Prospective patentees of inventions that involve academic inventors would do well to revisit their employment contracts, collaborative agreements and internal procedures in view of the September 3, 2009 decision of the Full Court of the Federal Court of Australia in University of Western Australia v. Gray1.
In this case, the Full Court considered whether the employer, the University of Western Australia (UWA), was entitled to own an invention of one of its employees, Dr. Bruce Gray. Under the terms of his appointment, Dr. Gray was required “to undertake research and to organize and generally stimulate research among the staff and students.” A previous lower court decision considered the disputed ownership of a number of inventions relating to targeted treatments for cancer which were alleged to have been made by Dr. Gray during his term of employment with UWA2. On appeal, only one of these inventions was at issue.
The University argued that the provisions of its Patent Regulations, as set out in the University of Western Australia Act, formed part of the terms and conditions of Dr. Gray’s contract. The Regulations required inventors of inventions made or developed using the University’s facilities to immediately inform the Vice-Chancellor, allowing the University an opportunity to exercise its right of ownership. On appeal, the University also submitted that Dr. Gray’s contractual “duty to research” carried an implied “duty to invent” in the context of its institutional objections, and that Dr. Gray was therefore in breach of his contract.
While the Full Court accepted the argument that the University of Western Australia Act was applicable to the employment contract, the Full Court noted that the Act's Patent Regulations specified a requirement for the University's Vice-Chancellor to refer any patent-related matter to an internal Patents Committee which would advise whether UWA's rights in an invention should be exercised. The inventor would be informed accordingly. The Full Court upheld the primary judge’s finding that UWA had failed to maintain its Patent Committee, which constituted an essential element of the mechanism required for Dr. Gray to maintain his contractual obligation. This failure, in effect, excused Dr. Gray from that obligation.
The Full Court also affirmed the primary judge’s decision that the wording of Dr. Gray’s contract, which set out a “duty to conduct and stimulate research”, did not imply a “duty to produce patentable inventions” in an academic setting. The Court reiterated the facts supporting this view. These facts included that Dr. Gray (i) was not bound by a non-disclosure agreement relating to his inventions, (ii) was expected to solicit external funds to support his research, and (iii) was expected to collaborate externally to further his research. The court found that UWA’s primary function in education was not altered by its commercial ventures. Thus, Dr. Gray, as an employee of an educational institution, was not required to advance the University’s commercial interests and therefore, no such “duty to invent” could be read into his contract.
The Australian characterization of a university’s activities stands in contrast to the U.S. Court of Appeal’s position for assessments of infringement and experimental use set out in Madey v. Duke University3. In that case, the U.S. court found that even research projects of no commercial application “…unmistakably further the institution’s legitimate business objectives, including educating and enlightening students and faculty participating in these projects”. As such, Duke could not rely on its educational focus and not-for-profit status to escape an allegation of infringement. However, in light of the decision of the Full Court of Australia’s decision in University of Western Australia v. Gray, it is now clear that this view of a university’s activities cannot be relied upon to establish ownership, at least not in all jurisdictions. The issue remains untested in Canada, and is somewhat muddied by the present requirement to submit a declaration as to the applicant’s entitlement at the time of filing. Just what constitutes a sound basis for the entitlement is uncertain. It is not clear, for instance, that a declaration based on employment would hold water in the absence of a specifically recited contractual obligation, or for inventors in international jurisdictions in which a presumption of employer ownership is contrary to national employment laws.
The Canadian situation may change, to an extent, with the forthcoming amendments to the Patent Rules, but the UWA v. Gray decision suggests that patentees dealing with inventors affiliated with academic institutions should be wary of relying on employment contracts to demonstrate patent ownership on the world stage. It would be advisable that technology transfer offices re-examine their internal regulations and policies relating to IP (including archaic institutional statutes) to ensure that all required procedural mechanisms are in place and operating. The institutions, themselves, should ensure that all research staff and contractors have contracts which clearly set out an explicit requirement to invent and/or assign ownership of inventions developed while discharging their contractual obligations.