Patent rights for an invention can be challenged if ownership is not ‘rock-solid’. Written agreements play an important role in determining ownership and patent rights to an invention, and use of the patent in commercialising the invention. This article briefly considers each of these issues.

Invention Ownership

Common law principles dictate that an inventor (who must be a natural person) is the owner of his or her invention (or inventive input), unless there is an agreement to the contrary. Where there is no such agreement in place, determining ownership is usually straightforward, provided that the issue of inventorship itself is not in question.

However, complications can arise if there is in fact an agreement to the contrary or there could be an agreement to the contrary, particularly if the agreement is verbal as opposed to written. Complications will most definitely arise if one party has an expectation of there being an unspoken agreement in place, which the other party ought to realise and respect. This frequently happens when engaging a consultant to develop or improve on an invention. The issue of ownership is often not even addressed at the outset and, after development of the invention, each party expects to own that invention or inventive input.

The issue of ownership can sometimes become complicated even in cases where there is a written agreement in place. For example, an employee develops an invention whilst under an employment agreement, and the invention is developed during normal working hours using some of the employer’s resources. In this scenario does the employee or employer own that invention?

This scenario was considered and resolved to some degree in University of Western Australia v Gray [2009] FCAFC 116 (‘the Gray decision’). Dr Gray was a full-time employee of the University and was required by the terms of his appointment to teach, conduct examinations, direct and supervise work in this field, undertake and organise research, and generally stimulate research amongst the staff and students. During the term of his employment Dr Gray also developed technologies for which he filed patent applications in his own name.

The Federal Court found that Dr Gray did not have a duty to invent and held that whilst Dr Gray was employed by the University and owed a fiduciary duty to the University, he did not breach this fiduciary duty as the University failed to establish, from the terms of appointment, that it had rights in the developed technologies. The Court denied that the employer-employee relationship provides an automatic right that any inventions created by employed researchers is owned by the University.

Patents for Inventions

Under the Australian Patents Act 1990 (Cth) (‘the Act’), a patent for an invention may only be granted to a ‘person’ (being a recognised legal entity such as a natural person or company) who:

(a) is the inventor; or

(b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or

(c) derives title to the invention from the inventor or a person mentioned in (b); or

(d) is the legal representative of a deceased person mentioned in (a), (b) or (c).1

Each inventor must be identified on the patent application as well as each patent applicant and/or nominated person. Moreover, each applicant and/or nominated person must be entitled to the invention. The Patent Office requires that a notice of entitlement be filed prior to acceptance of a patent application, noting the entitlement of each applicant and/or nominated person to the invention from each inventor.

With regards to patent co-ownership, the Act states that, subject to any agreement to the contrary, where there are 2 or more patentees:

(a) each of them is entitled to an equal undivided share in the patent; and

(b) each of them is entitled to exercise the exclusive rights given by the patent for his or her own benefit without accounting to the others; and

(c) none of them can grant a licence under the patent, or assign an interest in it, without the consent of the others.2

Furthermore, where a patented product, or a product of a patented method or process, is sold by any of two or more patentees, the buyer, and a person claiming through the buyer, may deal with the product as if it had been sold by all the patentees.3

In the case of co-ownership, disputes between owners can arise as to how a patent application should proceed or how the patent should be dealt with – for example, with regards to the grant of licences. In such instances, direction can be sought from the Commissioner of Patents, and the Commissioner of Patents can direct co-owners as to how the matter should be resolved, but such directions must not be at odds with the existing terms of agreement between the owners.4

Under the Act, ownership of a patent application can be disputed, as can a granted patent.5 In such disputes, generally the parties provide their evidence to support their position, and a hearing is set by the Commissioner of Patents to consider the evidence and provide a ruling. In such cases, any and all pertinent written and/or verbal agreements between the disputing parties are carefully scrutinised by the Commissioner of Patents. Verbal agreements may be difficult, if not impossible, to substantiate, when compared with written agreements.

Therefore, when developing, patenting and commercialising an invention, the best practice is to have one or more written agreements in place addressing each of these matters.

Key Takeaways

  1. Ensure that each inventor of an invention is identified.
  2. Check that the ‘owner’ of the invention is in fact entitled to it. If in doubt, use a written agreement (even if there is an employment agreement in place).
  3. Ensure that a written agreement is in place addressing invention ownership, particularly when dealing with third parties, such as consultants.
  4. Check the terms of your employment agreement and update invention ownership and other intellectual property clauses if required.
  5. Agreements with commercial partners/invention co-owners should be in writing, and should contain clauses dealing with invention ownership, patents, exploitation and commercialisation, as well as dispute resolution.