06 June 2010

The Importance of Establishing Early Ownership of Inventions

It is common for employers to assume that they own their employees' inventions, either due to express provisions in employment contracts or by operation of relevant statutes and/or common law.

It is also often assumed that, in any event, an assignment may be obtained from an inventor at any time after the invention has been made.  It appears to be particularly common in the US that the first time a written assignment document is executed by the inventors, whether employees or not, is after the filing of a nonprovisional application at the USPTO.

A relatively recent case from the UK highlights the potential danger of delaying formal assignment of inventors' rights until later in the patent process, while a recent Australian case serves as a further reminder that there is no guarantee, in all circumstances, that an employer will gain entitlement to an employee invention simply because it was made during a period of employment.


The England and Wales High Court (Patents Court) issued a decision in June 2009 in the case of Edwards Lifesciences AG v Cook Biotech Inc [2009] EWHC 1304 that serves as a reminder of the great importance of ensuring that you own all of the relevant rights in respect of a new invention prior to filing internationally, and in particular through the international patent application process provided under the Patent Cooperation Treaty (PCT).

Cook Biotech Inc ("Cook") was the proprietor of a European patent that had been filed via the PCT route, and subsequently granted and brought into force in the UK. Edwards Lifesciences AG ("Edwards") had applied to the court for revocation of Cook's patent, and Cook, in turn, had counterclaimed for infringement.

Among other grounds, Edwards contended that Cook was not entitled to claim the benefit of priority from a US provisional application filed twelve months prior to the PCT application upon which the European patent was based. In particular, Edwards established that while Cook had secured rights to the invention, and ownership of the US provisional application, from two non-employee inventors prior to grant of the European patent, it had only done so by virtue of assignments executed after filing of the PCT application. (There was also a third inventor, who was a Cook employee, and his share of the rights vested in Cook by virtue of employment.)

The court ruled that because Cook was not the sole owner of the provisional application at the time of filing the PCT application, it was not entitled under the relevant provisions of the Paris Convention and the PCT, to claim the right of priority from the provisional, in the circumstance that the PCT application was filed in Cook's name only. As a result, the priority claim was deemed invalid, which allowed a later publication to be raised as prior art. Cook's patent was found to be invalid (and additionally not to have been infringed by Edwards in any event).

While this decision currently applies only in the UK, it is perhaps significant that much of the reasoning was based upon wording appearing in the Paris Convention and the PCT, and thus may be applicable in other countries party to these treaties.

The Full Court of the Federal Court of Australia issued its appeal decision in University of Western Australia v Gray [2009] FCAFC 116 on 3 September 2009, upholding a decision of a single judge of the court.  In particular, the appeal court confirmed that the University of Western Australia (UWA) did not own the rights to inventions made by one of its employees, Dr Bruce Gray.
Dr Gray commenced employment in 1985 as a Professor of Surgery. In the course of his research, he developed cancer treatment technologies, which became the subject of three patent families. Dr Gray subsequently assigned his rights in the patents to a company set up to commercialise the treatments, Sirtex Medical Ltd, in exchange for shares in the company. Dr Gray’s terms of employment by UWA required him to teach, to conduct research and to comply with various obligations under the UWA statutes.

The facts in this case are complex, and the first-instance decision runs to hundreds of pages!  There is no question, however, that UWA believed that it was entitled to claim rights in Dr Gray's inventions.  It transpired, however, that UWA was wrong in this belief.  The reasons for this are many and varied, however UWA's main error appears to have been in assuming that terms of Dr Gray's employment contract, and University statutes and regulations, were operative to effect a transfer of rights.
Some of the factors affecting the decision in this case were as follows.
  1. Although Dr Gray was employed by UWA to conduct research, it did not necessarily follow that he had a duty to make patentable inventions on behalf of the university.
  2. It was noted that Dr Gray had freedom to publish the results of his research without the need to seek prior approval from UWA, 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, suggesting that UWA could have no expectation of ownership of IP arising from the research.
  4. Furthermore, Dr Gray did not breach his employment contract by failing to disclose the inventions to UWA, as allegedly required under the University's Patent Regulations, because the Patents Committee established by the regulations for this purpose had ceased to exist in 1988!
An appeal by UWA to the High Court of Australia was refused earlier this year, implying that Australia's top court is satisfied with the Federal Court's application of the law in this case.


In light of the UWA v Gray decision, a significant question arises, especially for Universities and similar organisations, as to whether the employment arrangement alone is sufficient to establish employer ownership of an invention.  The problem may be further exacerbated in the academic or research environment, where it is very common for details of an invention to be published during the 12 months following a provisional filing. In these circumstances, it is vital that a subsequent claim to priority from the provisional filing date be valid.

The take-home message from Edwards v Cook is that it is extremely important for all applicants to ensure that they have secured ownership of an invention, and any initial provisional application, prior to the filing of any further applications claiming priority from the original filing.  If necessary, or if there is any doubt, formal written assignment documents (or confirmatory assignments) should be obtained from all inventors.

Patentology suggests that, in the event that it is not possible to secure the relevant rights from all inventors prior to filing internationally, the problem that arose for Cook may be avoided by filing initially in the names of the inventors, and subsequently recording a change of ownership once the necessary assignments have been obtained.


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