Joint Inventorship and Ownership: the importance of contracts in collaborative research in Australia
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1 Joint Inventorship and Ownership: the importance of contracts in collaborative research in Australia Ashwin Nair The question of joint inventorship has been described as one of the muddiest concepts in the muddy metaphysics of patent law. 1 This paper examines the law and its effect in relation to joint inventorship and co-ownership, within the context of collaborative research in Australia. Inventions developed as a result of collaborative research can potentially give rise to joint inventorship, as well as ownership issue concerns before and during the patent protection period. This paper thus attempts to identify potential concerns by analysing the relevant law. It will conclude that while the law serves up a combination of inequity and uncertainty, precollaboration contracts play a big role in protecting the interests of parties and provide an opportunity for collaborative researchers that can be seized upon. The law on co-inventorship Importance of identification of inventor Proper identification of the inventor is crucial in light of the rights derived from a patent. There are four broad reasons for this. First, and perhaps most obviously, the inventor will be entitled to claim compensation if the invention is commercially exploited. Secondly, under section 15(1) of the Patents Act 1990 (Cth) (the Act ), ownership of patents is derived from the inventor alone. Thirdly, the improper identification of the inventor will be a ground upon which the patent may be revoked. 2 The grant of a patent may also be opposed by anyone who believes that the nominated person should only be granted the patent in conjunction with another. 3 Lastly, if one of a group of joint inventors is found not entitled to the patent, the patent itself may be invalidated even if the other inventors are so entitled. 4 The consequences of improper identification, in a collaborative research context, could potentially lead to legitimate patentees losing statutory protection of the property in the patent and the right to commercially profit from it. Conversely, legitimate inventors have the opportunity to assert their rights in a patent application that wrongfully excludes them. The risk clearly weighs heavier on parties already granted patents and thus it would be prudent for them to exercise caution when making patent applications in a collaborative research context. Definitions of joint inventor LLB candidate, Murdoch University, Perth, Western Australia. 1 Mueller Brass v Reading Industries 352 F Supp 1357, 1372 (Newcomer J), (ED Pa 1972). 2 Patents Act 1990 (Cth), section 138(3)(a). 3 Patents Act 1990 (Cth), section 59(a)(ii). 4 Conor Medsystems Inc v University of British Columbia (No 2) (2006) 68 IPR 217, 223.
2 Section 15(1) the Act is the starting point for determining who an inventor is. An application would fail if any of the applicants is not a person for the purposes of section 15(1). 5 Section 29(5) defines person to include a body corporate. The terms inventor or joint inventor, however, are not elsewhere defined in the Act. Looking to other jurisdictions, section 7(3) of the British Patents Act 1977 (UK) provides that the word inventor refers to the actual deviser of the invention and states that joint inventor shall be similarly construed. In the United States, the US Code ( USC ) provides some statutory guidance on what constitutes joint inventorship. 6 It provides that inventors may jointly apply for inventorship even though they did not physically work together, make the same type or amount of contribution, or make a contribution to every claim of the patent. Such a definition sheds more light on what does not constitute joint inventorship rather than what it actually involves. Hence, in light of limited statutory guidance, one turns to the common law for guidance. Determining joint inventorship In Row Weeder Pty Ltd v Nielsen, the Commissioner s delegate held that a person is a joint inventor if that person s contribution had a material effect on the final concept of the invention. 7 The question of inventiveness within such a contribution was said to be secondary. In the United Kingdom, Yeda Research And Development Co Ltd v Rhone-Poulenc Rorer International Holdings Inc is authority for the proposition that the crucial determination lies in the contribution to the inventive concept of the invention rather than the inventiveness of the contribution itself. 8 Similarly, in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd, Crennan J opined that in determining an inventor s rights in an invention, a court has to objectively assess contributions to the invention rather than evaluating the inventiveness of respective contributions. 9 Her Honour went on to posit a but for test in this context by stating that if the final concept of the invention would not have come about without a person s involvement, that person is entitled to property in the invention. 10 This, obviously, would be the bare minimum required to make a determination and would not, without more, justify a claim of joint inventorship. It is noteworthy that the timing 11 and amount 12 of the respective contributions are irrelevant. The position is different in the US, where the contribution itself must be inventive. 13 There, joint inventorship occurs when two or more collaborators each contribute to the conception of the solution to the problem, which constitutes the invention. 14 In Polwood v Foxworth, the Federal Court warned against the problem/solution approach as not all inventions or inventive steps can be analysed in terms of problem/solution University of British Columbia v Conor Medsystems Inc [2006] FCAFC 154, at [44], per Emmett J USC 116 (2000). 7 (1997) 39 IPR 400, (2008) 1 All ER 425, at [19], per Lord Hoffman. 9 (2005) 67 IPR 68, at [132]. 10 Ibid. 11 Primmcoy Pty Ltd v Barry Charles Teer [2003] APO 37, at [26]. 12 Polwood v Foxworth [2008] FCAFC 9, at [34]. 13 Acromed Corp v Sofamor Danek Group Inc 253 F.3d 1371, 1379 (Fed Cir 2001). 14 Fritz Fasse, The muddy metaphysics of joint inventorship: cleaning up after the 1984 amendments to 35 USC 116 (1992) 5 Harv JL & Tech 153, Polwood v Foxworth [2008] FCAFC 9, at [38]. 1
3 What then is material? A material contribution relates to the formulation of the inventive concept of the invention. 16 It would contribute sufficiently to make an idea patentable. 17 In other words, it must in some way contribute to the advance over the prior art which the specifications says, directly or by inference, that the invention makes. 18 Joint inventors must contribute to the conception of the invention. The conception has been described in the UK as being the heart of the invention and is the basis of a holistic determinative approach rather than a claim-by-claim analysis of the inventor s contributions. 19 In Polwood, the Federal Court offered qualified support of this proposition. The court indicated that the conception of the invention must be determined with reference to the whole of the specification, including the claims, which assist in the understanding of the inventive concepts that give rise to the invention itself. 20 On the above analysis, in Australia, the concept of joint inventorship may be crystallised into the material, but not necessarily inventive, contribution of a person to the inventive concept of the invention. The conception of the invention should be determined with reference to the whole of the specification including the claims. While such simplicity is alluring, as Polwood demonstrates, 21 the principles are heavily factdependant and application to various cases is bound to produce difficulty. This highlights the importance of a flexible rather than mechanistic 22 approach to the determination of joint inventorship. Invalidity Pursuant to 35 USC 116 (2000), where an invention is made by two or more persons jointly, they shall apply for a patent jointly. This has given rise to the principle that where there are joint inventors, a patent application in the name of only one of them is invalid. The Ethicon case 23 provides a pointed example of the potential significance of such provisions. The case concerned the inventorship status of an electronics technician, Young, who was not a grantee of a patent for a surgical tool known as a trocar. The original patentee had exclusively licensed its interest in the tool to Ethicon, who subsequently sued the defendant for infringement of the patent. The latter claimed that Young should have been named as a joint inventor on the patent, and that he had sold the licence to the patent. 16 IDA Ltd v University of Southampton [2004] EWHC 2107, at [39]. 17 Polwood v Foxworth [2008] FCAFC 9, at [45]. 18 Colin Bodkin, Patent Law in Australia, (Lawbook, 2008), p Markem Corp v Zipher Ltd [2005] All ER 377, at [102], per Jacob LJ. 20 Polwood v Foxworth [2008] FCAFC 9, at [61]. 21 Ibid, at [34]. 22 Stanelco Fibreoptics Ltd s Applications [2005] RPC 15, at [15A]. 23 Ethicon Inc v US Surgical Corp 135 F.3d 1456 (Fed Cir 1998). 2
4 The court found that Young was a joint inventor of at least one out of 55 claims in the patent. 24 As such, Young was required to be joined as a plaintiff for the claim to succeed, and because he refused to do so, the claim failed. 25 The case attracted much criticism and has been blamed for fostering caution and mistrust in the collaborative research sector because it introduces the spectre of an unseen inventor into any collaborative research equation, leading researches to be more circumspect about sharing information, even in collaborative settings. 26 Such a situation is detrimental to today s research environment where collaboration is seen as vital. 27 However, it remains law in the US and it appears that Australian courts support this principle too. 28 This is however, a potentially powerful arrow in the quiver of collaborative researchers who are weaker vis-à-vis stronger collaborators. Weaker parties thus have a strong bargaining chip in precontractual negotiations to at least secure some beneficial right of exploitation of patents developed as a result of the research, and cannot easily be deprived of the benefits of their work. Co-ownership Inequity and uncertainty Section 16(1)(a) of the Act entitles each of the patentees to own an equal undivided share in the patent. The statute also allows co-owners to exercise exclusive rights over the patent without accounting to the other co-owners. 29 Importantly, section 16(1) is subject to contract between the parties. In light of the fact that contributions among co-inventors need not be equal, this raises a question of fairness. Assuming there is no agreement between the parties, a co-inventor with a material, but substantially less, contribution to the invention will still be entitled to an equal share in the patent equivalent to another co-inventor who put in the bulk of the work. The position is similar in the US; 30 the Ethicon case 31, analysed above, provides a pointed illustration of the potential inequity of such provisions whereby the joint inventor of at least one of a number of claims can claim entitlement to an equal share in the whole patent. Co-ownership is also similarly provided for in the UK. 32 In relation to the equivalent of section 16(1)(b) of the Act 33 which allows co-owners to exercise exclusive rights with respect to the patent without accounting to other co-owners the British Court of Appeal has held that such a 24 Ibid, Ibid, Lawrence Sung, Collegiality and collaboration in the age of exclusivity, (2000) 3 DePaul J Health Care L 411, Rochelle Dreyfuss, Collaborative research: conflicts on authorship, ownership and accountability, (2000) 53 Vand L Rev 1161, Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422, at [21]. 29 Patents Act 1990 (Cth), section 16(1)(b) USC 262 (2000). 31 Ethicon Inc v US Surgical Corp 135 F.3d 1456 (Fed Cir 1998). 32 Patents Act 1977 (UK), section Patents Act 1977 (UK), section 36(2)(a). 3
5 right is confined to domestic enjoyment of the patent and that it does not include large-scale commercial exploitation of the patent. 34 A grant of a patent provides the patentee(s) with exclusive rights to exploit the patent to gain profit from it. 35 This gives effect to a fundamental purpose of patent law to incentivise innovation through the prospect of profit. 36 To hold differently from the UK Court of Appeal would allow one co-owner to derive profit from the patent without sharing that profit with another co-owner. Further, the intention of the Act to protect co-owners from such circumstances is evident from the caveat with respect to assignment and licences in section 16(1)(c), whereby consent is required from other co-owners. Hence it is argued that the position in Australia with respect to section 16(1)(b) is, or at least should be, similar to that in the UK. A similar argument may be run against the equal and undivided share rule in section 16(1)(a), but the contrary express words of the statute continue to have force of law until they are modified by Parliament. The potential uncertainty and inequity of the provisions of section 16 underscore the importance of parties delineating their ownership interest in the patent by way of a written agreement to avoid messy disputes in court. Conclusion It is evident that the law in relation to joint inventorship is continuing to develop on a case-bycase basis. The uncertainty surrounding materiality will perhaps only be clarified with more academic and judicial consideration of the matter. The crucial aspect of the law in relation to joint inventorship would be that one person or group of persons is not solely entitled to a patent for the joint invention of itself and another. This would necessitate care in making patent application for joint inventions particular where there are many collaborators. Parties may also consider precise and well-thought pre-collaboration contracts that provide for the necessary assignments or licences so as to minimise this risk. This would also be useful in avoiding the potential inequity of co-ownership provisions in the Act. 34 Henry Brothers (Magherafelt) Ltd v Ministry of Defence [1998] ECWA Civ It should be noted that the wording of section 36 of the UK Act, while substantially similar, is not identical to that of the Australian Act. 35 Patents Act 1990 (Cth), section 13(1), sch 1 (definition of exploit ). 36 Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia (1984), p 24. 4
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