Judgment of the Court
JUDSON J.:-Curtiss-Wright Corporation is the owner of a number of Canadian patents relating to the manufacture of flight training apparatus. On December 3, 1952, with the knowledge and approval of the Crown, it entered into a licensing agreement with Canadian Aviation Electronics (referred to as CAE) under which this company obtained the right to use these patented inventions in the manufacture of flight training apparatus in Canada for defence purposes. CAE agreed to pay to Curtiss-Wright royalties of 71 per cent of the selling price on the apparatus made under the agreement and, in addition, the cost of certain 1 [19681 1 Ex. C.R. 519, 53 C.P.R. 144, 37 Fox Pat.
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technical assistance. Curtiss-Wright also made an agreement with the Crown under which it agreed to provide engineering and technical assistance to CAE for a stated sum. Both agreements expired in December 1957, except that the licensing agreement was extended in a limited respect which does not affect the issue which has to be decided in this appeal. CAE continued to manufacture flight training apparatus under contract from the Department of Defence Production. By a letter dated July 8, 1958, and pursuant to 20(1) of the Defence Production Act, R.S.C. 1952, c. 62, the Minister of Defence Production directed CAE not to pay any royalties to Curtiss-Wright and agreed to indemnify the company against any claims for royalties arising out of the manufacture, sale, maintenance, repair and overhaul of any flight training apparatus.
Curtiss-Wright then sought compensation from the Crown under 20(3) of the Defence Production Act. The Crown refused to entertain the claim on the ground that the appellant's patents were invalid.
Curtiss-Wright then filed a petition of right in the Exchequer Court to determine whether it had a right to compensation. This was done as a preliminary to proceeding before the Commissioner of Patents to have the amount of compensation ascertained. Before embarking on the trial, the Exchequer Court decided to dispose of two preliminary questions of law. The first of these was:
The answer of the Exchequer Court' was that CAE was not estopped from contesting the validity of the patents after the expiration of the licensing agreement and that consequently, the Crown was not estopped from contesting their validity in proceedings for compensation under s. 20, subs. of the Defence Production Act. With this opinion I agree.
Counsel for the appellant founded his argument on clause XVI of the agreement. This reads:
His contention was that the principle of common law estoppel applied as the words "licensee hereby acknowledges the validity of the patents" were a representation not that the patents were valid but that the licensee accepted the fact that they were valid. To me this argument is without substance. The words do not constitute a representation of fact. Counsel for the appellant is claiming far too much for the word "acknowledges".
As the President of the Exchequer Court pointed out, an acknowledgment of a fact is not a representation of a fact.
To me, the meaning and effect of clause XVI are both clear. The licensee "acknowledged", "admitted" or "agreed" (and it does not matter which word is used) that the patents were valid. The licensee also agreed not to become an adverse party "directly or indirectly, to any suit or action disputing the validity of the said patents or any of them". Clause XVI contains no representation of fact which was intended to induce Curtiss-Wright to change its position to its detriment. It was simply a contractual obligation inserted to protect the patentee and binding upon the licensee for the life of the licensing agreement.
The President of the Exchequer Court came to this conclusion on a consideration of clause XVI in the context of the agreement, and particularly clause XI dealing with the rights of the parties upon the expiration, termination or cancellation of the agreement. It is unnecessary for me to go into the matter in further detail. On this branch of the case I am in complete agreement with the Exchequer Court. The Exchequer Court also went on to consider a further question, which was:
Although the President recognized that the question did not require an answer in view of the answer given to question 1, nevertheless he did express the opinion that the Crown was not precluded from contesting the validity of