Entitlement Issues with Multiple Inventors and Joint Patentees

This article first appeared in The Watermark Journal Vol 23 No 3 (September 2006) 

A recent case highlights the importance of correctly identifying inventors, and ensuring that applicants and patentees are legally entitled to the grant of a patent in Australia, especially in cases of joint applications arising from the contributions of multiple inventors.

The Facts
The case of Conor Medsystems, Inc. v The University of British Columbia (No. 2) [2006] FCA 32 was decided by Justice Finkelstein under Order 29 of the Federal Court Rules, which allows an interlocutory decision to be issued by way of a separate question pertinent to the outcome of an existing matter before the court. In this case, the question for consideration related to the validity of the patents in suit on the basis of certain assumed facts.

The patents in suit were granted jointly to Angiotech Pharmaceuticals, Inc (“Angiotech”) and the University of British Columbia (“UBC”). Each patent named five inventors, and UBC claimed to be entitled as joint patentee with Angiotech from only two of those inventors, Helen Burt and John Jackson. Under the facts assumed by Finkelstein J for the purposes of the decision, and as alleged by Conor, UBC was not entitled to the grant of the patents because neither Burt nor Jackson were inventors of the claimed invention.

The question to be answered under Order 29 was whether in these circumstances the patent could be revoked pursuant to section 138(3)(a) of the Patents Act 1990 (“the Act”).

The Decision
Section 138(3)(a) of the Act provides that a court may revoke a patent where “the patentee is not entitled to the patent.” The decision turned primarily on the interpretation of the singular “patentee”, and the requirements for entitlement in the case of joint applicants deriving title from multiple inventors.

Section 15 of the Act defines the persons to whom a patent may be granted; namely “the inventor” or (relevantly for present purposes) a person who “derives title” from the inventor. Justice Finkelstein examined the history of section 15 at length, arguing that under English law the “true and first inventor” had originally encompassed both a person who originated a new discovery and an importer of new knowledge “into the realm”. It also allowed a patent to be granted to several persons even if only one of them was the “true and first inventor”. The rationale for this latter concession was said to be to enable a “capitalist” to obtain an interest in a patent from the outset, in return for an advance of funds to a “needy inventor”.

However, the first Australian Commonwealth patents statute, the Patents Act 1903 (“the 1903 Act”) incorporated an intentional break with English law, which was by that time thought to be archaic in view of improvements in transport and communications. The 1903 Act replaced the term “true and first inventor” with “actual inventor”, being the term used in the US legislation to mean “the person who has discovered a thing”, with the express purpose of gaining the benefit of relevant US decisions. Interestingly therefore, Justice Finkelstein concluded that the notion of “inventorship” in Australia owes more to corresponding US law, at least post 1903, than to the English law.

The three principles which Justice Finkelstein concluded must follow from a review of the relevant US decisions are:

• that a valid patent can only be granted to the real inventor, and that if there is more than one inventor it must be granted to all; 
• that, in the case of a joint invention, a patent granted to only one of the inventors is void; and
• that a patent issued in the names of joint patentees will, unless all of them are the inventors, also be void.

It seems that the same principles should apply, mutatis mutandis, where one or more of joint patentees derives title from one or more actual inventors.

Justice Finkelstein therefore concluded that the answer to the question under Order 29 was that, yes, in the assumed circumstances the patents in suit were subject to revocation by the court. Additionally, while not deciding the point, His Honour suggested that the relevant time for assessing entitlement is at grant, and that in most cases non-entitlement would not readily be correctable post-grant.

Discussion
This decision highlights the care that must be taken with regard to identification of inventors and entitlement, particularly in cases having joint applicants. This is not the only disadvantage of joint applications; other issues relate to a generally undesirable default division of rights and responsibilities of joint applicants under the Act. While all such issues may be dealt with by execution of a suitable agreement amongst the parties, it remains that it is often preferable to vest all rights in a single entity, such as a joint venture company, to which the patent may be granted.

Despite the attention given by Justice Finkelstein to the US origins of the concept of inventorship under the Act, Australian law remains quite different in many respects to the US statute which, for constitutional reasons, embodies a particular focus on the rights of the inventors themselves. By contrast, the primary focus of the Australian Act is upon entitlement, and a patent cannot be revoked merely because of an incorrect identification of inventors (in the absence of something more, such as fraudulent intent), so long as all patentees can demonstrate entitlement to the grant of the patent.

For example, in the common circumstance in which an invention is made within the bounds of the employer/employee relationship, the inadvertent inclusion of a non-inventor or exclusion of an inventor amongst the employees, while undesirable, should not result in a fatal lack of entitlement on the part of the employer. Furthermore, if according to the recommendation above, had Angiotech and UBC both assigned their rights to a single joint venture entity as sole applicant and patentee, it seems likely that the patents in suit would not be subject to revocation, since the sole patentee would derive title by virtue of the assignment from Angiotech, notwithstanding that the assignment from UBC may be ineffective.

Appeal
This decision was appealed and heard by the Full Federal Court on 17 and 18 May 2006. At the time of writing, the decision has yet to issue. The outcome will be reported in a future edition of the Journal.

Conclusion
Most entitlement problems are readily corrected prior to grant, under section 113 of the Act. Accordingly, regardless of the outcome of the appeal, it will remain Watermark’s practice to confirm entitlement details prior to acceptance of an application. We encourage our clients to take all due care when responding to our requests for details of entitlement.