GLOBAL: Who owns IP, university or researcher?

The question whether a university or its employees own the intellectual
property in inventions is not a new one. With the increasing commercialisation of universities, it is not going to become any easier.

To some extent, a recent decision by the Federal Court of Australia in the University of Western Australia v Gray provides some guidance on the issues involved; if it does not provide an automatic answer to all cases where the question arises, it at least gives a clear guide to individuals and institutions as to what they should not do and what they should try to do to protect their positions.

In short: do not rely on implied terms being read into a contract of employment and do make sure that as far as possible, a written contract of employment sets out precisely the rights and duties of institutions and employees and who will be entitled to intellectual property in inventions and other products of the work of the researcher.

The University of Western Australia, so far, has lost its claim to the intellectual property in Gray's inventions, as it lost before the trial judge and has now lost in the Full Court on appeal. As in all cases, the result depended on the facts of the case and the light that those facts threw on the implications to be read into the contract of employment between the parties.

The facts

Dr Bruce Nathaniel Gray was a full-time professor of surgery at the university and was engaged on clinical work at the Royal Perth Hospital, teaching and research. Some 70% of his salary was paid by UWA and 30% by the hospital. He had a contract of employment in writing with UWA that required him, as such contracts did for its professors, "(a) to teach, to conduct examinations and to direct and supervise the work in his field; and (b) to undertake research, to organise research and generally to stimulate research among the staff and students".

A particular interest of Gray was the treatment of liver cancer and to that end he had invented certain processes for its treatment while employed as professor of surgery and he had taken steps to have them patented.

The UWA claimed that these inventions were made by Gray and other academic researchers working with him in the course of his employment and that as a consequence it owned the inventions and the intellectual property in them.

The benefit of the commercial exploitation of the inventions was therefore said to belong to the university which was also said to be entitled to shares in the company that had been set up for that purpose.

For some time, UWA had believed it had a right to some of the intellectual property in Gray's inventions being exploited, but it had not been resolute in pursuing such a claim until it brought the present claim.

UWA's case against Gray and the company exploiting the inventions was that there was an implied term of Gray's contract of employment to the effect that intellectual property developed in the course of his employment with UWA belonged to the university.

The issues

The first question was whether there was an implied term in Gray's contract to the effect that inventions made during his employment belonged to the university. It was clear there was no such express clause and the university conceded that, nor was there an implied "duty to invent".

However, there was a duty to engage in research which included "a duty to make advances in the art" which was, in fact, a duty to invent. But was there an implied term?

The test, the court said, was "one as to whether the terms agreed by the parties to the contract are inconsistent with, or negate, the implied term. The opponent of the implication bears this onus. The present case is of the former variety".

The court held that there were several circumstances of Gray's employment that went against the implication necessary to establish UWA's property rights. They were:

* The absence in the contract of any duty to invent anything; "... he had not been engaged to use his inventive faculty in an agreed way or for an agreed purpose, for UWA's benefit.

"While his duty to research was in an applied science, it cannot for that reason be transformed into a duty to invent, notwithstanding that his actual research, in fact, carried the possibility of developing inventions capable of attracting patent protection." Nor did his contract "...even require him to perform tasks from which inventions might result. The subject matter and the manner of discharge of his duty to research were in his discretion."

* When his contract was properly interpreted, it was seen that he had freedom to publish the results of his research discoveries he made and any invention developed during that research, notwithstanding that such publication might destroy the patentability of the invention.

Nor was he obliged to protect by non-disclosure the patentability of any invention he developed in the course of his employment. This militated against there being an implied obligation to do nothing prejudicing the university's rights to an invention.

* The extent to which Dr Gray, as a researcher and those working with him, were expected to be entrepreneurs and solicit funds for their research, including the development of inventions, from sources outside UWA. In other words, an implied term of the sort claimed by UWA seems inconsistent with the expectation that he would find his own research money.

* The necessity, consistent with research of the kind he was doing, to enter into collaborative arrangements with other institutions. Again, this tended to weaken any notion that he was employed to invent for the benefit solely of UWA.

It was also pointed out that Gray was not pursuing the commercial purposes of the university; he did not have to invent anything; he had a duty to undertake and stimulate research among staff and students at UWA. He was working for a university, which was different from working for a commercial employer where any inventions made in the course of his employment could benefit or affect the business of the employer.

In contrast, Gray was not required to advance a commercial purpose for UWA. This was "a central pillar" in the argument because of "the distinctiveness of a university such as UWA and of academic employment in it as considerations relevant to the determination of the 'threshold question'."

UWA has sought to circumvent the trial judge's conclusion by arguing that "... although Gray was entitled to determine the subject and manner of his research, if what he chose to do required him to bring his inventive faculty to bear, then the doing of that research should, it is said, be regarded as that which he was engaged to do and for which he was paid.

Any invention resulting from his so doing should, in consequence, attract the implied term (of the contract of employment). But such an argument, the court said, was "untenable" because it was "not what Gray's terms of employment required; there is no "necessity" for it being implied by law into the employment contracts of university academic staff; and, importantly, it is inconsistent with the researcher's freedom to share and to publish research results".


The trial judge's conclusion that UWA failed at the threshold point was therefore held to be correct. The court however recognised that this might not be the end of the argument or perhaps that it was not even the best result.

Accordingly, "(i)f a less crude and more fair and reasonable result is to be achieved which balances the respective interests of a university and its academic staff members, this will need to be done by or under legislation or, if it could be devised, by an express contractual régime appropriate to the circumstances of the individual case."

The history of governments and legislatures responding to invitations like this from courts to pass special legislation is not encouraging. It is of course possible, but unlikely, that legislation will solve the issue before more problems arise. Accordingly, by far the better course for institutions and individuals is to concentrate on drawing contracts of employment that accurately embody what the parties want and what they have agreed on as to the ownership of the intellectual property in inventions and similar achievements of university staff.

* Neil Brown QC is an arbitrator and mediator with a Melbourne law firm.