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Focus: Intellectual Property – July 2008
Are contracts with universities in disarray?
In brief: The
Federal Court recently decided that the intellectual property in inventions made
by a university professor employed to conduct and stimulate research was owned by the professor
– not the university – because he was under no duty to
make inventions. Partner Richard Hamer (view CV) and Articled Clerk Harry Evans report.
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How does it affect you?
- In the absence of a duty to invent, the
academic (and not the university) owns the right to sell the
intellectual property.
- The decision exposes problems for the University of Western
Australia and other universities relating to employment contracts,
research contracts, statutory powers, regulations and intellectual
property management.
- There is further danger for third parties contracting with
universities for research as they may not get the intellectual property
they had expected to gain and for which they believed they had
paid.
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In University of Western Australia v Gray (No
20) [2008] FCA 498, Justice French considered the ownership of intellectual
property rights in inventions made by Professor Gray of the University of
Western Australia (UWA). Dr Gray had
been employed by UWA to conduct and stimulate research into the treatment of
liver cancer. Through this research, Dr Gray made a number of inventions, which
were acquired by Sirtex Medical Limited for commercial purposes. UWA initiated
proceedings against Dr Gray and Sirtex, arguing that there was an implied term
in Dr Gray's contract of employment that intellectual property developed in the
course of his employment belonged to UWA.
Justice French found that inventions made by academic staff during research,
whether or not they used university resources, would ordinarily belong to the
academic staff. His Honour found that, although Dr Gray's inventions were made
within the scope of his employment, there was no duty to invent. This meant
there was no implied term in the contract that the rights to Dr Gray's
inventions belonged to UWA. In deciding that there was no duty to invent,
Justice French placed particular emphasis on:
- the absence of an express duty to invent;
- Dr Gray's freedom to publish the results of his
experiment, notwithstanding that such publication might destroy patentability;
- the extent to which Dr Gray, as a researcher, was
expected to solicit funds for his research; and
- Dr Gray's need to enter into collaborative agreements with external
organisations, such as the CSIRO.
UWA also sought to rely on the university's intellectual property regulations
and fiduciary obligations owed by Dr Gray to retain ownership of the
intellectual property in Dr Gray's inventions.
Justice French found that, under the University of
Western Australia Act 1911 (WA) (The UWA Act), the university's intellectual property regulations only
applied to rights that it had an interest in, or was entitled to, under the
relevant law. Since the law gave UWA no interest in Dr Gray's invention, there
was no subject matter over which the intellectual property regulations could
operate.
In relation to fiduciary duties, Justice French found that Dr Gray had not
breached his fiduciary obligations because UWA's case rested on the assumption
that Dr Gray was dealing for his own benefit with rights owned by UWA. Since UWA
held no rights or interests over the inventions, there was no breach of
fiduciary duty.
UWA has appealed the decision.
Justice French's decision is quite anachronistic
and appears to be rooted in 19th century British concepts, which saw academic
research and invention as two different fields. One was an 'ivory tower'
occupied by pure academics, the other a workshop occupied by practical workmen
of industry. This aspect of the decision is quite out of touch with modern
scientific research practices, where research and invention are usually two
aspects of the same work performed by the same people.
The lesson for
universities is that they should ensure that academic contracts contain
provisions that deal with any intellectual property produced by the academic,
and that university intellectual property regulations are in force and operate
within the scope of the enabling legislation.
Third parties dealing with universities and academics for research,
where the third party expects ownership or licence rights in the resulting
intellectual property, should take one or more of the following steps:
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At a minimum, get full warranties from the
university.
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Require the academic to be a party to research
contracts.
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Make necessary enquiries to ensure that the university has its
intellectual property ownership house in order.
For further information, please contact:
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