Canada: Judge Rejects Purported Oral Amendment of Toilet Patent Licensing Agreement

Arnold Hennessy invented "tip-tank" toilet technology, and assigned his rights in the patents and technology to Arnold Hennessy Holdings. AHH licenced the technology to Flapperless, a company owned by his nephew, Philip Hennessy. The licence agreement provided that Flapperless was to pay AHH $120,000 per year until Arnold passed away, at which time AHH and Philip would each receive $60,000 annually and the intellectual property would transfer to Philip.

Flapperless reduced its payments to $60,000 per year before Arnold passed away, and ceased all payments after that. Philip asserted that this was in accordance with an oral agreement between him and Arnold. AHH brought an action against Flapperless and Philip, and sought summary judgment to enforce the original agreement.

The defendants resisted the motion for summary judgement, largely because of the failure of AHH to disclose certain documents, some of which were requested during cross-examinations on the affidavits submitted by AHH in support of the motion. Justice Mew held that the defendants should have brought a motion seeking the production of these documents. Ultimately, and with regard to the factors in Hryniak, Justice Mew concluded that summary judgment was appropriate.

Justice Mew concluded that there was no oral agreement between Arnold and Philip. This finding was based on the fact that the only evidence of the oral agreement was Philip's testimony, and the fact that previous modifications to the agreement were made in writing. Justice Mew held that Philip should have known that there would be no evidence of the oral agreement if Arnold died or became incapable.

As a result, Justice Mew determined that AHH was entitled to royalty payments of the full $120,000 per year until Arnold's death, and $60,000 per year for the remainder of the term of the agreement. AHH sought to enjoin the transfer of the intellectual property to Philip until the monies owed had been paid. Justice Mew concluded that this relief was not possible because the intellectual property had been transferred to Philip when Arnold passed away.

A copy of the decision may be found here.

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