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tion, but, under Article 16 thereof, agreed, by an Order in Council, dated the 17th day of March, 1884, to adhere to it, with the reservation for her Majesty to accede to the convention on behalf of the Isle of Man, the Channel Islands, and any other of her possessions, on due notice being given to the other governments for the time being adhering to the convention (c). The principal provisions seem to be those which are in effect : (1) that the subjects or citizens of one state are in any other state of the Union to be placed on the same footing as to patents as the subjects or citizens of the latter state ; (2) that the registration of an application for a patent in one state will, for the period of six months, give a right of priority as to registration in any other state ; (3) that the introduction of the patent articles manufactured in one state into the state where the patent has been granted will not entail forfeiture of the patent, but the patentee must work his patent in accordance with the laws of the country into which he introduces the articles; and (4) that states which have not taken part in the present convention shall be permitted to adhere to it at their request. If a patent is to be sold, but the purchase-money, or a portion of Sale of patent
on the hire it, is not to be paid at once, the arrangement is sometimes carried
system. out by means of an absolute assignment in which the whole purchase-money is acknowledged to be received, followed immediately by a mortgage executed by the purchaser to the vendor to secure the repayment of the moneys and interest (a). In order, however, for the vendor to avoid the troublesome position of a mortgagee, another plan can be followed, namely, the execution of an agreement for the sale of the patent on what may be termed “the hire system.” An exclusive licence is granted by the agreement to the purchaser until the time fixed for payment of the final balance of the purchase-money and the completion of the purchase, with provisions for the determination of the agreement by either party in certain events, such as the failure of the patent, or default in payment of any instalment. A provision is often inserted, similar to that in an agreement for the sale of a piano or furniture on the hire system, to the effect that on default in payment of any one
withdrawn. Ecuador joined and afterwards withdrew. See Article XVI., post, p. 366.
Queensland has been added by Order of the Queen in Council (see above) as from the 17th day of September, 1885.
(c) Under this article Queensland was made a party. See last note. (d) This is, no doubt, the common conveyancing practice to land.
instalment the remaining ones shall at once become due. This provision, though somewhat modified, appears in the precedent of a licence given herein, which is intended to provide for a sale on the hire system (e). In the kind of agreement now under consideration, no such provision occurs, as, owing to the indefinite value of a patent at all times, a purchaser might be found to object to its insertion.
Further, it may be found prudent to make the terms of purchase less onerous, in order to attract a purchaser. It is, therefore, provided (f) that the only penalties for default on the part of the purchaser, except as to the last instalment, shall be the obligation also to pay interest, and liberty for the vendor to rescind. On default in payment of the last instalment, the vendor is virtually to have the choice between specific performance and the rescission of the contract (g). Again, as from the amount of each instalment, the purchaser is to be supposed liable to pay at the commencement of each year somewhat (at least) in excess of the sum fairly chargeable for the use of the invention for that year (regard being had to the duration of the patent), he is permitted to determine the agreement any time before the commencement of the last year. An exception is made of the last year, in order that the vendor may have time, before he makes up his mind (if at all) to have the purchase completed, to seek for another purchaser. On payment of the final balance of the purchase-money an assignment is to be executed. By construction of law, however, the patent would then vest, it seems, in the purchaser without any assignment, although such an assurance is of importance to the purchaser and should be required (h).
The event of the patent becoming void, either by revocation or omission of the vendor to pay the fees or otherwise before the purchase is completed, is provided for by this form of agreement. In case no appeal shall be made against a judgment in revocation of the patent, all instalments not already due at the date of the judgment are to cease to be payable. Pending the appeal (if any)
(e) Licence VII., post, p. 266, where the sale is to be for a district only.
(f) Agreement XI., post, p. 89, where the sale is to be for the whole kingdom.
(g) Independently of this provision, he could claim specific performance, or, in default, rescission. See Fry on Specific Performanco, p. 458 (3rd ed. 1881). The last instalment mentioned above is intended to be the largest.
(h) See post, p. 91, note (j), to Agreement XI.
and subject to the right of either party to determine the agreement as therein provided, the payment of every instalment not previously due is suspended, which payment is to revive on the appeal becoming successful. It is provided also that the final cesser of payments, as above mentioned, shall be in lieu of damages (if any) payable to the purchaser by reason of the patent becoming void. The right to these damages, however, will depend upon the nature of any covenant by the vendor as to the validity of the patent, or his liability to pay the fees or to defend the patent. In the precedent now under consideration, the liability of the vendor in respect of the validity of the patent is to be as to his own acts or defaults, which must necessarily be such as relate to the payment of the past fees, or performance or observance of the other conditions of the patent, and not to the novelty or utility of the invention (i). In the same precedent the vendor covenants to pay the future fees up to the completion of the purchase, or permit the purchaser to do so, and deduct the sums paid from the purchase-money, and also to defend the patent in proceedings for revocation (j).
A sale on the hire system might also be effected by the agreement imposing royalties for the use of the invention, which, when amounting in the aggregate to a certain sum, shall, after payment thereof, entitle the purchaser to an assignment of the patent. The form of such an agreement is given in the precedents (k). The difference in the forms of the two kinds of agreements mentioned in this paragraph is mainly that due to the difference in the considerations for the purchases. The same observations will, therefore, mainly apply to both parties. The power of the vendor to rescind as contained in the later form is, however, more stringent than that in the earlier one. As the licensee may be lax in working the patent, and thus pay few or no royalties, the vendor is given a right to rescind on default not only in payment of royalties due or breach of other conditions after notice to repair the same, or on bankruptcy, but also in the event of his not in any half-year manufacturing patent articles to a certain quantity. It is now proposed to note some of the principal points in the Some points
in general law
(i) See post, p. 114.
(j) See Chapter on Licences,” post, pp. 196, 199, as to covenants in an exclusive licence where premiums are to be paid with or without royalties.
(k) Agreement XII., post, p. 93.
of contracts general law relating to agreements or, as they are often called, now to be noticed.
contracts ((). Requisites of A good and valid consideration is a requisite for a simple cona simple contract. tract, and, it appears, must be disclosed in the document itself,
if the contract is in writing (m), as nothing not found in the document can be considered as part thereof (n). Parol evidence, however, is admissible to explain latent but not patent ambiguities in a document (o). Sect. 4 of the Statute of Frauds requires agreements that are not to be performed within the space of one year from the making thereof to be in writing. Such an agreement must be one which, from its terms, appears incapable of performance within the year; but the possibility of such performance will take it out of the operation of the section (p). If, however, it appears from the terms that one party can perform his part, the statute does not operate (?). Where a verbal agreement in the nature of a licence had been acted on for some years by both parties and royalties had been paid there
under, it was held a valid and continuing licence (;-). Agreement by An agreement by deed has a superior efficacy, as between the deed.
parties thereto, over a simple contract, both on account of the almost absolute completeness of the consideration which, in general, is to be implied therein (s), and also of the doctrine of estoppel
next noticed (t). Estoppel Estoppel arises where a man is concluded by his own act or
acceptance to speak the truth (u). Estoppel by writing does not
(1) For the general law, see Chitty on Contracts, Addison on Contracts, Pollock's Principles of Contracts, &c.
(m) Eden v. Blake, 13 Mee. & Wel. 614; and Lockett v. Nicklin, 2 Exch. 93, cited in Chitty, 11th ed. p. 65.
(n) Kain v. Old, 2 Barn. & Cress. 627; Chitty, 107.
(p) Williams on Personal Property (Chapter on Contracts"); Pollock's Principles of Contracts, 4th ed. p. 160.
(1) Donellan v. Reid, 3 Barn. & Adolph. 899; Cherry v. Heming, 4 Ex. Rep. 631. See notes to Peter v. Compton, 1 Sm. L. Cas. 335 (7th ed.).
(r) Crossley v. Dixon, 10 H. L. Cas. 293. As to verbal and other licences not under seal, see Chapter on Licences,” post, pp. 184, 187—189.
(8) The exceptions will be mostly in case of fraud or as to voluntary settlements, &c. under 13 Eliz. c. 5, or the bankruptcy laws.
(t) The precedents of agreements given herein are to be treated as being of simple contracts, unless the contrary is stated in any footnote thereto respectively.
(u) Co. Litt. 352 a ; Com. Dig. Estoppel A.
arise in the case of a simple contract (w). Strong presumption, but not conclusive evidence, may, however, arise against a party to the simple contract by reason of the recitals or statements therein, but he is at liberty to prove mistakes in, or the falsity of, them, unless another person has been induced thereby to alter his condition. In the latter event he would be estopped with respect to that person and that transaction (y). A deed operates as a conclusive bar, and prevents all inquiry into the truth (s). A recital in a deed of a particular fact which all the parties have agreed to admit as true is an estoppel to all (a); but when it is intended to be the statement of one party only, the estoppel is confined to that party (6). In Hills v. Laming (e), there was an agreement under seal in compromise of the disputes between two patentees of similar or rival inventions, in which, after providing for the exclusive use by either party of some limited part of the other's invention, subject to the payment of royalties, it was stated that it was assumed, for the purposes of the agreement, that each party was exclusively entitled to the portion of the invention over which he purported to grant the exclusive use to the other party; and it was provided that, on breach of the agreement by either party, a certain sum should be paid to the other by way of liquidated damages. In an action to recover that sum, the defendant pleaded that the plaintiff's patent was not valid. It was held that the plea was bad, as the defendant was estopped by the agreement from disputing the validity of the patent (d). Certain general rules guide the court in decreeing specific Specific per
() There must be a deed: Shep. Touch. 320, 321. See Grant v. Norway, 10 C. B. 665; Bates v. Todd, 1 Moo. & Rob. 106; also cases cited in Everest & Strode's Law of Estoppel, p. 193. There are exceptions to this rule by certain statutes, which do not apply to the subject of this work : see 18 & 19 Vict. c. 111, s. 2, as to the signature of a bill of lading by the shipowner.
(y) Per Bayley, J., in Heane v. Rogers, 9 B. & C. 577, 584, cited in Chitty on Contracts, p. 7; and see the other cases there cited. As to equitable estoppel, see Pollock, 479.
(z) Carpenter v. Buller, 8 M. & W. 209; Carter v. Carter, 27 L. J. Ch. 74.
(a) Stroughill v. Buck, 14 Q. B. 787, and other cases cited in Chitty on Contracts, p. 6.
(6) Stroughill v. Buck, supra.
(d) As to estoppel by recitals in a deed, see also the Chapters on “ Assignments” and “Licences,” post, pp. 111, 112, 184, 191, 192.