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Allens Arthur Robinson

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.

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.

The decision

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.

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Comment

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:

  • At a minimum, get full warranties from the university.
  • Require the academic to be a party to research contracts.
  • Make necessary enquiries to ensure that the university has its intellectual property ownership house in order.

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