Title to inventions: University of WA v Gray

Summary

To increase the likelihood that employers can claim title to any inventions created by their employees, their employment contracts should expressly state:

• the role of the employee includes a duty to invent; 
  
  
• that any existing and future intellectual property rights in inventions are assigned to the employer; and
  
  
• that the employee must do all things reasonably necessary to give effect to the assignments.

The decision of the Federal Court of Australia in University of Western Australia v Gray (No 20)¹, clarifies the scope for employers to rely on implied terms in employment contracts to enable ownership over any inventions created by employees.

Absent express contractual provisions, in determining whether an employer will own the intellectual property instead of an employee, the court will closely examine the role of the employee.

Only when an employee is engaged or instructed “to invent” can it be implied into their employment contract that the employee’s inventions or discoveries are the property of the employer. 

Background facts

Dr Gray was a full-time employee of the University of Western Australian (UWA) for the purpose of stimulating research relating to the treatment of liver cancer. Dr Gray made various discoveries as a result of this research, including the ability to inject anti-cancer cells into tumours.

Dr Gray developed these ideas further with the help of Sirtex Medical Limited (Sirtex), a publicly listed company, of which Dr Gray was a major shareholder and director.  Patents for these inventions were filed in the names of Dr Gray and other related parties. No patent was filed in the name of UWA.

UWA initiated legal proceedings, arguing that, as the patents had not been filed in the name of UWA, Dr Gray breached:

• his employment contract;
  
  
• UWA regulations; and
  
  
• his fiduciary duties to UWA.

The decision - summary of legal issues

The Court found against UWA for the following reasons:

• there was no implied term in Dr Gray’s employment contract that UWA was the owner of inventions which Dr Gray was not obliged to create under that contract.  Dr Gray’s employment contract obliged him to organise and stimulate research, not invent. Relevantly, Dr Gray was also expected to secure funding for his research from external sources to UWA.
  
  
• UWA’s regulations which directed employees to make patent applications in UWA’s name and authorised UWA to unilaterally acquire its employees’ property rights were unenforceable.
  
  
• Dr Gray was found not to have breached any fiduciary duties owed to UWA to protect and preserve UWA’s rights, as the invention or discovery did not belong to UWA in the first place.

Implications

This ruling illustrates the point that a court will be unlikely to imply a term into an employment contract to secure property rights over an employee’s invention in favour of the employer if the employee’s role does not include a duty to invent.

UWA has appealed the decision.  Hall & Wilcox will provide an update once the decision is handed down.