assertion does not establish facts necessary for a legal conclusion.
Again, when regard is had to the answering affidavit, it is established that Ciba enjoyed a licence which was
subject to a royalty of 6% but that this was regarded as "low" and that it was concluded only because Ciba was to
bear significant development and registration costs which the patentee would then not itself have to bear or
recoup. In appellant's case, of course, the licensee's position would also have to be considered in determining what
would be a reasonable royalty and the recoupment of such additional costs would have to form a component in the
computation of a royalty for any other licensee. The patentee's denial that 6% was reasonable was thus supported
by the terms of Ciba's licence and not the contrary as appellant asserted.
The decided cases (see for example HoffmannLa Roche & Co AG's Patent [1973] RPC 601 at 606) suggest that it
is normal that the calculation of an appropriate royalty at the very least involves taking into account three elements
namely (a) the patentee's expenditure on research and development; (b) the patentee's expenditure on promotion;
and (c) a servicing of the capital element to allow a reasonable return on the capital employed in (a) and (b). This
will normally call, in a case like the present, for evidence as to the practice of companies in the field as to how
current research is financed and recouped. It is true that details of this nature are to a large extent the confidential
information of, in this case, the patentee. But that does not mean that a bare assertion can shift a tactical onus to
the patentee to prove that 6% is not reasonable. To revert to the founding affidavits, however, there is no reason
why appellants could not have provided facts from which conclusions (even if tentative) could be made. Far from
doing so not even the price of the product in South Africa (or indeed elsewhere) is set out nor is there any
reference to appellant's own cost structure. Given that it was at least in a position to manufacture, this would seem
to have been a source of potentially helpful information. In short no serious attempt has been made to prove the
essential jurisdictional facts. It follows that here too no case of abuse was made out.
The court below held, in the first place, that the conclusion to be drawn from the facts was that appellant did not
want a licence to ensure an adequate working of the patent in the Republic during the term of the patent. This is a
conclusion which would seem to me to be one which can reasonably be drawn. I do not read the judgment to
suggest that the learned judge was unconscious of the importance of a finding that an
View Parallel Citation
abuse had to be shown. I read the observation to reflect on whether a licence can, in terms of the section, be given
to a party whose avowed objects are wholly unrelated to the purposes of the section. In this it would seem to me
that the learned judge's approach was both logical and in accordance with the overall purpose of the section and
one to which he was driven by the facts. I, however, prefer to place the decision on a narrower ground and I leave
open the broader considerations which seem to me to underlie the learned judge's conclusion on this point. The
learned judge also held that the appellant had failed to prove that a 6% royalty was reasonable. In this regard his
conclusion is matched by my own.
What I have said renders it unnecessary to deal further with the reasoning of the court a quo. It also renders
any further analysis of the section or any more detailed discussion of the philosophy which underlies it unnecessary.
Similarly it
Page 451 of [1998] 4 All SA 445 (A)
becomes unnecessary to discuss questions relevant to the discretionary elements of the section or the role of
subsections (7) and (8) and problems which could have arisen from the fact that the patent has in the interim finally
expired. The applicant failed to make out a case for the grant of a licence. The appeal must fail. The order is:
The appeal is dismissed with costs including the costs of two counsel.
(Harms, Scott, Zulman JJA and Farlam AJA concurred in the judgment of Plewman JA.)
For the appellant:
CE Puckrin SC and JN Cullabine instructed by Spoor & Fisher, Pretoria
For the respondent:
JW Louw SC and CJ van der Westhuizen instructed by Adams & Adams, Pretoria