17 March 2010

Employer's Ownership of Invention Governed by Common Law

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Case: Richwood Creek Pty Ltd v Williams [2010] FCA.

I came across this unreported case recently. It's a reminder of the importance of getting the business relationship right.

The case is an appeal to the Federal Court from an opposition decision handed down by the delegate of the Commissioner of Patents. The Commissioner had found that Williams' rights in respect of the patent vested in a company called Norkres Pty Ltd as well as the applicant, Richwood Creek. Since Richwood Creek alone was not entitled to the grant of the patent, according to the delegate, opposition was established and the patent application was refused.


Section 15 includes: "Subject to this Act, a patent for an invention may only be granted to a person who would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person. The delegate was of the view that because a contract of service existed between Williams and Norkres Pty Ltd at the time the invention was conceived, the rights in the invention vested in Norkres Pty Ltd pursuant to section 15.

However, Spender J. pointed out that even if a contract of employment existed in terms of which Williams was employed to invent, the rights of the employee to the invention did not pass to the employer pursuant to section 15. Citing Spencer Industries Pty Ltd v Collins (2003) 58 IPR and Fine Industrial Commodities Ltd v Powling (1954) 71 RPC, his Honour said that if the invention was something that was the employer's job to invent, then the invention vests with the employer, not by virtue of statute, but by common law and equitable principles. As set out in the RPC case, it does not necessarily follow that the existence of a contract of service disqualifies an officer or employee from taking out a patent. That's even though the invention relates to subject matter relevant and useful to the employer. It does not even follow where the employee or officer made use of the time and material of the employer. All of the circumstances must be considered in each case.

In this case, it appeared that there was no documentary evidence for the purpose of Williams' employment. Furthermore, there was an assignment document assigning rights from Williams and another to Richwood Creek. It was also regarded as significant that Norkres Pty Ltd did not seek to assert any entitlement to the patent.

Spender J. dismissed the opposition.

Employers need to make sure that there is documentary evidence to indicate the nature and scope of an employment (permanent, contractual or otherwise) relationship. That evidence should relate directly to the invention conceived by the employee.

1 comment:

  1. Interesting to know.
    The Israeli patent act has a specific section which entitles any invention made by an employee due to his service and during the term of his service. As the law dictates this, there is no need to find remedy in equity.

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