A recent decision of the Full Court of the Federal Court of Australia (University of Western Australia v. Gray[i] (Gray) puts into question the rights that universities may hold in inventions made by their academic staff. Because Canadian law relating to the assignment of inventions from inventors to their employers is similar to that of Australia, the Gray decision is of concern to Canadian universities, and any entity that relies on rights in inventions held by universities.
Dr. Bruce Gray was the head of the Department of Surgery of the University of Western Australia ("UWA") when he made or contributed to a number of inventions in the field of cancer treatment. UWA claimed that, though there was no explicit assignment of rights in the inventions, it owned Dr. Gray's rights in the inventions by reason of an implicit term arising from the latter's employment with UWA. Dr. Gray countered that the criteria for an implicit assignment of rights in his inventions were not satisfied.
The Court quoted the following statement of English authorities on this subject which have been accepted in Australia:
The law is well settled upon the position of an officer or employee who makes an invention affecting the business of his or her employer. It is an implied term of employment that any invention or discovery made in the course of the employment of the employee in doing that which he is engaged and instructed to do during the time of his employment, and during working hours, and using the materials of his employers, is the property of the employer and not of the employee. Having made a discovery or invention in course of such work, the employee becomes a trustee for the employer of that invention or discovery, and he is therefore as a trustee bound to give the benefit of any such discovery or invention to his employer. But the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship. And that is so even if the invention is germane to and useful for the employer's business, and even though the employee may have made use of the employer's time and resources in bringing the invention to completion. Certainly, all the circumstances must be considered in each case, but unless the contract of employment expressly so provides, or an invention is the product of work which the employee was paid to perform, it is unlikely that any invention made by the employee will be held to belong to the employer.
The Court sided with Dr. Gray, noting that, though his duties included undertaking research (which could result in inventions), he had considerable freedom in choosing the line of research and was not obliged to direct his efforts to creating inventions. In short, he had no duty to invent.
The Court was strongly influenced by the special nature of a university. Beyond the freedom to choose a line of research, academic staff are also encouraged to publish the results of such research. This demonstrates that academic staff are not subject to implicit obligations of confidentiality with regard to their research, as would normally be the case for employees of for-profit corporations. Of course, public disclosure of an invention can deprive the owner of the right to obtain a patent. The Court found it difficult to accept an implicit assignment of rights in inventions to the university without an accompanying obligation to refrain from making disclosures that would deprive the university of the benefit of such inventions.
As indicated above, the applicable law in Canada is similar to that in Australia. It has been stated as follows:
[T]he mere existence of an employer-employee relationship does not per se disqualify an employee from patenting for his own benefit an invention made by him during the course of his employment, even though the invention's subject-matter may be useful for his employers in their business. This is so, even though the employee may have made use of his employer's time and co-employees and material bringing his invention to completion and he may have allowed the employer to use the invention while in their employment. .
The only exceptions to the presumptions which favour the inventive employee, are: (1) an express contract to the contrary; or (2) where the person was employed for the express purpose of inventing or innovating. . Although a more senior employee may have a duty of good faith toward his employer, this notion alone does not impede the employee from claiming that the invention is his own. The court should consider the nature and context of the employer-employee relationship, such as:
whether the employee was hired for the express purpose of inventing;
whether the employee at the time he was hired had previously made inventions;
whether an employer had incentive plans encouraging product development;
whether the conduct of the employee once the invention had been created suggested ownership was held by employer;
whether the invention is the product of the problem the employee was instructed to solve, i.e., whether it was the employee's duty to make inventions;
whether the employee's invention arose following his consultation through normal company channels (i.e., was help sought?);
whether the employee was dealing with highly confidential information or confidential work;
whether it was a term of the servant's employment that he could not use the ideas which he developed to his own advantage. (Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) 29 at 52-4 (F.C.T.D.) [references omitted])
In view of this authority, it seems likely that a Canadian court faced with facts similar to those in Gray would reach a similar conclusion. Not only is the law concerning ownership of employee inventions similar, but the special nature of a university and its relationship with its academic staff are comparable in Canada.
Therefore, it is important that Canadian universities that wish to take rights in inventions made by their academic staff ensure that an explicit assignment of rights is in place. The most direct manner of achieving this is an assignment signed by the inventor(s) that identifies the invention. Another approach is to have a general assignment of rights in inventions included in employment agreements with academic staff. Many universities have an intellectual property policy that provides for the ownership of rights in inventions made by academic staff. However, to the extent that such a policy purports to assign some or all of an academic inventor's rights in an invention, it is important that there also be some indication that the policy has been accepted by the academic inventor. One possibility is the inclusion in employment agreements with academic staff of a clause providing that they have read, understood and accepted the various policies of the university, including the intellectual property policy.
As indicated at the beginning of this article, this issue of proper assignment of rights from academic staff to the university-employer should be of concern not just to universities, but also to any entity that relies on intellectual property rights held by a university. For example, a licensee or prospective licensee of a university's rights in an invention will want to ensure that it is obtaining the licence from the real holder of the rights. Also, a financial institution that is considering making a loan to such a licensee or someone who is considering a purchase of equity in the licensee, relying on the value of the licence, would be wise to seek a similar assurance.