TRADE MARKS BILL [HOUSE OF LORDS]

Public Bill Committee [HOUSE OF LORDS]

TRADE MARKS BILL [HOUSE OF LORDS]

13th—20th January 1994

PARLIAMENTARY DEBATES

HOUSE OF LORDS

OFFICIAL REPORT

Public Bill Committee

TRADE MARKS BELL [H.L.]

First Sitting

Thursday 13 January 1994

LONDON: HMSO

£7·50 net

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1

The Lords following, with the Chairman of Committees, were named of the Committee:

L. Airedale

L. Allenby of Megiddo

L. Clinton-Davis

B. Fisher of Rednal

V. Goschen

B. Hamwee

E. Harrowby

L. Haskel

B. Hooper

L. Lucas of Chilworth

L. Lyell

L. Monson

L. Oliver of Aylmerton

L. Peston

L. Reay

L. Strathclyde

2
3 Official Report of the Committee on the
TRADE MARKS BILL [H.L.] Thursday, 13th January, 1994

The Committee met at half-past ten of the clock.

[The Chairman of Committees in the Chair.]

The Chairman of Committees (Lord Ampthill): As regards the timetable, we shall sit in accordance with the schedule which has been distributed to Members of the Committee; namely, at the conclusion of today's sitting, we shall meet again on Tuesday 18th January at 3.15 p.m. and sit until 5.45 p.m. On Wednesday 19th January we shall sit at 10.30 a.m. until 12.45 p.m. On Thursday the 20th January we shall sit at 10.30 a.m. until 12.45 p.m. and on Wednesday 26th January we shall sit from 10.30 a.m. to 12.45 p.m., if necessary. On Thursday 27m January we shall sit from 10.30 a.m. to 12.45 p.m., again, if necessary. Is that timetable agreeable to the Committee? As many as are of that opinion will say "Content"; to the contrary, "Not-Content".

Noble Lords: Content.

The Chairman of Committees: I think the "Contents" have it. The Question is that the Title be postponed. As many as are of that opinion will say "Content"; to the contrary, "Not-Content".

Noble Lords: Content.

The Chairman of Committees: I think the "Contents" have it. Title postponed. Clause 1 [Trade marks]:

Lord Lucas of Chilworth moved Amendmen No. 1: Page 1, line 9, after ("services") insert ("(including retail services)"). The noble Lord said: In moving the above amendment I shall, with the leave of the Committee, speak also to Amendment No. 58. At the outset, perhaps I may record my grateful thanks to my noble friend the Minister for arranging a number of meetings between his officials and representatives of the retail industry, largely through the good offices of the British Retail Consortium. I should also like to thank him for arranging another meeting between him and myself, with officials. If I may say so, those meetings have been extremely helpful and have advanced the matters that I wish to put before the Committee this morning. As a background, I think that it would be helpful if I remind the Committee that we are dealing here with matters which were set down in law about 50 years ago, after an amending Act. Sadly, they have become out of date so far as concerns the retail industry. Perhaps, in parenthesis, one might suggest that we now have an opportunity to put right some of those omissions, 4 bringing up to date current practices in the Bill before us which I suppose might very likely last, perhaps, 20 or 30 years—that, I do not know. The background is that, essentially, in the highly competitive sector in which the retail industry has to work, those concerned have to differentiate from their competitors not only the goods that they sell—many of which are branded and available in a number of outlets—but also the manner in which they sell such goods; I suppose one could say the way in which they support themselves. I have in mind their shop layout, the amount of technical skills available to consumers, and so on. One can look at some of the larger stores, some of which I mentioned on Second Reading—for example, organisations like Sainsburys, Boots and C&A which are well known across the land—but, of course, there are other smaller organisations which seek in this very competitive world to differentiate the manner in which they deal with the customer from that of their competitors. They feel, quite rightly, that that layout which is usually demonstrated by their trade name, or by the style of their store or shop, should be protected. That is the purpose of the amendment. Retailers believe that good will or property—the name of a shop where goods are sold—is quite distinct from the trade mark on goods. That is demonstrated by the fact that many different retailers may trade in the same range of goods; for example, in Heinz beans or Cadbury's chocolate. However, the fact that they sell the same goods does not mean that they sell them in the same way or offer the same kind of service to the consumer. The definition of a trade mark in Clause 1 follows the directive, with which the Bill is mainly concerned. The amendment seeks to clarify that the fact that the undertakings whose services may be distinguished includes retail outlets does not prevent the directive being fully implemented under UK law. It is necessary in the UK only because the previous practice of the register refused such marks. It has been suggested that to differentiate between different marks—trade names and trade styles—is very difficult. I do not believe that that is so. In the Patent Office's consultative paper which was issued a few days ago it is accepted that, although a problem, this is not insurmountable, using modern technology for searching and resolving any disputes. It may cost more. But that is a fact of life. It is a fact that the retail industry has taken on board, and while no retailer likes to add to overheads, retailers believe that the good will and their style of trading are sufficiently important to them for them to be able to accept some increase in charges for registration. It is to be hoped that they would be small and could be absorbed by the retail industry. I draw the attention of the Committee to the fact that both in Spain and in France marks are registered for retail services. These are administered by their patent offices in the same way as trade marks. That, in essence, is the purpose of the two amendments. In a nutshell, the intention is to allow retailers in a hugely competitive market not only to differentiate between goods but also in the way in which 5 goods are offered for sale and are sold. Such amendments would be to the advantage not only of the retail industry but also to consumers, who would have an easily identifiable way of selecting where they shop. I beg to move.

10.45 a.m.

Baroness Hooper: Perhaps I may support my noble friend and the amendment he has just moved. In doing so perhaps I should explain that, had he not tabled the amendment, I would have tabled it in his place since I believe that the situation requires clarification. The matter was raised at Second Reading. While my noble friend the Minister responded to the point, many of us feel that there should be further discussion of the matter and that clarification is needed. Had I tabled such an amendment it would have been as a probing amendment. It is not a matter on which I would wish to divide the Committee. Essentially this is a matter for clarification. In the interests of consumers at large it would perhaps mean less litigation, which of course may not be in the interests of lawyers at large. My noble friend has made the essential points in moving the amendment, but I should like to add to the reference he made to the international acceptability of such marks and definitions. At Second Reading I referred to the fact that a number of countries, such as Australia, New Zealand, South Africa and indeed the United States, as well as certain other European countries, already so define retail service marks. To that list I can now add Hong Kong. There may also be other countries where that is the case. Therefore, I see no reason to suggest that this is not acceptable internationally. That is not a valid argument. I recognise that the international classification itself does not mention retail services, although it does include second-hand dealing services. But I believe that the fact that agreement has not been reached on a definition in the international classification is in some part concerned with Her Majesty's Government. Therefore, on that front, and indeed so far as concerns any future moves to define this aspect within the European Union, I should like the Minister to deal in his response with HMG's attitude to this matter and to say whether they would be prepared to push in other international circles for an internationally agreed definition.

Lord Peston: I am glad that the amendment has been tabled. When it was first drawn to my attention I thought that an amendment of this type was fairly innocuous and not a problem. I regret to say that that is no longer my view. I believe that it is a substantive amendment, and I am not certain that it is one I could agree with. I wish to echo the remarks of the noble Baroness, Lady Hooper, that the purpose of the amendment—and in my judgment the purpose of all our amendments in the course of our proceedings—is to obtain clarification. I do not intend to divide the Committee on any issue unless I am forced to. What I wish to hear is the Minister's considered response to the amendments. 6 Retailers can register trade marks for the ranges of goods which they offer, and they do so. They do so by product class, on a grand scale. We all know that because we all buy precisely those goods. Retailers saying that they also produce something separate from those goods called their retail services, which are distinctive, and that they wish to give them a trade mark is, I now believe on reflection, stretching the point a little. It seems to me to be asking for far too much. In my judgment they are asking for it simply to save money on registering the separate classes. Certainly many of the briefings that have been pushed at me are more concerned with saving money—for which I do not blame the retailers —than anything else. My judgment is from the economic standpoint. I find it hard to accept the blanket notion that companies providing a distinctive retail service want a trade mark for that, as opposed to the notion that they provide certain goods and services in certain categories to which they would like to have their trade mark attached. At this point I have an open mind in that I wish to hear what the Minister has to say. However, I am not convinced that the case is as good as I imagined when I first saw the amendment. I shall certainly not say "Not-Content" on a matter of this kind. I simply say at the present moment that I am certainly not persuaded that the Bill ought to be amended in this form.

Lord Howie of Troon: I have only one brief question to ask. As I read the Bill, a trade mark means any sign capable of being represented graphically. I wonder how far that extends. Does it cover the logo which is described by graphical designers as a corporate identity? For instance, my company, Thomas Telford, has a logo which consists of the initials TT. This is used on letterheads and such things. I note that the political parties have logos. One has a logo which I take to be a torch. Another has a bird of some kind; and the third has a rather fine single rose. Are those logos trade marks within the meaning of the Bill? I realise that that is a fairly trivial point, but I should like to hear a reply on that.

Lord Macaulay of Bragar: Following the remarks of the noble Lord, it appears to me that the controlling words of Clause 1 are, "any sign capable of being represented graphically". Will the noble Lord, Lord Lucas, help by giving an example of how this would work in practice, hypothetically or otherwise?

The Earl of Harrowby: I wished also to raise the subject of logos. I probably knew less about the Bill than anyone in this room. I had not read the Bill before the Second Reading. I did not attend the Second Reading. However, now that we have moved on to logos, I wish to ask the Committee's indulgence to raise what is essentially a Second Reading point. I shall be interested to hear the Minister's reply. It seems to me that logos are essentially a matter of design. I consulted my son-in-law, who is a solicitor, for an hour and a half before New Year's Day, surrounded by seven grandchildren; it was not therefore a very coherent discussion. However, I gather that currently 7 logos are controlled by a quite different piece of legislation, probably the Copyright, Design and Patents Act 1988.I do not know whether that is correct. I gather too that they could not previously be in the trade marks legislation because they often cover a variety of subjects. That is no longer true. If we consider paragraph 4.06 of the White Paper, we see that it is the Government's intention to introduce multi-class coverage. That is obviously sensible. I could not pick out in the Bill which clause that was but I assume that it may be covered in the Bill because it is not excluded. Obviously multi-class is not the same as collective class, but perhaps it is allowed under Clauses 28, 30 and 37. It seems to me that now is the chance to elucidate and simplify the subject of logos. I gather under the old Act it was very far from a simple position. It was a very complicated procedure and, if I am right in my analysis, and it is not included, it does not seem difficult to move a provision across from one piece of legislation to the other. I shall be interested to hear the Minister's comments.

Lord Lyell: Perhaps I may ask briefly whether either my noble friend who moved the amendment or the Minister can put me at ease about line 9, which states, "represented graphically which is capable of distinguishing goods or services". When I first considered the Bill, including at Second Reading, the word "graphically" could be taken in three senses. First, perhaps I may take one specific object: the shape of a soft drink bottle. The Coca Cola bottle is familiar to many of us. That seems to me to be a clear shape. It can be represented graphically. Secondly, as the Committee may be aware (my voice has gone), I have just spent 10 days skiing. To all intents and purposes, skis are the same. But each type of ski can be represented by a logo. My noble friend Lord Orr-Ewing and others with whom I have been skiing are acutely conscious of that. One has a virtually identical object with a different logo. However, what confuses me—perhaps my noble friend who moved the amendment could clarify this—is how an identifiable shape—for example, a mineral water bottle with a logo—can be allied to retail services or paid services as in the Bill. Much has been raised by my noble friend who moved the amendment. It seems to me and many other consumers that a specific retail service would be covered by the Bill as drafted. However, if either of my noble friends could elucidate how the matter works in France and Spain I should be most grateful.

The Minister of State, Department of Trade and Industry (Lord Strathclyde): I am grateful to have the opportunity of responding to my noble friend, and likewise I speak to the same amendments, Amendments Nos. 1 and 58. The noble Lord, Lord Peston, is right when he says that this is a substantive amendment. The short debate that we have had indicates that the Committee is in agreement with that. I hear what is said about businesses' concerns about the protection of good will 8 associated with shop names. However, what I am not convinced about is that in practice the inability to register them as trade marks has led to difficulties. Nonetheless, I should like to indicate some willingness to consider the point. Our approach is flexible and, as my noble friend knows, the Government are studying whether it would be possible to allow registration of trade marks for retail services. Extensive discussions with interested circles are still going on. The debate also indicates what a difficult problem the issue is. A discussion paper prepared by the Patent Office has been distributed to those interested circles for comment. Registering a trade mark confers exclusive rights. It must be clear what the protection conferred by the registration extends to. In a case decided under the old law, the Court of Appeal considered that "retail services" was too imprecise to support a registration, and that, moreover, "retail services" were simply another way of saying trading in goods. I suspect that that was the point my noble friend Lord Lyell asked my noble friend Lord Lucas of Chilworth to answer, as indeed did the noble Lord, Macaulay of Bragar. That example was under the old law. The Government are considering whether the Bill as it stands would allow the trade mark registration in respect of retail activities or whether amendments would be needed, or indeed whether amendments would actually be possible in practice. Apart from anything else, we have to be sure that amendments do not go against the directive upon which these clauses are based. We are aware, as my noble friend Lady Hooper pointed out, that the USA and Australia register retail services because they are not bound by Community law. The Community Trade Marks Office is not expected to register marks for retail services. My noble friend Lord Lucas in moving his amendment said that Spain registered trade marks for retail services. I understand that Spain registers business names in this way, but they do not confer the same rights as trade marks, although I believe that they are in fact put on the same register. To my noble friend Lady Hooper I can say that the United Kingdom's attitude in international fora reflects our practice and the legal position that exists in this country. If those change, which is the point we are discussing this morning, we would of course support similar changes in the international classification. I turn briefly to the points raised on logos by the noble Lord, Lord Howie, and my noble friend Lord Harrowby. I do not think that discussing political logos is a trivial matter. To some of us it is very important. But I can point my noble friend and the noble Lord to Clause 1 line 12 where we see the words "designs" and "letters" and where the point is made that these logos are registrable as trade marks if they are distinctive of other goods. Trade marks may be simply designed—for instance, the Bass red triangle, which was the United Kingdom's first trade mark. I trust that that answers the point raised by my noble friend and by the noble Lord, Lord Howie. I hope that my noble friend will not feel the need to press the amendment. I accept what my noble friend 9 Lady Hooper said about it being a probing amendment. I very much recognise the importance in the economy of the retail sector and I am aware of its concern. As I have said, we are giving this issue full and careful consideration, and I very much hope, given the fact that a discussion document is currently out for public consultation, that we shall be able to state the Government's intentions before the Bill leaves the House.

11 a.m.

Lord Lucas of Chilworth: I am a little disappointed that the noble Lord, Lord Peston, is not able to say categorically that he can support the amendment or, from what I understood him to say, that which lies behind it. He said that to try to register a distinctive style of trading is pushing it. All I can say to him is that he must be very far removed from the retail trade.

Lord Peston: I am certainly removed from the retail trade in the sense that I am a mere consumer who spends all his life in shops using his various cards. But I do not run the businesses. To take an obvious example, I find it difficult to distinguish between the goods and services that I buy in Marks & Spencer or Sainsbury's and something else called the Marks & Spencer service. I cannot see it. I speak here not just as a consumer but as an economist. I am not opposing the noble Lord; I am simply saying that I want to be convinced about it and need to think about it some more. At this point I cannot see what it is they claim that they are doing other than their normal retailing and providing goods and services. I intervene only to clarify my point.

Lord Lucas of Chilworth: At the risk of delaying the Committee, I feel bound to give some examples to the noble Lord, Lord Peston. Just before Christmas, on a radio or television programme, Hamley's, the world-renowned toy store in London, was criticised for selling branded goods—toys—at a price which it was alleged was greatly in excess of what was charged in other stores. Hamley's responded quite robustly by saying, first, that it is a world-renowned store. The noble Lord, Lord Peston, may laugh. Secondly, it said that it has demonstrators of proven skills far in excess of what is available in other stores which sell goods, as it were, off-the-shelf. It has far more space, it has play areas and so on. In a letter to the British Retail Consortium Harrods described its special services—nurseries, banking, delivery and so on—which it maintains sets it apart. It is fine to talk about Sainsbury's and Tesco in terms of layout and training of staff, but let us take a smaller type of set-up. The one that I have in mind is a firm which trades under the name M & W. It is a small plc with 121 convenience stores in the south of England mainly dealing in food. That small chain has been built up over 10 years. It is distinctive in its appearance. It would be injurious to it were someone in East Anglia, the Midlands or somewhere else in the country to adopt its style or the way it writes M & W against a certain background which demonstrates a certain style of trading. The noble Earl, Lord Harrowby, asked for a description of some of these things. I can describe quite 10 a number of brands, logos and styles. If I may respond positively to my noble friend Lord Lyell, he may like to know that Whyte & Mackay, distillers of Dalmore House, Glasgow, registers all the logos depicted on this sheet of paper which I am holding up, as well as the trade mark of its product. It is quite easily identifiable and it is quite easily recoverable from records—otherwise, how would I have got hold of it? If in this competitive way a retailer wishes to protect his style—that is what we are talking about—demonstrated not only by logo but by a mark, I do not think that he should be denied. Finally, perhaps I may respond to the Minister. I am grateful to my noble friend for saying that the Government are flexible. They find themselves in a difficult position. Yes, I can understand that. But these difficulties are for us to overcome. Since further discussions are to take place, it is for the retail industry and the Government to overcome those difficulties. I hope indeed that they will do so. My noble friend asked me about the position in Spain. My understanding is that the retail service in enshrined in Spain's law but, so far as I am aware, has not been tested in law. But perhaps that is the point that he was trying to get at—I do not know. It is obvious to me that this subject has aroused more interest than I would have anticipated some weeks ago. In the light of what Members of the Committee have said, and with the assurance of my noble friend the Minister that further discussions will take place and that the Government will attempt to make their position absolutely clear before this matter leaves the House, it would be sensible of me to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 2. Page 1, line 12, after ("names") insert ("and slogans)"). The noble Lord said: I move the amendment to seek clarification. Slogans are very important in identifying products in industry today. There does not seem to be any clarification as to whether or not slogans are registrable under existing law. I feel that this point should be clarified. If a slogan is capable of distinguishing goods and services it should be registrable as a trade mark. We believe that it would be useful for the specific addition of the word "slogans" to be clear, and groups of words could also clarify the registration of the trademark. There is a second reason for this amendment. It would appear to me that the harmonisation directive makes it mandatory to include slogans in the trademark registration. I shall be glad to hear what the Minister has to say. I beg to move.

Lord Lucas of Chilworth: Briefly, may I just say how glad I am to see the noble Lord, Lord Haskel, at our Committee. I believe that it is his first Committee. Certainly, if he continues with the clarity and brevity with which he has put this matter before us, he will endear himself to us. From what I have already said about the descriptions and illustrations which I have put 11 before the Committee as regards logo signs, the noble Lord will not be surprised that I support him in the aim behind his amendment.

Lord Airedale: If I am right in thinking that slogans are always expressed in words, surely the matter is covered by the use of the words in the subsection. Therefore, it is unnecessary to add the word "slogans". It was the noble Baroness, Lady Hamwee, who put this thought into my mind. Unfortunately, she is not able to be with us. this morning.

Lord Strathclyde: I too would like to welcome the noble Lord, Lord Haskel, to this Committee, and I hope it is the first of many. I join with my noble friend Lord Lucas in saying that I hope that he will continue to keep his amendments as clear and his words as brief. The purpose of his amendment is absolutely clear. I can understand the reason for it. Clause 1 as drafted follows the wording of Article 2 of the directive. It is identical to the text of the Community trademarks regulation. We are most anxious to retain the wording. It ensures that the aim of harmonisation is achieved. It enables us to take account of decisions reached elsewhere, especially in the European Court of Justice, which has the last word on actions taken concerning Community marks. I assure the noble Lord that there is no objection to slogans as such. But, as the noble Lord, Lord Airedale, explained, they are of course words and will be registrable as trade marks as long as they are capable of distinguishing goods or services of one undertaking from those of other undertakings. It is on that basis and with that explanation that I hope the noble Lord will feel able to withdraw his amendment.

Lord Howie of Troon: I am not quite sure about that. The Minister and the noble Lord, Lord Airedale, have drawn attention to the fact that the words in Clause 1 would include slogans. They would also include personal names. It has been thought fit to include "personal names" for the purpose of clarity. I believe that including "slogans" in the same way would add clarity to that part of the Bill. Merely to say "words" is far too imprecise. I support the amendment.

Lord Strathclyde: Perhaps I may briefly reply. The point which I was making is that we are following here the wording of Article 2 of the applicable directive. I am not sure that I entirely agree with the noble Lord, Lord Howie of Troon, when he says that, as we have already included "personal names", we should include the word "slogans". Slogans would not mean anything else but words and therefore I believe that we should leave the wording as it is. Going back to the European directive, personal names are at present not registrable in some countries. Therefore, they are mentioned in the directive to make it absolutely clear that that is what is required in the terms of the directive.

Lord Haskel: I thank the Minister for his reply, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

12

11.15 a.m.

Lord Cawley: I thought that at this moment I might take the opportunity of issuing a warning to the Committee by spending about two minutes in reading a portion of the speech which I made to the House on 22nd December 1982. This is what I said: "When it was quite a young Act [the Act of 1938] in 1940, on 9th May, the important section that deals with infringement came before the Court of Appeal. Lord Justice MacKinnon said this: 'In the course of three days' hearing of this case I have, I suppose, heard Section 4 of the Act of 1938 read, or have read it for myself, dozens if not hundreds of times. Despite this iteration, I must confess that, reading it through once again, I have very little notion of what the section is intended to convey and particularly the sentence of 253 words, as I made them, which constitutes subsection (1). I doubt if the entire Statute Book could be successfully searched for a sentence of equal length which is of more fuliginous obscurity'. For the benefit of your Lordships who do not usually use the word 'fuliginous', it means 'sooty, or dusky'. The Master of the Rolls said this: 'Nor must the fact that the language used is crabbed and involved deter the Court from endeavouring to discover its meaning. Every Act of Parliament must be approached with the conviction that its language is capable of a reasonable construction when carefully examined'".—[Official Report, 22/12/82; col. 1112.] It is obvious that Parliament made a complete hash of these sections of the 1938 Act. I do not want this Committee to be accused in future by members of the judiciary of producing this sort of gobbledegook. I hope that we we shall study the actual wording of the clauses in detail. From the rough observations which I have made some of them appear to be somewhat obscure.

Lord Strathclyde: I am very grateful to my noble friend Lord Cawley for explaining what he has done. I share with him the desire that this Bill, when enacted, should be as clear as possible to all concerned and that we do not repeat the mistakes which have been made in the past. That is why we are all here. I have every faith that as the Bill progresses through this House and another place we shall be making sure that it is clear and concise and means exactly what it says.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 [Absolute grounds for refusal of registration]:

Lord Peston moved Amendment No. 3: Page 2, line 8, leave out ("(c)") and insert ("including— (i)"). The noble Lord said: In moving this amendment I shall also be speaking to Amendments Nos. 4 and 5. I believe that I am also speaking along the lines of the noble Lord, Lord Cawley, who has advised us how to proceed. The purpose of this amendment is precisely to make clear what I would argue is obscure. Clause 1 emphasises distinctiveness, which is something that I believe we all strongly support. However, it could be argued—it is certainly argued by my advisers —that it somewhat departs from the directive in that regard. Clause 3, which I am now addressing, concerns the absolute grounds for refusal of registration. It reproduces the directive, and it is confusing. The reason that it is confusing is that, the Bill having defined trade marks as having two positive requirements in Clause 1, Clause 3 gives three categories of trade marks which are 13 not registrable unless they require factual distinction through use prior to application. That is what is covered by paragraphs (b), (c) and (d). Paragraph (b) refers to trade marks which are devoid of any distinctive character. Members of the Committee can see what is in paragraphs (c) and (d). The question that we have to ask, and I agree that it is technical and to do with drafting, is this. What is the significance of the layout—if I may use that word—adopted in Clause 3? A trade mark which is devoid of any distinctive character cannot, by definition, comply with the positive requirements that it should be capable of distinguishing goods, one from another. That is what paragraph (b) is about. It is qualitatively different from marks in paragraphs (c) and (d) and which we know may be inherently non-distinctive, but which may give rise to factual distinctiveness. Therefore the presence in the clause of (b) can only give rise to obscurity. I assume (b) is there because it is meant to indicate that certain signs are, prima facie, non-distinctive and hence unregistrable. Therefore I interpret (b) as saying something of which (c) and (d) would then be examples. The point of these drafting amendments is to make clearer the structure of the clause. Essentially, they leave (a) and (b) as they are and treat (c) and (d) as subparagraph (i) and (ii) of (b). That makes it clearer, at least from a technical standpoint. That change would work on what is called a general inclusionary basis. It would leave it open to the courts to find, if necessary, that a non-distinctive mark outside my (i) and (ii) had acquired distinctiveness prior to application and should therefore be registrable. It would eliminate the problem that at present paragraph (b) appears to contradict Clause 1. Another possibility would be to leave out (b) on the grounds that it is not needed, but I do not propose that. I know that at this early stage one should not start to insult and criticise the draftsman, but my purpose is to assist the progress of the Bill by offering amendments upon which I hope the Minister will reflect and which in my view clarify the Bill and make it do the job which it sets out to do better. I beg to move.

Lord Strathclyde: I, too, speak to Amendments Nos. 3, 4 and 5. We are now entering a series of amendments with which I have some sympathy, because I know that the intention is to improve the drafting of the Bill. In this case it is to improve the drafting of Clause 3. On that basis, I am happy to consider them. As Clause 3 implements Article 3 of the directive and, in so doing, uses the wording of that article as far as is practicable, I need to be satisfied that the drafting changes suggested by me noble Lord do not affect the meaning of the directive. Once again, this is an instance where the wording of the directive and the regulations has been carefully aligned. We do not want to implement the Community requirement in a way which puts us out of step with our partners and the Community trade mark office. I suggest to the noble Lord that I take away these amendments and study them to ensure that there is no risk that they would change the meaning of the directive.

14

Lord Peston: I thank the Minister for that reply. That is what I hoped that we would do with these amendments and with many others. We wish to ensure that the law, as it becomes English law, is clear and workable. Equally, we must implement the directive. Therefore, with the assurance that the Minister has given, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 and 5 not moved. ]

On Question, Whether Clause 3 shall stand part of the Bill?

The Earl of Harrowby: Clause 3(1) (c) as it stands incorporates the word "quality". That worries me somewhat because surely it is in direct contradiction to certification marks as outlined in paragraph 5.1 of the White Paper. I shall be interested to hear my noble friend the Minister's comments on that point. It seems to outlaw something which elsewhere is advocated strongly, certainly with certification marks.

Lord Strathclyde: I was not aware that the clause presented problems. Perhaps I can explain what it attempts to do. Clause 3 is the first of a series of clauses dealing with the grounds upon which registration of a trade mark may be refused. It implements Article 3 of the directive. As I said in reply to an earlier amendment, it covers what are known as "absolute grounds"; that is, those grounds which relate to the nature of the mark itself and its distinctiveness; and thus its ability to be associated in the mind of the purchaser with the goods or services of the proprietor rather than with anything else. Clause 3 replaces the test found in Sections 9 and 10 of the 1938 Act thereby providing a single set of criteria for registrability and does away with the present differing standards for registration in Part (A) and (B) of the register. It states that in addition to being distinctive a mark must not be descriptive; that is, it must not be something which another trader might legitimately wish to use to describe his goods. It lists the things which may not be registered unless they have become distinctive through use such as, of course, geographic words. That is another change in the law. Under the 1938 Act, it was virtually impossible for geographic words to be registered as trade marks, no matter how distinctive they were. Clause 3 allows geographic words which are distinctive in the market place to be registered. On the certification marks point, a mark may not be registered if the nature of the mark itself is concerned with quality. It may of course, in use, be part of quality foods, for instance, and quality goods in general can be included. I hope that answers the point made by my noble friend.

The Earl of Harrowby: I thank my noble friend for his remarks. I should like to read carefully what he said. He said, first, that it may not be registered, but the clause is strictly prohibitive and states that it "shall not be registered". I still do not follow why something which refers, even exclusively, to quality shall not be registered when certification marks are primarily, and often solely, as I understand it, for that very purpose.

15

Lord Strathclyde: This may be a detailed point which it is not ideal to deal with under the procedure of a clause stand part debate. Perhaps I may write to my noble friend.

The Earl of Harrowby: I thank my noble friend.

Lord Howie of Troon: When the Minister reconsiders Clause 3, I hope that he will take note of the fact that, regardless of the comments made by my noble friend Lord Peston, Clause 3 subsections (1) (c) and (d) are not subsets of Clause 3(1) (b). It might be possible to rethink that and call them Clause 3(1) (b) (i), (ii) and (iii).

Lord Strathclyde: Yes.

Clause 3 agreed to.

Clause 4 agreed to.

Clause 5 [Relative grounds for refusal of registration]:

Lord Peston moved Amendment No. 6: Page 3, line 33, leave out ("of"). The noble Lord said: I speak also to Amendments Nos. 7, 8, 9 and 10. Here, too, the matter is more one of drafting but there could also, I am advised, be matters of legal substance which I raised on Second Reading on the use of language. Essentially, the words "identical" "its identity", and "similarity" appear. I am rather more concerned about the former than the latter, but they are both important. What concerns me is the use of the word "identity". Although I am obviously not a legal expert, I am interested in philosophy and economics and I am worried about the expression "the identity of a trade mark". I cannot understand—and certainly my advisers cannot give me any explanation—quite why the Bill needs that word rather than sticking to the language of something being "identical" or "similar". Therefore, briefly, the amendments were merely attempts to make the Bill better, to make it clearer by what in the end look like grammatical changes—and perhaps that is all they are—but I have a feeling that they would actually make the Bill better in substance by not giving lawyers a chance to enter into endless litigation as to what is the "identity". Again, the amendments have been put forward for the Minister to argue about and I hope that he will think about them. I beg to move.

11.30 a.m.

Lord Strathclyde: I am grateful to the noble Lord. I agree with him that perhaps there is more than just a grammatical conflict here and a substantive point is involved. On that basis, I have some sympathy with his remarks, with his amendments and with his desire to clarify the wording of the clauses. Unfortunately, at this stage I need further time to study the amendments. Again, as we are implementing a mandatory provision of the directive, both I and my advisers must be absolutely sure that in reshaping the Bill in an effort to make it more understandable we do not at the same time change its meaning.

Lord Peston: I can only repeat what I said earlier. I certainly do not wish us to do anything that would take 16 us away from the directive. However, I want us—and I must now remember to use the right expression—to improve British law. The amendments have been put forward in that spirit. Having said that, and having heard the Minister's response, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 7 to 10 not moved.]

Lord Peston moved Amendment No. 11: Page 4, line 1, leave out ("without due cause"). The noble Lord said: In moving the amendment I shall speak also to Amendment No. 12. My point here is much more logical than grammatical. I should like to draw the attention of the Committee to the sentence at the top of page 4 of the Bill, in Clause 5(3) (b), which refers to, "the use of the later mark without due cause would take unfair advantage of, and so on. What I have to say is that the inclusion of the expression "without due cause" in its present position makes no sense. The question that we must ask ourselves—and it is one to which I have already drawn the Minister's attention—is whether someone could take unfair advantage with due cause. That is the point. I think we would all agree that that is absurd. On the other hand, something might legitimately need to be registered with due cause, but the later mark would, nevertheless, be detrimental to the earlier mark. The whole point of the amendment is to probe the matter. I hope that Members of the Committee will agree that the clause as drafted does not make much sense. I think that my redraft would do the job that the Minister wishes to do. It would leave the wording not looking contradictory or absurd. The point of the amendments is essentially to tidy up the Bill. As I said, I have already informed the Minister of the arguments involved. I very much hope that he will be able to respond sympathetically. I beg to move.

Lord Strathclyde: I, too, wish to avoid anything in the Bill which would appear contradictory or silly. Therefore, I appreciate the noble Lord's wish to improve the drafting. Again, at the risk of sounding boring, I do not want to run the risk of changing the meaning of a provision which aims to mean the same in all member states. However, the point is clearly worth considering. I shall look at it and possibly return to the matter on Report.

Lord Peston: I thank the Minister for that response. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 12 not moved.]

Lord Strathclyde moved Amendment No. 13: Page 4, line 16, leave out from ("registration") to end of line 17. The noble Lord said: The amendment will ensure that the Registrar of Trade Marks has no discretion to refuse to register a mark which conflicts with an earlier registered trade mark where the proprietor of that earlier mark consents to its registration. We have listened to 17 what interested circles have had to say on the matter and have accepted their view that agreeing to the registration of another mark in those circumstances is a matter for the commercial judgment of the proprietor. It had been thought that the registrar ought to have a residual power to refuse where, notwithstanding the consent of the owner, confusion of the public appeared likely. However, such refusal would not of itself avoid that confusion as it would not prevent use of the later mark in the market place. The amendment has been put forward on that basis. I hope that it meets with the approval of the Committee. I beg to move.

Lord Peston: I am slightly confused. I thought that we had changed the grouping and that we would be dealing with Amendments Nos. 13 and 14 together. Can the Minister clarify the position?

Lord Strathclyde: I apologise to the Committee. I believe that I was looking at an earlier grouping where Amendments Nos. 14 and 15 were together rather than Amendments Nos. 13 and 14. However, I stand corrected by the noble Lord. Perhaps I may now reply to his Amendment No. 14.

Lord Peston: No, I simply wish to speak to my amendment and deal with Amendment No. 13 at the same time, and then perhaps the Minister can reply. Is that agreeable to him?

Lord Strathclyde: Yes.

Lord Peston: I am much obliged. Perhaps I may first say how pleased I am that by an amazing chance—which only shows that great minds work alike—at least part of my amendment is identical to the Minister's. I am extremely pleased about that. However, there is an extra part to my Amendment No. 14. The point here is that, as presently drafted, consent of the earlier trade mark owner to registration of the mark of a later user will not be sufficient if the registrar considers such a registration to be confusing. The problem here is that the register has a public function, and it is arguable that the registrar should not be seen to be registering marks which are likely to confuse. However, given the ease of assignment of marks, and the loss of the right to object to use of a rival mark through consent or acquiescence, the residual discretion of the registrar is pointless. But in view of the effect of acquiescence elsewhere in the Bill, I consider it necessary to make clear that the consent or acquiescence of the proprietor is sufficient. That is the point of the additional part in my amendment. Again, I appreciate that it is quite a technical and legal point and I would appreciate the Minister's comments on it at this stage of the proceedings.

Lord Reay: I should like to express my support for Amendment No. 13. In doing so, I should declare an interest as I hold a brief on behalf of the CBI. I am extremely pleased that the Government have seen fit to remove the registrar's discretion in this case. It is something that the CBI has strongly wanted, believing that it is a matter which should be left to commercial judgment. 18 A further reason for removing such discretion is that it would have been possible to circumvent it by agreement between the proprietor of the earlier registered trade mark and the later trade mark, whereby the proprietor of the original trade mark could have registered the later one and then reassigned it. I am extremely grateful to the Government for introducing the amendment.

Lord Strathclyde: I thank my noble friend for his words of support. I am also delighted that Amendment No. 13 finds favour with him. Perhaps I may now reply to Amendment No. 14. Again, I appreciate the concern reflected in the amendment. Although acquiescence is a topic covered in the directive, it is always acquiescence in the use of a mark which is already on the register. There seems to be no room to adopt these provisions by analogy to deal with the case of acquiescence by the owner of a registered mark in the use by someone else of a similar unregistered mark. If the owner of the unregistered mark has established sufficient good will through use of his mark he may of course be able to contest the position of the registered mark. I am doubtful whether the amendment can be reconciled with the directive. I do not wish to rule out what the noble Lord said and I shall consider it. If that is acceptable to the noble Lord I hope that he will withdraw his amendment, but I make the proviso that I believe that there is real difficulty with what he suggested.

On Question, amendment agreed to.

Lord Peston had given notice of his intention to move Amendment No. 14: Page 4, line 16, leave out from ("registration") to end of line 17 and insert ("or has acquiesced for a continuous period of five years in the use of the later trade mark in the United Kingdom"). The noble Lord said: I thank the Minister for his response to the amendment. I am extremely interested in the question as to whether my amendment is compatible with the directive. One reason for putting it down was precisely to obtain some elucidation on that matter. I shall be very intrigued if I discover that it is not compatible with the directive because, although we have to comply with the directive it would suggest to me that there is something wrong with the directive. However, there is nothing that we can do about that. I look forward to the eventual analysis of the matter.

[Amendment No. 14 not moved.]

Lord Peston moved Amendment No. 15: Page 4, line 17, at end insert: () Nothing in this section prevents the concurrent registration of a later mark which through honest concurrent use has gained .such goodwill in the later mark as would be protected by the law of passing off."). The noble Lord said: This is my last amendment, and perhaps the last amendment, of the day. It takes us back to our old friend the honest concurrent user, of whom I had heard nothing until I was told that trade marks had to be my subject for the next few weeks. In view of the fact that extensive searches may have to be made to establish whether a rival can prevent registration across a vastly extended range of classes 19 and, as I pointed out in my Second Reading speech, the prospect that examination by the registrar will cease in future thus giving rise to registration of a large number of marks which may be unjustified, in my view it is necessary to retain the honest concurrent user provisions of the law. The wording that I have put forward is rather negative. It is not what I would have liked, but I could not think of a better way of doing it. It states that: "Nothing in this section prevents the concurrent registration of a later mark which through honest concurrent use has gained such goodwill in the later mark as would be protected by the law of passing off. I believe that it is important to make the position of the honest concurrent user clear. Certainly all the advice that I have received is that that is so. There is some doubt as to whether the Bill does that. As Members of the Committee know, I speak as a lay person. I do not know what the position is in continental law concerning whatever the honest concurrent user is called so I cannot give examples of how the amendment would relate to that. However, it would seem to be wrong if we did not retain the honest concurrent user provision. I look forward to the Minister's response. I beg to move.

11.45 a.m.

Lord Strathclyde: I am very grateful for the way in which the noble Lord explained his amendment. Honest concurrent use is a concept known in our old law, but it simply does not fit into the new substantive provisions modelled on the directive. The changes which the Bill makes put a registered mark in a stronger position vis-°-vis an unregistered mark than is the case at present. At the same time, it makes it easier to get on to the register so that in due course unregistered marks will be of less importance in commerce than formerly. As with the previous amendment, I am doubtful whether the amendment can be reconciled with the directive. The noble Lord wisely pointed out that if that is the case then perhaps the directive is at fault here. I am 20 not sure that it is, but either way we are not here to change the directive: we are here to try to put the meaning of the directive into UK law. Again, I do not rule out the noble Lord's amendment. I would like to consider it further, but again mere are real difficulties.

Lord Peston: I thank the noble Lord for that reply. I, too, intend to examine the matter further because I believe that it is an important point in relation to the honest concurrent user. The interesting logical point which I make at this moment is that we must incorporate the directive into British law. The important question is whether we can have more in British law than is contained in the directive so long as it does not conflict with the directive. That is why I was interested in the exact words which the noble Lord, Lord Strathclyde, used. The issue is not solely whether this provision is contained in the directive itself, but whether it is incompatible with the directive. In thanking the Minister for looking at the matter again, I shall also be looking at the matter further to see whether this or another form of words can do the job. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 5, as amended, shall stand part of the Bill?

Lord Airedale: The clause ends with a reference to: "a likelihood of confusion on the part of the public". Cannot we simply say "confusion of the public"?

Lord Strathclyde: If the noble Lord refers back to Amendment No. 13 he will see that those words have been excluded altogether.

Clause 5, as amended, agreed to.

The Deputy Chairman of Committees (Lord Brougham and Vaux): Does the Committee agree that this is a convenient moment at which to adjourn until Tuesday next at 3.15 p.m.?

The Committee adjourned at thirteen minutes before noon.