Colin CM Moore Pty Ltd v Sivathasan - [2022] NSWSC 532

Supreme Court

New South Wales

Medium Neutral Citation: Colin CM Moore Pty Ltd v Sivathasan [2022] NSWSC 532
Hearing dates: 11-14; 19 and 20 April 2022
Decision date: 04 May 2022
Jurisdiction: Equity
Before: Lindsay J
Decision:
Subject to allowing the parties an opportunity to make submissions about the form of orders to be made and costs:
1. DECLARE that the Licensing Agreement dated 8 July 2018 made between the plaintiffs (of the one part) and the defendant (of the other part) was validly terminated by the defendant on 30 October 2018.
2. ORDER that the plaintiffs’ statement of claim and the defendant’s amended statement of cross-claim otherwise be dismissed.

Catchwords:
CONTRACTS — Implied terms — Terms implied in fact — Necessary to give business efficacy – Licence defined by reference to listed patents – Implied term that patents were, and would remain, current
INTELLECTUAL PROPERTY – Patents – Claims – Construction
INTELLECTUAL PROPERTY – Patents – Licences

Legislation Cited:
Patents Act 1990 Cth
Australian Consumer Law

Cases Cited:
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20
Britax Childcare Pty Ltd v Infa-Secure Pty Ltd (No 3) [2012] FCA 1019
Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41; 94 ALJR 1044
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Décor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385
Federal Commissioner of Taxation v United Aircraft Corporation (1943) 68 CLR 525
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603
Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCA FC 220; 224 ALR 168
Glaverbel Sa v British Coal Corp [1994] RPC 443
Glaxo Smith Kline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd [2016] FCAFC 90; 120 IPR 406
H Lundbeck A/S v Sandoz Pty Ltd [2022] HCA 4; 96 ALJR 208
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104
Norbert Steinhardt & Son Ltd v Smith (1961) 105 CLR 440
Populin v HB Nominees Pty Ltd (1982) 41 ALR 471
Ransburg Co v Aerostyle Ltd [1968] RPC 287
Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479
Regency Media Pty Ltd v MPEG LA, LC (2014) 231 FCR 588
Shepherd v Felt & Textiles Australia Ltd (1931) 45 CLR 359
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632
Wake Forest University Health Sciences v Smith & Nephew Pty Ltd (No 2) [2011] FCA 1002; 92 IPR 496
Welch Perrin & Co Pty Ltd v Worrel (1961)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWSC 532
Decision Date: 04 May 2022

CaseChat Overview and Summary

The Federal Court of Australia heard a dispute between Colin CM Moore Pty Ltd, the owner of several patents, and Sivathasan, a licensee of those patents. The crux of the dispute was whether the licence agreement between the parties included an implied term that the patents would remain current and valid. Colin CM Moore Pty Ltd argued that such a term was necessary to give business efficacy to the contract, while Sivathasan contested the existence of this implied term.

The legal issues that the court had to resolve were whether a term implying that the patents would remain current and valid was necessary to give business efficacy to the licence agreement and how to interpret the licence in light of the listed patents. The court had to consider the terms of the licence, the nature of the patents, and the commercial context in which the agreement was made.

The court found that an implied term that the patents were, and would remain, current was necessary to give business efficacy to the licence agreement. The court reasoned that the purpose of the licence was to grant Sivathasan the right to use the patented technology, which would only be of value if the patents remained valid. The court held that it was implicit in the contract that the patents would remain current and enforceable, as this was necessary for the licence to achieve its purpose. The court also noted that the construction of the licence agreement and the listed patents supported the implication of such a term. The court's decision was based on the necessity of the implied term to give business efficacy to the contract and the commercial context in which the agreement was made.

The court ordered that an implied term that the patents were, and would remain, current was incorporated into the licence agreement. This decision reinforced the importance of implied terms in ensuring the effectiveness of contractual agreements and highlighted the need for careful consideration of the terms and context of such agreements.

Orders