whats the legal issue?

Question

JUDGMENT

1HIS HONOUR: Before me is an application by the plaintiff, Mrs Ehsman, for leave under s 237 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of the fifth defendant company, Timentel, by filing and serving a further amended originating process and amended points of claim.

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The plaintiff's case
7The parties agree that Mr Brady and Mr and Mrs Ehsman came together in a business venture before Timentel was formed. Mrs Ehsman owned some patents for a split face wristwatch display, and she wished to exploit them commercially. Mr Brady had some marketing experience. There are disagreements about the commercial utility of Mrs Ehsman's patents, and as to the precise terms of their arrangements, which need not be resolved for present purposes. It is common ground that they respectively brought to the business of Timentel, when it was formed in 1998, the patents (such as they were) and a measure of marketing/commercial input.

8When Timentel was formed, Mrs Ehsman granted it a licence over her patents, for no consideration (although she received shares in the licensee entity). There is disputed evidence as to whether, as Mrs Ehsman asserts, she entered into the licence agreement in reliance on the assumption, encouraged by Mr Brady, that the licence would always be held by a company in which she would be a director and shareholder. The licensee's interest in the licence agreement was assignable. Mrs Ehsman claims, and the defendants deny, that it was a term and condition of the licence agreement that the licence would not be assigned by Timentel to a company in which Mrs Ehsman was not a shareholder and director.

9Initially the only shareholders were the Ehsmans and Mr Brady, and Mr Brady and Mrs Ehsman were the directors. Mr Brady's evidence is that he devoted very considerable time and effort, and expense, to travelling to Europe to negotiate for the commercial exploitation of the split face wristwatch display. According to him, the people he consulted in Europe told him that Mrs Ehsman's patents were just concepts and it would be necessary to work out the most efficacious interior wristwatch mechanisms to support the split face. That is disputed by Mrs Ehsman. But it is clear enough that Mr Brady did do some amount of developmental/marketing work in Europe, the cost of which was shared or partly shared with the Ehsmans.

10Mr Brady's evidence is that he came up with the idea of having movements in each half of the split face watch case for the forward and return hand movements, all controlled by an electronic integrated circuit, and that Mr Claude Ray, an experienced watchmaker, carried out the necessary design work. The eventual product, which he called a "hinged electronic watch", was based on ideas that were fundamentally different, he said, from Mrs Ehsman's patents. These matters are contested.

Answer 1

So, what's the deal? Are you a lazy law student? Or even worse, a lazy lawyer?

Answer 2

The legal issue is whether the Plaintiff Mrs Ehsman is entitled to leave to commence proceedings on behalf of the company Timentel. S.237 of the Corporations Act states:
(2) The Court must grant the application if it is satisfied that:

(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

(b) the applicant is acting in good faith; and

(c) it is in the best interests of the company that the applicant be granted leave; and

(d) if the applicant is applying for leave to bring proceedings--there is a serious question to be tried; and

(e) either:

(i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied.

What you have cited is a recitation of the facts of the case, which the judge will use to determine whether Mrs Ehsman falls into the relevant category of persons under s.236 of the Act, and whether she can establish those things necessary under s.237 for leave to be granted.

The whole of the judgment explains why Mrs Ehsman wants leave to commence proceedings.

Answer 3

You need to break this down paragraph by paragraph and frame your issues - each paragraph seems to have its own. What is this, a bar practice exam? You need to look at corporations, and IP. This is what is known as a cross over exam questions where there are many subjects twisted into one fact pattern.

The general formula to answer this question is IRAC, with the elements framed and defenses to each element. The trick is to pick up as many points along the way by nailing your elements.