Hunter (Thomas) Ltd v James Fox & Company Ltd

• Jurisdiction: Ireland
• Judgment Date: 31 July 1966
• Date: 31 July 1966
• Court: Supreme Court

Thomas Hunter Ltd. v. James Fox & Co. Ltd.

THOMAS HUNTER LIMITED

Plaintiffs

and

JAMES FOX & COMPANY LIMITED and B. & J. METAL CAPS LIMITED

Defendants.

Supreme Court.

Patent - Licence to use patented article - Condition the effect of which will be to prohibit the licensee from using articles not supplied by the licensor or his nominee - Condition the effect of which will be to require the licensee to acquire non-patented articles from licensor - Effect of such conditions - Whether abuse of monopoly rights - Industrial and Commercial Property (Protection) Act, 1927 (No. 16 of 1927), s. 43, sub-ss. 2 and 3; s. 54,sub-ss. 1 and 4.

The plaintiffs were the patentees of Patent No. 19081, a patent which related to a sealing head used for securing metal caps to bottles and jars so as to create an air-tight seal. The sealing heads were used extensively by jam manufacturers, under licence from the plaintiffs. The licence, which was granted for a nominal charge, excluded the use of the sealing head for any purpose. On a purchase by a licensee from the plaintiffs of metal caps which could be secured by means of the sealing head licensed to them, a further licence was granted by the plaintiffs to enable the licensee to use the sealing head to apply the metal caps so purchased.

The defendants, who proposed to manufacture the metal caps in Ireland, applied to the Controller of Industrial and Commercial Property for relief under s. 43 of the Act, seeking an order that the patent be endorsed, "licences of right," and that they should be granted a licence under the patent upon such terms as the Controller might decide. Upon this application they contended that the plaintiffs were in effect restricting the use of their sealing heads to caps supplied by them, that this was contrary to the provisions of s. 54 of the Industrial and Commercial Property (Protection) Act, 1927, and, accordingly, an abuse of monopoly rights within the meaning of s. 43 of that Act.

The Controller allowed the application, holding that the monopoly rights granted by the patent had been abused in circumstances which fell within s. 43, sub-s. 2, paras. (c) and (f). On appeal by the plaintiffs to the High Court, Kenny J. affirmed the decision of the Controller. The plaintiffs appealed to the Supreme Court.

Held by the Supreme Court ( Ó Dálaigh C.J., Kingsmill Moore, Lavery, Haugh ó dálaighand Walsh JJ.) 1, that the effect of clause 5 of the agreement under which sealing heads were licensed was to prohibit the licensee from using the sealing head on the goods of any person other than the plaintiffs and to require the licensee to purchase any lids, which were to be used with the sealing head, from the plaintiffs;

2, That such prohibition and requirement when taken in conjunction with the terms of the label licence was a condition which had the effect of transgressing paras. (a) and (b) of s. 54, sub-s. 1, of the Industrial and Commercial Property (Protection) Act, 1927;

3, That by virtue of the provisions of s. 54, sub-s. 4, of the said Act such condition was void ab initio. As such, it could have no operation to make terms unreasonable or to creste unfair prejudice. Accordingly, the monopoly rights granted by the patent had not been abused.

Patent Application.

The plaintiffs, Thomas Hunter Ltd., were an English company who were, inter alia, manufacturers of a system for applying an air-tight seal to glass jars and bottles. The system involved the use of a thin metal lid with a rubber gasket and a lip which gripped the jar or bottle. The lid was applied by means of a sealing head which deformed the lip so that it gripped the container while at the same time the gasket made it air-tight. The sealing head was the subject of a patent, but the lid was not, being sold only under the trade name, "Omnia," of which the plaintiffs were the registered proprietors.

This system was one of a number available to the jam manufacturers, but was the one generally used by them. It was used by the jam manufacturers under agreements with the plaintiffs whereby they hired the head for a nominal rent subject to a condition that they would purchase their requirements of caps from the plaintiffs. The form of agreement was as follows:—

"HIRE & MAINTENANCE AGREEMENT

AN AGREEMENT between...................................... ........................................................... of.............................in the County of………… ............................(hereinafter referred to as the Hirer) and Thomas Hunter Ltd. of Rugby in the County of Warwick (hereinafter referred to as the Owner) dated the.................... day of..............19.............

1. In consideration of the Hirer having paid the Owner the initial sum of………for the......................... ……………………………and of the Hirer undertaking to pay the scheduled fees per annum in advance as shown overleaf for the Hire and Maintenance of the Machinery and/or Tools as specified in the subjoined schedule the Owner hereby undertakes to deliver to the Hirer at his address above or to an address otherwise specified in writing by the Hirer such Machinery and/or Tools.

2. The Hirer hereby agrees to pay to the Owner the fees set out in the Schedule hereto such payments to be made in advance on………………………in each year.

3. If any annual payment is not made within one month of the date upon which it is due the Owner shall have the right to terminate the Agreement and at any time thereafter to resume possession of the said Machinery and/or Tools and to remove the same from the premises where they may be.

4. The Hirer hereby agrees that at no time during the continuance of this Agreement shall the said articles be removed from the premises to which they have been delivered by the Owner without the Owner's consent.

5. The Hirer further agrees that the sealing head and machinery and tools comprised in this Agreement shall not at any time be used on any seals other than Omnia seals and in the event of any breach of this provision the Owner shall be entitled forthwith on giving notice in writing to the Hirer immediately to determine this agreement and the Hirer will forthwith return the machinery and/or tools to the Owner.

6. The Hirer also agrees to permit all persons authorized by the Owner at all reasonable times during this Agreement to inspect and examine the condition of the said Machinery and/or Tools.

7. The Hirer hereby agrees that the said Machinery and Tools shall at all times have plates affixed to them in a prominent place indicating that they are the property of the Owner.

8. The Hirer hereby accepts responsibility for the safekeeping of the said Machinery and/or Tools and also undertakes to make good any loss of or damage thereto other than by fair wear and tear.

9. This Agreement shall continue until determined by either party giving to the other one month's notice in writing to that effect. Notwithstanding such notice the Hirer will remain responsible for the safekeeping of the Machinery and/or Tools for a period of one month after the determination of this Agreement, after which date the Machinery and/or Tools will become the Owner's responsibility.

10. Under this Agreement the liability of the Owner is limited to the obligations set out in Paragraph 1 of this Agreement and the Owner shall be under no further liability to the Hirer of any sort for any damage or loss however caused.

11. Should the Hirer cease to operate the business at the address above specified for any reason whatsoever or dispose of same to another party the Hirer is to notify the Owner in writing of such cessation or disposal within a period of not less than one calendar month prior to the effecting of the said cessation or disposal and the Machinery and/or Tools returned to the Owner's address at the expense of the Hirer also within the aforesaid period.

12. Except as expressly set out herein no conditions or warranties expressed or implied are made or given in connection with or as terms of the Agreement or as consideration for entering into it."

Doubts arose as to the validity of the above form of agreement and the plaintiffs were advised that clause 5 thereof might contravene the provisions of s. 54 of the Industrial and Commercial Property (Protection) Act, 1927. The agreements were thereupon determined in accordance with their provisions on the 18th February, 1961, after which date a fresh form of agreement was substituted. This latter agreement was similar to the previous agreement save for clause 5 in place of which the following clause was inserted:—"The hirer recognises that the said machinery and/or tools or some of them, and the use thereof, are the subject of Letters Patent in Eire and overseas the exclusive property of the owner, and this agreement shall in no way be construed as conferring upon the hirer any licence or privilege or right of user under such Letters Patent or other protection for the time being in force."

The right to use the sealing head on "Omnia" caps was subsequently given by means of a label licence supplied with each consignment of caps. The label licence was as follows:—

"IMPORTANT

The purchase of this package entitles the first purchaser to employ the seals contained therein with the apparatus and in accordance with the methods protected by patents 19081, 21407 and 22437. Provided that this licence shall not be effective unless the full purchase price is paid in accordance with the Company's price list for the time being in force, and all other conditions of sale are observed.

This licence, being effective only for the first purchaser from Thomas Hunter Limited, may not be assigned without the prior consent of the Patentees and is restricted in its effect to the seals contained within the package to which this label was affixed by Thomas Hunter Limited."

The defendants were both Irish companies carrying on business as manufacturers of closures of bottles and jars...