The Australian Patents Office (APO) recently considered an application brought by the Royal Children’s Hospital (RCH) under sections 32 and 36 of the Patents Act 1990 (Cth) (Act). The RCH sought a determination by the APO that the RCH was entitled to the inventions that were the subject of two patent applications filed by its employee, Dr Robert Alexander.
The APO undertook an analysis of the scope of Dr Alexander’s employment duties and determined that RCH was entitled to one of the inventions, but not the other.
Following on from the 2009 Full Federal Court decision in University of Western Australia v Gray2, this decision provides an interesting insight into how the APO assesses ownership of employee inventions and, in particular, the circumstances in which an employee has a ‘duty to invent’.
In 1996 Dr Alexander commenced employment with the Women’s Children’s Health Network (a predecessor organisation to the RCH). At all relevant times, Dr Alexander was a senior scientist at the RCH.
In 2006 Dr Alexander filed two international patent applications under the Patent Cooperation Treaty; one for a viral recovery medium (First Application) and another for a well device (Second Application) (collectively, the Inventions).
The Inventions related to improvements in viral diagnostic methods and kits which could be used with a viral detection technique which was the subject of an innovation patent granted in 2001 in Dr Alexander’s name. Both the First Application and the Second Application claimed priority from Australian provisional patent applications that had been filed in Dr Alexander’s name in 2005.
In its submissions, the RCH accepted that Dr Alexander was the sole inventor of the Inventions. However the issue in dispute between the parties was whether there was an implied term within Dr Alexander’s employment contract that had the effect of transferring his rights in the Inventions to the RCH. The APO considered whether Dr Alexander conceived of the Inventions in the course of his employment and whether his employment imposed on him a ‘duty to invent’.
Applying UWA v Gray
The Full Federal Court in University of Western Australia v Gray considered the issue of employer ownership of employee inventions. We reported on this decision here.
In UWA v Gray, the Court identified that the critical question in determining ownership of employee inventions is whether the invention was conceived by the employee in the course of his or her employment in circumstances in which was his or her ‘duty to invent’. In determining whether an employee has a ‘duty to invent’ the courts will generally give consideration to the seniority of the employee’s position, the nature of the employee’s duties, whether the employee received a specific directive relating to the invention and whether there were any terms which were inconsistent with or negated the ‘duty to invent’.
In UWA v Gray, the Court found that UWA did not own Dr Gray’s inventions as he did not have a ‘duty to invent’. The evidence that indicated the absence of such a duty included that Dr Gray had freedom to choose the avenue of research he wished to undertake and to decide when and how to publish the results of his research, he had to independently solicit funding for his research and enter into collaborative agreements with external parties. The existence of these freedoms assisted in negating UWA’s assertion that Dr Gray was under a ‘duty to invent’.
The APO distinguished the facts of UWA v Gray from the facts of the present case in that Dr Alexander was not expected to (and did not) obtain external funding for his research and he was not following other avenues of research independent of those concerning the RCH. Accordingly, the APO formed the view that the circumstances of Dr Alexander’s employment did not necessarily mean that there was no “duty to invent”.
The APO’s findings
Dr Alexander’s primary role at the RCH was to maintain the Virology/Tissue Culture and Molecular Diagnostics service. He was responsible for both the quality and efficiency of the viral diagnostic work performed at the RCH. The duty statement contained in Dr Alexander’s employment contract required him to identify potential areas for improvement in the diagnostic service.
The APO found that Dr Alexander undertook research that was focused on improving the viral diagnostic techniques used at the RCH. However he did not conduct pure research or pursue individual research interests independent of those of the RCH.
The APO determined that Dr Alexander only had a ‘duty to invent’ in circumstances where there was a clear motivation to identify an improvement to the then-current diagnostic technique which arose in the course of his employment.
The APO gave two examples of such circumstances:
- where there was a recognised problem which he would have been reasonably expected to resolve; or
- where he was otherwise motivated to pursue a particular avenue of research in the reasonable expectation of identifying potential improvements.
On this basis, the APO determined that the RCH was solely entitled to the invention which was the subject of the First Application (the viral recovery mechanism), because it was the product of research which a skilled worker would undertake when trying to optimise the techniques used at the RCH. The APO directed that the First Application proceed in the name of the RCH.
However the APO determined that Dr Alexander was solely entitled to the Second Application (the well device). The APO found Dr Alexander’s employment duties did not extend to this invention as the invention was an improvement to an existing design of a microtitre tray which had been successfully used for a number of years and a substantial improvement was neither likely nor needed. Accordingly, there was no clear motivation for Dr Alexander to seek to improve on the existing design in the course of his employment.
The RCH’s IP Policy stated that any intellectual property generated by employees during the course of their employment are the property of the RCH. However the APO found that since this policy merely stated the common law position it did not assist RCH and did not affect the APO’s determination.
Federal Court Appeal
While Dr Alexander filed an appeal in relation to the APO’s decision in the Federal Court in December 2011, the matter was resolved between the parties in October 2012. The terms of settlement have not yet been made public.
Implications of the decision
The APO’s determination indicates that if an employee is found to have a duty to invent some things, it may not mean they will be found to have a duty to invent other things, even if they are within the same field.
Whether the APO’s approach to identifying the ownership of the Inventions was correct will unfortunately not now be subject to the review of the Federal Court.
However, the decision of the APO in this matter is likely to be confined to the particular facts of Dr Alexander’s employment. Clearly, determining the scope of an employee’s duties will always be critical in disputes of this nature.
Accordingly, the decision serves as a good reminder to employers to take care in preparing their employees’ employment contracts. Employers should give consideration to the description of their employee’s duties to ensure it properly captures the scope of the employee’s duties and the employer’s expectations in relation to the development of new or improved products or methods. Employers should consider the day-to-day oversight they have and direction they give to research activities of their employees. Employers should also consider entering into specific Deeds of Assignment in relation to valuable or important intellectual property.