BMS Computer Solutions Ltd v AB Agri Ltd

A contractual licence described as perpetual may still be subject to express termination provisions. The word ordinarily concerns duration and does not, without clear language, remove provisions linking the licence to a related support agreement. Contractual documents must be read together and construed coherently, having regard to their commercial structure. Where one provision contemplates authorised use beyond a stated tonnage threshold and another provides for additional charges above that threshold, the threshold is a payment trigger rather than a limit on the licence. A variation requiring new agreements for all non-organic tonnage growth applies to non-organic growth in compound-feed activities as well as non-manufactured-feed activities.

BMS sought summary judgment under CPR Part 24 on two construction issues concerning linked software licence and technical-support agreements. The agreements had originally been made with a predecessor of AB Agri and were later novated and varied. AB Agri had terminated the support agreement but maintained that its software licence continued because the variation granted a UK-wide perpetual licence. It also contended that use of the software at a newly acquired compound-feed mill was covered by the existing licence because total annual production remained below 2.45 million tonnes. The issues were whether termination of support terminated the licence and whether the additional mill required a new licence.

1. Summary judgment. The first construction issue was suitable for summary determination. The evidence did not create a triable issue affecting the proper construction of the linked agreements, applying the guidance in ICI Chemicals and Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
2. Perpetual licence. The word “perpetual” in the variation meant a licence of indefinite duration, subject to contractual termination provisions. It did not mean a licence incapable of termination. The variation stated that the existing agreements continued in force subject to the agreed variations, and the language that the licence would be “extended” indicated continuation of the original licence in modified form.
3. The termination provisions remained commercially necessary and were not clearly excluded. In particular, the licence agreement’s provision making continuation of the licence conditional on the support agreement continuing in effect remained operative. Accordingly, AB Agri’s termination of the support agreement also terminated its licence to use the software. The support agreement’s provision requiring return of the software on termination reinforced that conclusion.
4. Flixborough mill. The 2.45 million-tonne figure in the variation was a threshold for additional payments, not a limit on the scope of the licence. The agreement contemplated authorised use above that figure, since it provided for additional charges for excess tonnage. Reading the variation as a whole, the requirement to negotiate new licence and support agreements for “all non-organic tonnage growth” applied to non-organic growth in compound-feed activities. The Flixborough mill therefore required a new licence agreement.
5. Judgment was given for BMS on both issues. The parties were to make further submissions on the form of order.