An American manufacturer of airplanes purported to license its rights to use Australian patents and registered designs to an Australian company in consideration for a lump sum of $25,000 and further sums based on the number of aircraft engines manufactured by the Australian licensee. In fact, the American company did not own any Australian patents or any designs registered in Australia. The drawings of specifications were delivered in New York. Six technicians from the Australian company were to visit the American factory for the purpose of obtaining information and the American company further agreed to give the Australian company pertinent information and advice.
In finding that the American company was not subject to tax on income "derived directly or indirectly from all sources in Australia" in respect of this agreement, Latham C.J. found (at p. 321) that "the agreement was in reality an agreement for the communication of information which would facilitate the manufacture of the engines in Australia", that the knowledge so communicated did not represent property and (at p. 322) that "a person who neither owns anything in a country nor does nor has done anything in that country cannot ... derive income from that country".
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