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Universities have always been sources of innovative ideas as they, provide the infrastructure and environment to encourage research and development. Increasingly, universities are promoting commercialisation of some of those ideas to encourage entrepreneurship and generate revenue. Many universities have some form of Technology Transfer Office where innovators can seek advice about taking their innovation further and can potentially also obtain financial support for seeking patent protection.
Normally an inventor is the first owner of any invention they make. However, there are circumstances in which this may not be the case, the most common is when the invention is made by an employee during the course of their employment, but other contracts or agreements can transfer ownership of inventions. To generate a return for the university, the university may want at least a share of the ownership of the invention and any patent protection.
In the first case of its kind in the UK (Oxford University Innovation Limited v. Oxford Nanoimaging Limited) Mr Daniel Alexander KC, sitting in the Patents Court, looked at ownership of an invention originating in a university and provided some useful clarity.
In the UK, Section 39 of the Patents Act 1977 states that any invention made by an employee shall belong to the employer if the invention is made during the employee’s normal duties, or duties specifically assigned to them, and where an invention might reasonably be expected to arise. This last requirement is often referred to as the employee being “employed to invent.”
The employer also owns inventions made by an employee if, at the time it was made, the employee had a special obligation to further the interests of the employer.
In other circumstances the employee will normally own any inventions that they make.
When trying to determine who owns an invention made by an employee it is helpful to review any employment contract and any associated documentation to understand the nature of the ‘normal duties’ expected of the employee.
Many inventions made at universities are made by employees of the university and the considerations in relation to employee inventions apply, but what if the inventor is not an employee? Students, including PhD students, are not typically employees of the university. However, there is usually some form of agreement between the student and university which may govern ownership of any inventions made by the student.
The court case mentioned above is interesting as the judge was required to consider both ownership under an employment contract and ownership under a university-student contract.
Oxford University Innovation Limited (“OUI”) went to court to seek payment of license fees for Intellectual Property (IP) rights that were licensed to Oxford Nanoimaging Limiting (ONI). The IP rights relate to a compact, super-resolution imaging device (a type of specialised microscope) developed at Oxford University (“the University”) and which was commercialised by the Defendant (“ONI”) as the ‘Nanoimager.’ In the case the University and OUI were together referred to as “Oxford.”
A key part of the case was whether Oxford could validly claim rights to inventions made by Mr Bo Jing (“Mr Jing”), who was initially a research intern, and later a DPhil student, at the University. While Mr Jing was employed as an intern, and while he was working as a DPhil student, he worked on the Nanoimager project in the condensed matter lab at the University and this work resulted in IP later exploited by ONI.
When ONI was spun out to exploit the technology, Mr Jing became the chief technology officer, and later the CEO, having left the University without completing his DPhil to focus on commercial development of the Nanoimager.
IP created while Employed as an Intern
It was argued that during the time Mr Jing was employed, his lack of experience and ‘low status’ as an intern meant that there was no reasonable expectation that he would create inventions and therefore, any inventions he made did not automatically belong to Oxford.
On the facts the Judge concluded that, while employed as an intern, Mr Jing’s duties did result in a reasonable expectation that inventions might be created so any relevant inventions belonged to Oxford. This was described as “the relatively straightforward part of this case.”
IP created while Studying for DPhil
The more complex part of the case was ownership of inventions made while Mr Jing was studying. There was no suggestion that Mr Jing was an employee at this stage. The DPhil contract Mr Jing signed incorporated the University IP Statute and Regulations and it was common ground that these appear prima facie to transfer ownership of IP to the University in exchange for a share of any revenue and, potentially, equity from its commercialisation.
However, what was disputed is whether those contract terms should be binding on Mr Jing. The main argument from ONI was that Mr Jing was a consumer and the contract between Mr Jing and the University contravened the Unfair Terms in Consumer Contracts Regulations. The judge therefore had to consider whether Mr Jing was a “consumer” and, if he was, whether there were terms in the University IP Statute and Regulations that were “unfair.”
A key reason for the existence of consumer protection is to counter a potential imbalance in the bargaining positions between a supplier and consumer. Where a contract is established for trade or professional reasons it is considered that the parties are in a reasonably similar bargaining position. In reaching a decision the judge reviewed various definitions of a “consumer” in different legislation. The judge also considered whether studying as an undergraduate or postgraduate could be considered to be for professional or trade reasons, and whether the level of funding a student might receive could make a difference. It was concluded that a student, whether undergraduate or postgraduate, was a consumer.
The review then turned to the specific contract terms imposed and whether they were unfair. The IP position in different scenarios was considered.
Without an agreement to the contrary, as a non-employee Mr Jing would have been the owner of the IP he created (subject to any conditions imposed as part of any funding received) and might be considered to have been better off than in the current situation. However, he would not have been able to call upon the University for assistance in protecting or commercialising that IP.
The IP Provisions offered employed researchers at the University substantially the same benefits as a student. Those benefits were considered to be more generous than those commonly found in industry and therefore a student was no worse off than a University employee, and was probably better off than an employee in industry.
A review of the IP regulations at other institutions also showed that the University IP Provisions were in line with those of other universities.
The judge decided that the IP terms in the contract were not unfair and were therefore not void.
As a result, the judge concluded that the Oxford was entitled to claim ownership of the IP which was the subject of the license agreement with ONI. The license was not void and ONI should therefore pay the royalties due.
It is important for both parties to review any contract which might have a bearing on IP ownership. The ‘normal’ duties set out in an employment contract should be set out with care and the IP provisions in a contract between a student and university must be fair as the student is a consumer.
In this case the IP provisions between the student and university were considered fair. It is important for universities to review such agreements periodically and update them as required to ensure that they remain in line with others to avoid issues in the future. This is particularly important as universities seek to commercialise results of research to provide additional funding.
If you have any questions about ownership or protection for your own inventions, or about how the IP protection of others could impact your plans, please do not hesitate to contact Alex Bone from our team.
Category: Latest Insights | Author: Alex Bone | Published: | Read more
