Recent Federal Court of Australia Decision Places IP rights in the Hands of Academics, not Universities

A recent appeal initiated by the University of Western Australia (UWA) was dismissed by the full Federal Court of Australia, which upheld the decision to place intellectual property rights into the hands of academics, and not the institutions that employ them.

The case of University of Western Australia v. Gray involved a particular invention developed by a prominent professor of surgery (Dr. Gray) at UWA. UWA argued, that by virtue of Dr. Gray’s employment contract with the school, all of his inventions and associated patents belonged to it. This claim was promptly dismissed by the primary judge of the federal court.

Although Dr. Gray’s contract of employment stipulated that he was to conduct research (as well as teach and conduct examinations), he was under no express obligation to invent. Consequently, it was found that UWA did not have an interest in his invention or relevant intellectual property rights simply due to his status as a university employee. The full court also held that Dr. Gray was under no fiduciary duty to UWA and as such, he was not found to be accountable to the university for proceeds derived from his invention or the associated intellectual property rights. Further, there were no effective express or implied terms relating to the ownership of intellectual property rights in Dr. Gray’s employment contract.

As a result of the ruling in this case, universities who wish to retain IP rights in the inventions created by their employees will have to lend more careful consideration to IP ownership clauses in employment contracts to allow for less confusion in the future. In a similar vein, corporations that associate with universities and academics should rigorously strive to ensure that employment contracts are clear, concise and that there are no ambiguities in the language concerning the ownership of IP rights.

While the court did explicitly mention that the present case was decided fairly narrowly, it is still important for universities, academics and corporations to have a clear understanding of the intricacies of IP rights ownership under various circumstances to enable the successful commercialization of innovative ideas.

It is important for governments to maintain a financial incentive for intelligent and skilled researchers to continue inventing and innovating, since it is society who ultimately benefits from this type of behaviour. I strongly agree with the full court’s reasoning in this case. As I mentioned earlier, the present case was decided narrowly and should only apply in situations where the employment contract contains no duty to invent, there is no express/implied provision suggesting that the university in question owns the IP, and where the researcher owes no fiduciary duty to their employer. In the case where a university has a legitimate claim to an invention (and associated IP rights) created by an employee (i.e. ¬†where research funds are procured by the institution directly), the employer should take extra precaution and ensure that this is expressly noted in the contract of employment.