Greene M.R. found that royalties derived by the taxpayer from the licensing of patents covering improvements in electrically operated hand tools were profits of its trade or business, rather than income from the holding of investments, in light of the relation of the patents to its business and the fact that it did not receive the royalties as a "mere passive owner". He also doubted the test of Macnaghten J. in C.I.R. v. Rolls-Royce, Ltd. (No. 2) (1944), 29 TC 137 (K.B.D.) that an investment involves the laying out of money, and cited the example of a son who is bequeathed a patent from which he thereafter passively derives investment income.
MacKinnon L.J., in concurring, stated (p. 165):
I think that the word 'investments' in the relevant Sections of the statute is not a word capable of legal definition. Like so many words in modern legislation, it is a word of current vernacular.