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court will have an opportunity of putting the plaintiff precisely A. D. 1841. in the situation in which he would have stood if this question had not arisen. If it shall turn out that the patent is not valid, the court will deal with it accordingly; and that will, I think, most effectually prevent all prejudice.
Neilson AND OTHERS v. FOTHERGILL AND Thompson.
This case differed from the preceding, and the bill contained the following additional statements :-That the plaintiffs having called upon the defendants for an account of the iron smelted by the use of the invention, in order to ascertain the sum due, the defendants rendered an account in writing of all the iron smelted by the defendants up to the 2d of August, 1839 (from some time in 1837), and duly paid one shilling per ton on all the iron which it appeared that up to that period they had smelted; that plaintiffs had applied to the defendants for an account of the iron smelted since the 2d of August, 1839, and for like payments, but defendants have refused such application.
It appeared that the draft of a license was sent to the Aberdare Company, which the defendants represented, containing, amongst others, a clause for revoking the license on the nonpayment of the rent, and that this license was kept; that the payments made were in conformity with it, and that plaintiffs, after August, 1839, revoked the license.
Wigram, Richards, and Roupell, moved to discharge the order of the Vice Chancellor.
The only unlawful act was the refusal to pay, and a court of law affords the proper remedy for refusing to pay under an agreement. If the contract is repudiated, and the defendants are to be dealt with as strangers, the objection to the validity of the patent must be considered. [Lord Cottenham, L.C.: The only question is, whether any thing which can take place now can relieve you from the payment of the year's rent. You are liable to pay that, whether the patent is good or not. I am not now ordering you to pay the rent, I have no jurisdiction to do that, but as I am called upon to interfere by injunction, I give you that relief upon such terms as appear to me to be equitable. You have, according to the rule laid down by Lord Eldon, put yourselves in the situation of invading a patent right-the right at least which has been used. I think that ought to be protected by an injunction; then the question is, upon what terms ought that injunction to be granted, if I find that you owe a year's rent, as to which you can have no de
Argument in support of in junction.
· fence, because it is not due by virtue of the patent right, but by
virtue of the contract.] The right to an injunction is displaced by showing a contract to use the invention. The defendants have a right to dispute their liability to pay the money, notwithstanding the license. If the consideration totally fails by the patent being invalid, our having made an agreement to pay on the supposition of the patent being valid, does not prevent us from raising the question. A person taking a license to use a patent, if it turns out that there is no patent in law, may at law dispute his liability to pay. He is not, as in the case of landlord and tenant, prevented from disputing the title. [Lord Cottenham, L.C.: If it were quite clear that in whatever way the right is determined that year's rent would be payable, I should have felt no difficulty.]
Knight Bruce, Jacob, and Campbell, in support of the order of the Vice Ch the Vice Chancellor.
The defendants, after notice of revocation of the license, were wrong-doers : they were previously under a contract, and are by their own acts estopped from denying the validity of the patent.
The authority of Bowman v. Taylor is a settled principle of law, and proceeds on the same footing as that of landlord and tenant, until you show that there has been some such impropriety of conduct, or fraud, as to prevent the consequence resulting. The case here is a case of equitable estoppel, of a party having had a thing demised to him attempting to dispute his landlord's title, which is against all principle. In the present case the license has not been actually executed, but the licenses have all been granted in one form, and a draft of the proposed license was sent to the parties and never returned; but having paid money on the footing of it, they are exactly as much bound by it in a court of equity as if they had executed it, as in the common case of a demise between landlord and tenant. The Aberdare Company have been let into possession, they have been allowed to use it, to set up machinery, to avail themselves of the profits on the faith of the contract they have continued uninterruptedly without cessation. There has been no eviction as if another patentee or alleged patentee claimed the payment, or as if the patentees had omitted to perform their duty in securing them the enjoyment of the patent. They have been let into possession, and by the use of it have made the contract as solemn in equity as if it were by deed. It is a part of the terms of the contract, as evidenced by the draft of the license, that if they did not pay it should be revoked. Thus in the case of a tenant from year to year, the landlord cannot evict him as long as he sustains the character of tenant without giving six months' notice. But suppose the tenant says, you are not my landlord, and sets him at defiance. Upon a repudiation of the landlord's title, the landlord has a right to bring ejectment
because his title is repudiated; accordingly, this payment being H. T., 1841. withheld, and the right of it disputed, the payment being made a ground of continuing the license, we are restored to those rights which we had originally, and which these parties have distinctly occupied.
Lord COTTENHAM, L.C.: This case is deprived of those circumstances upon which I acted in the other, namely, the party who claims to be patentee permitting them to incur expense in the expectation of being permitted to use the furnaces upon the payment of the rent, which is all the plaintiff requires. But here, all that is accounted for, because that was done under a contract, and for two years at least the party has had the benefit of the works which he has so erected, and the patentee has kept his contract with the defendants; he has not interposed and endeavoured to deprive them of the benefit of their expenditure. It is the act of the manufacturer which has put an end to this connexion; he has therefore exposed himself to any degree of injury that may arise from the expenditure upon these works, and it appears that there is no answer to the claim to this rent from August, 1839, to August, 1840. I shall have to consider, if your client declines to escape from the injunction upon the terms I propose to him, whether the injunction should not go in a case which is deprived of those equitable circumstances which induced me to dissolve it in the others. [Wagram : Your lordship will give me the benefit of the supposition, that, at law, I have a defence if the patent is good for nothing.] If you can show me that there is a real question to try, the money must be paid into court instead of being paid to the parties; but at all events, I do not see how for that year, from August, 1839, to August, 1840, when you went on under the contract without giving notice to determine, you can escape paying it, either into court to abide the event of the trial of the question at law, or paying it to the party if there is no question to try.
Wigram, in reply. Your lordship said you should consider, whether, since August, 1840, we were to be considered as holding adversely, and, therefore, whether liable or not to pay for what was gone by, we were at all events wrong-doers. And then you put me to show, whether I could not in law defend myself for what was said to be due in August, 1840. The principle which I have always understood to govern cases of this sort is this, that, excluding the law of estoppel, if you go into a court of law, and can show a total failure of consideration for the contract, there you may always defend yourself; if, on the other hand, you cannot make out a case of total failure of consideration, you are liable upon your contract, and you may or may not have your cross action. This is the general principle In these cases, subject to the question, whether that which has been done may or may not amount to an estoppel. The whole
Argument on the question in the case of Bowman v. Taylor, relied upon for the injunction.
plaintiff, was, whether or not there could be an estoppel by recital, and it was held that there could. In Hayne v. Maltby the question was, whether there was any estoppel, there being no recital of the plaintiff's title, but only an agreement and a covenant to pay, and the court held that there was not. In that case Mr. Justice Ashurst said, the plaintiffs use this patent as a fraud on all mankind, and they state it to be an invention of the patentee, when in truth it was no invention of his. The only right conferred on the defendant by the agreement was that of using this machine, which was no more than that which he in common with every other subject has, without any grant from the plaintiff. That is exactly our case. We say that all mankind have a right to use it, but that some people have taken licenses, supposing it to be the plaintiff's invention. On the money then being paid into court, the injunction should be dissolved.
Lord COTTENHAM, L.C.: The case of Hayne v. Maliby appears to me to come to this —that although a party has dealt with the patentee and has carried on business, yet that he may stop, and then the party who claims to be patentee cannot recover without giving the other party the opportunity of disputing his right, and that if the defendant successfully dispute his right, that notwithstanding he has been dealing under a contract, it is competent to the defendant so to do. That is exactly coming to the point which I put, whether, at law, the party was estopped from disputing the patentee's right, after having once dealt with him as the proprietor of that right; and it appears from the authority of that case, and from the other cases, that from the time of the last payment, if the manufacturer can successfully resist the patent right of the party. claiming the rent, that he may do so in answer to an action for the rent for the use of the patent during that year. That being so, I think that, upon the money being paid into court, that is to say, upon the amount of the rent for that year being paid into court (if required), and the same undertaking being given to account for the subsequent period, the same order ought to be made in this case as in the others. There must be an undertaking to deal with the amount of that in the same way as before. The great difficulty in this case, which however is surmounted in the undertaking, is, that the said suit does not go to that year's rent.
Neilson v. Harford and others.
Estoppel and failure of consideration. It may - v. Homfray and Thompson. be convenient to present an abstract of the prinThe same order was made in these cases as in cipal cases referred to in the argument, or which Neilson v. Thompson and others, ante 287, the cir- I have occurred on the questions of estoppel and cunstances being substantially the same.
failure of consideration, more especially with reference to patents.
Oldham v. Langmead. In this case, where the action was brought by the assignee of the patentee against the patentee, Lord Kenyon, before whom the cause was tried, would not permit the latter to show that it was not a new invention against his own deed, and (in his judgment in the case of Hayne v. Maliby) he says : In the case of Oldham y. Langmead, the patentee had conveyed his interest in the patent to the plaintiff, and yet in violation of his contract be afterwards infringed the plaintiff's right, and then attempted to deny bis having bad any title to convey; but I was of opinion that he was estopped by his own deed from making that defence." 3 T. R. 439 & 441.
It does not appear from the report of the above case, whether the estoppel in the case was considered to arise out of any recital in the deed, or the relative position and acts of the parties; but the latter would appear, under the circumstances, in connexion with the deed, to be sufficient to create an estoppel, though the deed should have contained no recital of the invention being new. Hayne and another v. Maliby.
[3 T. R. 438.] This was an action of covenant on articles of agreement, which recited that the plaintiffs were assignces of a patent granted to T. Taylor ; that the defendant had applied to the plaintiffs for their permission to use the patent invention, to which they assented, on condition of his working it in the manner described in the specification; then there was a covenant by the plaintiffs with the defendant that he should have the free use and quiet enjoyment of one patent machine, in case the same should be worked only in the manner described in the specification ; and also a covenant by the defendant, that he would not, during the residue of the term, use any of the patent machines except the one by the articles allowed to be employed by him. The declaration aferred enjoyment by the defendant without interruption from the plaintiffs, and assigned two breaches, one for using patent machines other than and besides that by the agreement allowed, the other for using machines resembling the patent machines. The defendant, among other pleas, pleaded that the invention was not a new invention, and that it was not discovered by Taylor. To these pleas the plaintiffs demurred.
It was argued for the plaintiffs, in support of the demurrer, that the defendant was by his deed estopped from saying that the invention was not new, or not discovered by the patentee, on the same principle that a party who has entered into a specialty cannot say that there was no consideration, though he may plead that the consideration was illegal. The above case of Oldham v. Langmead was referred to, and relied on. Further, that the defendant should have repealed the letters patent by scire fucius, and then applied to the Court of Chancery to have the deed delivered up and cancelled ; but by his deed the defendant has admitted that the plaintiffs had a title, and as long as the term exists he is estopped from denying it, in the same manner as a tenant holding under a demise from his landlord is estopped from denying his landlord's title in answer to an action for rent.
The court gare judgment for the defendant, being of opinion that he was not estopped; but
the learned judges did not take the same view of the subject, and their judgments rest on different grounds.
Lord Kenyon, C. J., put it on the ground of fraud, and that the doctrine of estoppel did not apply, but distinguished it from the case of a landlord and tenant; for that the tenant is not at all events estopped to deny his landlord's title, the estoppel only existing during the continuanc of his occupation, and if he be ousted by a title paramount he may plead it.
Ashurst, J., also distinguished it from the case of landlord and tenant, on the similar ground, that the tenant having a meritorious consideration shall not, so long as he enjoys the estate, be permitted to deny his landlord's title ; and put it on the ground of fraud. That the plaintiffs were using the machine as a fraud on all mankind, having no more right to do so than any other subject.
Buller, J., referred the case to the principle of eviction, thinking the facts disclosed by the pleas equivalent to an eviction. The plaintiffs, asserting an exclusive right, covenant with the defendant in respect thereof, and it is afterwards discovered they have no such right, and therefore the defendant has not the consideration for which he entered into the covenant.
The reasons assigned by Buller, J., do not appear altogether consistent; the defendant had the enjoyment in fact of the machine for which the plaintiffs covenanted; the failure of consideration was only in respect of the want of exclusiveness, inasmuch as others might also use the invention if the patent was void. The reasons of the other two learned judges proceeded chiefly on the assumption of fraud, which is not borne out by the statements on the record. The ques. tion of estoppel by reason of any recital in the deed did not arise in the above case, and this fact was held to distinguish it from the subsequent case of Bowman v. Tuylor, 2 Ad. & E. 290, where Patteson, J., remarked, with reference to this case, that the recital contained no assertion of right in the plaintiffs except as assignees, and the plea does not deny that the case is not properly one of estoppel. Infra.
Hare v. Harford and Taylor, This was an action (tried before Lord Alvanlev, Trin. Vac. 1803), on a bond conditioned for the payment of an annuity to the plaintiff during the existence of letters patent, in consideration of his licensing the defendants to use the invention for which it was obtained. The defendants pleaded that one T. S. Wood had before practised the same thing, that the plaintiff's invention was therefore not new and the patent void. Issue being taken on this plea, the question was as to the identity of the two inventions. The evidence on the part of the plaintiff and of the defendants was very conflicting, but it appeared that Mr. Wood's invention, which was for certain improvements in the application of steam and heat connected with brewing, besides the immediate objects as set forth in the specification, did in fact preserve the essential oil of hops, the preservation of which, by means of apparatus placed over the copper, was the express object of the plaintiff's invention. Mr. Wood, who was called on the part of the defendants, stated that he had once entertained an idea of preserving the essential oil of hops, but that the experiment failed, and he did not think it worth repeating. The