The decision of Justice French of the Federal Court in University of Western Australia v Gray (No 20) [2008] FCA 498 should prompt industry partners to review the strategies they use to secure intellectual property (IP) rights in collaborations with universities and other research entities.
Although the decision ultimately was based on specific circumstances, it is significant for its consideration of who truly owns the intellectual property rights in inventions created by academic staff in the course of their research.
If our organisation collaborates in research and you secure IP rights in the results of that research, then you need examine and query exactly how that organisation gets those rights from the researchers involved. In many instances universities and other research organisations rely on what has been the accepted position at common law, that it owns inventions of its employed researchers. However, this case puts in doubts that assumption. From your organisation’s perspective, this means you may not actually have the IP rights you think you have been granted by the university or other research entity. Accordingly, before you enter into any arrangements for licensing, commercialising or otherwise dealing with that IP you need to carefully consider the IP position.
Facts
In 1985 The University of Western Australia (UWA) appointed Dr Gray as a fulltime employee to teach and to conduct and stimulate research. Dr Gray’s employment contract also included any Regulations made by UWA. At the time of his appointment, Dr Gray had been engaged for some years in researching the treatment of liver cancer by using microspheres, research he continued at UWA along with other researchers.
Over a period of time Dr Gray developed three microsphere technologies; known as SIR-Spheres, DOX-Spheres and Thermo Spheres. Provisional applications for various patents and international applications were made in respect of inventions developed in relation to the technologies.
In 1997 Sirtex Medical Limited (“Sirtex”) acquired from Dr Gray intellectual property rights arising out of these inventions. UWA was aware of Dr Gray’s involvement with Sirtex and at the prospect of commercialisation of the technologies. In 1999, the Vice Chancellor of UWA sent a letter to Dr Gray informing him that UWA believed it may have some claim on these intellectual property rights.
By 2000 Dr Gray was a director of Sirtex, and the company floated on the stock exchange to commercialise and market the technologies. UWA was aware of the float of the company, its prospectus and that Sirtex acquired intellectual property rights in respect of the technologies. Four years later an action was commenced by UWA claiming that the inventions were subject of the by UWA claiming that the inventions the subject of the intellectual property rights which Sirtex had acquired were developed or made in the course of Dr Gray’s employment at UWA and as such were owned by UWA.
The Decision
The case was heard by Justice French in the Federal Court. UWA alleged that there was an implied term of Dr Gray’s contract of employment that intellectual property developed in the course of his employment was owned by UWA.
Justice French dismissed the allegation and the subsequent claim against Dr Gray and Sirtex on the basis that Dr Gray, and not UWA, owned the intellectual property rights arising out of the SIR-Spheres, DOX Spheres and Thermo-Spheres inventions. This was the case regardless that these inventions may have been created during the course of his employment. Justice French reasoned that Dr Gray had a duty to conduct and stimulate research at UWA but this duty did not carry with it a duty to invent.
Further, UWA was not empowered by its legislation to make regulations acquiring or interfering with Dr Gray’s property rights where it would not otherwise have had ownership rights in accordance with general legal principles, and that this was the case even where the IP regulations were expressly incorporated into his contract of employment. The judge went on to say that, without express agreement to the contrary, rights in relation to inventions made by academic staff in the course of research will ordinarily belong to the academic staff as the inventors, whether or not they are using university resources.
Although Justice French found that Dr Gray owned IP rights to any invention created during his course of employment he did consider whether the relevant inventions were in fact created during his course of employment. Justice French considered the notion of “inventive consent”: that is, there is a distinction between the inventive concept and the time of conception of the relevant invention as distinct from its verification and reduction into practice. Applying this approach, Justice French reasoned that the only invention made by academic staff of UWA in the due course of their employment were the DOX-Spheres.
UWA appealed the decision of Justice French. The Full Federal Court (Lindgren, Finn and Bennett JJ) carefully reasoned through each of UWA 43 grounds of appeal but ultimately agreed with Justice French’s conclusions and dismissed UWA’s appeal with costs. In agreeing with French J their honours restated two of the key points of the primary decision which rested on the facts of the case; namely that Dr Gray was not employed by UWA to invent, nor was he “required to advance a commercial purpose of UWA when selecting the research he would undertake.”
The High Court subsequently refused UWA’s application for special leave to appeal from the Full Federal Court’s decision.
What this Means to You
If you are engaging research at a university or other research organisation, you would be wise to consider strategies which secure the IP rights of inventions created by academic staff in the course of such collaborative research. A written research contract should be entered into which specifically deals with IP rights. The types of clauses to deal with the issue of IP rights include the following;
Making it a condition of a researcher being permitted to work on a project that:
(a) the university-research organisation which employs the researcher provides a copy of the researcher’s contract of employment in which there is express provision that IP rights in inventions are owned by the university-research organisation; or
(b) the university-research organisation which employs the researcher enters into an agreement with the researcher that the researcher will assign their IP rights to the university-research organisation; or
(c) requiring the university-research organisation to warrant expressly that it has good title to all IP created by its researcher employees.
- potentially including the researcher who will work on the project as a party to the project agreement for that project as well as the employer, to enable provision to be made in the project agreement for all the relevant IP rights to be assigned to you.
- making it a condition of funding that detailed laboratory notebooks are kept of all research undertaken in order to effectively “capture” the IP rights.
Due Diligence
Where you are considering commercialisation of IP generated by a university-research organisation, as part of the due diligence process, you should ensure that there is:
- an express provision of the contract of employment assigning IP rights to the university-research organisation; or
- an express provision between the university-research organisation and the researcher clarifying ownership of the IP.
Further, you should also carefully consider when an invention is in fact conceived (as demonstrated by laboratory notebooks) so that the true owner of the IP rights can be ascertained and, if need be, the IP rights may be assigned.