19 Apr 2017
High Court won't hear case on IP licences surviving the end of the contract
By Mary Still, Mathew Fenwick
If you're negotiating a contract with an IP licence, think about what happens to the licence once the contract ends.
The Victorian Supreme Court in 2015 determined that an IP licence could survive the termination of the agreement that created it gave pause to many businesses negotiating IP licensing agreements. Consequently, the appeal from Apple & Pear Australia Ltd v Pink Lady America LLC  VSC 617 was awaited by their IP lawyers.
On 23 November 2016, the Victorian Court of Appeal allowed the appeal from the decision of the Victorian Supreme Court (Apple & Pear Australia Ltd v Pink Lady America LLC  VSCA 280). However, the basis upon which the Court of Appeal reversed the first instance decision meant that the question as to whether the licence survived the termination "[did] not relevantly arise".
Pink Lady recently sought special leave to appeal to the High Court of Australia but that application was refused.
The upshot is that the decision of the primary judge that an IP licence can survive termination of the underlying agreement remains undisturbed. Accordingly, parties negotiating IP licences remain well advised to consider what should happen to the licence if the agreement is terminated and ensure that the contract reflects that intention, particularly where perpetual or conditional licences are contemplated.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.