Universities—and companies dealing with universities in the commercialisation of intellectual property—will need to review how universities have the rights to intellectual property developed by academics.

This follows the recent decision of the Full Federal Court which confirmed Justice French’s decision in University of Western Australia v Gray that Dr Gray owned the intellectual property in the inventions he created while employed by the University.

Summary and implications

The decision relates to the ownership of inventions, and patents for such inventions, which Dr Gray, Professor of Surgery, developed while employed by the University. There was no express ownership clause in Dr Gray’s employment contract with the University.

The court confirmed that Dr Gray owns the intellectual property rights in the inventions made wholly or in part by him during his employment with the University on the basis that:

  • Dr Gray did not have a duty to invent
  • there was no effective express term in Dr Gray’s contract about IP ownership—the reference to the University’s Patent Regulations was not effective
  • there was no implied term in Dr Gray’s employment contract that UWA owned the IP, and
  • Dr Gray did not owe UWA a fiduciary duty.

In brief, the decision means that:

  • universities may need to review their employment contracts on ownership clauses, and whether their IP regulations are valid and in practice, and
  • companies dealing with universities or academics should consider ways to ensure ownership issues are clear and not contested.

We comment below on the ownership issues discussed by Justices Lindgren, Finn and Bennett.

No implied term of employment contract

The court held there was no implied term in Dr Gray’s employment contract that UWA owns the intellectual property that Dr Gray creates in the course of employment. The primary factors influencing the court’s decision were:

  1. the court’s finding that Dr Gray had no duty to invent. The Full Federal Court agreed with Justice French that the duty to research did not amount to a duty to invent, even though the research carried with it a possibility of developing inventions capable of patent protection.
  2. Dr Gray had freedom to choose the line of research and freedom to decide when and how to publish the results of research. The court contrasted this with an implied duty of employees in private sector companies to obey all reasonable instructions of an employer and to maintain secrecy of confidential information generated in the course of employment.
  3. Dr Gray and others were expected to solicit funds for research and spent time and effort in applying for research grants. The Full Federal Court commented that if there was an implied term, UWA would be allowed ‘to reap where various entities had sown’.
  4. There was a need for Dr Gray to enter into collaborative agreements with external organisations, given the research he was doing. The Full Federal Court viewed this in contrast with the exclusive ownership to the UWA from an implied term.

The court distinguished the ownership of employee inventions in universities and in private sector entities. The court stated the different aspects including those discussed above highlights why the university/staff relationship differs from a private sector employment relationship that attracts the implied term for employee inventions.

Fiduciary duty

The University had also argued that Dr Gray had a fiduciary obligation to the University, which derived from his employment. The University argued that this included that Dr Gray had to protect and preserve UWA’s property rights and not to make any secret profit or payment from any third party.

UWA’s argument on fiduciary duty depended on the success of the implied term that UWA owned the invention. This ground failed given the court found that UWA did not establish it had rights in the invention from the implied term.

Patent and IP Regulations

UWA also unsuccessfully argued that the Patent Regulations and later IP Regulations were relevant to the claim against Dr Gray. The terms of Dr Gray’s employment contract made Dr Gray subject to University of Western Australia Act and regulations.

  • The Regulations included that UWA owns all IP developed by its staff. The court found the Regulations were beyond UWA’s regulation making power and therefore invalid.
  • UWA argued Dr Gray had breached his employment contract by failing to notify and report the patent developments to the Vice-Chancellor. One of the terms in the Patent Regulations included an obligation on an academic to disclose patentable inventions to the Vice-Chancellor who would then disclose it to the Patents Committee. However, this ground also failed. The Patent Regulations had not been promulgated as required by the legislation and UWA had earlier abandoned the Patents Committee.

The court did stress it was a narrow basis on which the matter was contested and decided. However, given the importance of ownership, universities and companies dealing with universities may need to carefully consider who owns inventions arising out of research to ensure commercialisation can successfully occur.