contract under the licence which would still be subsisting. It is, therefore, generally necessary in the interests of a licensor for the licensee to covenant not to assign the licence without his consent (u).

A power to grant sub-licences being in the nature of a power to Sub-licences. assign must also be expressly (if at all) conferred by the licensor (v). The power may, therefore, it is presumed, be conferred by the use of the word "assigns" in the operative part of the grant (w), or it may be separately conferred, or be necessarily implied on the construction of the terms of the licence generally (x).

licensee dur

from disput

In general, in the absence of fraud or an agreement to the con- Estoppel of trary, the mere relationship of licensor and licensee, while subsist- ing licence ing, whether originally constituted by licence under seal or a mere ing validity writing, or even verbally, estops the latter from disputing the of patent;' novelty or utility of the invention or, in any other particular, the validity of the patent (y). Until the patent has been declared void in legal proceedings between the licensor and third parties, the licensee cannot successfully resist the performance of any of his obligations if entered into by deed (z), or, if not so, then unless he can show either the total failure of the consideration for such obligations (a), or, where such consideration is apportionable, a partial failure thereof (a).

(u) See post, pp. 213, 214, as to this covenant. The licensor should join in the assignment, in order to obtain direct covenants from the assignee. See Assignment X., ante, p. 163, which is a precedent of an assignment of a licence to which the licensor is a party.

(v) See ante, p. 184, as to a licence being assignable.

(w) Sce observations of Jervis, C.J., and Maule, J., in Bower v. Hodges, ante, p. 185, note.

(x) Such an implication would, it is submitted, arise if the licence or counterpart thereof contained a covenant by the licensee to send particulars to the licensor of sub-licences when granted, or if there were a proviso in the licence that no sub-licences should be granted at premiums, or for less royalties than those payable by the licensee.

As to the contents of sub-licences, see post, p. 215 (Express power to grant sub-licences).

(y) See the cases of Smith v. Scott, Lawes v. Purser, Crossley v. Dixon, and others mentioned later or these points. If the licensee disputes the validity of the patent during the continuance of the licence he may be restrained from using the invention (Grover & Baker Sewing Machine Co. v. Millard, 8 Jur. N. S. 714).

(z) Smith v. Scott, 6 C. B. N. S. 771.

(a) Chanter v. Lees, 4 Mees. & Wels. 295, affirmed on appeal in 5 ibid. 698. In that case the licence was not under seal, and one of the six patents being

even if licence be exclusive;

The doctrine also applies in the case of a deed, even if the licensor covenants for quiet enjoyment or as to the validity of the patent, and whether absolutely or limited to his own acts or omissions. Thus, in Smith v. Scott (b), the licensor covenanted that the licensee should be entitled to the exclusive right to the invention in manner and subject to the conditions therein mentioned, which covenant was plainly an absolute one for quiet enjoyment. The licensee was held to be estopped in an action for the payment of the royalties from disputing the validity of the title.

Again, in Cutler v. Bower (c), a licensor had sold half the patent to the licensee, and, in consequence, had assigned the patent to a trustee for himself and the licensee. In the assignment, the licensor had given the qualified covenant as to the validity of the patent and for quiet enjoyment. It was held in the action which was brought by the licensor to obtain payment of an instalment of the purchase-money according to the covenant in this behalf, that the consideration had not wholly failed, as no eviction was alleged to have taken place, and that under the licence the licensee was bound by estoppel to pay the royalties, and that the covenant to pay the purchase-money was independent of the covenants for title.

This rule of estoppel obtains even where the licence is expressed to be exclusive, whereby it might be contended that warranty of title to the invention as against all the world, including the licensor, was implied (d). The rule also holds notwithstanding

found void, it was held that the whole consideration, namely, the exclusive
right to use all the patents, had under the circumstances totally failed;
especially as there was no averment that the licensee had used any of the
five patents, and as neither the consideration nor the annuity agreed to be
paid was apportionable. See also Knowles v. Bovill, 22 L. T. N. S. 70. As
to the rescission and apportionment of contracts, see ante, pp. 44—46.
(b) 6 C. B. 771.

(c) 11 Q. B. 973.

(d) See Noton v. Brookes, 7 Hurl. & Norm. 499, in which that argument was used to no effect although the licence was not under seal. In the previous case of Besseman v. Wright, 6 W. R. 719, the licence, which was apparently not under seal, was a non-exclusive one and was granted in consideration only of the payment of a sum of money. In an action for payment of the sum the plea that the patent was void from want of utility and novelty was disallowed. Erle, J., treated the licence as amounting to a contract by the licensor not to bring an action against the licensee for infringement. Crompton, J., said that "in Chanter v. Lees (4 Mees. & Wels. 295, affirmed 5 ibid. 698) the bargain was for an exclusive right which could not be given, but here the plaintiff says, as against me you may use this

that the patent has been declared void in proceedings between the licensor and third parties (e).

deed or not.

The case of Smith v. Scott (f) is an illustration of the rule when and whether licence be by the licence is by deed. It was there held also that a plea in an action for royalties that the licensor knew at the date of the licence that patent was invalid was not sufficient as a plea of fraud. In Lawes v. Purser (g) the licence was not under seal, and it was held that notwithstanding the plea of invalidity of the patent at the date of the licence and the then consequent absence of consideration, a consideration became executed by the use of the invention by the licensee and that the plea was bad (h). In Crossley v. Dixon (i), the licence was by parol and had been acted upon by the parties for some time, and it was held in an action for royalties that the licensee was estopped from denying the validity of the patent.

tion discon

tinued or

Where, however, the patent is set aside in an action between But not so after patent the licensor or persons claiming under him and third parties, and set aside and the licensee discontinues the use of the invention, he is released use of invenfrom his future obligations under the licence (j), unless, on the construction of the terms, it can be held that the obligations were intended to be binding without reference to the validity or duration of the patent or the use by the licensee of the invention (k); as

patent, but he says nothing as against the rest of the world." In Chanter v. Lees, however, the decision was based on the total failure of the consideration, which the licensee was not estopped from showing, as the licence was not under seal. See this case as stated at pp. 44, 187, ante. This remark of Crompton, J., if it can be reconciled with the decision in Noton v. Brookes, must then be treated only as a statement that the decision in Chanter v. Lees was inapplicable to the point in Besseman v. Wright. The cases of Noton v. Brookes, and later cases cited above on the rule laid down in the text, make no distinction between exclusive and non-exclusive licences.

(e) The Grover & Baker Sewing Machine Co. v. Millard, 8 Jur. N. S. 713, where it was held that the licensee must continue to pay the royalties so long as he used the invention during the prescribed term.

(f) Supra.

(g) 6 Ell. & B. 930.

(h) See also Chanter v. Dewhurst, 12 M. & W. 823; Trotman v. Wood, 16 C. B. N. S. 479; Noton v. Brookes, 7 Hurl. & Norm. 499; Clark v. Adie (2nd Appeal), L. R. 2 App. Cas. 423; but the reports of these cases do not disclose the nature of the respective instruments, although the terms of the judgments seem sufficient to include licences whether under seal or not. (i) 10 H. L. Cas. 293.

(j) See Neilson v. Fothergill, 1 Webs. 290, which is stated in the text above in the next page.

(k) See Cutler v. Bower and Smith v. Scott (both supra).

licence deter

mined.

How licensee should relieve

himself from obligations if patent void.

Money paid not returnable, unless

such a construction would show that the revocation of the patent did not amount to an entire failure of the consideration (1). The failure of consideration, however, will, in default of such a construction, be considered immaterial if the licence or counterpart is by deed executed by the licensee (m).

A licensee, therefore, who wishes to be relieved from his obligations under a licence and is not prevented from so doing by its terms, should cease to use the invention and give immediate notice. in writing to the licensor of his intention so to do (n). In Neilson v. Fothergill (o), Lord Cottenham held to the effect that, notwithstanding the relationship of licensor and licensee had once been established, a licensee, after the patent had been declared void between the licensor and third parties and he had ceased to use the invention, could successfully resist an action for rent i. e. a fixed minimum sum payable for royalties claimed for the period after such cesser (p). When the relationship of licensor and licensee has been dissolved by notice as provided by the licence or the latter has otherwise become properly determined, the licensee, in the absence of any covenant to the contrary, is not estopped from disputing the validity of the patent (2).

Where there has been a total failure of the consideration to the licensee any money paid by him may be recovered (r). This rule

(1) Smith v. Scott, ubi supra, in which is recited Hall v. Conder, 2 C. B. N. S. 22.

(m) Ibid.

(n) If the obligations are to be more than as to the payment of mere royalties, or doing other acts proportionate to or during his use of the invention, an intending licensee should see that the licence provides for his being at liberty to determine the licence, or his obligations thereunder, in the event of the patent becoming void. As to such a provision, see post, pp. 219, 220. (6) 1 Webs. 290. There the decision in Hayne v. Maltby (cited in 3 T. R. 438) was explained, which was apparently a case of fraud by the licensor, although not noticed as such by Lord Cottenham, who held that a licensee, notwithstanding his covenants under seal not to use other than the patent machines, was not estoppel, in an action for breach, from pleading the invalidity of the patent.

(p) As to such a rent, see post, p. 193.

(9) Dangerfield v. Jones, 13 L. T. N. S. 142; Axmann v. Lund, L. R. 18 Eq. 330, and Neilson v. Fothergill, supra. In Pidding v. Franks (1 Mac. & G. 56), the equitable assignees of an exclusive licence, who had used and afterwards disclaimed the use of the invention, were held not estopped in an action to restrain their selling the articles from disputing the validity of the patent.

(r) Knowles v. Bovill, 22 L. T. N. S. 70 (cited ante, pp. 44, 188), where the

consideration

or where

equally applies where the consideration is apportionable, so that on total failure of the total failure of any apportioned part of the consideration the or apportioned moneys paid for such part will be returnable (s). Where the part thereof, failure is only partial and the consideration cannot be appor- fraud. tioned-e. g. if the patent has turned out invalid after the licensee has worked the invention to some extent according to the licence,and the consideration cannot be apportioned, no money already paid by the licensee can be recovered (t) unless there has been fraud (u).

The question of estoppel by recitals or statements in licences is not now so important in respect of the novelty or utility of the invention or otherwise as to the validity of the patent, as it was before the decisions in the cases of Smith v. Scott, Lawes v. Purser, Crossley v. Dixon and others above mentioned (r). The estoppel must, however, be specially pleaded to be conclusive in a court of law (w), but if issue only be joined upon an allegation by the licensee, contrary to his admissions in the licence or counterpart thereof, the admissions can only be put in as evidence (a). It does not seem to have been decided that estoppel can arise in the case of instruments under seal which have not been delivered as deeds. As to estoppel from recitals or statements in licences see also the cases mentioned in the note below (y). For further observations on the law of estoppel by deed see the preceding Chapters on "Agreements" and "Assignments," pp. 40, 111.

Estoppel by recitals, &c., in licence.

It is usual and convenient in a licence to recite the grant of What recitals

failure was in respect of obtaining the prolongation of a patent under which the licensee was to have a licence, but the death of the patentee prevented the application. As to another example of total failure (constructively) of consideration to a licensee, see Besseman v. Wright, 6 W. R. 719, cited ante, p. 188, note (d).

(8) See Chapter on " Agreements," ante, pp. 45, 46.

(t) Taylor v. Hare, 1 Bos. & Pul. N. R. 260. The licensee had covenanted to pay annual sums secured by bond.

(u) Lovell v. Hicks, 5 L. J. N. S. Ex. Eq. 101.

(v) Ante, pp. 187-189.

(w) Bowman v. Rostron, 2 Adolp. & Ell. 295; and see Rules of Supreme Court, 1883, Order XIX. r. 15, as to particular facts to be pleaded, which no doubt comprise estoppel by deed. As to pleading an estoppel, see Everest and Strode on Estoppel, Chapter XI. p. 391.

(x) Bowman v. Rostron, supra.

(y) Bowman v. Taylor, 4 Nev. & Man. 264, and 2 Adolp. & Ell. 278; Hills v. Laming, 9 Exch. 256; Cutler v. Bower, 11 Q. B. 973, supra.

should be in licences.