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Are you infringing if you fail to pay a licence fee?

1 March 2011

I was always taught, that a company using intellectual property must necessarily either:

A) Own it; B) Be licensing it (from a third party); or C) Be infringing (a third party’s rights)

A case in the Patents County Court last month however has looked at the question – “if you are using copyright material under licence, but fail to pay the ongoing licence fee – are you therefore infringing the owner’s rights?” The answer was no – it is not necessarily an infringement. Even though you are in breach of the licence, so may be in breach of contract, it does not necessarily follow that you are infringing copyright, or that the licensor has a right to terminate the licence.

From a pure contract law perspective, this isn’t that surprising but is a reminder that if you don’t put express wording in a contract, the courts will not imply it for you (so it is worth getting the wording in at the start).

When and how contracts can be terminated for breach is an issue we’ll be covering at the next in house lawyers forums on 16th, 29th and 31st March. Please sign up here if you’d be interested in attending.

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Richard Nicholas

Richard Nicholas

Partner and Responsible for In House Lawyers

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