IP ownership in the academic sector: a new perspective

A recent decision by Justice French of the Federal Court that the University of Western Australia (UWA) had no claim to certain intellectual property created by Professor Bruce Gray has provoked heated debate over the ownership of patents in the university and research community (University of Western Australia v Gray (No 20) [2008] FCA 498). UWA has sought leave to appeal the decision. However, regardless of the outcome of the appeal, the case raises many important issues for commercialisation in the academic sector.

The technology in question was the use of microspheres to target a radioactive payload to kill liver cancer cells, while sparing normal liver tissue. The microspheres, which deliver “selective internal radiation”, became known as SIR spheres and are now successfully marketed by Sirtex Medical Ltd, which floated on the Australian Stock Exchange in 2000.

UWA sued Gray and Sirtex, seeking ownership rights in the intellectual property. During the case, more than 20 years of evidence from the commencement of Gray’s appointment at UWA as professor of surgery in 1985 to the development and commercialisation of the cancer therapy was examined.

No assignment agreements existed between UWA and Gray or Sirtex - therefore, the court initially looked to the University of Western Australia Act 1911, the Patents Act 1990 and common law decisions to see if they were relevant to the transfer of ownership in the intellectual property.

The UWA Act defines how statutes and regulations can be made by UWA. Notably, the UWA Act stipulates that a new regulation can come into force only from the date when it is promulgated. Although there was much discussion during the case about the date of promulgation of the IP regulations, this was ultimately futile in light of the judge’s decision that UWA could not acquire ownership of intellectual property purely through its statutes and regulations. The regulations provided a procedure “to enable the orderly identification” of intellectual property; however, the judge found that the regulations alone were insufficient to acquire or transfer IP ownership from employees to the university.

Similarly, the Patents Act 1990 includes no mechanism for an employer to attain ownership of an employee’s inventions. Therefore, the judge reviewed previous court decisions in Australia and around the world. He concluded that, in the absence of an assignment agreement to the contrary, an employer would generally own inventions made by employees during the course of their employment.

So, did Gray make inventions “during the course of his employment”? If so, the prevailing common law would say that UWA had a valid claim to ownership. Gray and the various members of his team were employed under contracts which included obligations to teach, undertake research and stimulate research among staff and students. The judge was of the opinion that, even though inventions could reasonably be expected to arise from research, a duty to research does not equate to a duty to invent. This notion was particularly raised in reference to the university academic environment where the concept of ‘academic freedom’ involves the free exchange of results, and commercialisation is a by-product. Gray’s results were published, patients were treated with new techniques and the entire research focus was on getting better results when treating those patients. Thus, the court concluded that this environment was inconsistent with the secrecy required for patenting inventions.

The judge stated that he did “not consider as a general proposition that there is a presumption at law that the university will be entitled to the rights of inventions developed by such [academic] staff in the course of their research” and that Gray “had no duty to invent anything”. Even if there had been an explicit statement in the contract of employment that inventions made during the course of employment belonged to the university, this would not have been enough. Ultimately, it appeared that the “evidence was insufficient to establish that the inventive concept… was developed by Dr Gray while he was an employee or in the course of his employment at UWA”.

The decision may cause some alarm among the university community and prompt a review of university legislation, regulations and employment contracts. The case underscores the importance of ongoing vigilance in creating and maintaining processes for rigorous intellectual asset management in the academic sector.

A final take-home message from the judge:

“[U]niversities might well consider the alternative of deriving benefits from inventions produced by their staff by offering highly competent and experienced commercialisation services in exchange for a negotiated interest in the relevant intellectual property.”

This article first appeared in BioTechnologyNews.net.