Jeans PyLid Industries v Nominees

Jeans PyLid Industries v Nominees - [1919] HCA 18 - HCA 1919 case summary — Zoe

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tralia and Tasmania, originally granted to one James Robinson Hatmaker but then in the name of the Imperial Dry Milk Company, _ having become such owner by assignment from the said Imperial Dry Milk Company (then in liquidation), and that the plaintiff was willing to sell and the defendant desirous of purchasing the said inventions and the right to use the same and the said processes as well in Victoria as in other States of the Commonwealth, and to sell the products of the same in all parts of the world except the Dominion of New Zealand and also the said letters patent and all the informa- tion and knowledge of the plaintiff and its officers of the processes 'secret and otherwise of such manufacture upon the terms and con- ditions thereinafter appearing. 4, By the said agreements it was (inter alia) provided as follows : - _ [Then followed clauses 1, 2, 3, 6, 7, 8, 12 and 13 of the documents of ~ Ist July and 18th November 1910, which are hereafter set out]. 5. They repeat pars. 7, 8, and 9 of the defence herein. [Those ragraphs set out the provisions of clauses 9 and 10 of the agree- _ ments ; alleged an agreement between the defendant No. | Company and its liquidator and the defendant No. 2 Company that the latter should take over all the assets of the former Company including _ the benefit of all contracts, and should perform all the obligations of such contracts; and alleged that the terms and conditions of _ the agreements of 21st July and 18th November 1910 had been duly

observed and performed by the defendants. ] 6, The patents referred to in the said agreements have expired, and the plaintiff contends that notwithstanding the provisions of the said agreements it has been since the expiration of the said patents and is now entitled to import into and/or manufacture and/or sell in Australia powdered milk prepared according to the inventions or processes referred to in the said agreements or the _ products thereof including the preparation known as " Glaxo" 'referred to in the said agreements, and the plaintiff will unless restrained by this Court act in assertion of its claim.

The plaintiff in breach of the said agreements has since the _ expiration of the said patents imported into and sold in Australia " large quantities of the preparation known as " Glaxo " and referred

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new business. " Destroy the business," says Lord Macnaghten Muller's Case (1), "' and the goodwill perishes with it." Inthe present case, that the agreement so stringently drawn from Bacchus Marsh Company's side should entirely omit all mention of "business" and " goodwill," if they were intended to pass, is beyond comprehension. At all events, the words do not include them. The Bacchus Marsh Company could not represent itself in any way as successor of Nathan's, that the "maison" was thesame, (See Thynne v. Shove (2).) The retirement of Nathan's did not transfer its business or goodwill. In Gray v. Smith (3) L.J. says: "A contract to retire from the firm has not the same effect as a contract expressly bargaining for the aSsignment of ' goodwill." The appellants' minute of 20th July has importance from its guage as indicating the view taken by that Company of the tier. It says: "Resolved that this Company enter into the 'manufacture and sale of dried "milk," and refers to the agreement as one for the acquirement of "certain rights.' Nathan's was not engaged in the "manufacture" of dried milk in Australia. 'It is clear to me that, whatever business the Bacchus Marsh Com- pa ny intended to do in dried milk, it intended to do as part of its own independent business, and not in any way as the successor to the old business of Nathan's. Further, Purbrick in his evidence ites that there was no intention whatever in 1910 of enter- ing into the infants' food trade, so that "Glaxo" was not then considered of any importance to it, and it did not in fact manufacture infants' food until 1914. Nathan's may have thought the right to "Eclipse" trade mark passed, on the 'ground, and as the appellants' counsel have argued, that the trade mark indicated the method of manufacture, but unless the goodwill "passe d, the right to the trade mark did not, and unless " the busi- 'ness " - the definite particular commercial undertaking or enterprise, Which Nathan's was in fact carrying on - was sold and passed, the 'goodwill did not pass (Ullmann & Co. v. Cesar Leuba (4) ). There is no trace of any evidence of any intention to pass the " business," or

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assignment there is no need for the express word "assign"; it is sufficient if the agreement show an intention to appropriate the trade mark to the purchasing Company. But to assign a patent, or an unpatented process, is not necessarily to assign a trade mark for the product of the process. The assignee may manufacture and sell under another name or mark. He has the right to use the device ; but how does it follow that he must be entitled to use the name? We have been referred to sec. 58 of the Trade Marks Act 1905: "A trade mark when registered may be assigned and trans- mitted onlv in connection with the goodwill of the business concerned in the particular goods or class of goods in respect of which it has been registered and shall be determinable with that goodwill." Now, the trade mark was registered in respect of " food products'; and there are food products other than dried milk powder: so that it is doubtful whether the trade mark can be assigned except in con- nection with a business concerned in food products generally. But even if the word "the" could be ignored before the word " par- ticular," it by no means follows that the goodwill of the business in " Glaxo" has been assigned. The section is negative in effect - "may be assigned only in connection with the goodwill." There can be no assignment except in connection with the goodwill; but it does not follow that if the goodwill be assigned the trade mark is assigned. Possibly, the assignment of all right to manufacture and use the dried milk products in Australia may carry the goodwill of the Nathan Company as to those products; but I can find no indication of an intention to assign the trade mark. With doubt, I have come to the conclusion that the injunction should be granted. For obvious business purposes the agreement ought to have conferred on the purchaser a right to use the trade mark; but I know of no principle which would justify me in holding that there is an assign- ment of the mark by implication, or any permission to use the mark.

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Milk Company and that the true and real agreement between the intiff and the said No. 1 Milk Company was and is to the effect following: (a) That the provisions of clause 7 of the document dated 21st July 1910 only operated and took effect during the existence of the patents mentioned in the said documents ; (b) that 'the right of the plaintiff to import into to manufacture and sell in Australia its infants' food under the trade mark or name ' Glaxo 'was untouched and unaffected by any agreement between the plaintiff and the said No. 1 Milk Company." This paragraph has been the main cause of the length of the proceedings here and 'in the Court below. No objection was taken to it in the defence, and under this paragraph a vast mass of evidence, letters and conversations has been admitted as to negotiations before the agreement and since the agreement. This evidence would have been irrelevant but for this paragraph ; and yet no case has been produced which would justify the rectification of an agreement because of a misinterpretation of the agreement, even mutual. In effect, the plaintiff says : '' This written agreement means so-and-so, and, if it does not, I want it to be rectified so that it may have that meaning." This seems to me to be a perversion of the equitable doctrine as to rectification of instruments. If some words have been put into the instrument which were not meant to be put in, or if _ some words have been left out of the instrument which were meant to be there, equity relieves; but, according to the cases, it does _ not relieve where the mistake is as to the legal effect of certain words that the instrument contains (Powell v. Smith (1)). "If A induces B to execute a lease in the belief that the lease will have an effect different from what it really has, B may have a remedy in this Court ; but not a remedy by way of rectification " (Willesford _y. Watson (2); and see Johnson v. Donaldson (3)). The same Principle seems to be accepted in America: "If the writing be 'exactly what the parties intended, there can be no reforma- tion" (see Harvard Law Review, vol. xxu., p. 610). If this kind

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words to be altered or qualified by the "uncertain testimony of slippery memory " will become obsolete ; and whenever there is a dispute as to the effect of an instrument Courts will have to find first what it means, and then to say what, on the balance of evidence and probabilities, was the intention hidden in the recesses of the parties' minds. It should be clearly understood that the rights of parties under agreements are to be decided according to the expres- sions in the agreements, and not according to the words used in "preliminary communings," but that in exceptional cases, such as when it is clearly proved that a word or words have been wrongly inserted or omitted, that the agreement as written does not truly show what the parties intended to write, a Court of equity will not refuse relief. It was not until the end of his argument that Mr. Starke, being asked to say what was the mistake to be rectified, pointed to clause 1, and said that "Glaxo" should be expressly excluded. There is not the slightest evidence that such an express exclusion was intended to be inserted. These considerations are, in my opinion, quite sufficient, in the present state of the law, to justify the learned primary Judge in dismissing the claim for rectification. But Cussen J. has also taken the strong ground that on the facts there never was any agreement, any consensus ad idem between the parties, or even their negotiators, except this written agreement of 21st July 1910, up to that date. Exhibit B (Purbrick's letter of 18th July 1910) has been much pressed on us, but though the solicitors were given this letter as a basis to work on, there were many communings and exchanges and alterations of the draft agreement before the agreement was signed by the companies. The solicitors have not been heard; and, above all, the directors of the Companies have not been heard. It is the directors of the Bacchus Marsh Company, and not the manager, who, under the articles, have the right to make agreements on behalf of the Com- pany. These directors have not been shown to have assented

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(3) the exclusive right to sell in all parts of Australia the said ' powder," that is to say, dried milk in the form of powder the product of such inventions and processes. It is to be observed that the vendor purports to give to the purchaser the exclusive right of manufacturing by means of these inventions and processes, and of selling the product throughout Australia, and that the vendor had no power to do this with respect to Victoria, where no letters patent existed. The form adopted shows that the parties were anxious that the purchaser should be as far as possible in the same position in Victoria as in the other States of Australia; indeed, they probably thought that the vendor would be able to obtain letters patent in Victoria and assign them to the purchaser. There had been an application for letters patent in Victoria, but it had lapsed, and the assignment of "all forms of provisional protection of the said inventions and processes " contained in clause 1 of Exhibit G, and the undertaking contained in clause 13 that the vendor will do all things and execute all deeds, instruments and writings which the purchaser may reasonably require for the purpose of obtaining patent rights for the said inventions in Victoria and to assure or vest in the purchaser all or any of the rights thereby sold, indicate that the parties anticipated that letters patent would ultimately be obtained in Victoria and assigned by the vendor to the purchaser. I think that the effect of clause 1 was to give to the purchaser rights which were to continue during the existence of the letters patent in the various States, and in Victoria, if no letters patent were obtained there, during such time as the letters patent which had been applied for there would have continued to exist if they had been granted. It was not intended to give greater rights in Victoria than in the States where patent rights existed, and in these States it was not intended to confer any rights which would operate after the letters patent had ceased to exist. Had the clause not contained the words "to sell the said powder in all parts of Australia," it would have been in a usual and proper form for the assignment of the patent rights then existing in Australia, and the added words were, in my opinion, designed to secure to the purchaser, so far as possible, the same rights in Victoria as it was acquiring in the other States. I shall not consider whether an attempt to preclude the vendor from

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