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UWA v Gray anatomises universities and IP

By Peter Jorm - posted Thursday, 27 February 2014


Background

Universities may once have been communities of scholars that served society by acting as storehouses of knowledge, extending it and disseminating it through instruction to, and supervision of students.

Those days would appear to be largely over in Australia. Universities now are the vassals of government funding, and much of their work, and, in particular, research is directed by governments and industry.

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One way of adapting to this change is for universities to seek supplementary funding by making claims on the intellectual property (IP) created by staff and by entering commercial agreements with outside companies to exploit that IP.

The issue of the ownership of staff-created IP and its commercialisation was central to the decision in University of Western Australia v Gray ([2009] FCAFC 116 (3 September 2009) and has substantial implications for university and staff rights to IP.

The Basic Rule

The common law position regarding the ownership of IP is that IP created by staff belongs to the employer.

This is reasonable. The employer provides the staff salary and the facilities whereby the IP is created. The employer may well employ the staff for the express purpose of creating IP.

The 'Group of Eight'

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Tertiary institutions have their policies on IP expressed in statutes, regulations or policy documents. There are far too many tertiary institutions to analyse the policy on IP of each. However, an examination of the policies as presently promulgated of each of the 'Group of Eight' universities (Queensland, New South Wales, Sydney, Melbourne, Monash, Adelaide, ANU, Western Australia) shows they all have the following common features.

  • The universities claim rights to all staff-created IP
  • They then generally exempt certain staff-created IP defined as those attracting copyright or as 'scholarly works'
  • They reserve the right to enter into agreements with outside bodies to exploit staff created IP
  • Some, but not all, offer staff creators a share in the net profits from the commercialisation of IP

As far as staff rights to their creations of IP are concerned, the above would seem to make it game, set and match to any university policy on IP that includes the above features.

However, the case of UWA v Gray has a massive effect on the universities' position.

UWA v Gray

The facts of this case can be put simply. Dr Gray was a staff member of UWA. He (and his team) developed patentable inventions that had considerable commercial prospects. The University claimed the IP rights to the patents and the inventions and the right to exploit them commercially. The University had a statute in place that appeared to support its position.

Now the University's rights would seem unassailable, but the courts thought otherwise.

UWA took the matter to the Federal Court, where Dr Gray was successful. It then appealed to the Full Court of the Federal Court where Dr Gray again succeeded. In October 2009 the University sought to take the matter to the High Court but that court declined to hear the matter, which indicated it was satisfied with the decisions of the courts below it.

Hence the decision of the Full Federal Court in UWA v Gray is the law in Australia.

How did the Full Federal Court arrive at its decision?

Terms of Dr Gray's Employment

Dr Gray was required by the terms of his appointment to teach and to conduct research.

As his contract of employment did not specifically state that IP developed in the course of his employment belonged to the University, then it belonged to him, regardless of his use of University facilities in the development of that IP.

Furthermore, 'research' does not imply any duty to 'invent'.

The Relevant Statute

Although there was a statute on IP in place, the University had no power under its foundation Act to acquire compulsorily the IP generated by its staff.

There was also an issue of when and where the IP had been created. If the concepts (as distinct from any invention) had been developed before Dr Gray's employment at the University, then the IP in any invention belonged to him.

Team Membership

The team that worked with Dr Gray were not all employees of the University. Dr Gray, and not the University, had assembled his research team. Membership of his team varied over the years and the contributions made by team members also varied in quantity and quality.

Finance

Much of the funding for Dr Gray's research came from grants and not from University sources.

If the University were to obtain IP rights from Dr Gray's research, it would be benefiting from the financial inputs of others.

Employer-Employee Relationship

The Full Federal Court re-stated the basic principle that the employer owns the IP created by employees.

However, the Court also found that the relationship of an academic staff member with a university cannot simply be defined in terms of a contract of employment. There is a distinctive dimension of that relationship – that of corporate membership of the University.

Membership of a university has distinctive features: a university does not engage staff for commercial purposes.

Legislation

The Court decided that the University statute on IP was inadequate where commercial considerations came into play.

Effects on the 'Group of Eight'

It is now over three years since the decision in UWA v Gray was handed down. What effect has it had on the expressed IP policies of the 'Group of Eight'?

The simple answer is 'Not much, if any', probably because these universities are not sure how to react or because there are significant obstacles to reacting.

UWA itself describes its IP Regulations as being 'under review', and this over three years after the decision in Gray.

All eight universities still maintain they have full and unfettered rights to the IP creations by their staff. They clearly do not.

Or perhaps they think it unlikely another Dr Gray will be prepared to stand up for his rights.

Implications for University Staff

Perhaps universities see individual contracts (of employment or of apportionment of returns from staff-created IP) between staff members and themselves as the way forward after Dr Gray's case. If this is so, there would be a gross disparity in bargaining power between the parties.

The universities are caught in a dilemma. On the one hand, governments expect them to be less 'ivory tower', more entrepreneurial, and to generate more of their own funding. On the other hand, they may not have the power to do so - and then there is the law found in Dr Gray's case.

The thought may occur that Dr Gray's case is limited to patents and inventions. A staff member may think his or her work would be exempt as it falls under 'scholarly works' or some similar exception.

But think again. Dr Gray's case should be read more widely to include any form of staff-created IP.

So what should a staff member do where IP rights are concerned?

  • Do not be enticed, bluffed or cajoled into signing any document assigning IP rights to the university or worse, to a third party
  • Check the contract of employment. Does it clearly and explicitly require the staff member to create IP? What type of IP? Does it clearly and explicitly state that any IP rights so created will belong to the university?
  • Do not accept any university statute, regulation or policy document on IP at face value. After UWA v Gray it may no longer be binding on staff members
  • Ascertain if any IP rights or even concepts were created prior to employment at the university. If so, any claim by the university would probably fail
  • If changing employment from one university to another, obtain a deed, letter or statement that the previous university employer vests any IP rights in the departing staff member
  • Keep close records of funding from outside organisations and of contributions made by persons not employees of the university
  • Do not accept that the university has the power to assign staff-created IP to third parties. The university cannot assign property it does not own
  • Be wary of accepting any apportionment agreement. The university may have no IP rights to exploit unless these are assigned to it by the creator(s). Similarly the university may not have the power to enforce any apportionment policy it may have.

And as for third parties seeking to commercialise the IP creations of university staff:

  • Make certain in any dealings with a university that it has indisputable rights to staff-created IP. It may not.
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About the Author

Peter Jorm is an administrative lawyer whose pro bono activities post retirement have involved him in aspects of commercial and intellectual property law.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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