In Australia, it is a general principle of the common law that an employer is entitled to any IP rights created by an employee in the course of their employment. Universities can claim ownership of inventions created by academic staff in the course of their employment, both at common law and under university IP policies and statutes. Many IP policies and statutes also allow universities to claim ownership of all inventions created using university resources. Universities can claim ownership of inventions arising from publicly funded research undertaken pursuant to an agreement with a government funding agency such as the ARC or the NHMRC. Academics have no common law rights to the inventions they create in the course of their employment. In two universities however, academics can claim full or part ownership under university IP statutes. Academics cannot ordinarily claim ownership of the results of publicly funded research, where funds are provided through an agreement with the ARC or NHMRC. Students are entitled to claim ownership of inventions created during their studies. Some university IP statutes and policies modify this general rule, particularly where a student has relied substantially on university resources. As indicated by the National Principles of Intellectual Property Management for Publicly Funded Research, government funding agencies such as the ARC and NHMRC do not claim ownership of inventions created during the course of research. The position will normally be different where a government Research and Development Corporation such as the RIRDC is concerned.
As is the case with universities, government research organisations can claim ownership of inventions created by employees in the course of their employment under the common law and under their internal IP policies. Some IP policies in these organisations also allow the organisation to claim ownership of inventions created by employees outside their normal terms of employment but using the organisation’s resources. None of the IP policies in the organisations surveyed allow employees to claim full ownership of their inventions whether within and outside their course of employment (but using the organisation’s resources). Where there is an agreement with another party to undertake a research project, patent ownership rights are generally negotiated on a case to case basis (subject to the organisation’s IP policy) before the commencement of the project.
In contrast to the general position in Australia, under United States common law, an individual owns rights in any invention they create, regardless of whether than invention was created in the course of employment. In the absence of a clear common law right to inventions created by academics, most universities have enacted IP policies, which purport to claim ownership of inventions made using university resources and/or in the course of employment.
One of the most significant features of the United States framework is the existence of federal legislation (the Bayh-Dole Act) governing inventions created with project-specific public funds. Under the Bayh-Dole Act, universities and government funding agencies enter into a funding agreement which grants a right of ownership to the university subject to a number of obligations. Most importantly, the university must comply with various obligations concerning disclosure of the invention, election whether to retain title, royalty sharing and preference to small businesses and US industry.
If the university does not comply with the above obligations or chooses not to take title, the Bayh-Dole Act and its implementing regulations provide for the government to receive title by giving written notice. The inventor can apply to the government for title. If the university complies with its obligations, it will be permitted to retain title and commercialise the invention. However, the government will still have certain minimum rights, including a non-exclusive irrevocable licence to use the invention throughout the world. The government will also have ‘march-in rights’ which allow it to make the university grant (or itself grant) a licence to a third party where the university fails to commercialise the invention, where licensing is necessary for health and safety needs, or where preference for United States industry has not been observed.
All research institutions that receive funding from government funding agencies are subject to the Bayh-Dole Act. Invention ownership in government research organisations is governed exclusively by national technology transfer legislation. The United States government can claim ownership of inventions created by public servants under the authority of Executive Order No 10096 and its implementing regulations, unless the government’s contribution is not sufficient to justify the assignment of ownership. Once a government research institution claims ownership of an invention, that organisation will be obliged under the Stevenson-Wydler Act to commercialise it where appropriate. The Stevenson-Wydler Act establishes various administrative structures to encourage commercialisation and specifies that if the research institution claims ownership and fails to commercialise, then the employee inventor can obtain title (subject to the government obtaining a non-exclusive licence).
The Bayh-Dole and Stevenson-Wydler legislation was introduced in the United States to address the problem that a large number of potentially valuable inventions created by universities and private research institutions with public funds were not being commercialised. This problem was attributed to the absence of a uniform policy governing the ownership of such inventions, and to the lack of incentives for institutions to actively pursue commercialisation as there was no guarantee that they would be given exclusive rights to the technology. Furthermore, government funding agencies lacked the expertise and the ability to see the commercial potential of a new invention. In this regulatory environment, it was thought that the US was unable to develop its own inventions and potential products were lost to overseas developers.
The primary aim of both the Bayh-Dole and Stevenson-Wydler legislation was to provide a clear and uniform system of managing IP rights in publicly funded institutions, which would, in itself, provide an incentive for improved technology transfer. Bayh-Dole vested title over all inventions created using public funds in universities and other research institutions, regardless of the funding agency. Stevenson-Wydler applied to government agencies and imposed a duty on federal departments to transfer technology to State and local governments and the private sector, and established administrative structures to support this obligation. Bayh-Dole empowered federal agencies to license federally owned inventions and enacted a detailed licensing regime. Both Bayh-Dole and Stevenson-Wydler provided that royalties from commercialisation should be shared with the inventor to provide an incentive to create inventions for practical use.
A secondary aim of the legislation was to create an additional incentive to patent inventions by introducing the potential for the government to confiscate ownership of an invention if it was not patented within a certain period of time. Further, to curtail the potential abuse of monopoly power, the government was granted a non-exclusive license to use the invention for government purposes and retain "march-in rights" which can be exercised in the public interest. An examination into the effectiveness of Bayh-Dole shows that the most probable effect of the legislation is that it accelerated the trend in patenting by universities, by removing obstacles surrounding complicated patent ownership rights.
Experiences in both Canada and the United Kingdom generally support a Bayh-Dole style approach to ownership and management of patents resulting from publicly funded research. Experience in Canada reveals many problems that may arise out of a laissez-faire approach to IP ownership and especially out of the failure of research institutions to take responsibility for IP management. On the other hand, the UK experience reveals problems that arise when research funders maintain too much control over IP generated from their funds. Both experiences therefore point to research bodies as the most desirable owners of IP.
Both countries recognise the need to attach responsibilities to IP ownership, though each country seeks to implement them in different ways. The responsibilities are aimed at encouraging research bodies to implement strategies and systems to identify, protect, manage and commercialise valuable IP. In addition, both countries also emphasise the importance of incorporating knowledge transfer or innovation as an express part of research bodies’ missions. They also require disclosure of all intellectual property owned by research bodies to the Government on a regular basis. Canada has proposed that research bodies give priority to local industry and small business when licensing IP. The UK, on the other hand, considers such an obligation unrealistic and inconsistent with the global nature of industry.
The common points shared by the UK and Canadian proposals for reform of IP management in publicly funded research bodies can be summarised as follows:
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IP should be vested in the research bodies
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IP ownership should be coupled with responsibilities designed to encourage research bodies to implement strategies and systems to identify, protect, manage and exploit valuable IP
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Knowledge transfer or innovation should be included as an express objective of research bodies
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IP owned by research bodies should be disclosed to the government on a regular basis
Other studies have identified many impediments to the effective management and commercialisation of intellectual property by Australian universities and government research organisations. To date, the emphasis has been on encouraging universities to change their own practices. This strategy has had varied success. This study has identified a new strategy that the government could adopt, inspired by the key features of the United States’ Bayh-Dole legislation and the Stevenson-Wydler Act and building on the existing mechanisms in Australia.
The proposed approach involves granting research institutions the benefit of ownership rights to publicly funded inventions, subject to the fulfilment of a number of responsibilities. These responsibilities concern the identification, protection, management and commercialisation of IP resulting from publicly funded research. Monitoring and supervision of the discharge of these responsibilities could occur by requiring research institutions to report periodically to government funding agencies. An incentive to comply could be based on the prospect of reduced funding for research for inadequate discharge of those responsibilities.
It is acknowledged that these new strategies will not remove all the impediments to the effective management and commercialisation of IP in publicly funded research institutions. Some issues, such as a lack of funding for invention development, cannot really be solved by placing obligations on research institutions. Nevertheless, a Bayh-Dole and Stevenson-Wydler type strategy is at least worthy of consideration by the Australian government. These initiatives could be implemented in research institutions by strengthening the National Principles and the Interim Guidelines and extending their operation to grants from a wider range of public funding agencies.
As experience has shown in the United States, Canada and the United Kingdom, the optimal initial owner of a patent for an invention is the research institution in which the invention was created. Research institutions are best placed to implement management structures to identify potentially valuable patents and they are also well positioned to pursue commercialisation of such inventions. The default position should not vest ownership of patents in employee inventors or funding agencies. However, whilst there should not be an automatic devolution of patent rights to employees or funding agencies, research institutions should be allowed the freedom to assign patent rights on a case by case basis where the institution believes that such an assignment would lead to an optimal outcome with respect to commercialisation.
The right to ownership of patents should be coupled with the assumption of responsibility for the effective identification, protection, management and commercialisation of the invention. The following responsibilities should attach to the ownership of patent rights:
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A responsibility to identify, and have systems in place to support the identification of, commercially valuable inventions.
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A responsibility to protect commercially valuable inventions.
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A responsibility to reward employees who create commercially valuable inventions.
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A responsibility to appropriately exploit patented inventions.
The approach proposed above could be implemented by the adoption of a policy requiring certain federal government funding agencies to make grants to research institutions conditional upon the acceptance of the responsibilities recommended above. In particular, it could be implemented through an expansion of the approach already operating in Australia via the National Principles and the Interim Guidelines. This "expanded National Principles approach" would enlarge the content of the responsibilities currently applied to research institutions, as well as the range of funding agencies applying those responsibilities.
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