»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp point at issue in the case was whether the sale of patents was a transaction on trading account, or the disposal of fixed capital assets, i.e. did the trade include the buying and selling of patents.

»Ê¹ÚÌåÓýapp company was formed for the general purpose of acquiring patents, licences and concessions, to improve them, use them and turn them to account. A specific purpose was the acquisition of patents in a centrifugal turbine pump. »Ê¹ÚÌåÓýapp company's memorandum of association contained the power to sell, dispose, turn to account and grant rights and privileges in respect of the company's property.

»Ê¹ÚÌåÓýapp company acquired an interest in the patent relating to the pump and subsequently also acquired interests in foreign patents granted in respect of the invention. »Ê¹ÚÌåÓýapp company did not undertake manufacturing activities under the patents, but granted licences for others to manufacture the pump in return for the payment of royalties. »Ê¹ÚÌåÓýapp agreements it entered into with some manufacturers contained the right, in certain circumstances, for them to acquire the whole of the foreign patent rights. A number of the manufacturers duly exercised this option, acquiring the foreign patent rights in return for a further payment.

»Ê¹ÚÌåÓýapp company contended that the company's business did not include buying and selling patents, that the patents were fixed capital assets of the company and were held for the purpose of obtaining royalty income.

»Ê¹ÚÌåÓýapp Commissioners held that the profits on the sale were trading profits.

Rowlatt J in the High Court, concluded that the Commissioners had found that the company's trade included the buying and selling of patents and that they had evidence on which to base their conclusion. However, he expressed his unease, given that the opposite conclusion had been reached, on very similar facts, in the case of Collins v »Ê¹ÚÌåÓýapp Firth-Brearley Stainless Steel Syndicate Ltd [1925] 9 TC 520 (see BIM21015).

»Ê¹ÚÌåÓýapp House of Lords agreed, unanimously, that the Commissioners had not misdirected themselves and had abundant evidence on which to base their conclusion of fact.