by patents and the use of alternative methods of protecting innovation. The report will also summarise the findings of evaluation exercises. The first of these was published last month and concerns the Lambert toolkit, which contains model agreements and a framework for university and business collaborations. The toolkit was developed by a working group of interested parties, supported by the IPO. The research showed that the toolkit has had a positive influence on some innovative research partnerships between UK universities and businesses.
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Fifthly, the report will provide an assessment of the IPO’s activities that support businesses and raise awareness of the importance of protecting intellectual property. Through its seminars, exhibitions and workshops, the IPO reaches over 25,000 businesses per year, including around 18,000 direct contacts. The report will include information on the work the office has undertaken in partnership with other organisations, such as the MusicBiz competition for young people, run with UK Music, and IP audits provided to small and medium-sized enterprises and funded by the IPO. When data are available, it will provide an assessment of the impact that such work has had. The report will also contain data that support the assessment made in the report. This will include statistics on the number of IP rights granted by the office, the use of international systems, such as those run by the World Intellectual Property Organisation, and any relevant evidence on enforcement and infringement.
Amendment 26C would specify particular issues to be reported on. Where the IPO has acted on those issues, I assure noble Lords that they will be included in the report. However, as I have already noted, the challenges facing the intellectual property system will change from year to year. It is for this reason that the clause does not specify individual issues that will be considered. For example, 10 years ago, the proposed European directive on software patents was a matter of great topical interest. If the IPO had at that time produced a report on the impact of its activities on innovation and growth, these negotiations would have
been discussed. However, the directive was rejected by the European Parliament in 2005 and debates have moved on. If we had passed legislation at that time that stipulated specific items on which to report, the Government would have been required to report on its activities in this area every following year, even when no such activities took place. Alternatively, the Government would have needed to return to Parliament to make changes through primary legislation to ensure that the report remained relevant.
Amendment 26C would also require the report to set out the plans for legislative change for the next 12 months. The purpose of the clause is to create a duty to report, not to set the forward programme of activities for this or any future Government’s IP policies. Noble Lords will of course be aware that the Government cannot pre-empt the gracious Speech in any year, but following the publication of the legislative programme each year, plans for primary legislation, as well as any secondary legislation, are set out in the Intellectual Property Office’s corporate plan. It is therefore neither appropriate nor necessary to include these details in the annual report on innovation and growth.
Amendment 27 would require the Secretary of State to make a statement detailing the findings of the report and the actions he intends to take as a result. The clause already commits the Secretary of State to lay the report before Parliament. So it will be a Written Statement to Parliament by the Secretary of State and, each year, the report will be placed in the Libraries of both Houses. I have already referred to the IPO’s corporate plan, which sets out its future programme of work and priorities. The annual report on innovation and growth will be one of a number of pieces of evidence that feed into the business planning process leading to publication of the corporate plan.
Amendment 28 concerns the information that should be considered in producing the report. It would require that the Intellectual Property Office carry out consultations and investigations to inform the production of the report. It would also require the Government to consider any responses collected by the IPO in response to any consultations or investigations carried out for the purpose of producing the report. In particular, the amendment refers to any assessment the Government might make of the effective operation and protection of IP rights licensing in promoting economic growth. The report will focus on the activities of the Intellectual Property Office during the financial year under review and is not intended to be a Hargreaves-like review of the effectiveness of the intellectual property system. If research has been commissioned to measure the impact of the IPO’s activities on IP rights licensing, then I can assure noble Lords that the results of that research would be taken into account as part of that year’s report. At present, the Government have no plans to run consultations for the sole purpose of producing the report, but if consultations of this nature are conducted, I assure noble Lords that any responses will be considered.
Finally, I turn to Amendment 28ZA, spoken to by the noble Lord, Lord Howarth of Newport, which would require the report to include information detailing approaches made to the Government and the Intellectual
Property Office by interested parties. The noble Lord has raised an important issue. The Government are committed to transparency, as I said earlier, and I have therefore considered how information on the IPO’s engagement with interested parties can be provided in a way that is proportionate. I have therefore asked the chief executive of the IPO to publish on a quarterly basis the names of external organisations with whom he has had meetings. I already disclose details of my meetings on the government website, as do all Ministers, special advisers and Permanent Secretaries. The extension of this practice to the chief executive of the IPO is at the forefront of efforts to increase transparency in policy development.