My Lords, I speak on behalf of my noble friend Lord Clement-Jones, who has commitments in China this week. I reassure the Committee that this is not an option that has been proposed in order to make speedier progress on the Bill.
The purpose of Amendment 57A is to amend the Unfair Contract Terms Act 1977 so that it would apply to intellectual property rights contracts. Although this has been sought by the Society of Authors, we would argue that there is a wider significance that needs to be examined in the context of the Bill. There is no justifiable reason why creators should be denied the legal protections afforded to other businesses, and we would therefore press for the amendment to be accepted.
The Consumer Rights Bill should be extended to protect creators and others in an unfair negotiating environment where they often have little choice but to sign the contracts that are put in front of them. For example, writers always have to sign clauses indemnifying publishers against any claims brought by other parties even when they arise through no fault of the author, and even though the publisher is covered by insurance. Nor can writers easily enforce performance which turns out to be substantially different from what they could have reasonably expected under the contract.
The proposed new clause would impose a basic obligation of fairness. It is unclear why contracts involving intellectual property are currently excluded from the Unfair Contract Terms Act, but it is probably because they were not so significant in 1977. It will protect consumers and businesses from being bound by contractual terms that they may not have read as they would have simply clicked their agreement to them, as we all do, on the assumption that they contain nothing astonishing or that the law will offer protection. For intellectual property rights, which could include something as basic as buying an e-book, there is currently no legal protection against unfair terms. This is remarkable, given the growth of contracts involving intellectual property rights.
The Government may argue that this new clause would represent a major change that requires consultation, but we do not agree. It is not being suggested because
creators have little bargaining power—although that is true—but because if as a society we agree that people should be protected from hidden and patently unfair terms in contracts, the protection should be apply to everyone. It is completely illogical to exclude contracts that relate to intellectual property. Without a government response, this unfairness will grow with the increase in contracts involving intellectual property, and it will deter innovation. I urge the Minister to accept the amendment, or at the very least tell the Committee how the Government intend to deal with this growing inequity.
I now turn to Amendment 63A, which is somewhat unrelated. I have spent my life in the publishing business, where passing off brands was a problem. Although we invested heavily in brands over a long period, it required us to be ever vigilant to protect them. Parasitic copying—the practice of packaging consumer products to mimic familiar brands—misleads consumers and distorts competition. Indeed, this has been recognised by the Government, who launched a consultation in February on enforcing consumer protection regulations in relation to misleading, similar packaging. It is therefore a legitimate subject to be covered by the Bill. Copying the packaging of branded goods hijacks the reputation of a brand built up over many years of consumer experience. The current legislation appears inadequate to deal with the problem.
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I urge Members of the Committee to look particularly at the British Brands Group website, which shows some of the extent of the problem. I will not mention brands from Tesco in the interests of not embarrassing my noble friend the Minister but other goods from supermarkets besides that particular chain are identified on that site as clearly infringing fair and competitive practice. I urge other Members of the Committee to look at some of those goods. They are not just big brands, which have the defence of the resources of big companies; there are smaller brands as well. I will mention just two: Dorset Cereals, copied by Sainsbury’s, and Tunnock’s Caramel Wafer Biscuits. These are products we all know and some of us may love but others are trying to imitate. This problem is not helped in the grocery trade by the concentrated power of the supermarkets, which makes it very difficult for branded products to complain. A major study by the Intellectual Property Office last year showed that consumers are misled by packaging to buy the wrong product. Similar packaging increases the perception that two products can be from the same source, enhances perceptions of quality and increases the propensity to buy—that is precisely why it is done.
Why does existing legislation not work? Designers who produce parasitic copies design around registered trademarks and to avoid infringement while still creating a similar overall impression to the original. Parasitic copies tend to fall short of the substantial reproduction tests required for copyright infringement. The evidence for proving passing-off in the courts to show confusion is extremely difficult to obtain. Consumers tend not to complain about low-priced items. Evidence cannot be gathered in store and courts often dismiss survey results as unreliable.
Parasitic copies are potentially unlawful under the consumer protection regulations as they mislead consumers. However, civil enforcement action can be brought only by those designated under the Enterprise Act; namely, the Competition and Markets Authority and trading standards, both of which lack the resources to do so. The ineffectiveness of existing legislation calls into question the UK’s compliance with the trade-related aspects of intellectual property rights, the Paris convention and the unfair commercial practices directive requirement for member states to provide adequate, effective remedies to unfair practice.
On remedies and solutions, we propose a new clause to give brand owners the right to take a private civil action under the consumer protection regulations as provided for in the European directive where they reasonably believe that similar packaging is likely to cause confusion or association with their packaging and/or products. That right is focused solely on similar packaging of consumer products and extends only to those adversely affected. It is a tightly focused, limited right. Such a right would ensure compliance with the European directive and other treaty obligations. The consumer would be presented with a clear, fair choice when making purchase decisions. Consumer protection would be enhanced at no cost to the public purse. Business investment in strong, compelling reputational quality and innovation would be protected. I hope the Minister will accept this amendment and at least update us when action will follow on the current consultation. I beg to move.