Sirtex Medical Limited v Cancer Research Institute Incorporated & Ors

The dispute before the High Court of Australia concerned the interpretation of a clause within a licence agreement between Sirtex Medical Limited (the licensee) and the Cancer Research Institute Incorporated (the licensor). Sirtex sought a declaration that it was entitled to a rebate on royalties paid to the Cancer Research Institute under the agreement.

The central legal issue before the Court was whether the phrase "net sales" as defined in the licence agreement included or excluded sales made by Sirtex to its related body corporate, Sirtex Medical (USA) Inc. This interpretation was critical to determining the amount of royalties payable and, consequently, Sirtex's entitlement to a rebate.

Kirby J, in his judgment, focused on the plain meaning of the contractual language. He found that the definition of "net sales" in the agreement did not contain any express exclusion for sales to related bodies corporate. Therefore, sales made by Sirtex to Sirtex Medical (USA) Inc. were to be included in the calculation of "net sales" for the purpose of determining royalty payments. The Court applied the principle of contractual interpretation that words are to be given their ordinary and natural meaning unless the context clearly indicates otherwise.

The Court ordered that Sirtex Medical Limited was entitled to the rebate it claimed.