New South Wales
Court of Appeal
CITATION: Fermiscan Pty Ltd, Fermiscan Australia Pty Ltd, Fiberscan Pty Ltd v Veronica Jean James [2009] NSWCA 355 HEARING DATE(S): 5 August 2009
JUDGMENT DATE:
11 November 2009JUDGMENT OF: Allsop P at 1; Ipp JA at 156; Handley AJA at 169 DECISION: Appeal dismissed with costs. CATCHWORDS: CONTRACTS – general contractual principles - construction and interpretation of contracts - assignment of rights in connection with patents – application for patent of further invention – whether failure to assign patent application breached the assignment agreement - CONTRACTS - general contractual principles - construction and interpretation of contracts – agreement to settle litigation– non-disparagement clause - whether breach of the settlement agreement in comments made about efficacy of first invention – legitimate expression of scientific views – no tendency to injure or damage the reputation of the invention - CONTRACTS – penalties –– characterisation of agreed sum owing on breach of agreement to settle litigation - acceleration of payments of deferred settlement upon breach - whether clause characterised as a penalty – objective intention of the parties - clause intended to operate as a deterrent against the breach of the contract by coercing compliance – penalty clause void and unenforceable LEGISLATION CITED: Patents Act 1990 (Cth)
Trade Practices Act 1974 (Cth)CATEGORY: Principal judgment CASES CITED: Acron Pacific Limited v Offshore Oil NL [1985] HCA 63; 157 CLR 514
AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1989) 15 NSWLR 564
AMEV-UDC Finance Limited v Austin [1986] HCA 63; 162 CLR 170
Ballantyne v Aktiebolaget Separator [1915] HCA 20; 19 CLR 620
Boucaut Bay Co Ltd (In Liquidation) v Commonwealth [1927] HCA 59; 40 CLR 98
British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631
Campbell Discount Co Ltd v Bridge [1962] AC 600
Commissioners of Customs and Excise v Savoy Hotel Ltd [1966] 1 WLR 948
Commissioner of Public Works v Hills [1906] AC 368
Clydebank Engineering & Shipbuilding Company v Don Jose Ramos Yzquierdo Y Castaneda [1905] AC 6
Cullen v Welsbach Light Company of Australasia Ltd [1907] HCA 3; 4 CLR 990
Delaney v Staples [1992] 1 AC 687
Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Limited [1915] AC 79
Esanda Finance Corporation Ltd v Plessnig [1989] HCA 7; 166 CLR 131
Ex parte Celotex Corporation [1937] HCA 31; 57 CLR 19
Favelle Mort Limited v Murray [1976] HCA 13; 133 CLR 580
Glegg v Bromley [1912] 3 KB 474
Gum v Stevens [1923] HCA 48; 33 CLR 267
Hargans v Commissioner of Patents [1932] HCA 60; 48 CLR 609
Hunt v Kallinicos [2009] NSWCA 5
Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310; 257 ALR 292
Lord Elphinstone v Monkland Iron and Coal Co Limited (1886) 11 App Cas 332
Kauzal v Lee [1936] HCA 39; 58 CLR 670
Lockwood Security…
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- AGLC
- Fermiscan Pty Ltd v James [2009] NSWCA 355
- Case
- [2009] NSWCA 355
- Decision Date
CaseChat Overview and Summary
Fermiscan Pty Ltd (Fermiscan) and Dr. James were parties to litigation concerning an assignment agreement related to patents. The dispute involved whether Fermiscan had breached the assignment agreement by failing to assign a patent application for a further invention, and whether Dr. James had breached a subsequent settlement agreement by making comments about the efficacy of the first invention, which included a non-disparagement clause. The matter was heard in the Court of Appeal of New South Wales.
The Court of Appeal was required to determine three primary legal issues. Firstly, whether Fermiscan's failure to assign the patent application for the further invention constituted a breach of the original assignment agreement. Secondly, whether Dr. James's comments regarding the efficacy of the first invention breached the non-disparagement clause in the settlement agreement, considering whether these comments were a legitimate expression of scientific views or had a tendency to injure or damage the reputation of the invention. Thirdly, the Court had to characterise an agreed sum payable upon breach of the settlement agreement, which involved the acceleration of deferred settlement payments, and determine whether this clause was a penalty and therefore void and unenforceable.
The Court reasoned that the assignment agreement did not extend to the further invention, thus Fermiscan had not breached it. Regarding the non-disparagement clause, the Court found that Dr. James's comments were a legitimate expression of scientific views and did not tend to injure or damage the reputation of the invention. On the issue of the penalty clause, the Court determined that the objective intention of the parties was for the clause to operate as a deterrent against breach by coercing compliance, and therefore it was a penalty clause that was void and unenforceable.
The appeal was dismissed with costs.
The Court of Appeal was required to determine three primary legal issues. Firstly, whether Fermiscan's failure to assign the patent application for the further invention constituted a breach of the original assignment agreement. Secondly, whether Dr. James's comments regarding the efficacy of the first invention breached the non-disparagement clause in the settlement agreement, considering whether these comments were a legitimate expression of scientific views or had a tendency to injure or damage the reputation of the invention. Thirdly, the Court had to characterise an agreed sum payable upon breach of the settlement agreement, which involved the acceleration of deferred settlement payments, and determine whether this clause was a penalty and therefore void and unenforceable.
The Court reasoned that the assignment agreement did not extend to the further invention, thus Fermiscan had not breached it. Regarding the non-disparagement clause, the Court found that Dr. James's comments were a legitimate expression of scientific views and did not tend to injure or damage the reputation of the invention. On the issue of the penalty clause, the Court determined that the objective intention of the parties was for the clause to operate as a deterrent against breach by coercing compliance, and therefore it was a penalty clause that was void and unenforceable.
The appeal was dismissed with costs.
Orders
Orders of the court
Appeal dismissed with costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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