Intellectual property ownership

11.21 One of the issues in the commercialisation of research is where intellectual property rights should vest to ensure the public benefits from the research it helps to fund. This involves considering which organisation will most effectively exploit intellectual property to realise these benefits.

11.22 Currently, a mixture of contract, common law rules and legislative mechanisms determines the ownership of intellectual property that is generated within research organisations. Ownership may also be altered by an organisation’s policies.

Current law and practice

11.23 Under s 15(1) of the Patents Act 1990 (Cth) (Patents Act), a research organisation may apply for a patent over an invention created by employees in the course of their employment. The section provides that:

a patent for an invention may only be granted to a person who:

1. is the inventor; or
2. would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
3. derives title to the invention from the inventor or a person mentioned in paragraph (b).^[12]

11.24 Although the Patents Act does not explicitly address an employer’s right to patent an invention created by its employees, s 15(1)(b) is generally relied upon by employers to claim proprietary rights in such inventions by virtue of their employment of the inventor, or by virtue of the terms of an employment contract.^[13]

11.25 The terms of the employment contract may include an explicit agreement to assign rights to an invention to the employer, allowing the employer to apply for a patent under s 15(1)(b).^[14] Where there is no explicit agreement to assign, the court may imply such an agreement into a contract of employment. According to Professors Jill McKeough and Andrew Stewart:

the courts have basically tended to favour employer ownership. Any invention will impliedly belong to the employer, so long as it is arrived at in the course of duties the employee is engaged to perform.^[15]

11.26 The nature of the employment and the duties it encompasses will therefore be determinative of whether an employer may assert rights to an invention created by the employee in the absence of an explicit assignment.^[16] Where the employer is an organisation receiving public research funding, and the employee is an academic staff member or researcher, the organisation’s claim to ownership of inventions created by the researcher will be determined by the nature and scope of the employment and the terms of the employment contract. The employer’s rights may also be altered by an organisation’s statutes and policies.^[17]

11.27 According to a report by the Department of Education, Science and Technology (DEST Report), universities may claim ownership of inventions created: using university resources; by academic staff in the course of their employment; and through publicly funded research received as part of an agreement with a government funding agency.^[18]

11.28 In some instances, it may be difficult to determine which inventive activities fall within the scope of the researcher’s employment. Associate Professor Anne Monotti and Professor Sam Ricketson suggest that the situation is complicated because:

• the duties associated with an academic position may not always be clear;
• different research positions within organisations will have different duties attached to them, including teaching, curriculum development and leadership within research groups;
• a researcher will tend to move between organisations over the course of a career, and will enter each new position possessing knowledge and, in some cases, intellectual property from previous positions;
• a researcher may spend part of his or her time working in start-up companies, in collaborative research projects and centres, public teaching hospitals and other organisations; and
• a researcher may undertake research during leave or while on exchange to another organisation.^[19]

Intellectual property policies

11.29 As indicated above, research organisations generally address intellectual property ownership issues through internal statutes and policies. Organisations vary in their practices as to whether they claim ownership of intellectual property generated by staff or within the organisation. Typically, however, they will seek to claim ownership.

11.30 In addition, an organisation’s policies often include provisions to encourage publication and the wide dissemination of research. However, where research leads to an invention, these policies usually provide for the organisation to delay publication while patenting and commercialisation are explored. Policies also normally provide that commercial development must be for the benefit of the organisation, the inventor, government and commercial or other partners.^[20]

11.31 Some Australian research organisations may choose to assign intellectual property rights to the researcher, if the organisations do not wish to develop these to commercial stage. The researcher may then choose to develop the invention.

11.32 Alternatively, and more rarely, some organisations allow researchers to hold intellectual property rights in their research results. In these cases, the organisation may foster commercialisation by supporting individual researchers through the commercialisation process.^[21]

Students and visitors

11.33 A research organisation’s rights to inventions created by students and visitors are somewhat different to the general position. As the relationship between a student and an research organisation is not one of employment, the organisation may not imply a right to ownership of inventions created by the student during the course of their education in the same manner as for academic staff. The relationship between the organisation and a student is, in part, based in contract.^[22] If the organisation is established by statute, its statutes, by-laws and regulations bind the student and may also affect the relationship. The student will not be automatically bound by non-legislative policies and resolutions. However, he or she may agree to be bound and thereby agree to assign ownership of intellectual property to the organisation.^[23]

11.34 Students funded through government scholarship schemes, such as the Australian Postgraduate Awards (APAs), may also be subject to conditions on the award including that the organisation administering the scholarship controls the grant and any research results arising from it. As the organisation is required to adhere to its own intellectual property policy, which will generally direct that the research is exploited for the public benefit, the organisation will exercise a degree of control over the intellectual property that results from the student’s research.^[24]

11.35 Visitors to research organisations include researchers on exchange from other organisations, and honorary or salaried appointees. The research organisation’s rights in relation to intellectual property created by a visitor will depend on the nature of the appointment.

11.36 A 1999 ARC survey of university research commercialisation in Australia found that all respondent universities had intellectual property policies in place for staff, and most also had policies for postgraduate students. However, fewer had policies covering undergraduate students and university visitors.^[25]

Collaborative research

11.37 A growing feature of biotechnology research in Australia is collaborative arrangements between research organisations or between organisations and industry. These collaborations may take a broad range of forms, from informal sharing of knowledge to highly formalised collaborative arrangements. Collaboration may involve staff, students or visitors from a number of organisations, funding bodies, government agencies and commercial entities in a variety of combinations. Such collaborations raise issues around intellectual property ownership.

11.38 In the absence of clear agreement on the terms of the collaboration, the ownership of resulting intellectual property will be determined by legislation and common law principles.^[26] The Patents Act allows for co-ownership of patents. Section 16(1) provides that:

subject to any agreement to the contrary, where there are 2 or more patentees:

1. each of them is entitled to an equal undivided share in the patent; and
2. each of them is entitled to exercise the exclusive rights given by the patent for his or her benefit without accounting to the others; and
3. none of them can grant a licence under the patent, or assign an interest in it, without the consent of the others.^[27]

11.39 Some research organisations have included provisions to address collaborative research in their intellectual property policies and statutes.^[28] However, regardless of the organisation’s policies, rights arising out of a particular collaboration will be determined by the contractual arrangements between the parties.

11.40 Much collaborative research in Australia occurs within Cooperative Research Centres (CRCs). The model agreement for the establishment of a CRC provides that intellectual property generated through the research, training and commercialisation activities of the CRC shall be owned by the parties to the CRC agreement ‘as tenants in common in proportion to their Participating Shares’.^[29] Research organisation policies may also provide that such agreements will override their own internal policies for intellectual property ownership.^[30]

Jointly funded research

11.41 Questions of intellectual property ownership may be similarly complex where research is funded jointly by a number of bodies, as each body may have different policies regarding the ownership of research results.^[31] This may be particularly problematic where research is funded partially by overseas bodies. For example, the National Health and Medical Research Council Act 1992 (Cth) requires that intellectual property generated through NHMRC-funded research be vested in an Australian organisation. However, this may conflict with the requirements of other bodies that also provide funding.

Issues and concerns

Effective commercialisation

11.42 One concern raised by allowing ownership of gene patents to vest in research organisations is whether they have the capacity to exploit such patents effectively. If patents are not properly exploited, the research may not be translated into public healthcare benefits.

11.43 This may occur for a number of reasons. The organisation may fail to transfer the technology to a commercial partner for development into a usable product, such as a test or therapy, if the organisation does not prioritise commercialisation or lacks the skills needed for effective commercial negotiations. The organisation may attempt to develop the technology through the creation of a spin-off company. If the company fails, the patent may pass to another organisation, such as a private company. These concerns are discussed further in Chapter 17.

Clear ownership and control

11.44 Genetic research undertaken by students or visitors may raise concerns about the ownership of resulting gene patents due to the complex relationship between the organisation and students or visitors. Issues about clear ownership may arise in the absence of policies determining which party will own any resulting intellectual property.

11.45 Difficulties in determining ownership may also arise where researchers at a number of organisations conduct research jointly. Similarly, as discussed above, disputes about ownership may occur where research has been jointly funded and each funding body has differing policies about ownership. This may impede commercialisation because industry may be unwilling to pick up intellectual property where there is a lack of clarity in ownership. As noted in Chapter 18, joint ownership may form a barrier to commercialisation, as industry partners are generally unwilling to invest in developing intellectual property where negotiation with multiple parties will be necessary.

Options for reform

11.46 Public benefit from research is promoted when research results are exploited most effectively. If research results are not protected effectively, they may fail to attract commercial developers and products that require considerable industry development may not be created. If valuable research is not identified and utilised appropriately, its value to the public may not be realised. For these reasons, the vesting of ownership of intellectual property in publicly funded research may affect the promotion of public benefit. This section considers a number of ownership models.

11.47 Property rights could vest in one of a range of individuals or organisations involved in funding and producing research. Intellectual property rights to publicly funded research results could be vested in:

• a government;
• the body that provided funding for the research that led to the invention’s creation;
• the researcher; or
• the organisation, initially, but subsequently vested in the funding body or government if the commercial potential of the invention is not developed within a reasonable time period.

11.48 The OECD Report asserted that for governments, granting research organisations rights to intellectual property generated with public funds

can lead to better use of research results that might otherwise remain unexploited as well as to the creation of academic spin-offs or start-ups that create employment. For PROs [public research organisations] the benefits may include increased licensing and royalty revenues, more contract research and greater cross-fertilisation between entrepreneurial faculty and industry. Equally important, however, are the intangible benefits to an institution’s reputation and to the quality of its research that closer interaction with the private sector can generate.^[32]

11.49 The ARC has indicated that to date it has left commercial development to research organisations and that intervention in commercialisation has not been its practice, or that of the Australian Government.

However, when there is a real problem requiring a real solution then a top down approach may offer the most effective approach to bring about a significant change in the culture in Australia towards the commercialisation of university research.^[33]

11.50 In a 2000 report, the ARC raised the issue of granting university researchers, rather than the university, a licence to exploit the results of publicly funded research as a condition of the award of a grant. Such an approach would create financial incentives for researchers to identify and develop the commercial potential of their research.^[34]

11.51 The strength of this approach lies in its potential to stimulate a more entrepreneurial attitude among researchers. This might focus early research efforts on areas of study that may lead to commercially profitable products. However, placing the onus to exploit intellectual property on researchers may be problematic where they lack the financial capacity to take their research results through to the commercialisation stage. Researchers also may not possess the business and legal expertise required for successful commercial negotiations.^[35]

11.52 The ARC has suggested that these problems could be overcome if research organisations provide appropriate support to researchers.^[36] This support might extend only to an advisory service, or more hands-on involvement in the commercialisation process. Research culture and commercialisation are discussed in Chapter 14.

11.53 The OECD Report supported intellectual property ownership by organisations, rather than vesting rights in individuals, because this provides:

greater legal certainty for firms interested in exploiting research results, lowers transaction costs for partners and encourages more formal and efficient channels for knowledge and technology transfer.^[37]

11.54 The DEST Report also favoured ownership by organisations^[38] and suggested that the experience from Canada ‘reveals many problems that may arise out of a laissez-faire approach to IP ownership’.^[39] It argued against funding bodies retaining ownership. It suggested that ‘the UK experience reveals problems that arise when research funders maintain too much control over IP generated from their funds’ and concluded that ‘experiences therefore point to research bodies as the most desirable owners of IP’.^[40]

Submissions and consultations

11.55 DP 68 proposed that universities and other publicly funded research organisations should ensure that their guidelines on intellectual property ownership cover research undertaken by visiting researchers and students, as well as staff—whether undertaken solely within the organisation or jointly with other bodies.^[41]

11.56 This proposal met with widespread approval.^[42] One submission also emphasised the difficulties research organisations face in developing and enforcing good intellectual guidelines that can be applied across all situations.^[43]

11.57 The Queensland Government noted a number of considerations relevant when entering into an agreement for visiting researchers and students to undertake research. These included:

• whether the agreement should be made with the visiting researcher or the researcher’s organisation;
• how and when the ownership of the intellectual property should be determined;
• whether the intellectual property should be shared, or owned solely by the host organisation;
• whether the visiting researcher or the organisations they represent should be entitled to a royalty stream from the commercialisation of the patent; and
• what administrative arrangements need to be in place to oversee the management of these agreements, particularly where the host organisation has a number of visiting researchers at any one time.^[44]