In view of what the Minister has said I will not move my amendment No. 46 and will return to it on Report Stage.
SECTION 90.
Amendment No. 46 not moved.
I move amendment No. 47:
In page 47, subsection (3), lines 1 to 5, to delete paragraphs (a) and (b) and substitute "that person acts with a view to gain, for himself or another, or with intent to cause a loss to another".
This amendment proposes the deletion of section 90 (3) for two reasons, first, to add the words "for himself or another" to avoid any possibility that a person caught with counterfeit goods might plead that he was not the owner of the goods and was not being paid for his services.
Second, the deletion of section 90 (3) (a) and (b) is sought as a person escaped prosecution in the United Kingdom by pleading that he never intended that the counterfeit goods should be accepted as genuine. Both amendments represent what is considered to be a necessary tightening of the provisions of the section.
It had been my intention and that of Deputy Ned O'Keeffe to speak on this loophole in the United Kingdom law which allowed people walk out of selling counterfeit goods by merely sticking on them a label saying they were fakes. Therefore, the second necessary proof would not withstand the legal test if it could always be contended by the seller of the fake goods that he pointed out to the buyer they were a fake, when he could escape all criminal liability.
I strongly support the Minister's proposal since many people trading in branded goods favour his approach.
I have been watching the proceedings on the monitor and I felt I should make an observation on section 90 which deals with sentencing people to ten years' imprisonment for offences committed under this Bill. I am a law and order person but I would ask the Minister to reconsider the sentence of ten years' imprisonment, or a fine of £200,000, or both, for offences committed under the Bill. Will the Minister explain what sentences apply for rape and armed robbery or, perhaps, our learned legal eagle, Deputy Michael McDowell, would know. If people are to be incarcerated in our prisons, and duly sentenced on foot of legislation passed by this House, for crimes committed, those who have stolen the intellectual property of a company or whatever should not necessarily occupy the cell for ten years. I wonder whether the Minister——
——has any opposition to white collar crime being prosecuted?
I am not pleading on their behalf but I would like to think that in the judicial system, there were sentences to meet the crime. Will a more severe sentence be deemed necessary for a person who is arrested for the sale of counterfeit goods than for a person who has stolen a handbag from an old lady? Whatever penalties are being applied should be comparable to the crime committed.
The Deputy's question was addressed to both the Minister and Deputy McDowell.
I agree that ten years is a huge sentence to impose. If, for instance, a large factory is uncovered, somehere in Ireland, producing a perfume, shirt or something else, which are counterfeit goods, and somebody has put much effort into establishing it and has set out, dishonestly, to cash in on somebody else's reputation and to imperil the jobs of the workers in the first person's business, in theory, he should be liable to receive just as heavy a sentence as a person who marches into the wages office of the legitimate company and grabs the entire week's wage packet. They can go away on a robbery charge for life imprisonment. If I, coldheartedly, established a significant counterfeit operation in, say, the Liberties in Dublin, a premises which produced fake Fruit of the Loom teeshirts or whatever and mounted a big scam from the City of Dublin I would be imperilling the jobs of counties Donegal and Derry workers, dishonestly and coldheartedly.
I do not accept the proposition that there is a distinction to be drawn between a person who drives a Mercedes, lives a high lifestyle and engages in a very complicated rip-off of that kind and a person who, somehat less sophisticatedly, marches in with a sawn-off shotgun to the wages office of the Fruit of the Loom in County Donegal and takes £50,000 the more direct way. I do not believe we should distinguish in our law between subtle and unsubtle crime. I strongly support heavy sentences for a person who is caught on a major rip-off.
One of the scandals about Irish commercial life is that very substantial crimes were committed — a massive tax fraud — as recently pointed out, in the beef tribunal report, and the only people who seem to be affected are the middlemen and the lower management in a certain company. If we are serious about stopping rip-offs being operated from this country, the law should be clear that if one engages in a deliberate strategy of that kind one should go to jail.
Deputy Byrne may be thinking about a person who is caught in Moore Street selling a few of these teeshirts. I do not think they will be sent to jail for ten years; they will be dealt with in the District Court if they are caught. The fat cat who sits down, premeditatedly orders fake wrappings and fake labels and puts together the whole operation should be liable to penalties as severe as those for the person who marches in the front door of Fruit of the Loom in County Donegal and tries to take their weekly wage packet at gunpoint.
I am not apologising for anybody who might establish an alternative Fruit of the Loom industry in the Liberties. I am sure there are some entrepreneurs there capable of entering such a business proposition. Those who engage in white collar crime, the Mercedes criminals, are never incarcerated. I share the concerns of Deputy McDowell that maybe it will be the Moore Street woman who will fill Mountjoy Jail and not the men with the Mercedes cars. Perhaps the Minister would examine the sentencing policy as envisaged in the Bill.
Would Deputy O'Keeffe like to make a contribution before I call the Minister?
I was going to speak to this important section at length because it deals with the intention to deceive. I understand that a crime committed under section 90 (4) (b) would be an indictable offence. An argument can be made that, because of the potential profits which a counterfeit operation — an horrendous crime which can be attempted in money laundering — can generate, it would be unrealistic for the maximum fine to be pitched at £200,000 in a case where there was clear evidence that substantial profits, in excess of £200,000, were generated. A limited fine of this nature will not be a deterrent and might prevent a court imposing the type of fine which would be appropriate. Taking into account the large scale profits which counterfeiting operations can generate, it may be more realistic not to specify a maximum penalty or to pitch fines to the statutory maximum of £500,000. Counterfeiting may not be a major problem in Ireland or in the United Kindgom but it is a huge problem in the United States and that can spread rapidly. There is an argument on the other side of the coin also.
Since we are so close to finality, would the Committee agree to finish debating the Bill today?
The Minister must have read my mind. As it is now 12.30 p.m. — the agreed finishing time — and as we are within an ace of completing Committee Stage, I respectfully suggest, with the co-operation of Members, we conclude at 1 p.m. rather than have to reconvene on Wednesday next. Is that agreed? Agreed.
Section 90 will be welcomed by reputable business because, although as Deputy O'Keeffe has said it may not be practised here on the same scale as in other EU countries, counterfeiting is a phenomenon that is happening in Ireland and this section is designed to provide the powers to deal with it. I agree with Deputy McDowell that the Arthur Daly's who progress up the ladder to the stage of being able to conduct a manufacturing enterprise, representing an inferior product, having the trade mark of a well known brand is reprehensible and ought to be addressed with stiff penalties. There is no doubt about that.
When I remarked earlier that I had representations from colleagues in Government about a different matter we were discussing, Deputy Byrne's intervention reminded me that eyebrows were raised and queries made, that section 90 (4) (b) especially, "on conviction on indictment to imprisonment for a term not exceeding ten years or to a fine not exceeding £200,000", seemed to be draconian. The Deputy's intervention also reminded me that I meant to check where it stands in the hierarchy of penalties; Deputy McDowell can assist the committee in that.
Counterfeiting is a serious crime and the purpose of this section is to tackle it and wipe it out. However, I do not want to be accused of introducing draconian measures that would not be brought in for drug pushers or rapists. A sentence of ten years and a £200,000 fine seem to be draconian penalties.
I am examining whether some measure in terms of the power of search to locate the kind of places to which Deputy McDowell referred ought to be included in the Bill. Although I am still not satisfied with the merits of the case represented to me, I am still examining it. I do not want to turn this Bill into criminal law legislation; this is not its purpose. There are other laws relating to money laundering, etc., and it would skew the Bill if we went too far down this road.
However, a distinction may need to be drawn between those who are feeding the counterfeit business and those merely selling the end product. Perhaps the thrust of the legislation should be to go after the source of the problem. If there are views on whether there is a more effective way to tackle the source of the problem as distinct from the comparatively harmless small scale selling of a product, I will examine it. I will examine this and look at the scale of the hierarchy of penalties imposed and judge whether it is fair in all circumstances.
There is a view that the Bill does not go far enough in that area. Deputy Byrne raised other matters which may be pertinent to the Bill. However, people have told me that a person making millions of pounds through counterfeiting can commit repeated offences and there is no reference to penalties for this in the Bill. If they commit more than one offence, there should be forfeiture of their property. This provision is contained in the Competition Act. I see this case as different because property and large amounts of money are involved.
Many in the legal and other professions believe the penalties proposed are not severe and strict enough. I ask the Minister to re-examine this matter on Report Stage and not to cloud the issue by speaking about drug pushers, money launderers, etc.
The Minister said he would take these comments into account.
The sentences contained in this section are not excessive when compared to, for example, sentences for receiving. They are tough sentences but they have to cover repeat offences, as Deputy O'Keeffe said. Somebody could be charged for their third offence and a judge might finally decide, since they have not learned any lessons from past leniencies, to impose the maximum sentence.
If somebody in a small glass company decided in conjunction with a person in Asia to produce £2 million worth of fake Waterford crystal, they could make a fantastic sum; that money would be as safe as houses. There is something wrong with our criminal law if it does not deal with these people as severely as it would with a person who stole money from a company. There should be severe sentences for somebody who say, decides to produce £2 million of fake Waterford crystal and flood the Hong King market.
They could buy a yacht or a Mercedes with the proceeds.
As legislators, we have to examine how these penalties are imposed. Deputy Byrne is correct in saying that we do not want to see our limited jail spaces filled with minor criminal elements for many years. There must be some form of attachment either to the person or his property so that, even if they only get a lenient fine or sentence, they will not find it as easy to become involved in this practice again.
We must ensure those posing a threat to the safety of the public have priority in the allocation of jail spaces. While I have no time for those who can afford to drive a Mercedes because they ripped off the system, we need to re-examine this matter.
They could be driving Jaguars as well.
We all accept that what happened in a certain sector of our beef industry was scandalous but only the minor players have been questioned.
I agree with Deputy McDowell but I still have reservations. While it would be comforting to think we are tackling the eradication of white collar crime on a fair and even handed basis, we all know this is not the case. Deputy McDowell's example referred to the established malfeasance in our beef industry and wholesale tax evasion. However, far from the State meting out any punishment, it ends up paying fines for the malfeasances of others.
Peerages are being handed out.
Therefore, there is not equality before the law as far as white collar crime is concerned and there is also a necessity to maintain a sense of balance.
We should not compare the beef tribunal to counterfeiting. That is a criminal offence and we should not complicate this Bill further by referring to it. If the criminal law is not right, it should be amended or reintroduced, which is relevant at this time because we do not have criminal law punishment that fits the crime.
If the Minister removes section 90 (3) (b) — he should do this because that loophole was created in the UK — he might consider inserting into the end paragraph that it would be a defence for a person charged with an offence under subsection (1) to show (a) that it was honest use and (b) that he had reasonable grounds to believe it, in other words, to cast the onus of proving honesty on to a defendant.
The paragraph the Minister is removing allowed somebody to escape the law if he could show he did not deceive anybody else. If the Minister puts a requirement that he shows his use was honest into the defence provisions which follow on from it, one might achieve the original aim of that defective paragraph and, at the same time, prevent somebody from escaping the clutches of the law. If somebody is selling counterfeit goods, they should have to establish by way of defence that they were acting honestly.
Perhaps the Minister of State will consider the matter before Report Stage.
Amendment agreed to.
Section 90, as amended, agreed to.
Sections 91 to 100, inclusive, agreed to.
NEW SECTION.
I move amendment No. 48:
In page 50, before the First Schedule, to insert the following new section:
"101.—Stamp duty shall not be chargeable other than at a nominal rate on any Instrument relating to the assignment or other transmission of a trade mark either registered, unregistered or the subject of an application for registration and regardless of whether such assignment or transmission is in connection with the goodwill of a business or separately.".
Under the law there is an obligation to pay stamp duty on instruments transferring trade marks where it is a property right effective within the State or simply because the instrument is executed within the State. The effect of these provisions has been to create severe restrictions on the ability of businesses in Ireland and elsewhere to transfer Irish trade marks. Lawyers have to operate in an environment where they can advise certain clients that in some cases the payment of stamp duty can be avoided by having an instrument executed outside the State. This is ludicrous and may result in a legal service which might otherwise be provided in the State being taken elsewhere.
An added problem is the evaluation of trade marks. Such evaluation by its very nature is an inexact science and results in considerable extra expenditure on trade mark owners in Ireland.
The situation will become even more intolerable when the Union trade mark and international Protocol trade mark take effect within the State. Instrument transferring will be liable to stamp duty. An Italian company will have to submit the instrument to the Revenue Commissioners within 30 days for the payment of stamp duty. Apart from making us unique and imposing an intolerable burden on companies throughout the world, it is both impractical and unrealistic to expect compliance. Union trade marks and international Protocol trade marks are exempted from stamp duty in the new trade marks Act in the United Kingdom. We propose that we should be more friendly to industry and exempt trade marks entirely.
My automatic reaction is to kick the ball to the line. Stamp duty is not a matter for me but for the Minister for Finance in the context of the Finance Bill. What the Deputy is proposing is radical. I am all for attracting business to this jurisdiction but there has to be a limit. If we did not have any taxes on many practices, we could set ourselves up as a little tax haven. Perhaps, the weather would work against us, but we would still attract a certain kind of business.
This is a far reaching proposal. As taxation is a matter for the Minister for Finance, I would be only wasting the time of the Select Committee if I tried to deal with it. If the Deputy has constituents who are concerned about it, I will happily arrange for them to meet the relevant officials in the Department of Finance or the Revenue Commissioners.
This week I tabled a question to the Minister for Finance asking the tax take from stamp duty on trade marks. He stated in reply that it is not possible to quantify it. I also raised this matter with the Minister of State's officials in private session this morning. As there is a scale of rates, stamp duty can prove expensive and prohibitive. In the United Kingdom, for example, one is liable at the lower rate of 1 per cent whereas here the appropriate rate can be as high as 6 per cent. The amendment is relevant in the sense that the Minister of State must take into account the cost involved and value in the registration of trade marks.
I understood the Minister of State to say that the subject matter of the amendment is not relevant to his Department.
That is essentially what I am saying.
He did not say it was not relevant.
The rates of stamp duty in France and Spain are extremely low. I am not asking the Minister of State to assume the role of the Minister for Finance or that of the Revenue Commissioners but to consider the matter before Report Stage.
I would have no objection to discussing the matter further with the Deputy, but I do not want to mislead him or confuse this with other undertakings I have given. My own disposition is that it is not warranted but, even if it were, it should be considered in the context of the Finance Bill.
I support the Deputy, for what it is worth.
I compliment the Minister of State for the able way in which he dealt with the Financial Resolutions on the night of the budget. He is very capable.
I am available should the job become vacant, but until then I will confine myself to the comparatively boring area of trade marks.
The Deputy rarely compliments the Minister of State.
He is not bad.
Amendment, by leave, withdrawn.
First Schedule agreed to.
Second Schedule agreed to.
THIRD SCHEDULE.
I move amendment No. 49:
In page 57, paragraph 2 (3), line 36, to delete "Notes" and substitute "Entries".
I hope no one asks me what this means because I do not know. I am advised that the original term ought to have been "Entries". This is purely an internal matter for the Controller.
Amendment agreed to.
I move amendment No. 50:
In page 58, paragraph 3, lines 15 to 17, to delete subparagraph (3) and substitute the following:
" (3) It shall not be an infringement of—
(a) an existing registered mark, or
(b) a registered trade mark of which the distinctive elements are the same or substantially the same as those of an existing registered mark and which is registered for the same goods or services,
to continue after commencement any use which did not amount to infringement of the existing registered mark under the old law.".
Amendment agreed to.
I move amendment No. 51:
In page 59, paragraph 6 (5), line, 6 to delete "failing" and substitute "falling".
Both the association and the Controller have made representations to me complaining about the clarity of paragraph 6 (5). Unfortunately, two typographical errors have found their way into the subparagraph. These amendments correct them.
Amendment agreed to.
I move amendment No. 52:
In page 59, paragraph 6 (5), line 8, to delete "(2)" and substitute "2".
Amendment agreed to.
We now come to amendment No. 53. Amendments Nos. 53, 54 and 55 form a composite proposal. It is proposed, therefore, to take them together by agreement. Is that agreed? Agreed.
I move amendment No. 53:
In page 59, paragraph 8 (2), line 38, to delete "subparagraph (3)" and substitute "paragraph 9".
In paragraph 8 and 9 we set out the manner in which applications pending at commencement will be processed. In the present text it is proposed that applications advertised before commencement will carry on under the old law. Non-advertised applications will be dealt with under this Bill unless the office raises objections in which case the old law will apply.
There is a conversion option which allows these applications to convert to the new law, but the priority date would be lost and they would be treated as if made at commencement. The association identified problems with this approach and suggested that we follow the provisions of the UK Act. This amendment reflects the UK approach and provides that all pending applications proceed under the old law. Applications which have not been advertised can convert with loss of priority. The application date becomes the date of commencement of the Act.
Amendment agreed to.
I move amendment No. 54:
In page 59, paragraph 8, lines 43 to 46, to delete subparagraph (3).
Amendment agreed to.
I move amendment No. 55:
In page 60 paragraph 9, lines 5 to 15, to delete subparagraph (1) and substitute the following:
"9. (1) This paragraph applies if an application which was pending at commencement has not been advertised under section 26 of the Act of 1963.".
Amendment agreed to.
I move amendment No. 56:
In page 62, after line 3, to insert the following paragraph:
"16. Section 38 of this Act (claim to priority of convention) applies to an application for registration under the Act made or deemed to be made at or after commencement notwithstanding that the Convention application was made before commencement; provided that an application in respect of a trade mark which would not have complied with the definition of a ‘trade mark' in section 2 of the Act of 1963, shall not be accorded a date for the purposes of section 38 (2) earlier than the date of commencement.".
There is a failure in the current transitional provisions to deal with the issue of convention priority. Under the Paris Convention, to which most countries including Ireland adhere, an application for registration may claim the date of a foreign application as the date from which to claim rights in Ireland, provided the Irish application is filed within six months of the first application abroad. However, such a right should not be allowed if it results in rights arising prior to the new law and in circumstances where those rights did not exist under the current law. For example, under paragraph 15 of the transitional provisions, all applications in respect of service marks made before commencement are to have effect as if the date of filing were the date of commencement of the new law.
Without the proposed amendment, all service mark applications will not be treated equally and a foreign applicant who had the fortune to claim priority within six months of the commencement date will have rights earlier than applicants who had the misfortune to file in 1993, 1994 and 1995. It also prejudices Irish industry because such a priority claim would not be possible. What is proposed is similar to what occurred in the UK when it introduced service marks in 1984.
The Bill allows new types of marks to be registered, such as the shape of goods or their packaging. An applicant in respect of such should not be able to claim rights earlier than the commencement date of the new law.
As Deputy O'Keeffe argues, the claiming of priority is provided for in the 1883 Paris Convention for the Protection of Industrial Property and section 38 of the Bill would enshrine the convention's priority provisions into Irish law.
Priority is an arrangement whereby a trade mark proprietor who has filed an application, referred to as a convention application, to register his or her trade mark in a country other than Ireland may, on applying to register the mark in Ireland, rely on the date of the convention application for the purposes of establishing whether his or her rights take precedence over those of other trade mark owners. The date of the convention application is referred to as the priority date. However, the convention application must have been filed within the six months prior to the filing of the Irish application and must be in respect of the registration of the same trade mark and the same goods.
Deputy O'Keeffe tabled an amendment in relation to priority as it would apply to applications for the registration of trade marks in respect of services or service marks. The effect of the amendment would be that a service mark application would not be allowed a priority date which was earlier than the commencement date of the new law. The Bill, as drafted, would allow all applications under the new Act to claim priority, provided of course that the priority date was within six months prior to the date of the application.
The underlying logic of the proposed amendment is that since service marks are not registrable in Ireland earlier than the commencement of this Act, owners of service marks should not be in a position to claim the rights conferred by the Act from a date earlier than the date of its commencement.
I think it was Deputy McDowell who argued on Second Stage that the State may be already exposed to actions for damages through its failure to implement the EU Directive by January 1993. Service mark owners could claim that they were thus denied the benefits of registering their marks from that date. To deny them the ability to claim a priority date which is much later than January 1993 would compound and aggravate the position to which Deputy McDowell referred.
The principle of priority provided for in section 38 will apply as a general principle to all applications made under the new Act. There are trade marks other than service marks which will be registrable for the first time under the new Act. It would be invidious and inequitable to apply a less favourable regime to one category or trade mark than to all othes.
The according of priority dates is an important principle in the registration of trade marks internationally as it arises from the provisions of the Paris Convention. It is not considered that a departure from this principle is warranted in the case to which the amendment relates.
Amendment, by leave, withdrawn.
Question proposed: "That the Third Schedule, as amended, be the Third Schedule to the Bill."
A number of submissions were made to various members of the Committee by the Irish Trade Mark Agents Association and I may return to them on Report Stage.
I thank all the parties who had a keen interest in this Bill. I find myself in at the deep end because, unlike some of my august friends, I do not have a qualification from the Law Library. I learned a great deal from this debate and as I now have a greater legal insight into the matter, I may move amendments on Report Stage. I thank the Minister for accepting some of our amendments which is a good sign from any Minister.
I thank Members of the Committee and the staff for their co-operation on this legislation.
Question put and agreed to.
Title agreed to.
Report of Select Committee.
I propose the following draft report:
That the Select Committee has considered the Bill and has made amendments thereto. The Bill, as amended, is reported to the Dáil.
Report agreed to.
Ordered to report to the Dáil accordingly.
I thank the Minister, his officials, Mr. McDermott and Mr. O'Shea, and the Opposition spokespersons for their co-operation. I also thank everyone who contributed to the debate, the staff, who are very efficient, and the convenors.
The Select Committee adjourned at 1 p.m.