In a recent case, the UK High Court determined that a licence described as “perpetual” may nevertheless be terminated.  The parties had entered into a software licence agreement and a related technical support agreement where termination of the support agreement resulted in the termination of the licence agreement.  These agreements were subsequently amended to allow for a perpetual software licence.  When the support agreement was terminated, a dispute arose as to whether the licence agreement could remain in force.  The Court found that terminating the support agreement resulted in the termination of the licence agreement, notwithstanding the use of the term “perpetual”. 

The Court stated that “perpetual” can carry different shades of meaning, it can mean “never ending” (i.e. incapable of being brought to an end) or “operating without limit of time” (i.e. the licence was of indefinite duration, but subject to contractual provisions governing termination).  The Court held that the latter interpretation was applicable.  In reaching its decision, the Court noted (i) that the amending agreement was not intended to completely replace the licence agreement (ii) the failure of the amending agreement to refer to the termination provisions was indicative that they were to remain in force and (iii) commercial realities necessitated the possibility of termination to ensure that ongoing and onerous obligations would be brought to an end.   

Although this case was decided upon its particular facts, it illustrates the need for clear and unambiguous drafting of agreements and amendments, particularly regarding related agreements.  It is recommended that the intention of the parties is explicitly stated rather than to leave any margin for an alternative interpretation being adopted by the Courts.