The Australian Full Federal Court has upheld an earlier decision that the duty to perform research in an employment contract did not give rise to an implied duty to invent, even though the nature of the research was such that inventions could quite likely result. See University of Western Australia v Gray 9[2009] FCAFC 116 (3 September 2009)).
Here, the University of Western Australia claimed that three families of patents invented wholly or in part by Dr Bruce Gray belonged to the University. The patents, which relate to the production and use of microspheres for targeted treatment of human tumors, were transferred to Sirtex Medical Ltd. (previously Paragon) in exchange for shares in the company, reportedly valued at A$60-90 million.
The University maintained that Dr. Gray conducted the work leading to the inventions while he was employed by UWA as its Professor of Surgery. Under the terms of his employment contract Dr. Gray was required to teach and to undertake research in his field.
In the end, the Full Court Justices held that the duty to do research in Dr. Gray’s employment contract did not give rise to an implied duty to invent, even though the nature of Dr. Gray’s research was such that inventions could quite likely result. In making this decision, the Full Court noted the distinction between ownership of employee inventions in the University context, in contrast to that in the private sector. Supporting factors in reaching the decision were summed up as:
- The absence of any duty to invent anything.
- The freedom to publish the results of his research and any invention developed during that research notwithstanding that such publication might destroy the patentability of the invention.
- The extent to which Dr Gray, as a researcher and those working with him, were expected to and did solicit funds for their research, including the development of inventions, from sources outside UWA. The relevance of those considerations is not affected by the arrangements under which UWA would administer funding, eg in the case of CSIRO or NH & MRC grants.
- The necessity, consistent with research of the kind he was doing, to enter into collaborative arrangements with external organisations such as CSIRO.
The court concluded that the University’s Patents Regulations had no significance in this matter. However, the Patents Regulations’ preamble states:
The purpose of University research is to advance knowledge and to make the benefits of such knowledge available to all. Although it is not the policy of University research specifically to seek patentable inventions, there can arise in the course of research inventions which in the interest of the public, the University and the inventor should be patented. The purposes of the University Patents Regulations are to define the procedures for determining which inventions resulting from University research should be patented, and to establish the procedures for obtaining patents without cost to the inventor and for dealing with them so as to safeguard the interests of the University and of the inventor in a manner consistent with the University’s obligations to the public.
The regulation also states that:
(2) Any person authorised under the preceding sub-regulation to undertake work supported by any outside person or organisation, shall assign to the University such rights as may be necessary to enable it to exercise the inventor’s rights in any invention made or developed with such outside support.
But, the University did not follow its own rules under Regulation 6.1 of the Patents Regulations, which required a person subject to them to inform the Vice-Chancellor immediately of any patentable invention made or developed wholly or in part during the course of the person’s duty or while using UWA’s research facilities. The Patents Regulations required the Vice-Chancellor to refer the matter disclosed to a “Patents Committee” and to act on that Committee’s advice as to whether to exercise UWA’s “rights in the invention” and to inform the inventor accordingly.
The university’s failure to maintain a patent committee mechanism –- deemed a failure to maintain a mechanism on which its rights were dependent – was held to be a non-fulfillment of contingent condition. While UWA said “Hold on thar, we could have thrown together a committee had we only known” — or something like that — even if there was no formal committee in existence, the court had no mercy:
The last of these propositions is notable for its unreality. Not only was the use of an ad hoc committee not considered (not surprisingly, given it was a creature of the Senate, not of the Vice-Chancellor) but also, and more importantly, UWA had moved down an “alternative pathway” to provide a framework within which inventions could be commercialised: [256]. To put the matter colloquially, the Patents Regulations were no longer part of UWA’s agenda and UWA acted accordingly.
Dr Gray had no duty to invent anything. He had a duty to undertake research and to stimulate research amongst staff and students at UWA. He was working for a university.
The court seemed to make a lot of the fact that at all presently relevant times there was nothing to prevent Dr. Gray from publishing the discoveries he made and details of the technologies he developed. They noted that he was not obliged to protect by non-disclosure the patentability of any invention he developed in the course of his employment making his employment obligations different from those of a person employed by a private commercial entity whose inventions in the course of employment could benefit or affect the business of the employer.
The primary Judge went on to acknowledge that the “contemporary reality” was that most if not all universities (including UWA) engage in commercial activities. Nonetheless, when selecting the research work he would undertake, “Dr Gray was not required to advance a UWA commercial purpose”:
Research of the kind that Dr Gray was engaged to do carried with it the possibility that he would develop inventions capable of attracting patent protection. The duty to undertake research could be discharged in a variety of ways. These were within the discretion of the researcher. One of the ways in which the duty could be discharged was the development and testing of new technologies. It could be said therefore that an invention made in the course of Dr Gray’s research activities as an employee of UWA was an invention made within the scope of his employment and doing what he was employed to do. It does not follow that there was an implied term that the rights to which his invention gave rise belonged to UWA.
In light of this decision, Australian Universities and other research institutions should be concerned about the ownership of intellectual property invented by employees not bound by a specific duty to invent within their employment contracts or where assignments of intellectual property rights have not been made. The question now, when can researchers can be expected to make inventions?
