One of the most fertile grounds for disputes relating to inventions, and patents, is the question of who owns the invention or patent. We are reminded of this year after year as cases relating to the ownership of inventions come before the Australian Patent Office and the Australian courts.
There are two considerations involved. Firstly, who is or are the inventors? Secondly, who then owns the invention?
Material Contribution to the Concept
In the Australian context, an inventor is someone who can be seen to have made a material contribution to the concept of the invention (see for example the decision in Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 4). In turn, the ownership of the invention will either reside with the (or with each) inventor or with someone else who can claim entitlement from the (or with each) inventor.
An Employer as Owner
One common circumstance is that an employer will claim entitlement to an invention from their employee. Typically this is appropriate. That is, an employee that has been engaged to generate ideas about how to achieve a certain outcome in new and innovative ways in a specific technology area should expect that their employer will claim, as theirs, the fruits of their labour. This is the traditional ‘master/servant’ relationship in action.
Other factors can and often do play a role in determining who owns what – although these factors are not determinative in and of themselves. For example, is the invention in the area of technology in which the employee was engaged to operate? Was the invention created on or with the employer’s equipment and facilities, and on their time? Was the employer directing the inventor’s actions or activities?
Any fuzziness around the edges can generally be clarified through an appropriate employment agreement. The inclusion of terms regarding an employee’s duties and the ownership of intellectual property is highly recommended.
It is worth noting that consultants are typically treated differently to an employee, and particularly careful consideration must be made of any engagement with a consultant to ensure that all parties are happy with how any existing intellectual property, and any resulting intellectual property, will be handled.
Not Employed to Invent
In Australia we have the benefit of some historical guidance on the question of when an employee may be considered not to have been employed to invent. The result being that the employer did not have the right to the invention, nor did they have the right to apply for a patent.
In University of Western Australia v Gray [2009] FCAFC 116, the Full Federal Court of Australia determined that researchers employed by a university to undertake and organise research did not have a ‘duty to invent’. The contracts of university academic staff do not include an implied term that would result in the university owning inventions created in the course of their employment. At the time of this decision, the result was, for most, quite surprising. On 12 February 2010, the High Court of Australia, the ultimate court of appeal in Australia, dismissed an application by the University of Western Australia for special leave to appeal the Full Federal Court’s decision. The High Court considered that there was no error in the judgement at first instance by Justice French (who is now the Chief Justice of the High Court) and whose decision was affirmed by the Full Federal Court, thus giving further weight and authority to the decision. Most publicly funded institutions in Australia set about setting in place new contracts with explicit terms relating to the ownership of intellectual property as a result of this decision.
In the case of Spencer Industries Pty Ltd v Collins [2003] FCA 542, a sales manager for a family business manufacturing and supplying equipment used in tyre re-treading was found to be the owner of an invention for a tool used in tyre re-treading that was conceived whilst he was employed.
Key aspects to this decision included that the inventor held a sales position, and despite it being a managerial level position the inventor did not have a level of seniority or control that would lead to a conclusion that the invention was made in the course of his employment. Also, whilst the invention was clearly in an area of technology that was relevant to his employer, the employer had not directed the creation of the invention.
Ex-Employee Not Entitled
A counterpoint to the decision in Spencer v Collins referenced above can be seen in the 2019 decision of Vuly Pty Ltd v Wei Yang [2020] APO 13. Here an employee (Yang) had become aware of an inventive concept whilst employed and was held not to be entitled to then obtain a patent directed to that inventive concept having left that employer.
The invention in question here related to trampolines of the springless type that are so popular at present. Yang was employed by Vuly as a mechanical engineer and there was no real argument that innovation in the area of trampoline design fell outside his employment. However, for some time and over a number of actions taken before the Australian Patent Office to assert their rights to the invention, Vuly had not been able to successfully make a claim to ownership of the invention.
This changed when Vuly was able to provide evidence of Yang having received two emails from Vuly’s CEO that included sketches of the invention that Yang was seeking to patent. The invention was consequently Vuly’s, despite Yang suggesting that he had no recollection of the emails. The Delegate was satisfied on the balance of probabilities that Yang would not have been able to isolate the information from the emails in his mind after receiving it and to then recreate it independently.
Take-Aways?
Employers should review, and if appropriate, put in place employment agreements with their staff that make it clear what the expectations are regarding ownership and handling of intellectual property. Employees should review their circumstances and any agreements in place to ensure their expectations regarding ‘who owns what’ are likely to be met. When in doubt, as always, seek professional advice.