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herein (c). It is there virtually provided that principal and interest shall, until the charge on the patent becomes enforceable, be payable out of one third share of the net profits half-yearly. The object of pledging a share only, is, of course, to prevent the stoppage of the business, which otherwise might occur. The mode of ascertaining the net profits should, if possible, be arranged prior to such an agreement being entered into, and the precedent contains a recital to the effect that the custom of the firm in this respect shall be adhered to (d). The payment of interest on all past advances is, of course, first to be made, and then the balance of the share is to go in reduction of the principal sum then remaining unpaid. The condition for the advance of an instalment at the end of any half-year is, that in the settlement of the accounts for that period, it shall be shown that the amount of the one-third share will admit of the lender receiving in reduction of interest and principal a sum equal to, or exceeding a certain per-centage on the latter (e). The instalments are for convenience provided to be equal in amount. The charge on the patent is supplemented by a declaration of trust of the patent in support of the charge. A legal mortgage could, of course, be executed and registered, but such an act would tend to expose to the public the financial state of the firm (f). The charge is made enforceable only on default of the firm in its obligations under the agreement, or, in case for any half-year the share of net profits, will not admit of the lender receiving his full interest at least on the principal sum then remaining unpaid. On the authority of Werdermann v. Société Générale d'Electricité (9), it seems that the assigns of the patent,
(c) Agreement III., post, p. 67.
(d) See note (b) to Agreement III., post, p. 68, for some observations on the mode of ascertaining net profits of a business. (e) E.g., let the interest on the advances be 10 per cent. per annum,
and the principal sum remaining unpaid at the end of any half-year (but before the settlement of accounts for that period) be 2001. If the minimum percentage above mentioned be 30, and is then reached or exceeded, the lender will be entitled to receive 601. at least, i.e., 101. half-yearly interest, and the balance in reduction of principal. In respect of the new advance, the lender will be credited with 501. at least.
(f) See note (f) to Agreement III., post, p. 69, as to this, and also as to the agreement being executed as a deed, and the effect of the declaration of trust.
(9) L. R. 19 Ch. D. 246 (Jessel, M.R., and Lush and Lindley, L.JJ.). See reference to this case in the Chapters on “Assignments" and "Licences," and generally as to the question of covenants being binding on assigns, post, pp. 120, 185.
taking with notice of the agreement, would be bound thereby as to the charge and the payment out of the net profits. To ensure such notice, it is provided that both the partnership deed and the letters patent shall be endorsed with a reference to the agreement.
The right to a share of net profits confers a right to an ac- Accounts. count (h). The same is the case, no doubt, where the right is not to a share of net profits in specie, but to some sum or per-centage equal in amount to or regulated by the amount of a share in the net profits. An express right to an account is invariably given in the precedents in this work. Where a patentee has assigned a share of profits, the assignee is entitled to call on a licensee of the patentee for an account, but the assignee must make the assignor and the assignees (if any) of other shares of profits parties to the account, and offer to pay to the licensee any moneys due to him from the assignor (i). In Werdermann v. Société Générale d'Electricitė (k) a covenant by an assignee of a patent that he and his assigns would pay the assignor a per-centage on the net profits, was held to be binding on the assigns who took with notice of the covenant, and they were ordered to furnish accounts accordingly.
The term “ improvement” or “addition” used in respect of an Improveinvention plainly suggests the dependence of the improvement additions to or addition on the invention itself. An entirely new process, inde- an invention
or discovery pendent of the invention, might, however, be discovered as applic- of other
process. able to the production of articles or commodities similar to those produced by or with the application of the invention. To such process the term “improvement or “addition” would hardly then be applicable. An agreement, therefore, to include present (if any) or future improvements or additions to an invention in the contract for sale of the invention should, in the purchaser's interest, be made also to include any such process, if the purchaser is to preclude the vendor from afterwards setting up a rival invention. The importance of including the benefit of the discovery of such an independent process in a contract for sale of an invention, and the patent in respect of it, is noticed in The Printing
(1) Harrington v. Churchward, 6 Jur. N. S. 576; Rishton v. Grissell, L. R. 5 Eq. 326; Turney v. Bayley, 4 De G. J. & Sm. 332; all cited in Lindley, 4th ed. p. 946.
(i) Bergmann v. Macmillan, L. R. 17 Ch. D. 427.
(k) Supra. See, as to covenants (including as to furnishing accounts) how far binding on assigns, Chapter on "Assignments," post, p. 120, and
p. Chapter on Licences,” post, p. 185.
and Numerical Registering Company v. Sampson (1), where Jessel, M.R., intimates that, in the absence of a provision to that effect, the inventor (or vendor) might produce something which, without being technically an infringement, or technically an improvement, would practically destroy the value of the patent purchased. The inducement, however, to the inventor (or vendor) to make any new discovery might be much diminished if he is to part with the entire benefit of it, without at the same time becoming entitled to some remuneration for his trouble (m). The best method seems to be to provide that the purchaser shall have the option of purchasing the exclusive benefit of the new invention at a fixed price, which would, no doubt, from the uncertainty involved, be a small one, and should be made payable if and when the purchaser exercised his option in writing within a reasonable time after the communication of the discovery shall have been made to him.
The practice, however, has been to include new discoveries in relation to the patent articles, without providing for any special remuneration on the benefit of them becoming vested in the purchaser of the original invention. Sometimes the mere personal right to the vendor to use any such new discovery made by him is reserved in the contract. This would be done especially in a case where the vendor is at liberty personally to use the original invention, or generally to make the patent articles by any process whatever. An agreement by which the vendor and purchaser of the entirety of a patent will be put on equal terms as to the use of any discovery made by the former is hardly to be recommended on account of the unsatisfactory position, inter se, of joint owners of a patent who are separately to work it (n). If the new invention should be patented, a partition of it as to districts might be made, or a licence to use it be granted by the inventor to the other party. The case of new discoveries by either a licensor or a licensee being made to enure also for the benefit of the other of them, is considered in the chapter on “Licences” (o). The above remarks
(1) L. R. 19 Eq. 464.
(m) In The Printing and Numerical Registering Co. v. Sampson, supra, Jessel, M. R., refused to assume as an absolute truth that a man will not invent without pecuniary reward, or that, having obtained money for the future products of his brain, he will not be ready to produce those products; and mentions artists and sculptors by way of illustration.
(n) See Chapter on “Assignments,” post, pp. 118—122, as to powers of co-owners separately working; and also Precedents III.-VI. of Assignments, post, pp. 142—156.
(o) Post, p. 218.
will equally apply to new discoveries acquired, but not made, by the vendor. Where a new discovery is to be included in the purchase of the original invention, the benefit of it can, of course, be made effectively to pass only so far (if at all) as the terms of the acquisition will permit (p). In the case of a joint discovery by the vendor and a third party, which is intended to be patented, the joint inventors would probably be bound, by force of the agreement above mentioned, if they effectually apply at all, to join the purchaser, if so willing, in the application for the patent, or otherwise the grant to the joint inventors would be made upon the terms of being vested in trustees for all parties (9). In the case of an agreement relating to a patent, otherwise than for the sale of the entirety of it, the above remarks as to special remuneration for any new discovery have apparently much less application, because, in general, each party would be entitled to some benefit from the original invention, and the question as to the want of inducement to make any new discovery would be of far less account. Hence, on an assignment of a share of a patent, or of the entirety of the patent for a district, or on the grant of a licence, or generally, where both parties remain interested to some extent in the original invention and patent, a mutual covenant should be inserted in the instrument providing for the use by both parties of new discoveries made, and perhaps acquired, by either of them, whether patented or not. A patent for an addition or improvement to an old manufacture For what
improvements may be granted (r), but the patentee cannot make use of the patents can substratum, or original invention, patented by another person, on which the addition or improvement was based or dependent (s), except by license from him (t); but he may wait for the expiration of the existing patent, and then take out one himself, if his invention be novel, and that patent will be valid (u). Where
(P) See ante, p. 27, as to confidential communications of a secret invention.
(7) See Re Russell, 2 De Gex & Jo. 130; and Ex parte Scott and Young, L. R. 6 Ch. 274 (ante, p. 12), as to conflicting claims of master and servant. The mode, generally, of satisfying the claims of another person than the applicant's, would probably be similar to that provided in one or other of these cases.
(r) Boulton y. Bull, 2 H. Bl. 489; and Hornblower v. Boulton, 8 T. R. 104, overruling Bircot's Case, 3 Inst. 184.
(8) Ex parte Fox, 1 Webs. 431.
Colonial and foreign patents.
application for a patent for an improvement or addition is made; it must be stated in the specification as being of such a nature, and not as an original (i.e., an independent) invention, and consequently the old process or manufacture on which the improvement or addition is to be grafted must be set out (x). The discovery of a more skilful and efficient mode of working a process already known and in use, is not the proper subject of a patent (y).
With regard to agreements relating to the purchase of colonial or foreign patents, but subject to the provisions of the International Convention as mentioned later, the following circumstances, some of which, at least, apply to most of the colonies or foreign countries, should be noticed :-(1) The inventor himself only can apply for a patent. (2) The patent will become void if the invention is not put in practice within a limited time of the date of grant, or not continuously used. (3) The patent will become void on the non-payment of the annual or other duties. (4) The patented articles are to be made in the country itself, and not imported, and in the case of Austria) the inventor must begin to work his invention with inland materials. (5) Publication in the United Kingdom, or elsewhere out of the country, is a bar to obtaining the patent (z). (6) A foreign or colonial patent expires (at least) when the British patent expires. It should be seen also (as in the case of Denmark) that the patent is assignable, as, if it is not, an application for a new one would have to be made (a).
An International Convention for the protection of industrial property was, on the 20th day of March, 1883, entered into between the governments of Belgium, Brazil, Spain, France, Guatemala, Italy, Holland, Portugal, Salvador, Servia, and Switzerland (). Great Britain was not a party to this conven
(x) See Hill v. Thompson, 2 B. Moo. 451 ; and Gibson v. Brand, 4 Man. & Gr. 179.
(y) Patterson v. The Gas Light and Coke Co., L. R. 3 App. Cas. 239, affirming Court of Appeal in L. R. 2 Ch. D. 812. On the above subject, see Agnew, pp. 50, 67, 100 et seq., and 276, where the cases are set out at some length.
(2) In that case the application should be made as nearly as possible simultaneously with the application here, and certainly before the acceptanco of the complete specification here.
(a) See as to the laws relating to foreign patents, Johns. P. M. (Appendix), and Carpmael's Patent Laws of the World. As to international and colonial arrangements, see sect. 103 of the new act, post, p. 325; also sect. 104.
() See Appendix, post, pp. 365—367, where the Articles and Protocol are set out. To the above countries must now be added Great Britain, Norway, Sweden, San Domingo, and Tunis, who have since joined. Salvador has since