On 17 July 2014, the Supreme Court confirmed that when deciding whether an employee or employer owns patent rights for research work carried out by an employee, one must consider (i) whether the work was carried out in the course of the employee's duties; and (ii) whether there were any relevant agreements in relation to the sharing of intellectual property.
An employee ("E"), of a company, ("C"), applied to be the sole creator of a new utility model patent based on research gathered when he was employed at C. Prior to the application for the patent, the chairmen of C had shared with E a number of ideas and opinions on new products. E used employees of C to assist with elements of the production, design and research and the expenses of the application were paid by C. E and C had previously entered into a contract stating that if C's resources were used for E's research, any results of the research would be shared between the parties.
After the patent application was made, C claimed that the patent rights should vest in it as E had created the invention in the course of his duties as an employee, or, in the alternative, should be shared between E and C as agreed beforehand. The case was referred to the IP Court and heard on 14 November 2013.
The IP Court held that the invention was not completed in the course of E performing his duties as an employee. The assistance provided by C and its employees was either conceptual, inessential to the end product or procedural and administrative work not related to the research/invention itself. Further, the IP Court found that the wording of the contract was not sufficient to justify joint ownership of the patent rights. As a result, the IP Court rejected C's claims.
On appeal, the Supreme Court overturned the IP Court's decision. The Supreme Court disagreed with the IP Court's ruling that there was no joint ownership of the patent rights, as the relevant contractual wording has expressly provided that the parties agreed to share the results of the research. The Supreme Court also held that there was clear evidence of useful assistance given to E by C throughout the course of the invention. The Supreme Court remanded the case back to the IP Court where it will be retried.
The practical effect for employers
The right to apply for a patent and related patent rights in an invention or design created by an employee, in the course of performing his or her duties, is ordinarily vested in their employer. However, if there is an agreement which provides otherwise, the terms of that agreement will prevail.
Employers should ensure, therefore, that their intellectual property is appropriately and properly safeguarded by properly drafting agreements and including express clauses in relation to intellectual property with the employees' employment contracts. Further, to minimise the practical effect of employees asserting proprietary rights over such inventions, contracts with both employees and third parties should be drafted to include (i) an express agreement regarding the ownership of intellectual property (especially when the resources of the employer are used); and (ii) a non-competition clause.