R v Westralian Powell Wood Process Ltd [1919] HCA 76; (1919) 27 CLR 236 (29 October 1919)

HIGH COURT OF AUSTRALIA

H C of A

On appeal from the Supreme Court of Western Australia.

29 October 1919

Barton, Isaacs, and Rich JJ.

Sir Edward Mitchell K.C. (with him Dethridge), for the appellant.

Starke and Ham, for the respondent.

Sir Edward Mitchell K.C., in reply.

The judgment of the Court, which was read by Isaacs J., was as follows:?

Oct. 24

Barton, Isaacs, and Rich JJ.

The facts are short. On 9th February 1904, four months before the Commonwealth Patents Act 1903 came into operation, a patent was granted by the State of Western Australia of which the respondent Company became the registered proprietor. That patent expired in February 1918. On 27th February 1912 a contract was made between the Crown and the Company by which a licence was granted by the Company to the Crown to use the patented process, and by which the Crown agreed to treat a minimum quantity of timber by the patented process until 15th July 1923 and pay a specified royalty. Acting as in pursuance of sub-sec. 2 of sec. 87B of the Commonwealth Patents Act 1903-1909, the Crown assumed to terminate the agreement after the expiry of the patent. The question is whether that sub-section applied to a State patent.

The learned Judge (Burnside J.) from whom this appeal comes thought sec. 6 of the Act, by reason of the words "right acquired," excluded such application. The "right," however, that was infringed, if any infringement has occurred, is the contractual right which was created by the agreement of February 1912, and, as that was not acquired before the commencement of the Act, it is not within the protection of sec. 6.

The case of the respondent is rested on the definition of in sec. 4. That section?the interpretation section?defines "patent" as meaning "letters patent for an invention granted in the Commonwealth." The argument is that "in the Commonwealth" means "under the Commonwealth Act" and excludes all patents granted under a State Act. The natural meaning of the phrase "in the Commonwealth" is one indicating locality, and is geographical. Some sections, as 41, 46 and 56 (c), seem to draw a distinction between "Commonwealth" and "State" as jurisdictions. But the introduction of the reference to "State" in those sections is not conclusive. To contrast a patent "in the Commonwealth" with a patent "in any State" is confusing. Before the Commonwealth existed there was no "State" : there were five Colonies and a Province. Since the Commonwealth Patents Act commenced no patent could be granted by a State, only by the Commonwealth (see sec. 8). Any distinction between patents granted by the Commonwealth or by a State must refer to a period since the inauguration of the Commonwealth and before the commencement of the Patents Act, that is, between 1st January 1901 and 1st June 1904. "In any State" cannot mean "under a State Act," because when that is meant the apt expression is used (sec. 7). On the whole, secs. 41, 46 and 56 (c) seem a short but rather incautious way of providing for the circumstances which might arise under sec. 7. The true geographical meaning of the phrase "in the Commonwealth" appears beyond question in sec. 87A. Other sections seem difficult to reconcile with the limitation suggested by the Company, such as secs. 17, 22, 60, 92, 121 (2), 122, 123 and 125.

The respondent relied on the dictum of the Privy Council in the Ore Concentration Co.'s Case[1] . That dictum, however, really tells against the Company, and for the following reason:?The patent there was a State patent and under State law was said to be invalid ab initio. Appellant argued that sec. 61 of the Commonwealth Act cured the invalidity, if it existed. The Privy Council held that sec. 61 was excluded by reason of the invalidity?if it originally existed?being a "liability incurred" before the commencement of the Act within sec. 6. Their Lordships apparently thought that, but for sec. 6, the provisions of sec. 61 would have cured the suggested defect. If so, they could not have read the definition of "patent" in the way contended for by the respondent. This view of the definition receives additional support from the phraseology of secs. 6, 8 and 19, each of which limits the future application of State Acts to "rights acquired" and "liabilities incurred" (sec. 6), "some right previously acquired" (sec. 8), and "pending proceedings" and "then existing rights" (sec. 19 (a)). The last-mentioned sub-section emphasizes this by recognizing that the fees belong to the State.

But even assuming the initial meaning of the phrase to be what the Company contends for, the opening words of sec. 4 are: "In this Act except where otherwise clearly intended" &c. Clear intention is itself a vague standard. Lord Macnaghten in Edyvean v. Archer[2] said:?"What is a clear intention? That which is clear to one man is not always clear to another." We have to read sec. 87B by the light of all legitimate circumstances, and, on the assumption contended for, ascertain whether the Legislature clearly intended to cover such a patent as that of February 1904. The source of the enactment was sec. 38 of the Imperial Act of 1907 (7 Edw. VII. c. 29). The evils struck at by that Act were identical with the evils existing here. No reason of justice or convenience can be assigned for excluding State patents from the operation of the section. Being introduced by amending legislation, it is in parts retrospective, and, where it is retrospective as to Commonwealth patents, it may with equal justice and reason be retrospective as to State patents. A day before or a day after 1st June 1904 makes no practical difference to the patentee, and the evils intended to be cured would be the same in each case. The generality of the language fits the generality of the subject matter, namely, the protection of the general population from oppressive bargains resting on grants of publicly granted monopolies. Sub-sec. 2 of sec. 87B is specially outside the words of sec. 6. Sec. 6 saves rights acquired before the Act. Sec. 87B (2) applies only after the patent rights have expired. Further, there is one circumstance which appeals strongly in favour of holding the sub-section of general application: The manifest object of the Legislature was to deal with an existing evil, and to give redress at the earliest moment consistent with fair dealing. Sub-sec. 1 prohibited certain conditions of future contracts when accompanying the sale, lease or licence of a patented article or process. Sub-sec. 3 enabled a past contract for the lease or licence of a patented article or process to be avoided if it contained such a condition. Both these were instantly operative. Sub-sec. 2 provides for all past or future contracts for the lease or licence of any patented article or process whatever their terms might be, and enacts that after the monopoly ceases they may be avoided. There is no indication that relief is to be deferred: the obvious intention is that the present evil should be met at once. But, if the respondent is right the astounding consequence is that sub-sec. 2 could not operate for nine years after it was passed. The Commonwealth Act commenced in June 1904, patents are to be for fourteen years (sec. 64), and consequently 1918 would be the earliest date at which sub-sec. 2, passed in 1909, could operate in respect of a Commonwealth patent. It is also to be observed that the sub-section speaks of "the patent or all the patents by which the article or process was protected" &c. The words "all the patents" are specially indicative of patents in various States for the same invention. This, taken in conjunction with the period of nine years' delay which would otherwise arise, seems to point conclusively to the inclusion of existing State patents, and none the less so because the States are no longer competent to deal with the subject.

The appeal should be allowed.

As to the minor point, when the notice to terminate should be given, the better reading is that it should be given after the patent expired.

The Court then announced the order it proposed to make.

Appeal allowed. Order appealed from varied so as to declare that the indenture of 27th February 1912 was determined on 11th May 1918; to order that, if required by the petitioner within two months from the date of this order and at its own risk as to costs, an account be taken of the amount due from the respondent to the petitioner under the said indenture to 11th May 1918, and that the amount if any found due on the taking of such account in excess of £2,143 8s. 8d. be forthwith paid by the respondent to the petitioner; and to order that the petitioner have the general costs of the action up to 16th September 1918, that the respondent have the general costs of the action since that date except the costs of the issue raised by the contention that the contract was terminated on 21st March 1918, and that the respondent pay the costs of that issue to the petitioner. Each party to bear its own costs of this appeal. All costs to be taxed and set off.

Solicitor for the appellant, F. L. Stow, Crown Solicitor for Western Australia, by Lawson & Jardine.

Solicitors for the respondent, Leake, James & Darbyshire, Perth, by Malleson, Stewart, Stawell & Nankivell.

1. 31 R.P.C., at p. 228.

2. (1903) A.C., 379, at p. 384.