In the case of QR Sciences Ltd v BTG International Ltd [2005]the defendant company, BTG, (purchaser of intellectual property rights and technology, in particular patents) granted an exclusive license to QR Sciences (an Australian company), in September 2002, to use a large number of its patents which subsist in many countries different.
A clause in the license agreement gave QR Sciences the right to assign the patents in certain circumstances. Clause 14.4 of the license stated that: “During the term of the license, BTG will not assign any patent without first offering to assign such patent to QRS.”
In March 2004, BTG informed QR Sciences that it was negotiating the assignment of the patents to a third party. QR Sciences initiated proceedings against BTG. QR Sciences argued that clause 14.4 applied when BTG proposed an assignment of the patents, as well as when BTG abandoned the patents, and the Court should interpret the clause to have this meaning.
The following problems arose during the action:-
whether BTG’s negotiations triggered QR Science’s rights under clause 14.4; and whether BTG’s proposals to QR Sciences in March 2004 fulfilled BTG’s duty to first offer the patents to QRS. The Court ruled:-
BTG’s negotiations with the third party to assign the patents did not trigger QR Sciences’ rights under clause 14.4. If the negotiations had involved abandoning the patents, QR Sciences could have asserted its rights under the clause; BTG’s proposals were contractual and therefore not contractual offers but only invitations to treat; BTG had not yet fulfilled its contractual obligations to first make an offer to QR Sciences; and any offer from BTG to QR Sciences must be a contractual offer whereby QR Sciences had a reasonable time to consider the offer and respond.
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© RT COOPERS, 2005. This Information Note does not provide a complete or comprehensive statement of the law relating to the issues discussed nor does it constitute legal advice. Its sole purpose is to highlight general issues. Specialized legal advice should always be sought in relation to particular circumstances.
