A recent High Court decision underscores the importance of clear contractual conditions indicating when and how the parties can terminate their agreement. Between 2012 and 2014, Ward`s royalties to Mevon were very low, which is much lower than the minimum licence fee that was jointly withdrawn from the licence as part of the transfer of the licence to Ward. He held that the licence had no fixed term, since Mevon was only entitled to terminate for ward`s violation, while Ward was also entitled to terminate the patents when the patents expired. He did not mention (and we assume it has not been advanced) the legal right that the licensee should have terminated when the patents expired. In accordance with Section 168 of the Patent Act 2013, any party may terminate a license to value a patented product or process once the patents that protected the product or process at the time of the patent have expired or have been revoked. We wonder if this would have changed the analysis, as it would have meant that each party could terminate the licence as soon as the patents expired. In 1998, the predecessor of Mevon Pty Limited (Mevon) issued an exclusive license to Ward Equipment Limited`s predecessor (Ward) to modify, customize, manufacture, use, sell, lease or other use of certain construction products in New Zealand. The main product was called „Superdeck,“ which allowed goods to be transported off the field in a tower. The licence was transferred to Mevon and Ward between the issuance of the relevant patents and the High Court procedure. If the parties intend to maintain the licence in effect until all patents (or other intellectual property rights) expire, we propose that it be difficult to know how bad performance is relevant, if a right of termination is made out of convenience. The existence of this right is determined on the basis of the intentions of the parties at the conclusion of the contract and not on the basis of the circumstances at the time of termination. When a licensee wishes to terminate the license agreement due to poor performance, it must ensure that the licensing agreement meets clear performance requirements and an explicit right of termination for non-compliance with these requirements.
Mevon did the opposite by agreeing to remove the minimum licence fee for the transfer of the licence to Ward. Each party had the explicit right to terminate the license for violation of the license by the other party. Ward also had the right to terminate patents with a three-month period when the patents expired. There was no right in the licence for any of the parties to terminate without notice without cause. Mevon claimed to invoke a tacit right of termination. Here the resignation came from heaven and could theoretically be given at any time.