Cummings v Stewart (No. 2)

• Jurisdiction: Ireland
• Judge: M. R.
• Judgment Date: 13 November 1912
• Court: Chancery Division (Ireland)
• Docket Number: (1911. No. 798.)
• Date: 13 November 1912

Cummings

and

Stewart (No. 2).

M. R.

(1911. No. 798.)

CASES

DETERMINED BY

THE CHANCERY DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL.

1913.

Patent — Action for royalties — Construction of licence — Lapse of patent by non-payment of fees — Implied covenant by patentee to pay fees — Dependency of covenant to pay royalties — Impossibility of performance of substantial part of contract.

Held (1) That the defence of want of novelty was not open to the defendant; (2) that there was an implied covenant by the plaintiff to pay the renewal fees; (3) that the covenant to pay the royalties was not an independent covenant, but dependent on the performance by the plaintiff of the implied covenant to pay the fees; (4) that, owing to the lapse of the foreign patents, a substantial part of the subject-matter of the agreement was destroyed, and the agreement in a substantial part became impossible of performance and ceased to be binding; and (5) that as the royalty was a fixed sum, the consideration was indivisible, and the failure of part was equivalent to failure of the entire.

Mills v. Carson, 10 R. P. C. 9, distinguished: Lines v. Usher, 14 R. P. C. 206, followed.

Trial Of Action.

This action was brought by the plaintiff, who was an American citizen, residing in America, against the defendant, who was a contractor carrying on business in Belfast, to recover royalties payable under an agreement dated April 3rd, 1907. The terms of the agreement, and the other facts of the case, are sufficiently stated in the head-note and the judgment.

S. L. Brown, K.C., D. M. Wilson, K.C. (with them Best, K.C., and Newett), for the plaintiff:—

The defendant says that the agreement is not binding on him for two reasons—(1) That the invention was not new or original; (2) that the plaintiff allowed the French and Austrian patents to lapse through non-payment of the renewal fees. As to (1), it is not open in this action by reason of the agreement and the estoppel which arises from the defendant's position as licensee. In clause 9 the validity of the patents is expressly admitted. A licensee is like a tenant, and cannot dispute the title of the licensor: Ashworth v. Law (1); Clarke v. Adie (2); Milk v. Carson (3).

As to (2), the plaintiff was not bound to pay the renewal fees; there is nothing in the agreement about paying them, and there is no ground for implying an obligation to pay them. This question was discussed in Mills v. Carson (3). It was an action on a covenant in an agreement under seal to recover royalties. The main defence was that the obligation of the licensee to pay the royalties ceased because the patentee had failed to fulfil the

implied obligation to pay the renewal fees. The Court of Appeal held that a covenant to pay the renewal fees could not be implied, and that, even if it could, the covenant was an independent covenant. There was there a covenant for quiet enjoyment, but the Court held that even if the non-payment of the fees was a breach of it, it was an independent covenant, and that the defendant's remedy, if any, was by a counterclaim. Lord Esher there cites with approval the rule laid down in Hamlyn & Co. v. Wood & Co. (1), that a stipulation is not to be implied in a written contract, unless an implication necessarily arises that the parties must have intended that the suggested stipulation should exist.

That case shows that where, as here, an agreement mentions certain events in which royalties are to cease, one cannot imply any further event in which they are to cease: Lines v. Usher (2) will be relied on on behalf of the defendant, but that case turned on the construction of the agreement, clause 6 of which provided that the patentees were to protect and defend the patent from infringement, and in default of their so doing the royalty should cease to be payable. The plaintiff's action was to recover back royalties paid in ignorance of the fact that the patent had lapsed by non-payment of the fees, and the Court of Appeal, the members of which, Lord Esher, M.R., and Lopes, L.J., were parties to the judgment in Mills v. Carson (3), held that the agreement to protect the patent obliged the defendants to keep it in full force, and that there was a breach of that agreement, the consequence of which was that the royalties should cease to be payable. So here clause 13 contains an agreement to defend the patent, but no such consequential provision in case of breach as in Lines v. Usher (2).

[It was also urged that the cause of the lapse of the foreign patents was non-user. The plaintiff and other witnesses were examined on behalf of the plaintiff and defendant, including several foreign lawyers of eminence on the French and Austrian law as to the lapse of patents by reason of non-payment of fees and non-user, the purport of whose evidence, so far as it is material, is given in the judgment.]

Ronan, K.C., and Herbert Wilson, K.C. (with them James Andrews), for the defendant:—

There was an implied covenant by the plaintiff to pay the renewal fees; the consideration for the defendant's promise to pay the royalty was the performance of this implied covenant. There was a partial failure of consideration by reason of non-payment of the fees for the foreign patents, and the action is not maintainable, as part of the consideration has failed: Pordage v. Cole (1), where the rules as to the construction of covenants, dependent and independent, are discussed, and Chanter v. Leese (2) and Ellen v. Topp (3) are cited. In Chanter v. Leese (2) an action was brought to recover a half-yearly payment under an agreement for a licence to use six patents; one of these patents was alleged to have been void to the knowledge of the plaintiff at the time that the agreement was made. It was held that the enjoyment of all the six patents was the consideration for every part of the defendant's promise, and that the annuity payable under the agreement could not be apportioned. Ellen v. Topp (3) was a case of apprenticeship; the master undertook to teach the apprentice the business of an auctioneer, appraiser, and corn factor; the master gave up the business of corn factor, whereupon the apprentice absented himself from the master's service. It was held, in an action on the indenture by the master against the father for the desertion of the apprentice, that the relinquishment by the master of his trade of corn factor was an answer to the action, the ground of the decision being that the performance of the covenant to teach was a condition precedent to the obligation to serve. The position of the defendant is analogous to that of a tenant sued for rent, who has been evicted from part of the demised premises. Eviction from part of the premises is the eviction from the whole: Foa on Landlord and Tenant, 4th ed., p. 168; Upton v. Townsend (4).

[The Master of the Rolls referred to Irish Society v. Tyrrell (5).] That case turned on section 44 of Deasy's Act (23 & 24 Vict. c. 154).

In Hayne v. Maltby (6), the plaintiff, pretending to derive a

right under a patent, assigned to the defendant part of that right on certain terms, and brought an action against the defendant for breach of covenant to use the patent right in a particular way. A plea that the patent was void for non-enrolment was held good on demurrer, the defendant not being estopped from showing that the patent was void. In The London Gaslight Co. v. Chelsea Veslry (1) the plaintiffs contracted by deed to light the parish lamps for a given period from sunset to sunrise with gas of good quality and sufficient in quantity, and the parish contracted to pay the company for that service at the rate of £4 10s. per annum for each lamp. The action was brought for the amount due for a year under the contract. The defendants pleaded (1) that the plaintiffs did not light the lanterns during the said period to the satisfaction of the defendants or their surveyor, and (2) that the plaintiffs did not supply the lanterns with the gas of the quality stipulated for in the deed. It was held on demurrer that these pleas were no answer to the action. Erle, C.J., said that it was not one of unity of contract on one side and of promise on the other. There was a severable contract with a severable consideration and a severable promise. It would be monstrous to hold that the failure to keep one lamp alight should operate an entire destruction of the plaintiff's claim, which it would do if they were to hold that the performance by the plaintiffs of each and every of the stipulations in the deed on their part was a condition precedent to their right to call upon the defendants for the stipulated payments. In the present case, however, the consideration is not severable; a fixed sum is payable. The agreement is made “in consideration of the faithful keeping, observance, and performance by each party of the several and respective covenants on his part therein contained.” In Mills v. Carson (2) the agreement was “in consideration of the covenants there in after contained.” In Leake on Contracts, 6th ed. (1911), p. 466, the construction of contracts as to conditions is discussed, and it is pointed out that the obligation of the one provision may be expressly or impliedly conditional upon the due performance of the other. In Pollock on Contracts, 8th ed. (1911), p. 272, the author points out that when a contract consists in mutual promises which on one or both sides are not to be completely performed at one time, and a party who has not performed the whole of his own obligation complains of a failure on the other side, questions arise which may be of great difficulty. He says that in the earlier decisions the Courts inclined to treat the several terms of a contract, unless expressed to be dependent on the other party's performance as separate and independent promises, but that at this day the tendency is the other way. The...