Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018

Motion to Approve

Moved by

That the draft Regulations laid before the House on 27 November 2018 be approved. Debated in Grand Committee on 14 January.

My Lords, the Grand Committee debate we had on this instrument on 14 January was extensive and wide-ranging; I am grateful to all noble Lords who took part so rigorously. Following that debate, I wrote a letter to noble Lords who participated, providing details on specific matters raised, which I placed in the Library.

The EU-derived law which provides for the current EEA regional exhaustion regime needs amending to ensure that it continues to function appropriately after exit as retained EU law. This instrument, therefore, provides a temporary solution if we leave the EU without a deal. If Parliament does not agree to this SI, it would expose businesses to considerable uncertainty and the risk of litigation. During the Grand Committee debate, noble Lords asked whether UK businesses and rights holders were put at a disadvantage. This arrangement should not disadvantage UK businesses compared to EU businesses. UK and EU businesses exporting secondary market goods from the UK to the EU may be more restricted, but that restriction would apply equally to all businesses, whether they are based in Brussels or Birmingham, and it depends on where rights are held and which direction the goods are travelling, not on nationality.

At this point, I would like to mention correspondence I received from the Publishers Association. Publishing is a key contributor to the UK economy and the sector considers that this instrument is,

“of immense importance to the UK’s publishing industry, and it is vital that it proceeds into law”,

and,

“helps avoid a potential regulatory cliff-edge for books, offering interim certainty to the industry, while the longer-term exhaustion framework is consulted upon”.

For the benefit of the House, I wanted to expand on some key matters raised in Grand Committee.

My Lords—

I am not going to give way. I think it would be more convenient if I made my speech, allowing the House to listen to it, and then took questions. I will continue.

In Grand Committee, noble Lords asked about the approach taken to consultation on the drafting of this no-deal instrument. The legislative approach for exhaustion of IP rights in a no-deal scenario was being developed at a time of considerable sensitivity over the ongoing withdrawal agreement negotiations and the shape of the future relationship. This meant that the usual formal consultation on the legislative instrument was not appropriate. The level of consultation was consistent with the approach being taken with respect to no-deal legislation across government. My officials have engaged with businesses across many sectors since the referendum. They have spoken to rights holders, distribution companies, academics and trade associations. This engagement helped establish support for the legislative approach taken on this instrument. It is ongoing engagement that will continue as the work progresses, not just on exhaustion but more widely too.

While this instrument is intended to provide a temporary fix if the UK exits the EU without a deal, the Government are already considering options for what exhaustion regime is best for the UK in the future. Such an important decision on the UK’s future exhaustion regime is not to be rushed. It is not sensible to put a sunset clause on this instrument. We intend to take the necessary time to build a robust evidence base and to consult with businesses and consumers before any major decision is made on the UK’s future exhaustion regime.

I appreciate that noble Lords have asked about the process for assessing the impact of the adjustments made by this instrument to retained EU law, as they have asked about other such instruments. I believe I have addressed this matter in my letter to noble Lords, and I hope that the explanation was helpful.

My Lords, I merely want to tell the Minister that I too have been advised by the publishing industry. It is with some reluctance that it has agreed that this is necessary legislation, because of the uncertainty that it would otherwise suffer.

The British publishing industry exports more books than any other country. This piece of legislation is vital for it. While it recognises the importance of this SI going through as a temporary fix, it is nevertheless typical of the kind of rushed legislation that has been necessary because of Brexit. This is another example of a gold-standard industry being put at risk because of the pressure to rush that we are all under.

I emphasise that the correspondence that I have had with the publishing industry has suggested that it is extremely unclear about what will happen and that the uncertainty around the long-term provisions for these particular and very important rights causes it considerable concern. For the record, can the Minister clarify this point?

My Lords, whatever the merits of these SIs, I am pleased that we are now debating them on the Floor of the House. I referred in Committee to what my noble friend Lord Tyler said about the critical importance of effective and timely scrutiny of Brexit-related secondary legislation. We have to do this properly. I noticed that the tag in front of this business is “Business expected to be brief”, but we do still have a few loose ends, even after the Minister’s opening statement.

The problem throughout has been inadequate public consultation and the lack of any sunsetting on these statutory instruments. In his letter of 21 January, the Minister defends the lack of proper public consultation as not being meaningful when,

“no wider policy changes were being taken forward”,

and because it,

“would have risked removing the EU’s incentive to agree to an ambitious future relationship on intellectual property”.

I fail to see the substance of the first point, as these SIs are more than technical, and the logic of the second, as, in my experience, contingency plans do not prejudice negotiations.

As we have discussed, we are unilaterally allowing EU 27 goods already placed on the market there to be exported to the UK, which is good news for parallel importers but not as good for parallel exporters from the UK. It is clear from the Government’s small print that these exporters may well need to seek permission to gain entry into the EU. That remains the case.

The Minister did not respond about what the Government are doing to mitigate their situation, by advice or otherwise. I was pleased that he confirmed that the ruling in the Silhouette case and those that followed will apply post Brexit to this modified exhaustion regime. In his letter and in Regulation 2(2), the Minister prays this in aid. It could still have been dealt with expressly in the language of the statutory instrument.

My Lords, I am happy to follow the noble Lord. He has made some detailed comments and posed some questions which I hope the Minister will be able to respond to. Having said that, I accept that the Minister’s letter of 21 January—running to eight pages and covering a lot of detail—as well as subsequent meetings have done a lot to clarify some of the issues that were before us when this was first considered in Committee. But good scrutiny leads to further debate and discussion, so it is not inappropriate that we should come back and point out areas that are not as good as perhaps they should be as we pass this important, time-limited piece of legislation. I also agree that the clarification about the Silhouette case, which was a confusing passage of discussion in Committee, has made things much clearer and will be helpful to those involved in that issue.

The Government should take away from this process three main things. First, if there is an SI of the sort of significance represented by the three intellectual property regulations before us today, the fact that consultation need not be carried out is not sufficient to assuage the concerns of those who have had to respond, even as late as yesterday, to these issues. There is a lesson to be learned here about the need for more engagement and a more considered approach to the context of these amendments. I accept the pressure of time and the difficulty of fitting everything in, but the consequence of not consulting according to the style and process that people have become accustomed to, just because this is a special case, has meant that we have not had the best advice that would have been available to us in ordinary circumstances.

Related to that, the question of whether one needs an impact assessment is also important. There is of course a de minimis figure, which was in the Cabinet Office rules. But when one thinks about the impact that these new regulations will have, even for a time-limited period, the Government should be prepared at the very least to bring forward for consideration evidence that the de minimis figure has been met. At the moment, all we get is an assertion; we are left to guess whether the figures that might be construed will work. That is not satisfactory in terms of general process.

My Lords, first, I thank the Minister for his extensive letter to noble Lords responding to the debate in Grand Committee. I have a specific question and will then make some comments on the wider issue of consultation which has bedevilled all our proceedings on these no-deal statutory instruments, because the consultation has been so haphazard and unsatisfactory. My question is in response to the Minister’s opening remarks, when he said that it was “not sensible” to put a sunset clause on the current exhaustion regime. That is a judgment which the Government have made but, since this is clearly a matter of extreme importance to the industry, can he tell us what the view was of stakeholders who were consulted on the issue of the sunset clause? I understand that that issue has bedevilled these proceedings throughout.

On consultation, the Minister’s letter was significant; it accepted that the consultation which had taken place had been in confidence. Having secret consultations which are not open to all relevant people, or all those who wish to take part, particularly from the industries consulted, is contrary to almost all of the principles of public consultation. The Minister’s letter has an extremely convoluted paragraph about how this secret consultation was conducted. It says that the Intellectual Property Office, or IPO,

“identified the relevant representative organisations or businesses it would usually engage with, and who would give a range of views. Because of the confidential nature of the review”—

which was entirely self-imposed by the Government; this did not need to be confidential but could have been an open, public review—

“the IPO then identified and invited 12 individual experts who had previously liaised with the IPO in a role within one (or more) of those relevant organisations”.

The letter then lists the organisations. It continues:

I want to follow up that point. I remind the Minister that after our rigorous series of exchanges in Grand Committee on these regulations, I took the liberty of submitting a Written Question, which was answered extremely helpfully on behalf of the Cabinet Office by the noble Lord, Lord Young of Cookham. I wanted to check that my memory was correct about the Cabinet Office rules on consultation. Not only do they require 12 weeks—during which people can comment in what is often a helpful way for the Government of the day—but the twin leg to this is that the Government have to publish those responses to their consultation. Not only have the Government, as the noble Lord, Lord Adonis, said, cut out the middleman in their approach to consultation, but by doing it that way they have avoided the commitment to publish the responses to that consultation. So there is a twin problem with the Government’s approach to many of these SIs. I suspect it is going to continue in relation to the Healthcare (International Arrangements) Bill, which contains Henry VIII powers for the Government to produce a lot of SIs. If the Government go on behaving on these SIs in the way that they have behaved on those we are discussing today, they will drive a coach and horses through their own Cabinet Office rules on the way we go in for consultation on legislation.

My Lords, I have waited in vain for some Conservative Members to contribute to this debate. When I moved here from the other place, a number of people, including the noble Lord, Lord Strathclyde, who I am glad to see here, told me that the great thing about the House of Lords is its careful scrutiny, the work that it does scrutinising detailed legislation using all its expertise, knowledge and background. That is why I am surprised. We are dealing with a statutory instrument on intellectual property, which a lot of Conservative Members, in particular, must have expertise in. I see the noble Lord, Lord Faulks, who has probably been involved with this in his work in the legal profession. There are others who no doubt could contribute. We have 12 statutory instruments here. I have been at a number of meetings of the Grand Committee, and with the notable, standout exception of the noble Lord, Lord Deben, there have not been any Conservative Members contributing. What has happened to this great scrutiny of the House of Lords? We have had wonderful and important contributions from some of my noble friends, including my noble friends Lady Kingsmill, with her experience in the law, and Lord Winston, when we were discussing the transfer of embryos and other matters. We have heard from the noble Lord, Lord Warner, from the Cross Benches, but no Conservatives. Yet today we have 12 statutory instruments—

We have 11.

We have 11. The noble Lord has made my argument much better, actually. On the Order Paper there are 180 statutory instruments waiting to be discussed by the Grand Committee and by this House, on planning procedures, plant protection, ozone depletion, plant health, equine records—I could go on. I will not, your Lordships will be glad to hear. But I could go on and on, because there are 180 of them—and some are on really important matters.

If the Lord Speaker is still running the visits to schools that we have been involved in, how can I honestly go to schools and say, “I am a Member of this great House of Lords, and we scrutinise. We are there to scrutinise legislation line by line”? This is a dereliction of duty. We are going to pass these statutory instruments, which could have unforeseen consequences —yet we are rushing them through. It is an appalling situation.

I know I am going a bit beyond intellectual property and making a general point—but we will see this again and again. It will go on all day today, all next week and the week after that. We shall certainly not have got through even the 180 on today’s Order Paper by the end of March. Can we really go before pupils—or, indeed, anyone—and say, “The House of Lords has done a really good job of scrutinising all these statutory instruments”? This is not to mention the six Bills that we still have to deal with—the Trade Bill, which is currently under way; the one on healthcare, which we discussed yesterday; the ones on agriculture and fisheries—and a whole range of other things that we still have to do.

This is an astonishing situation. It is only the Liberal Democrats, the Cross Benches and the Labour Party who are doing as much as possible within the time available to scrutinise these documents. The Conservatives—where are they? Perhaps the noble Lord, Lord Strathclyde, can tell me where the great people in the House of Lords who would scrutinise this legislation are, and what an important job we have done. I am very disappointed.