Prismex Technologies Pty Ltd & Anor v Keller Industries Pty Ltd & Ors

REASONS FOR JUDGMENT 1 The first applicant, Prismex Technologies Pty Ltd ('Prismex Technologies'), is the owner of Australian Patent No 647834 ('the patent') for an invention referred to as a display system ('the invention'). In 1995, Prismex Technologies granted to Interium Pty Ltd ('Interium') an exclusive licence to exploit the invention, and Interium did so until June 2006, when it went into liquidation. The principal question in this proceeding is whether the licence is revocable by Prismex Technologies, or whether it cannot be so revoked and is an asset assignable by the liquidator of Interium. The question is important because the liquidator purported to assign all the property of Interium, including intellectual property, to the first respondent, Keller Industries Pty Ltd ('Keller'), which was in competition with Interium, and which is still in competition with interests which were associated with Interium and which remain associated with Prismex Technologies. 2 The primary claim in the patent specification is for - '… an illuminated display system composing a transparent medium having two opposing surfaces to be illuminated, wherein both of said surfaces to be illuminated have a matrix of dots substantially covering said surfaces to be illuminated resulting in an increased illumination of the surfaces to be illuminated.' The invention is claimed to improve the evenness and brightness of the appearance of a sign, especially a large sign, illuminated by means of light sources at one or (on large signs) both of its edges, where the light radiates inwards over the surface of the transparent medium referred to. 3 The display system was invented by the fourth cross-respondent, Mr John Ashall ('Ashall') in about 1991, in which year the patent was applied for by Ashlar Screenprints Pty Ltd ('Ashlar'), a company with which Ashall was then associated. In July 1992, Ashlar assigned its interest in the patent application to a company called Illumination Research Group (Properties) Pty Ltd ('IRG'), which used the invention in the manufacture of an edge-lit diffusion system called 'Prismex'. Also in the early 1990's, Mr John Matyear ('Matyear') was in a separate business in the manufacture of edge-lit signs, called 'Interium'. In July 1994, he was approached by Mr Garry Buick ('Buick') of IRG who said that IRG was in financial difficulties, and suggested that they establish a new venture which would purchase the rights to manufacture the 'Prismex' panel. Whether or not connected with these developments, on 27 January 1995, IRG assigned its interest in the patent application, and in the then prospective patent, back to Ashlar. The patent was sealed only four days later, on 31 January 1995, in the name of IRG. The transfer to Ashlar was registered on 15 February 1995. By the time of important events in June and July 1995 to which I shall refer, Ashlar was the patentee. 4 Matyear and Buick commenced to develop their new business. They needed larger premises than were then available to them, and some factory space in Bayswater was offered by someone with whom Matyear had worked in the 1980's, the third cross-respondent, Mr Colin Taggert ('Taggert'). A little later, it seems, Matyear was told by a representative of Ashlar that the patent could be purchased for $150,000. Thus was born the idea of a business making edge-lit signs using the invention, which was referred to as the 'Prismex technology'. Taggert joined Matyear and Buick in the venture, as did Ashall himself, who had the technical skills required for the project. 5 The corporate structure for the business was discussed by the four venturers (Matyear, Buick, Taggert and Ashall) at a critical meeting in the office of their accountant, Mr Peter Mews ('Mews') on 9 June 1995. I was told that Buick is now deceased. Mews was not called to give evidence, a circumstance for which no explanation was offered by any party. The other three participants in the meeting gave evidence, but their recollections of the meeting were very general, and understandably influenced by their concept of what was the general plan at the meeting, rather than by any recollection of what was actually said or agreed. However, all were clear that there were to be two companies involved in the business, one to trade and the other to hold the patent. On 13 June 1995, Mews wrote a memorandum the stated purpose of which was 'to record the matters discussed' at the meeting on 9 June. Each witness accepted that this memorandum did accurately summarise what was discussed at the meeting. 6 Under the heading 'Purpose of the Meeting', Mews' memorandum stated: 'The meeting was called to consider the issues surrounding the formalising of the business associated with Edgelight Signs which is the sign system incorporating extruded aluminium framing, special lighting and the transfer of light through the Prismex Technologies Pty Ltd screens. The work has been done by John Matyear and Garry Buick to a point where a market for the product has now been established. The business is to incorporate the acquisition of Asher screens, the screening company which produces the Prismex Technologies Pty Ltd panels, and by way of a separate company will acquire the patent for Australia for the Prismex Technologies Pty Ltd screen technology. The business will also incorporate the design, manufacture and installation of special signage such as the New South Wales rail project where a contract is about to be awarded to the group.' Under the heading 'Name and Entities', Mews' memorandum stated: 'The business is to trade under the company known as Interium Pty Ltd and the patent is to be held by a separate company known as Prismex Technologies Pty Ltd. The purpose of separating the operations and the patent is to protect the value of the patent in the event of any litigation or law suits which may arise to Interium Pty Ltd. Two new companies are to be formed and the business name currently held by Metage Pty Ltd, John Matyear's trustee company, is to be transferred to the new company Interium Pty Ltd. The arrangement for the incorporation of the companies and the transfer of the name is to be between Garry Buick and John Matyear.' 7 Mews then recorded the agreed capitalisation of Prismex Technologies and Interium. Prismex Technologies was to have paid-up capital of $150,070, $150,000 of which was required to purchase the patent from Ashlar. That was raised by each of Matyear and Buick contributing $30 (30 x $1 shares), by Ashall contributing $10 (10 x $1 shares) and by Taggert contributing $150,000 (30 x $1 shares at a premium of $149,970). Interium was to have paid-up capital of $100, which was raised by contributions of $30 (30 x $1 shares) from each of Matyear, Buick and Taggert, and of $10 (10 x $1 shares) from Ashall, together with a 'premium issued' (as Mews described it) of $99,960, giving total capital of $100,060. All four men were to be directors of Interium, in addition to having various working roles in that company: Taggert was to be General Manager and responsible for accounts and finance, and record-keeping; Buick was to be responsible for sales in Victoria; Matyear was to be responsible for sales elsewhere; and Ashall and Matyear together were to be responsible for research and development, and production. 8 Mews set out various 'action steps' that needed to be taken, and under the heading 'Other Matters', he stated: 'Prismex Technologies Pty Ltd will also licence its patent to Interium Pty Ltd who will hold the master licence for Australia. Interium Pty Ltd may then issue sub licences to other parties.' 9 Prismex Technologies was registered on 15 June 1995, and Interium was registered on 30 June 1995. 10 On 12 July 1995, two significant agreements were executed. Each was drafted by solicitors engaged by Ashlar. The first was an agreement to assign the patent, certain formulae and other property from Ashlar to Prismex Technologies ('the assignment agreement'). The sealing of the assignment agreement by Prismex Technologies was witnessed by Buick and Taggert. The second was an agreement for the sale of business from Ashlar to Interium ('the sale of business agreement'). The sealing of the sale of business agreement by Interium was also witnessed by Buick and Taggert. By these two agreements Ashlar, which had previously owned the patent and exploited the invention in its business, divested itself of the patent and the business, but each to a separate party. 11 By the assignment agreement, in consideration of the payment of $150,000 (paid in full at execution), Ashlar assigned the patent to Prismex Technologies absolutely, together with items which were listed in a schedule to that agreement as follows: · CURRENT PRISMEX DOT MATRIX PRINTING INK MIXTURE · CURRENT DOT MATRIX PRINTING FILMS · COPY OF CURRENT PRISMEX DOT MATRIX PROGRAMME DISCS · PROVISION FOR ACCESS TO ALL INK FORMULAE FILMS AND PROGRAMME DISCS RELATING TO THE MANUFACTURE OF PRISMEX PANELS 12 There were several provisions of the assignment agreement that recognised that Interium, not a party to that agreement, would be the trading entity that exploited the invention. Prismex Technologies was obliged to 'procure' that Interium paid royalties to Ashlar for a 5-year period at the rate of 5% of the net proceeds (as defined therein) derived by Interium from sales of Prismex panels into the Australian market. Prismex Technologies was obliged to 'procure' that Interium notified Ashlar of its intention to sell or dispose of the Prismex panel business over the ensuing 5 years. If Interium went into liquidation, or if a receiver were appointed to Interium, Prismex Technologies itself was obliged, for the balance of the 5-year period, to pay an annual royalty to Ashlar equal to the average annual royalty that had been paid by Interium down to the date of liquidation or appointment of the receiver. The assignment agreement was supported by guarantees in favour of Ashlar given not only by the directors of Prismex Technologies, but also by the directors of Interium (who were, of course, the same people). 13 By the sale of business agreement, in consideration of the payment of $30,000 by instalments over the ensuing 12 months, Ashlar sold its business to Interium. The 'business' was defined as 'the business of screenprinting'. Goodwill, and a wide range of specific and general assets, passed under that agreement, as did - '… all trade marks and trade names copyrights, inventions, discoveries, patents, other than Patent No. 647834, trade secrets, know-how and other industrial property or rights … whether the same are registered or registrable or not ….' As noted at the outset, patent No. 647834 was the patent. Under the sale of business agreement, Interium was obliged to pay royalties to Ashlar for a 5-year period at the rate of 5% of the net proceeds (as defined therein) derived by Interium from sales of Prismex panels into the Australian market. This was Interium's primary obligation in relation to royalties, payment of which, under the assignment agreement, Prismex Technologies was obliged to procure. Interium was obliged to notify Ashlar of its intention to sell or dispose of the Prismex panel business over the ensuing 5 years. 14 In each of the assignment agreement and the sale of business agreement there were three recitals. Recital C in the assignment agreement was: '[Prismex Technologies] has agreed to grant a perpetual licence under the Patent to Interium …, and to procure Interium to pay a royalty to [Ashlar] in respect of use of the patented invention.' Recital C in the sale of business agreement was: '[Ashlar] has agreed to assign its Patent No. 647834 to Prismex Technologies …, which has agreed to grant a perpetual licence to [Interium] to exploit the invention.' 15 The sale of business agreement contained a series of warranties by Ashlar, most of which were appropriate to be given by a vendor selling a business. However, the warranties were introduced by the statement that Ashlar 'hereby warrants and agrees with [Interium] that ….' One of the warranties which followed was that 'the Recitals to this Agreement are true and accurate'. This provision assumed some importance in the present proceeding, as it was said (on behalf of Keller) that it constituted an assent by Taggert and Buick, who witnessed the execution of the agreement by Interium and who were, at the time, also directors of Prismex Technologies, to the truth and accuracy of the statement in the above recital that Prismex Technologies had agreed to grant a perpetual licence of the patent to Interium. The agreement to which Prismex Technologies itself was a party, the assignment agreement, did not contain such a warranty. 16 Although it is common ground that, in those months, Prismex Technologies did grant to Interium an exclusive licence, there is no document constituting or (save for the assignment agreement and the sale of business agreement) evidencing the licence. It is also common ground that, at the meeting on 9 June 1995, those who were to become the directors of both companies planned that Prismex Technologies would grant a licence to Interium to exploit the invention, yet it cannot be suggested that the licence was, at that meeting, granted orally, since neither Prismex Technologies nor Interium existed at the time. What the individuals were discussing at the meeting was what would happen, not what thereby did happen. 17 Nothing further was said or written on the subject of the licence of the patent to Interium until events of 2006 in which the subject became controversial and in relation to which the participants in the events of June and July 1995 were in dispute. 18 From the time of those events, Interium carried on the business of developing, manufacturing, marketing and selling edge-lit signs utilising the technology protected by the patent. The four initial venturers all had management roles in Interium: Taggert was Managing Director, Matyear was NSW Business Development Manager/Sales Manager, Ashall was Technical Director and Buick was a director and Victorian Sales Manager. The latter was removed as a director, and dismissed as an employee, in 1996. 19 In 1998, Interium applied for the registration of the trade mark 'PRISMEX'. Registration of the mark was achieved in 2000, and Interium remains the registered owner. 20 To the observer, Interium was the only company involved in the 'Prismex' name or technology. Not only was it Interium, not Prismex Technologies, that used the word in trade: on a number of occasions Interium, not Prismex Technologies, took proceedings to protect its interest in the patent, including taking opposition proceedings when third parties sought to register new patents considered to be relevant to the patent. From its incorporation in 1995 until the dispute which gave rise to the present proceeding, it seems, Prismex Technologies did virtually nothing. It did not even have a bank account. However, given the common shareholding and office-holdings within the two companies, Prismex Technologies must be taken to have been aware of Interium's exploitation of the invention, thereby justifying the suggestion that there was at least an implied licence to do so; and, given Prismex Technologies' own state of quiescence, it would take little extra to imply that the licence was intended to be exclusive (that is to say, exclusive of the rights of any other person, including the patentee itself). This latter aspect is not one which I am required to decide, since the existence of an exclusive licence is established on the pleadings. 21 At this point I should say something about the manufacturing process in which the invention was exploited. In the early 1990's, while employed by Ashlar, Ashall caused to be printed on to a sheet of acetate film, about 1200 mm square, millions of small dots in a particular matrix. The size and spacing of these dots was critical to the effectiveness of the invention. This particular piece of film was referred to by Ashall as the 'B-Dot' film. The next step was to engage a commercial silk screen printer to produce a pattern on a silk screen from the dots on the film. This silk screen was then used in the process of manufacturing the clear acrylic panels, about 10 mm in thickness it would seem, which were incorporated into the signs which Ashlar, and later Interium, manufactured. Using the silk screen, the matrix of dots was reproduced on to both sides of a panel, and the panel, with dots, was then placed immediately behind the front image of the sign in question. Then, as Ashall said in his evidence, 'you place the lamps down the side, the light travels through the acrylic and hits all these dots and they all light up'. The presence of the dots on both sides of the panel is said greatly to enhance the brilliance and evenness of the spread of the illumination across the whole sign. 22 It is evident that the physical item which is critical in the manufacturing process is the acetate film on which the dots are placed. The original 'B-Dot' film which Ashall produced in the early 1990's was used by Interium to the end. It had not been replaced by another film of the same dimensions. It could be, and presumably has been, used over and again for the production of silk screens with the corresponding matrix of dots. Silk screens themselves may, apparently, be used many times for the production of acrylic panels, but they are intrinsically delicate in their main component (the screen), which may have to be replaced from time to time when it suffers damage. The acetate film, by contrast, is quite robust. While working for Ashlar, Ashall produced a larger film which he described as the 'D-Dot' film, and later in the service of Interium he produced two smaller films, the 'A-Dot' film and the 'C-Dot' film. The production of these films from the original 'B-Dot' film was a relatively simple matter: Ashall explained that he merely instructed the outside supplier contracted to produce such things to expand, or to shrink, the pattern on the film to the desired size, and this was done, proportionally in all directions, by computer. In the result, the sizes of the dots themselves, and the distances between dots, were increased or decreased when films of different overall sizes were produced. 23 Returning to the course of events which preceded the present litigation, in 2003 Interium encountered serious cash flow problems as a result, it seems, of the failure of a particular overseas joint venture. This apparently left Interium with unpaid debts, and these were purchased by National Australia Bank ('the Bank') in June 2004 under what was described as a debtor finance facility. By way of security, the Bank took a fixed and floating charge over Interium's assets. 24 In 2003 Taggert was removed from his position as Managing Director of Interium, and in 2004 he resigned as director. Ashall's employment with Interium was terminated on 10 April 2006. In May and June 2006, the only one of the original four venturers who remained actively working in the business of Interium was Matyear, although Taggert and Ashall (or interests associated with them) remained shareholders, and Ashall remained a director. 25 On 10 May 2006, the Bank terminated Interium's debtor finance facility and demanded that Interium immediately repurchase the debts which it had sold to the Bank in 2004, a transaction which would have involved the payment of about $128,300. Interium could not and did not repurchase the debts, but on 11 May 2006 Matyear himself paid out the Bank and took an assignment from the Bank of its fixed and floating charge. On the same day, Matyear demanded repayment of the sum owing by Interium, and stated that, if payment were not made by the close of business on 12 May 2006, he would 'take such other steps as are necessary to enforce [his] Securities'. Payment was not forthcoming, and on 15 May 2006 Matyear appointed an administrator to Interium. At a meeting of creditors held on 22 May 2006, that administrator was replaced by a different administrator, Mr Peter Vince ('Vince'). 26 By letter dated 8 June 2006 to Vince, solicitors for Prismex Technologies noted that their client was the registered proprietor of the patent and was also the owner of the formulae for ink mixtures and films necessary for the manufacture of the Prismex panel. They noted that Interium used the patent and ink formulae pursuant to the licence. They noted (from the terms of a creditors' report dated 31 May 2006) that there were a number of parties interested in purchasing the business and assets of Interium. They asserted that Interium was incapable of assigning the licence or disclosing the ink formulae to interested purchasers without the permission of Prismex Technologies. Their letter continued: 'We note that you expect to receive a proposal from one or both of the directors of Interium. In the event that Interium does not trade on, we are instructed that [Prismex Technologies] will immediately terminate the licence. Accordingly, any purchaser interested in continuing to use the patent, ink formulae and films must seek permission from [Prismex Technologies]. We are instructed to respond to any enquiries in this regard.' 27 At a meeting of creditors of Interium held on Friday 30 June 2006 it was resolved that Interium be wound up. Vince was the liquidator. Immediately after the meeting, he negotiated with two parties who were interested in purchasing Interium's business and assets: one was a company with which Taggert was associated, and the other was Keller. Keller's offer was accepted. No documentary record of the agreement between Vince and Keller on 30 June is in evidence, but the Managing Director of Keller, Mr Greg Pobke, stated that, as part of the purchase, Keller was required to enter into possession of Interium's premises 'under licence' from the commencement of trade the next business day. 28 At some time about 7.15 or 7.30 am on Monday 3 July 2006, Taggert and Ashall entered the premises of Interium, by means of a rear door which was open. Some employees were at work at that time, and Ashall spoke to one of them who was known to him from his own time working there. Taggert uplifted cylindrical containers which he believed to contain - and which did contain - the acetate films used in the production of silk screens, and removed them from the premises. Ashall used a piece of aluminium to slash a number of silk screens which he believed to have - and which did have - representations of dot patterns made from the films taken by Taggert. By these steps Taggert and Ashall made it practically impossible for the purchaser of Interium's business, Keller, to exploit the invention. Ashall also removed an item referred to as a jig from the premises. 29 By letter dated 4 July 2006, Vince's solicitors wrote to the solicitors for Taggert and Ashall. They mentioned the actions referred to in the previous paragraph, and demanded the return of the films and of the jig. They said: 'As you are aware, the Prismex technology is an integral part of the business of [Interium] under which [Interium] holds a perpetual licence to use the patented Prismex dot matrix printing ink mixture and dot matrix printing films relating to the manufacture of Prismex panels.' 30 Solicitors for Taggert and Ashall - who stated that they also acted for Prismex Technologies - replied on 5 July 2006. They referred to the assignment agreement. They continued: 'Recital C of the [assignment agreement] states that [Prismex Technologies] has agreed to grant a perpetual licence under the Patent to Interium. We are instructed that no written licence between [Prismex Technologies] and Interium came into existence. Accordingly, the terms of any licence are unclear. At best, there was an implied licence for Interium to use the Patent and films. On any view, it cannot be said that such a licence purported to transfer title to the Patent and films to Interium. In accordance with ordinary commercial practice, any implied licence terminated immediately upon Interium going into liquidation. We note that the creditors resolved that Interium be wound up at the meeting on 30 June 2006. Accordingly, from that date Interium had no lawful entitlement to use the Patent or possess the films. Indeed, [Prismex Technologies] was entitled to the immediate delivery up of the films. We also note that by our letter to Mr Vince dated 8 June 2006, we advised that Interium was incapable of assigning the licence or disclosing the ink formulae to prospective purchasers without the permission of [Prismex Technologies]. [Prismex Technologies] has not provided permission. Further, we advised that [Prismex Technologies] would immediately terminate the licence if Interium did not trade on. …. In addition to the licence coming to an end upon Interium being placed into liquidation, our earlier letter served as notice of termination of the licence. Interium has no further entitlement to use the Patent or the dot matrix films. Moreover, it has no claim to ownership. They are the property of [Prismex Technologies]. Accordingly, our clients will not return them.' The letter concluded with a statement that the jig taken from Interium's premises had been made by Taggert's son-in-law, and did not form part of the assets of Interium. 31 On 14 July 2006 a written agreement recording the sale of Interium's business assets to Keller was executed by Interium, Vince and Keller ('the asset sale agreement'). By that agreement, Keller bought all the 'business assets' of Interium (with certain presently irrelevant exclusions). The term 'business assets' was defined to include choses in action, intellectual property, licences and permits. The term 'choses in action' was defined to include Interium's rights against Prismex Technologies, Ashlar, Taggert and Ashall. The term 'intellectual property' meant the rights and interests used by Interium in (inter alia) any patent. The term 'licences and permits' was defined as various generically-expressed rights and interests, but limited 'to the extent assignable or transferable' to Keller. The term 'Rights' was defined to mean (inter alia) Interium's rights 'to use intellectual property rights in respect of Prismex, as recorded in' the assignment agreement. Keller acknowledged that Interium 'does not have absolute rights to assign or transfer the Rights'. Interium and Vince promised 'to use their best endeavours to assign or transfer the Rights'. 32 The asset sale agreement also provided that the purchase price of $370,000 (subject to adjustments) would be allocated, for all purposes, as set out in a schedule to the agreement. That schedule indicated that '$NIL' had been allocated to intellectual property. It was noted in a recital that, on 3 July 2006, Keller had been given 'access' to the premises on the terms set out in a licence annexed to the agreement. That licence was described as 'Exclusive Licence to Conduct Business of Interium Pty Limited (In Liquidation)'. It was executed by Interium and Vince (but not by Keller) on 3 July 2006. By the operative provisions of the licence, Interium granted to Keller a licence to conduct its business from the premises during the term of the licence. Keller agreed to 'use, operate, maintain and repair all of the Business Assets in a normal business manner consistent with past practice.' It is recorded that Keller took possession of the premises at the 'commencement of trading' on 3 July 2006. The term of the licence was not explicitly stated, but a recital thereto notes that Interium and Vince had agreed to grant a licence to Keller to conduct the business from the commencement of trading on 3 July 2006 until completion of the agreement, then in contemplation, which became the asset sale agreement. On completion under the asset sale agreement, one of the obligations of Interium and Vince was to deliver to Keller an executed copy of an assignment of the lease pursuant to which Interium occupied the premises. A copy of the lease itself was annexed to the asset sale agreement: it was a lease of the premises by a company called Berona Nominees Pty Ltd to Interium for a term of 3 years and 2 months commencing on 1 November 2004. 33 In the meantime, on 5 July 2006, Taggert procured the incorporation of the second applicant, X-Position Pty Ltd ('X-Position'). He is the sole director and his own company is the sole shareholder. He gave evidence that, on the same day, he and Ashall, being a majority of the directors of Prismex Technologies, caused that company to grant to X-Position an exclusive licence to use the invention and to exploit the invention. It is proposed that X-Position will carry on business in the manufacture of edge-lit signs. Ashall is its Technical Manager. 34 Two of Interium's former employees on the sales side, one Brendan O'Rourke and one Phil Talbot, commenced employment with X-Position. In evidence is an email of 13 July 2006 from Talbot to someone apparently representing a potential customer for edge-lit signs. Talbot said that Interium had been placed into liquidation, but that 'all the Prismex technology relating to the manufacture of KFC signs has not been effected [sic] by the demise' of Interium. He said that 'the company who owns all the technology relating to Prismex' had appointed X-Position to market and promote the signs. He sent a similar email on 14 July 2006 to someone in Thailand, in which he asserted that X-Position held the 'exclusive rights to the Prismex edge-lit technology used by tens of thousands of customers throughout Australia and the world'. He asserted that X-Position could 'provide you the rights to use Prismex technology within Thailand'. In evidence also is an email of 31 July 2006 from O'Rourke to another potential customer. He said that X-Position 'manufactures quality edge-lit lightboxes and displays using the No. 1 primary light diffusion technology on the market PRISMEXTM'. He said that X-Position manufactured 'a wide range of standard and custom-designed edge-lit PRISMEXTM illuminated and non-illuminated signage solutions'. 35 At the end of July and the beginning of August 2006 correspondence passed between solicitors for Keller on the one hand and solicitors for Prismex Technologies and X-Position on the other hand in which each asserted their clients' rights to exploit the invention. On behalf of Keller it was asserted that Interium had, and that Keller purchased, a perpetual licence. On behalf of Prismex Technologies and X-Position, that was denied, and it was said that the licence had been terminated by the liquidation of Interium, or by the letter from Prismex Technologies' solicitors to Vince dated 5 July 2006. 36 By letter dated 9 August 2006, IP Australia informed Keller's solicitors that Keller's name had been entered in the Register of Patents as licensee in relation to the patent. This was said to be in accordance with a request from those solicitors received on 3 August 2006, which is not in evidence. Also, by letter dated 22 August 2006, IP Australia informed the solicitors that Keller was entered in the Register of Trade Marks as the owner of the mark 'PRISMEX', with effect from 7 August 2006. 37 The present proceedings were commenced by Prismex Technologies and X-Position against Keller on 11 August 2006. They allege that Interium's licence to use the patent was terminated on 30 June 2006 when it was placed into liquidation, alternatively by reason of the letter from Prismex Technologies' solicitors dated 5 July 2006. They refer to demands previously made that Keller cease to exploit the invention and deliver up any films etc which embodied the patent and any articles made using the patent. They claim a permanent injunction against infringement, orders for delivery up and damages or an account of profits. In its Defence, Keller asserts that the licence granted to Interium was both exclusive and perpetual. As I have mentioned above, Prismex Technologies admits that the licence was exclusive, but denies that it was perpetual. 38 By Cross Claim dated 20 September 2006, Keller makes a number of claims against Prismex Technologies, X-Position, Taggert and Ashall. It alleges that the licence of the patent was both exclusive and perpetual, and that it passed to Keller on the sale of Interium's business. It alleges that the letter from Prismex Technologies' solicitors to Vince on 5 July 2006, and the grant of a licence to X-Position, were breaches of the original licence to Interium. It says, alternatively, that Keller is the equitable owner of the patent by reason of a constructive trust arising from a series of actions undertaken by Interium, and statements by Taggert, in relation to the patent since 1995 (which I shall mention in more detail in due course). It alleges that X-Position has infringed the patent by manufacturing, selling etc articles made in accordance with the invention. It alleges that X-Position, by using the trade mark 'PRISMEX' in the course of trade, has infringed that mark, and that Prismex Technologies authorised the use of the mark by X-Position. It alleges that the exploitation of the invention and the use of the trade mark by X-Position, and the purported licence and authorisation by Prismex Technologies of X-Position to do these things, constituted a representation by both companies in trade and commerce that they were 'entitled to engage in such conduct', that that representation was misleading or deceptive, and that breaches of ss 52 and 53 (c), (d) and (g) of the Trade Practices Act 1974 (Cth) resulted. It says that Prismex Technologies and X-Position made unjustified threats of patent infringement. It alleges the acts of Taggert and Ashall at the former premises of Interium on the morning of 3 July 2006, and says that they amounted to trespass to land and to goods, and conversion. It also makes a number of claims of accessorial involvement against the cross-respondents. 39 The trial of the proceeding was expedited, and was conducted on 11, 12 and 13 October 2006. Part of the way through the trial, it appeared that Keller was working to the assumption that the trial, at this stage, was concerned with issues of liability only, and that questions of remedy would be heard subsequently. This assumption was not shared by the applicants or the cross-respondents. I heard short argument on the matter, the result of which was that, on 13 October 2006, I ruled that the issue of liability on the Application and the Cross Claim be heard and determined prior to the issue of quantum. 40 I shall consider first the main issue in the proceeding: whether the licence to exploit the invention granted to Interium in 1995 was not only exclusive but also perpetual, in the sense of being irrevocable by Prismex Technologies. It is alleged by Prismex Technologies, and admitted by Keller, that, by an agreement made in or about July 1995, Prismex Technologies granted a licence to Interium to use and exploit the invention. Prismex Technologies makes no further allegation about that agreement. There is no reference to any other terms of the agreement or to the consideration (if any) given by Interium for the grant of the licence. Neither are such matters raised by Keller in its Defence. Rather, in its Cross Claim, Keller alleges that, in or around June and July 1995, Prismex Technologies granted a perpetual and exclusive licence to exploit the invention to Interium. It is not suggested that this was pursuant to a contract. That an exclusive licence was granted in about June 1995 is admitted by Prismex Technologies in its Defence to the Cross Claim; but the grant of a perpetual licence is denied. 41 In support of its argument that the licence was irrevocable, Keller submitted that the licence was a species of property which was assignable (Vitamins Australia Ltd v Beta-carotene Industries Pty Ltd (1987) 9 IPR 41), and that a licence 'coupled with an interest' was irrevocable, absent express contractual provision (Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605, 616). It argued that, in this context, an 'interest' was an interest in property, real or personal (Hounslow LBC v Trigonum Garden Developments Ltd [1971] Ch 233, 254). If it was intended, by these arguments, to advance the proposition that, in the absence of express provision to the contrary, a licence of a patent was necessarily irrevocable (because it was a species of property), I am bound to say that the argument strikes me as entirely circular. If a licence arises pursuant to contract, the nature and incidents thereof will be given content by the terms of the contract in question. As Megarry J said in Hounslow, 'a contractual licence is not an entity distinct from the contract which brings it into being, but merely one of the provisions of that contract.' [1971] Ch at 254. It may be that an irrevocable licence (such as the licence expressed to be for the unexpired portion of the patent in the facts before the court in Vitamins Australia) might, in certain circumstances, be regarded as a species of property, but manifestly it cannot be argued that, simply because the phenomenon in question is a patent licence and can be regarded for some purposes as property, the licence cannot be revoked. If it is a licence subtended from a contract, all will depend on the terms of that contract, and I can think of no reason why the express terms thereof only should be taken into account. If it is a licence created not by contract but by the voluntary act of the patentee, the question whether the patentee reserved a power of revocation would be a question of fact from case to case. Accordingly, the task for the court in the present case is to look at all the facts and circumstances which surrounded the grant of the licence by Prismex Technologies in 1995, and to decide, by reference to implications as well as to express terms, whether that grant was intended to be irrevocable. 42 It is important to identify the nature of the transaction - even if implied - by which Prismex Technologies granted the licence to Interium in 1995. There was nothing ostensibly contractual in the plans of the venturers which led to the patent being held by one company, and the trading being done by the other. Their discussions did not clearly involve a conscious exchange. Neither did Interium provide, on behalf of Prismex Technologies, any part of the cash consideration for the patent. The whole $150,000 was paid by Prismex Technologies from shareholders' equity. However, under the sale of business agreement, Interium paid royalties to Ashlar. Were these payments referable to the patent, or only to the business which Interium had acquired from Ashlar? I think the former. The purchase price under the sale of business agreement was the sum of $30,000. Royalties were a separate matter. Furthermore, royalties were payable specifically 'in respect of Prismex panels sold into the Australian market'. The business purchased by Interium, on the other hand, was something wider: it was 'the business of screenprinting'. Evidently, the business involved more than merely the bundle of activities involved in exploiting the invention. 43 It must be remembered that the two-company arrangement devised in 1995 was for the benefit of the venturers and their new business, not Ashlar. It was intended that Prismex Technologies would not trade, and would have no income. It is, therefore, unsurprising that it was not that company upon which the primary obligation to pay royalties was imposed. Put another way, the fact that Interium was subject to that primary obligation is not, in context, inconsistent with the proposition that those royalties were in fact part of the consideration passing to Ashlar for the assignment of the patent. The fact that they were tied not to Interium's total turnover but to Australian sales of Prismex panels strengthens the implication that they were. The matter is taken further in the same direction by the terms of Recital C to the assignment agreement which refers to the royalties as being 'in respect of use of the patented invention'. 44 In the circumstances, I consider that the correct way to view the transactions of mid-1995 is to treat Interium's promise to pay royalties to Ashlar under the sale of business agreement as having been made pursuant to an implied contract between Interium and Prismex Technologies, and as consideration for the latter's implied promise to allow - ie to license - Interium to use the patent. This has two possible consequences for the resolution of the question with which I am presently concerned. First, Keller's task of establishing that the licence was irrevocable is made a little less daunting than it might otherwise have been by virtue of the fact that Interium was not a mere volunteer, but a party which provided consideration. Secondly, in identifying the implied terms of the licence, it will be the presumed intentions of both companies, not those of Prismex Technologies alone, which will be relevant. 45 Before turning to the axis of the relationship between Prismex Technologies and Interium, however, I should consider the nature of the obligations owed by each of them to Ashlar under the assignment agreement and the sale of business agreement. Under the sale of business agreement, Interium was obliged to pay royalties to Ashlar over a period of 5 years from the making of that agreement. I have found that those royalties were implicitly referrable to the exploitation of the invention. Even if not, it seems to have been the common assumption of all in 1995 that the exploitation of the invention was likely to be the main driver of Interium's sales of Prismex panels. It may be thought odd, in those circumstances, that the assignment agreement contained no express covenant by Prismex Technologies not to revoke the licence within the 5-year period. Had the licence been revoked, it would be a fair inference that Interium's revenue from the sale of Prismex panels would have suffered, probably quite severely. This would have had a direct impact on Ashlar's receipts of royalties, something which, I infer, Ashlar would not have intended. By what provision of either of the agreements in 1995 did Ashlar protect itself from such an eventuality? If the circumstances were sufficiently serious to drive Interium into liquidation, Prismex Technologies would have been obliged to assume the obligation of paying the royalties. But, short of that, the agreements did not deal with a situation in which Prismex Technologies simply chose to revoke the licence, thereby impairing Interium's capacity to continue paying royalties to Ashlar. 46 There are two possible explanations for the absence from the assignment agreement of any express obligation on the part of Prismex Technologies not to revoke the licence during the period of Ashlar's receipt of royalties. The first is that the parties' solicitors at the time may have regarded the agreement as within the class of contracts under which the co-operation of one party was necessary to enable the other party to have the full benefit of the agreement. For Prismex Technologies, without proper cause being given by Interium, to have revoked the licence before Ashlar had received the benefit of its 5 years of royalties would in all likelihood have been regarded as a breach of the implied term of co-operation. If there were such a term, it would supply the deficiency to which I referred at the start of this paragraph. At the same time, if the problem were solved in that way, there would be no basis for the implication of a term to the effect that the licence could not be revoked after the end of the first 5-year period. 47 The second explanation is that Ashlar's concerns may have been put to rest by Recital C of the assignment agreement. That recital is the only statement by Prismex Technologies directly on the matter now in controversy, and it contains an unqualified statement that the licence was perpetual. Understandably, Recital C featured large in Keller's case that the licence was irrevocable. Keller contended that 'perpetual' meant for ever (ie for the remainder of the term of the patent). It relied upon Taggert and Buick - who were two of Prismex Technologies' directors at the time - having witnessed the execution of the sale of business agreement which contained a similar recital which Interium agreed was true and accurate. In these respects Keller made points which were of considerable forensic effect, but ultimately they begged the questions at issue. Those questions were, first, why did the parties to the assignment agreement include Recital C therein, secondly, what did those parties mean by the word 'perpetual', and thirdly (and critically) what was the content of the agreement between Prismex Technologies and Interium on the subject? 48 It seems that neither Taggert nor Matyear has any recollection of why the licence was described as perpetual in Recital C. When he was taken to the recital, and reminded that his signature appeared on the assignment agreement, Taggert denied that the licence was in fact perpetual, adding: 'It was a licence. Neither here nor there on that perpetual part.' This was of course, an entirely self-serving response, and I give it little weight on the matter of the parties' intentions in 1995. Matyear was cross-examined about the assignment agreement at some length. When asked whether there was a practical reason for keeping the patent separate from Interium, Matyear said: 'We never actually discussed any reasons why we did it other than it was separated into a separate entity as a precaution, basically, that is all it was. We just - there was never any reasons given. It was never logically thought through to say these are the conditions under which it is going to be done even to the point where Ashlar actually set the agenda for the terms under which Prismex Technologies used its own licence. Ashlar wrote out the document that we all signed that stated the patent would be a perpetual - given to Interium in a perpetual licence. If we had sat down and discussed the matter we would have said, thank you, sell the patent to us and then we will decide what to do with it. We had the company selling it to us telling us what to do with our patent.' Evidently Matyear had little or no actual recollection of the purpose of particular parts of the assignment agreement that now assume some importance. He said that the agreement would have been considered by their own solicitors, and he presumed, in effect, that they were happy with it. Taken specifically to Recital C, his cross-examination proceeded: