08 September, 2009

Full Federal Court Dismisses UWA v Gray Appeal

Full Federal Court Dismisses UWA v Gray Appeal

The eagerly awaited decision of the Full Federal Court in the appeal against the first instance decision in University of Western Australia v Gray was handed down late last week. This decision has the potential to impact directly on ownership of intellectual property generated in public sector research organisations.

In April 2008, the Federal Court found that Dr Gray's duties as an employed researcher of UWA did not include a 'duty to invent', resulting in Dr Gray owning certain inventions created in the course of research he carried out while employed by UWA. This came as a surprise to most, who had believed that inventions created by employed researchers would automatically be owned by the employer as having been created within the duties of the employee.

The Full Federal Court has now upheld the decision at first instance, confirming that despite Dr Gray having been employed to undertake and organise research, his terms of employment did not include a duty to invent. Further, in the absence of an express agreement to the contrary, the Court confirmed there is no implied term in employment contracts of academic university staff that inventions created in the course employment are owned by the university. Not only was it not 'necessary' to imply such a term into employment contracts for academic university staff ('necessity' being a prerequisite for any term to be implied by law), but such a term would be inconsistent with the researcher's freedom to share and publish the results of his or her research. In other words, an implied term to this effect which is not supported by a duty of confidence would lead to the strange result that the employer would be entitled to ownership of the invention, with the employee being free to destroy the potential patentability of the invention by putting the research results in the public domain.

The Full Federal Court also placed considerable weight on the amount of time and effort devoted by Dr Gray and his team in applying for research grants and the extent of their dependence on their success. The suggested implied term would allow UWA 'to reap where various entities had sown'.

When coming to its decision, the Court recognised the special functions of Universities as publicly funded research organisations, thereby recognising the distinction between the ownership of employee inventions in universities and in private sector business entities. The Court's conclusions may therefore well have been different if Dr Gray had been employed by a privately funded entity.

The Court appeared to recognise that the result in this case may be less than ideal, stating that if 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...an express contractual régime...'

What are some of the impacts of this decision?

  • There is now a critical need for research organisations to review and put in place effective procedures and contractual terms dealing with the ownership of inventions created by employees, and to implement such procedures. With this decision the window of uncertainty which existed pending the appeal, on which many have been relying, has evaporated.
  • Expect more proactive negotiation by academic staff who become aware of this decision - commercialisation officers will need to understand the position applying for their organisation and be able to answer these issues accurately and confidently.
  • For some institutions ownership of IP in a range of existing projects and past transactions may now be open to question. Consider reviewing key projects and acting to confirm ownership arrangements before the question is asked by commercial partners.
  • For private sector organisations which rely on research conducted by Universities or other public sector research institutions, ensuring the academic partner has adequately addressed ownership of IP generated in those projects has just become even more important.

Spruson & Ferguson's Commercialisation Team acts for a wide range of University and public sector research institutions and is ideally placed to advise on this critical issue. Please contact us to discuss what steps may be appropriate for your organisation.

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