7 Rolls Buildings
London EC4A 1NL
B e f o r e :
| (1) JONATHAN HOWARD HORLER
(2) MAIL A DOC LIMITED
|Part 20 Claimants
|- and -
|EVERSEAL STATIONERY PRODUCTS LIMITED
||Part 20 Defendants
Robert Deacon (instructed by Hansel Henson) for the Part 20 Defendants
Hearing dates: 4th October 2011
Crown Copyright ©
His Honour Judge Birss QC :
i) An assignment of the patent from Mail a Doc Ltd to ESPL expressly in consideration of the payment of £80,000 (clause 2.1). The assignment included a covenant of further assurance (clause 8) that the parties would do all acts necessary to secure the vesting of the assigned rights to the assignee (ESPL) and to give full effect to the agreement.
ii) Termination of the licence agreement (which of course was no longer needed since an Everseal company was now the proprietor) (Clause 2.2);
iii) Payment terms, £5,000 on the date of execution and £5,000 per month for 15 further months (clause 4.1) making a total of £80,000;
iv) Interest at 5% above base on outstanding amounts (clause 4.3)
v) Provisions for Mr Horler to provide consultancy services to ESPL (clause 5). This included details such that the first 16 days of consultancy, which Mr Horler was obliged to provide, were free (plus expenses) but further consultancy if required would be charged at £500 per day plus expenses.
vi) Provisions prohibiting ESPL from assigning the patent until all the sums due had been paid (clause 7.1) and allowing Mail a Doc Ltd to demand reassignment of the patent in certain circumstances if money was outstanding (clause 7.2).
"If any three consecutive sums under this Agreement remain outstanding for more than 90 days cumulatively the Assignee shall, on demand by the Assignor, forthwith provide to the Assignor an executed assignment of the patent back to the Assignor or its designate in registerable form. The right to reassignment shall be without prejudice to any other remedy to which the Assignor may be entitled by law for breach of this Agreement."
As you know we have been considering the viability of the continued purchase of your patent.
This is entirely due to the escalating legal costs in the fight with Mastermailer over the validity of the patent.
With the costs at their present level we feel we cannot continue this fight with Mastermailer over the patent, even though we are 100% right.
Mastermailer will simply win by having more money and generating monthly profits from [a particular customer].
We are prepared to continue defending the patent, but we are unable to do under the current repayment schedule of £5,000 per month. There simply isn't enough money to go around.
We suggest you consider giving a holiday period initially for 6 months and then to review the situation. Obviously if Mastermailer back down (which is likely) or the court case is heard earlier then we reinstate the monthly payments.
This saving will enable us to continue the fight against Mastermailer and make available the necessary funds for the legal bills.
Without this monthly saving we would have no option but to return the patent to you.
I'm sorry to have to write to you in this manner but I really do feel that with the repayment holiday we can all succeed.
i) Mail a Doc Ltd and Mr Horler entered into an agreement with Mastermailer Holdings Plc which consists of three documents. A master document entitled Patent Assignment Agreement and two further documents, an Assignment of Contract Debt and an Assignment of Patent.
ii) Mail a Doc Ltd sent a notice pursuant to clause 7.2 of the agreement requiring ESPL to reassign the patent to Mail a Doc.
The rival parties' claims
i) The true construction of clause 7.2 both in terms of the triggering event and its place in the contract as a whole. If Everseal are right then the case does not get off the ground.
ii) The waiver and affirmation point and in particular the effect of the acceptance of Everseal's payments by Mastermailer. If Everseal's position is right then again nothing further needs to be considered.
iii) Whether clause 7.2 is a penalty or forfeiture clause? If it is a penalty then Mail a Doc did not deny it would be unenforceable. Of course they deny it is a penalty and contend it is as forfeiture clause instead.
iv) If clause 7.2 is a forfeiture clause, is relief against forfeiture available in this case?
v) If relief against forfeiture is not available, the only realistic point left for Everseal is whether Mail a Doc should be denied equitable relief. This may involve the issue of whether damages are an adequate remedy and involves the question of "clean hands".
The true construction of clause 7.2
Waiver / affirmation
"In the event that [ESPL] refuses to re-assign the Horler patent back to Mail a Doc and instead relies on remedying its breach of contract [Mastermailer] reserves its right to have the Horler patent struck out (subject to clause 3 above)."