UWA Rebuffed by High Court

The long-running legal battle centred around UWA’s claims that it owned the majority of the company’s IP portfolio because the company’s SIR sphere technology was developed by Gray while he was employed by the university.

Background:

Dr Gray was appointed as a Professor of Surgery by UWA in 1985. He had previously conducted research into cancer treatment, and this research was further developed at UWA and became the subject of three patent families. The patents were subsequently assigned to Sirtex Medical Ltd in exchange for shares in the company. Dr Gray’s terms of employment by UWA required him to teach and to conduct research. He was also obliged to comply with obligations under the UWA statutes.

The Federal Court ruled against the university in April 2008 in a landmark decision (subsequently upheld on appeal to the Full Bench of the Federal Court, in September 2009), which found UWA’s case did not have a legal foundation for the following reasons:

1. Although Dr Gray was employed by UWA to conduct research, the employment terms did not amount to an implied duty to invent.
2. Dr Gray had freedom to publish the results of his research, even if such publication could affect the patentability of inventions arising from the research.
3. Dr Gray was expected to raise funds for his research, and was dependent upon funding from sources outside UWA. This also weakened UWA’s claim to ownership of IP developed from the research.
4. Dr Gray had not breached his employment contract by failing to disclose the inventions to UWA. UWA’s Patent Regulations, which required academics to notify its patents committee of inventions, could not be imported into Dr Gray’s employment contract, because the patents committee ceased to exist in 1988.

The University has now finally exhausted their legal options, with the High Court refusing to hear a further appeal.

UWA vice chancellor Professor Alan Robson said “the university was disappointed by the decision, as it left the relationship between universities and research institutes and the intellectual property their staff developed “ill-defined”. "The university's course of action was a matter of principle that had important ramifications for the protection of intellectual property and the flow-on benefits of university-initiated research to the broader community,” Professor Robson said.

"Expressions of concern about the potential ramifications of this case have been received from research institutions around the world. "This could have extremely important ramifications for research, not only in universities but at other research organisations, in Australia and around the world."

It should be emphasised that there were complex, possibly unique, circumstances in this particular case (the Federal Court decision of French J was over 600 pages long). In particular, UWA had employed a researcher who had already begun developing the field of technology prior to his time at UWA, and did not appear to have an IP Policy which was integrated with employment contracts, or mechanisms to identify and capture IP developed by employees.

In the modern era where universities and research institutes are becoming more commercially focused, there are some important lessons to be learned from the decision in relation to management of intellectual assets.

• Universities (and other organisations) need to review their employment contracts with research staff to ensure they deal adequately with IP developed by employees.
• Universities should also review their IP policies and procedures to ensure that they comply with the University statutes and regulations. In particular, the regulations and policies should require academic staff to disclose research that may involve patentable subject matter to the University before publication of academic papers on the research.
• Companies and external organisations collaborating with universities that wish to own IP relating to research by university employees should ensure that ownership issues are clear.
• Researchers should maintain good records of their research, eg laboratory notebooks, to assist in determining the date of conception of invention in the event that validity or ownership of patents resulting from the research is contested at a later date.

We understand that, in addition to seeking leave from the High Court to appeal the case, the university took action last year to try to compel its staff to sign IP agreements before receiving research funding.

Aspects of this report were sourced from Nick Evans, Editor of Biotechnology News, and Roger Green’s news article.