INSIGHT

Make sure your IP doesn't end up in the bin!

By Miriam Stiel
Industrials Intellectual Property Patents & Trade Marks

In brief

A recent Australian Patent Office decision is a salient reminder to carefully assess the contribution of all those involved in design projects, so as to identify who is an inventor. Failure to do so can have serious consequences down the track, affecting the ownership of an invention and the ability to commercially exploit its IP. Managing Associate Tracey Webb reports.

Background

The facts in Khoury v Sherrard [2018] APO 20 were as follows. To combat smells emanating from open wheelie bins, the Sherrards conceived of a device that could bias the hinged lid in a closed position. They approached Form Designs Australia Ltd (FDLP) with their prototype, and a brief to design a mechanism that would be quick and easy to attach. The Sherrards and FDLP signed a service contract, which stated the Sherrards would own any IP arising from the design project, but only after entering into a royalty agreement with FDLP. Mr Khoury, of FDLP, subsequently developed two versions of a bin closer (the Khoury device) in line with the Sherrards' brief.

The Sherrards applied for patent protection for the bin closer (through their company, Sherrards Pty Ltd) and included drawings based on the Khoury device in the patent specification. The patent application named the Sherrards as the two inventors. About a year later, the relationship between them and FDLP soured, without a royalty agreement being established.

The dispute

Mr Khoury applied to the APO to be added as an inventor and co-applicant of the patent application. The Hearing Officer needed to determine whether he was an 'eligible person' who could be granted a patent for the invention under s15 of the Patents Act 1990 (Cth).

In applying the test established in University of Western Australia v Gray [2009] FCAFC 116, the Hearing Officer:

  • assessed the inventive concept, finding that it was a self-closing device embodying the features of the Khoury device;
  • determined that conception of the inventive concept occurred when FDLP actually produced the drawings; and
  • held that both the Sherrards and Mr Khoury were responsible for the inventive concept and were therefore co-inventors, since without the contribution of each, the inventive concept would not have been conceived.

As no royalty agreement was ever entered into, Mr Khoury's rights as a co-inventor were never transferred to the Sherrards' company. As a consequence, he was held to be an eligible person, along with the Sherrards.

Implications

Mr Khoury may now be added as a co-applicant of the patent application and thus acquire equal rights with the Sherrards to exploit the invention. This means neither party can license or assign the patent application without the other's consent.

This case is a timely reminder to ensure that collaborative arrangements are established within a proper legal framework and that assignments of IP from contractors do not depend on subsequent actions.