Naturo Pty Ltd v The Fruit Company Limited - [2016] APO 89

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Naturo Pty Ltd v The Fruit Company Limited [2016] APO 89

Innovation Patent: 2014101330

Title:Inhibiting Browning of Cut Fruit and Vegetables

Patentee:  The Fruit Company Limited
Requestor:  Naturo Pty Ltd
Delegate:  M. G. Kraefft
Decision Date:  23 December 2016
Hearing Date:  Written submissions due 30 September 2016

Catchwords: INNOVATION PATENT – application under Section 191A – whether rectification of Register of Patents appropriate – establishment of inventor – sole inventor – incorrect entry of alleged co-inventor – whether patentee entitled – requestor found to be entitled – directions to rectify the Register.

Representation: Patent attorney for the patentee: Wrays.
Patent attorney for the requestor: Davies Collison Cave.

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovation Patent: 2014101330

Title:Inhibiting Browning of Cut Fruit and Vegetables

Patentee: The Fruit Company Limited
Date of Decision: 23 December 2016
DECISION
Mr Jeffrey John Hastings was the sole inventor of the inventive concept in this case. Mr Christopher Murphy is presently listed as a co-inventor in the Register of Patents which is incorrect on the available evidence. Pursuant to Sub-section 191A(1), I direct that the Register be rectified to remove Mr Christopher Murphy as an inventor for the present innovation patent.
The requestor, and not the patentee, was entitled to have the patent for the present alleged invention assigned to it. On the balance of probabilities the Register of Patents does not properly record a person’s entitlement to the patent.
Pursuant to Sub-section 191A(2), I declare that the requestor is entitled to the innovation patent in this case. Pursuant to Sub-section 191A(3), in respect to the present innovation patent I direct that the Register of Patents be rectified to remove the present patentee, The Fruit Company Limited, from the Register and replace with the name of the requestor, Naturo Pty Ltd.
Costs in accordance with Schedule 8 awarded against the patentee, The Fruit Company Limited.
REASONS FOR DECISION
BACKGROUND

The Fruit Company Limited (“the patentee”) filed innovation patent 2014101330 on 6 November 2014. The innovation patent is a divisional patent based on a standard patent application 2013204221. The earliest priority date is 12 April 2013. The latter application has lapsed. The innovation patent was granted on 13 November 2014 and lists Mr Christopher Murphy and Mr Jeffrey John Hastings as the inventors.
On 2 February 2016, Naturo Pty Ltd (“the requestor”) made an application under Section 191A seeking rectification of the Register of Patents. The application essentially sought to have the requestor named as the sole patentee of the innovation patent. In the application, the requestor also asserted that Mr Murphy was not an inventor and that Mr Hastings was the sole inventor.
For the conduct of the proceedings, directions were issued on 3 March 2016. Each party had a concurrent period of two (2) months from that date to file evidence in support. Each party then had a concurrent period of one (1) month to file any responding evidence.
During the evidentiary period, the requestor sought and was granted an extension of time to file evidence in support. Each party was thus given until 3 June 2016 to file evidence in support. In the event, only the requestor has filed evidence in this matter. Notably the patentee did not file evidence in support of its own or evidence in response to the requestor’s evidence in support.
Subsequently the parties were notified that the hearing would proceed on the basis of written submissions. Both parties were to file submissions in chief by 22 September 2016 and then any responding submissions by 29 September 2016. Neither party filed any submissions.
SPECIFICATION
The specification describes the alleged invention as relating generally to inhibiting browning of food and, in particular, to inhibiting enzymatic browning of food. Paragraph [0004] describes enzymatic browning as a chemical process, involving polyphenol oxidase, catechol oxidase and other enzymes that create melanins and benzoquinone from natural phenols, resulting in a brown colour. Enzymatic browning generally requires exposure to oxygen. Thus, for example, avocado when cut turns brown.
At [0005], contrary to enzymatic or oxidative browning, non-enzymatic browning is a chemical process that produces a brown colour in foods without the activity of enzymes. Caramelisation is one form of non-enzymatic browning.
The specification then discusses a variety of existing techniques for preventing enzymatic browning. Blanching is mentioned as one example from [0014] onwards. Blanching is a cooking process wherein the food substance is plunged into boiling water, removed after a brief time interval, and finally plunged into iced water or placed under cold running water to halt the cooking process. Steam blanching is also discussed. The problem with blanching is that any water, directly or condensed from steam, that contacts the food can remove natural oils and juices from the food which can adversely affect the colour, taste or other characteristics of the food. With specific reference to avocados, at [0020] the specification mentions the desirability to be able to treat cut avocado to inhibit enzymatic browning thereof without adversely affecting the colour, taste, texture or other characteristics of the treated avocado.
The broadest form of the alleged invention may be found at [0024] of the specification, for example. Essentially the alleged invention relates to the steam blanching process and inhibiting any condensed liquid from the steam from contacting the food.
The specification ends with 83 claims. This is contrary to paragraph 40(2)(c) of the Patents Act 1990 which restricts the number of claims for an innovation patent to no more than five (5) claims. For present purposes it appears sufficient to have regard to independent claims 1 and 24. These claims are recited below.
1. A steam blancher for steam blanching food, the steam blancher comprising a steam source for producing steam to steam blanch food, the steam blancher being adapted such that a liquid that is condensed from the steam is inhibited from contacting the food.
24. A method for steam blanching food, the method comprising:
operating a steam source to produce steam to steam blanch food; and
inhibiting a liquid that is condensed from the steam from contacting the food.
EVIDENCE
The requestor filed evidence in support from Mr Jeffrey John Hastings. In his declaration, Mr Hastings stated that he was a director and the secretary of the requestor. At [5] Mr Hastings stated that, in or around May 2011, he was approached by the patentee to see if he would be interested in assisting the patentee to develop value-added avocado products for the patentee. Mr Hastings described, at [6], the purpose of the engagement to be to create a product using avocado flesh that could be sold commercially that had a longer shelf life than other commercially available packaged products of avocado flesh. During the course of that engagement, Mr Hastings created the invention ([16]). In several places in evidence ([64], [65], [108] and [109]), Mr Hastings further stated that he was the sole inventor. Furthermore he indicated (also at [64]) that Mr Murphy, the chief executive officer for the patentee, had never asserted that he contributed in any way to the conception of the invention. Moreover Mr Hastings considered that his engagement with the patentee was as an independent contractor ([12], [14] and [16]). Mr Hastings thus considered, and stated that the patentee acknowledged, that all intellectual property that Mr Hastings generated from the engagement belonged to Mr Hastings unless otherwise assigned by him ([66] and [83]).
As mentioned earlier, the patentee did not file any evidence in support, or evidence in response to the requestor’s evidence in support.
APPLICABLE LAW
Section 191A of the Patents Act 1990 relates to rectification of the Register of Patents. The sub-sections are outlined below.
(1)The Commissioner may rectify the Register if the Commissioner is satisfied, on the balance of probabilities, whether on application or otherwise, of any of the following:
(a)    the omission of an entry from the Register;
(b)   an entry made in the Register without sufficient cause;
(c)    an entry wrongly existing in the Register;
(d)   an error or defect in an entry in the Register.
(2)The Commissioner must, on application, make a declaration as to a person’s entitlement to a patent, or a share in a patent, if the Commissioner is satisfied, on the balance of probabilities, that the Register does not properly record a person’s entitlement to a patent, or a share in a patent:
(a)    because the patent, or a share in the patent, was granted to a person who was not entitled to it; or
(b)   because the patent, or a share in the patent, was not granted to a person who was entitled to it; or
(c)    for any other reason.
(3)If the Commissioner makes a declaration under subsection (2), the Commissioner must rectify the Register accordingly.
……
(6) An appeal lies to the Federal Court against a decision of the Commissioner:
(a) to make, or refuse to make, a declaration; or
(b) to rectify, or not rectify, the Register;
under this section.
Subsections (4) and (5) relate to precluding the making of a declaration or rectification of the Register, without first giving relevant persons the opportunity to be heard, or while relevant proceedings are pending, respectively.
Section 15 relates to persons to whom a patent may be granted. Relevant parts of sub-section (1) appear below.
(1)Subject to this Act, a patent for an invention may only be granted to a person who:
(a)    is the inventor; or
(b)   would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c)    derives title to the invention from the inventor or a person mentioned in paragraph (b); or ……
In Robert Dommett v Zebra Research Pty Ltd, [2011] APO 53 at [32], the delegate referred to the Full Federal Court decision, University of Western Australia v Gray, [2009] FCAFC 116 (“the UWA decision”), to discuss the law governing disputes over entitlement. The delegate stated that the court accepted that entitlement is assessed by considering three matters:-
1. identify the “inventive concept” of the invention as defined in the claims;
2. determine inventorship including the person responsible for the inventive concept and the time of conception as distinct from its verification and reduction into practice; and
3. determine how many contractual or fiduciary relationships give rise to proprietary rights in the invention.
In the first instance decision, University of Western Australia v Gray (No. 20), [2008] FCA 498, French J commented, at [1426], that the inventive concept marks a boundary between invention and verification. French J then referred to the US Court of Appeals Federal Circuit decision, Burroughs Wellcome Co v Barr Laboratories Inc, [1994] USCAFED 1225, (1994) 40 F.3d 1223. He stated that this decision set out the following principles, amongst others, as established by US appellate courts:
- Conception is the touchstone of inventorship, the completion of the mental part of inventions;
- Conception is the “formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention as it is hereafter to be applied in practice”. It is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice without extensive research or experimentation.
On appeal, the Full Court of the Federal Court, in the UWA decision, did not appear to disturb French J’s position on the above points.
The law is replete with cases of entitlement from employer-employee relationships. In Austal Ships Pty Ltd v Damien Smith, [2011] APO 4, the delegate stated that the law governing employer entitlement to employee inventions was summarised in Victoria University of Technology v Wilson, [2004] VSC 33. At [104]:-
“The law is well settled upon the position of an officer or employee who makes an invention affecting the business of his or her employer. It is an implied term of employment that any invention or discovery made in the course of the employment of the employee in doing that which he is engaged and instructed to do during the time of his employment, and during working hours, and using the materials of his employers, is the property of the employer and not of the employee. Having made a discovery or invention in course of such work, the employee becomes a trustee for the employer of that invention or discovery, and he is therefore as a trustee bound to give the benefit of any such discovery or invention to his employer. But the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship. And that is so even if the invention is germane to and useful for the employer’s business, and even though the employee may have made use of the employer’s time and resources in bringing the invention to completion. Certainly, all the circumstances must be considered in each case, but unless the contract of employment expressly so provides, or an invention is the product of work which the employee was paid to perform, it is unlikely that any invention made by the employee will be held to belong to the employer.”
In the UWA decision, the Full Court of the Federal Court discussed the law around implied terms of employment, employee inventions and the consequent entitlement issues at length, often referring to the first instance decision of French J. After reviewing some of the case law, including the Victoria University of Technology decision, the court stated at [152] – [154]:-
“Unsurprisingly, express contractual stipulation apart, with the employer’s entitlement turning on that which it was the employee’s ‘duty’ to do – and for which the employee was paid – the recurrent preoccupation in the case law has been in each instance with the actual subject matter and purpose of the employee’s engagement itself and with the question: ‘[w]hat is it that he is employed to do?’; cf LIFFE Administration & Management v Pinkava, [2007] EWCA Civ 217, [2007] 4 All ER 981 (LIFFE) at [97]. The end of this inquiry is to ascertain whether, if at all, it was part of an employee’s engagement with his or her employer to utilise his or her ‘inventive faculty’ (cf Sterling Engineering at 544; Vokes at 136) in an agreed way or for an agreed purpose for the benefit of, or to further the purposes of, the employer. ….
If the employee’s invention is the, or a, product of what he or she was employed to do, and did do, it will belong to the employer unless otherwise agreed. ….
By way of contrast, if (a) the employee was not engaged to use his or her inventive capacity at all …. or (b) was so engaged only by way of additional duties to use his or her inventive capacity as and when asked …. or only for an agreed purpose, the employer would have in case (a) no claim on the employee’s invention at all and in case (b) such a claim only if the invention resulted from a task the employee was asked to perform by way of additional duty or if the invention was related to the effectuation of the agreed purpose.”
In the university context the Full Court, again relying on French J’s considerations in the first instance decision, cautioned against equating an academic’s general duty to research with a duty to invent, even though the research is that from which an invention might reasonably be expected to result. Similarly the Full Court noted the different employment obligations that might pertain to persons employed by a university as distinct from a private commercial entity. At [170] and [171] of the Full Court decision:-
“When the primary judge later considered the circumstances of Dr Gray’s employment with UWA, he referred to the terms of his contract of employment (to which we earlier referred) and noted (at [1360]):
Dr Gray had no duty to invent anything. He had a duty to undertake research and to stimulate research amongst staff and students at UWA. He was working for a university.
His Honour went on to observe that, at all presently relevant times there was nothing to prevent Dr Gray from publishing the observations and discoveries he made and details of the technologies he developed. Nor was he obliged to protect by non-disclosure the patentability of any invention he developed in the course of his employment (at [1360]):
In this important respect his employment obligations differed from those of a person employed by a private commercial entity whose inventions in the course of employment could benefit or affect the business of the employer.
The primary Judge went on to acknowledge that the ‘contemporary reality’ was that most if not all universities (including UWA) engage in commercial activities. Nonetheless, when selecting the research work he would undertake, ‘Dr Gray was not required to advance a UWA commercial purpose’: [1362].”
As to relationships determined by consultancy agreements, the Novogen Research Pty Ltd v G. J. Consultants Pty Ltd decision, [2008] APO 24, appears relevant in the present case. In the Novogen case at [19], the parties did not dispute that a certain individual was the sole inventor. The key point of dispute concerned whether the invention was conceived during the period of a formal consultancy agreement. The arrangements regarding the consultancy agreement were described at [15] – [18] of the Novogen decision. Principally the consultancy was initially limited to 130 hours for an initial term of one year. The consultant was required to advise on matters of either a general or specific nature as to research in areas such as steroids, phytoestrogens, their derivatives and metabolites, and to assist with the chemical recovery, isolation, identification and synthesis of these products, amongst other things. In that case the delegate noted at [19] that there was general agreement that the client company, not the consultant, had entitlement to any invention conceived prior to termination of the consultancy. The delegate found in favour of the client company in respect to the key inventive concept conceived during the period of the consultancy agreement, but not in respect to another separate inventive concept that was also part of the subject matter in that case.
The Infra Red Technologies Pty Ltd v Dirk Domenico Cortesi decision, [1997] APO 6, dealt with an agreement considered in evidence by Mr Cortesi to have always been a marketing and manufacturing association involving his design of micronizers. His evidence was that he was involved as a consultant for the marketing and manufacturing efforts of a group of companies and that he was never an employee of the companies. The delegate accepted the evidence of Mr Cortesi and on balance concluded that, despite a company’s statement of entitlement on a notice of entitlement for a corresponding patent application, the rights to the invention did not flow from Mr Cortesi to any of the companies by virtue of an employee/employer or other contractual relationship. This case may clearly be contrasted with the Novogen case where there was general agreement between the parties that the client had entitlement to any invention conceived prior to termination of the consultancy.
INVENTIVE CONCEPT
The broadest form of the alleged invention as claimed is the inhibition of condensed liquid from steam from contacting the food. This appears to be insufficient to define an inventive concept along the lines discussed above. The alleged invention as broadly claimed appears to be no more than a desirable objective for inhibiting enzymatic browning without adversely affecting the colour, taste, texture or other characteristics of the product.

In evidence at [36], Mr Hastings stated that he came up with an idea to address the problem of condensed steam falling back onto cut avocado during the steaming process. That idea involved creating a slanted canopy covering the blanching area that would allow liquid, condensed from steam rising from the blanching area, to run off into a tray without dripping back onto the avocado. At [41c] of the evidence, Mr Hastings described the provision of a cover that contained steam rising from a water bath and ran the condensed steam away from the avocado pieces back into a water tray so that the water would not drip on to the avocado pieces below. At [44] Mr Hastings commented on the effectiveness of the slanted cover of the steam blanching apparatus during steam blanching trials.
On the other hand, the concept of a cover or canopy, slanted or otherwise, for directing condensed steam away and preventing condensed steam from dripping onto food, is not defined in the present claims until at least claim 22 of the innovation patent. I will treat this concept as the inventive concept in the present case.
INVENTOR
Mr Murphy is presently listed as a co-inventor alongside Mr Hastings in respect to the innovation patent. On the other hand, as mentioned above, Mr Hastings has stated himself to be the sole inventor in several places in evidence. Moreover Mr Hastings stated at [64] that Mr Murphy had never asserted that he contributed in any way to the conception of the invention.
The patentee has not filed evidence to defend against or challenge Mr Hastings’ assertions in this respect. In the absence of evidence to the contrary, I accept that Mr Hastings was the sole inventor of the inventive concept in this case.
WORKING RELATIONSHIPS
As mentioned earlier, Mr Hastings stated that, in or around May 2011, he was approached by the patentee to see if he would be interested in assisting the patentee to develop value-added avocado products for the patentee. The patentee traded as Natures Fruit Company (“NFC”). Mr Hastings initially produced a project scoping document (exhibit JH-1) for NFC that identified several different technologies that could be used to develop a long-life avocado product. The document also set out nine steps for the project to commercialisation. At NFC’s board meeting in around June 2011, the board agreed that, initially, NFC would engage Mr Hastings’ company, Xylem International Pty Ltd (“XI Co”), to complete the first two steps of the nine steps. Mr Hastings was the sole director and the secretary of XI Co. On the above basis, Mr Hastings stated that, on or about 1 July 2011, XI Co entered into a letter of engagement or services agreement (exhibit JH-2) with NFC. In the letter of engagement, the project was stated to relate to the commercial development of value-added avocado products.
According to the letter of engagement, the agreement was as follows:-
“Xylem International (Xylem) agrees to provide services to Natures Fruit Company (NFC), to assist them in developing a range of value added avocado products, as detailed in the Project Scoping reference document, dated June 2011.
It is agreed that the initial engagement will undertake task 1, New Product Development Phase and task 2, Market Scan, of the workflow summary & charges detailed in the reference document. Engagement on subsequent tasks will be the subject of a separate agreement and dependent on Xylem completing tasks 1 and 2, to the satisfaction of NFC.”
The project scoping document described the focus of the project to be primarily on the development of fresh and fresh-frozen sliced, diced or halved avocado products. The new product development phase was to include considerations of anti-browning technologies, freezing technologies, packaging technologies, whole avocado inflow quality controls, and blanching time and temperature determination.
Several points arise from an examination of the letter of engagement filed in evidence. Firstly, while the letter indicated a commencement date of 1 July 2011, there were no signatures or dating of the document by either party. On the available evidence, the engagement of XI Co appeared not to have been formalised. Secondly the relationship between the parties was described as one of client (NFC) and of consultant (XI Co). Thirdly the estimated time frame to complete each task was stated to be agreed to be 10-14 weeks for task 1 and 1-2 weeks for task 2. In view of these time frames, if the engagement had commenced on or about 1 July 2011, then it should have concluded by the beginning of November 2011. Fourthly, developmental work by XI Co was clearly required to assist NFC to improve the quality of avocado products to be brought to the market. Fifthly, the letter of engagement was silent over who would have been entitled to any intellectual property generated from the project.
Throughout the evidence, Mr Hastings described himself as an independent contractor under this agreement. Accordingly he considered that he owned any intellectual property that he developed as part of the project.
At [35] of his evidence, Mr Hastings stated that NFC agreed, at its board meeting of 25 November 2011, to continue with the project. Specifically, NFC continued to engage XI Co to carry out the subsequent stages of the project as outlined in the project scoping document. Mr Hastings acknowledged that NFC and XI Co did not formally enter into any further agreement or engagement in relation to XI Co’s ongoing provision of services in this regard.
At [15] of his evidence, Mr Hastings stated that, in or around July 2012, he ceased providing services to NFC on behalf of XI Co and commenced providing the same services to NFC on behalf of Xylem Management Pty Ltd (“XM Co”) in his capacity as sole director of XM Co. Mr Hastings acknowledged there was no formal agreement with NFC in this respect either. One may conclude from the above that the ongoing working relationship between the parties was rather informal.
NATURE OF DUTIES, & EMPLOYEE AND CONSULTANT RELATIONSHIPS
Mr Hastings was clearly engaged by a private commercial entity. His situation may be contrasted with that of a university researcher as discussed in the UWA decision. In the case of Dr Gray at UWA for example, he was not employed or under a duty to invent. He was appointed to teach, to conduct examinations and to direct and supervise the work in his field. Dr Gray was also appointed to undertake research, to organise research and generally to stimulate research among the staff and students. He was free to decide the nature and purpose of his research (UWA decision at [3] and [61]). On the other hand Mr Hastings’ duty was to assist NFC to develop “value-added” avocado products (at [5] of the evidence). More specifically, the purpose of his engagement was to create a product using avocado flesh that could be sold commercially (ie a packaged product of avocado flesh) which had a longer shelf life than other commercially available packaged products of avocado flesh (at [6] of the evidence). Mr Hastings further stated that to develop a product made from avocado flesh that would have a long shelf life, it would be necessary to develop a method or process to inhibit or delay the enzymatic browning of avocados. Clearly Mr Hastings’ duties were significantly more specific, directed and commercially focused in terms of the developments he was required to undertake than the duty and directions of Mr Gray’s research.
Considerations of other freedoms available to Dr Gray in the UWA case against those of Mr Hastings in the present case also appear pertinent. Again using the example of Dr Gray in the UWA case, he was free to publish the results of his research, along with any inventions arising from it, notwithstanding that such publication might destroy the patentability of the invention (UWA decision at [61]). In the commercial setting in which the present parties operated, confidentiality provisions appeared to be applied. For example, at [13] of Mr Hastings’ evidence, XI Co entered into a confidentiality agreement with NFC pursuant to which XI Co agreed to keep certain of NFC’s information confidential while providing services to NFC. Mr Hastings also organised freezing trials and blanching trials with third parties, including the then Department of Employment, Economic Development and Innovation (“DEEDI”), using prototypes and further modified steam blanchers designed by him and built by third parties. This work was all on a confidential basis (at [39] – [55] of the evidence).
From the above, the commercial context of Mr Hastings’ engagement is clear and may be clearly differentiated from that of employees at UWA for example. In the present case it may be argued that the inventive concept, that offered a solution to prevent condensed steam from dripping onto food by way of the provision of a slanted canopy covering the blanching area, arose on the side of Mr Hastings’ developmental work to inhibit enzymatic browning. It may also be accepted that Mr Hastings was not engaged specifically to invent. On the other hand, his engagement by NFC to find solutions related to longevity of products for NFC may be evidenced by the following examples. At [24] of his evidence, Mr Hastings stated that he investigated different anti-browning, packaging and freezing technologies which he considered might be used to develop a long-life avocado product. Also, Mr Hastings’ presentation to the NFC board on 25 November 2011 (exhibit JH-4), relating to the new product development stage of the project, mentioned blanching and freezing trials he conducted, and trials related to antioxidant selection. He also mentioned a problem of sticking avocados and considering conveyor belt design and non-stick papers. In summary, Mr Hastings was engaged to use his skills in product and/or technology development in the field to improve avocado products for commercialisation. The comments of French J in the first instance UWA decision appear pertinent. At [130]:-
“Where an employee has been employed for the purpose of solving a technical problem or improving the employer’s technology or to make inventions, then there will be an implied term in the contract that the inventions made by the employee in the discharge of such contractual duties belong to the employer”.
Consequently if Mr Hastings were an employee of the patentee then there would appear to be a strong prima facie case that any invention developed during his engagement with the patentee would belong to the patentee. On the other hand, Mr Hastings was emphatic in evidence that he considered himself to be engaged as an independent contractor and that he thus owned all intellectual property generated from the project. In this respect the present case would also appear to be somewhat removed from the Novogen situation and be more closely aligned with the Infra Red situation, discussed above. This would suggest that, on the nature of Mr Hastings’ duties performed in his capacity as a consultant, and absent any other relevant circumstances, the relevant intellectual property would belong to Mr Hastings.
TIMING OF ALLEGED INVENTION
Mr Hastings first mentioned coming up with an idea, in or around February 2013, for addressing the problem of condensed steam falling back onto cut avocado during the steaming process (at [36] of his evidence). That idea involved creating a slanted canopy covering the blanching area that would allow liquid, condensed from steam rising from the blanching area, to run off into a tray without dripping back onto the avocado. At [42] of his evidence though, Mr Hastings stated that, in anticipation of trials at the premises of DEEDI, he prepared drawings for a design of a prototype steam blancher apparatus. Those drawings (exhibit JH-6) were dated September 2012 and amongst other things showed, from end elevation, a slanted canopy covering the blanching area. Moreover the drawings were substantially the same as Figures 1-3 of the innovation patent specification. The specification described this aspect as a peaked canopy in the form of a lid resting on a tray and covering a middle portion of both the tray and a belt conveyor so that the canopy and the tray defined a tunnel through which the conveyor extended. Furthermore the preparation for and the nature of the steam blanching and freezing trials, with third party-built steam blanching prototypes and with further modified steam blanching apparatus, at DEEDI’s premises were also variously discussed in evidence as coinciding with the latter half of 2012. Similarly, discussions between Mr Hastings and NFC regarding the intellectual property generated from the project also principally occurred during the latter half of 2012. As indicated by the exhibit JH-6 of drawings mentioned above, I find the inventive concept the subject of the innovation patent had been substantially arrived at by at least September 2012.
CONSULTANCY PERIOD
From Mr Hastings’ evidence, it is clear that he was engaged and operating in accordance with the letter of engagement on stages 1 and 2 of the project. While the copy in evidence bore no signatures or dates, the conduct of the parties, from Mr Hastings’ evidence, would indicate the letter of engagement was in effect. Moreover the engagement to NFC, in a practical sense, continued beyond stages 1 and 2, and the period initially covered by the letter of engagement. At [14] for example, Mr Hastings stated that he provided services, under XI Co, to NFC in relation to the project pursuant to the letter of engagement until around July 2012. At [15], Mr Hastings indicated that he continued providing the same services to NFC under his new company name in or around July 2012.
The letter of engagement and the project scoping document in evidence both contained estimated consulting charges for stages 1 and 2 of the project. These estimates were $32,000. The project scoping document further contained estimated consulting charges for the whole project. These charges totalled $79,000. Mr Hastings stated that he ceased his dealings with NFC on or around 13 May 2013. While there is scant evidence provided of payments to Mr Hastings, the fact that he continued working for NFC on the subsequent stages of the project provides a strong indication that he continued to be paid by NFC until his cessation date. An email from Mr Murphy dated 15 April 2013, at exhibit JH-13, tends to support this position. Mr Murphy indicated there was a current fee-for-services arrangement between the parties. While a current contract is also mentioned in that email, no contract or copy thereof was provided in evidence.
The University of British Columbia v Conor Medsystems Inc decision, [2006] FCAFC 154, (“the UBC decision”), commented about Section 15 of the Patents Act 1990 in the following way. At [37] by Emmett J:
“Section 15 specifies no formalities as being necessary for an applicant to be effectively the assignee of the invention from the inventor. Further, s 15 specifies no formalities as being necessary for the derivation of title to an invention from an inventor or from a person who, on the grant of a patent, would be entitled to have the patent assigned. While an assignment in writing might be preferable, in order to avoid difficulties of proof, an assignment might be effected orally or may even be implied from the conduct of the parties.”
While the UBC decision discussed whether acts or conduct in that case could have constituted an assignment, it would appear that similar considerations apply in the present case. That is, whether the acts or conduct of the parties in the present case implied that the terms of the letter of engagement extended up to Mr Hastings’ cessation date. From the available evidence the conduct of the parties indicates that Mr Hastings was working as a consultant for NFC to develop value-added avocado products up to around 13 May 2013. I am satisfied the letter of engagement effectively extended up to 13 May 2013 and covered the full scope of the project as described in the project scoping document.
I have found that Mr Hastings conceived the inventive concept by September 2012. Thus the inventive concept was conceived during the period of Mr Hastings’ consultancy to NFC.
OWNERSHIP COMMUNICATIONS BETWEEN PARTIES
A significant proportion of the requestor’s evidence related to communications between the parties in respect to ownership and assignment of the alleged invention. According to Mr Hastings’ account, these communications proceeded on the principal basis of an understanding by both parties that Mr Hastings owned the relevant intellectual property rights and thus the parties engaged in negotiations with a view to transferring full ownership to NFC. Those negotiations did not proceed to any agreement. In the light of the UBC decision, this may be a factor where the conduct of the parties may influence assignment or otherwise of an invention.
At [65] of his evidence, Mr Hastings indicated that he had various communications with several representatives of NFC between April 2012 and May 2013 regarding ownership of the alleged invention. At all times during those communications, Mr Hastings understood, and believed that the representatives of NFC understood, that he personally owned all rights, title and interest in the invention on the basis that he was the sole inventor and that he had not assigned that right, title or interest to anyone. Mr Hastings supported this understanding amongst the parties by stating the communications involved negotiations to transfer full ownership of the invention from Mr Hastings to NFC and then to another entity for the purpose of jointly commercialising the invention.
Mr Hastings also exhibited a draft shareholders agreement and a draft management agreement (exhibit JH-11). He indicated in evidence that the drafts originated from NFC. On intellectual property matters, the draft shareholders agreement purported to be an agreement to incorporate a joint venture company for the ownership and commercialisation of the invention. At part 7 of the agreement, Xylem was to assign to the joint venture company all right, title and interest in and to the project intellectual property. This would appear to indicate a belief by NFC that Mr Hastings, or his company XM Co, owned the intellectual property arising from the project. At [76] of his evidence, Mr Hastings stated he did not execute either of the draft agreements.
Exhibit JH-12 contained an email chain seemingly originated by Mr Murphy as general manager of NFC. Attached was a draft Memorandum of Understanding (“MOU”). In the first email, amongst other things, Mr Murphy indicated the need for he and Mr Hastings to sign the attached MOU. The period of the MOU was stipulated to commence on 12 April 2013 and continue until 11 May 2013 (“the initial term”). The commencement date coincided with the earliest priority date of the present innovation patent, that being the filing date of the parent application 2013204221. At the outset the draft MOU stated it was, amongst other things, for the purpose of establishing agreements for the assignment by XM Co to NFC of any and all intellectual property rights in connection with the value-added avocado products. Amongst the undertakings listed in the body of the MOU is the following:-
“NFC and XM undertake to negotiate Agreements giving effect to the following:
(a)   Within the initial term, XM will by Deed of Assignment:
a.   assign to NFC any and all Intellectual Property rights relevant to the Value Added Avocado products; and
b.   confirm that any and all Intellectual Property created during the course of XM’s involvement in the Project has vested absolutely in NFC upon creation.”
Also at (c):-
“XM and NFC will jointly use their best endeavours to obtain an Australian Patent for the Value Added Avocado Products solely in the name of NFC.”

The above statements in the MOU, as in the draft shareholders agreement, again appeared to indicate a belief by NFC that Mr Hastings, or XM Co, owned the relevant intellectual property. Against this is another statement in the body of the MOU amongst several principles as follows:-
“XM acknowledges that it has gained considerable know how (sic) resulting directly from NFC’s knowledge contribution, participation and expenditure on the Project and as such, has no claim on any Intellectual Property developed created or acquired during the course of the Project and XM’s involvement in it.”
On the face of it, the above statements, purportedly from NFC, are contradictory. The absence of any evidence from the patentee on this matter has firstly required the veracity of the MOU to be presumed and secondly, if valid, has made it difficult to determine NFC’s rationale behind those statements. As best as I can discern, the patentee believed that XM Co had no claim to the relevant intellectual property but was concerned that XM Co may have owned it by virtue of Mr Hastings having been the inventor. The desire of the patentee to be regarded as the owner of the intellectual property, or to acquire the intellectual property by assignment, may be found in other parts of the MOU. According to the MOU, NFC had spent in excess of $250,000, including an XM Co consultancy fee of more than $187,000, in pursuit of the development of value-added avocado products to a commercially acceptable standard. Notably that consultancy fee was more than twice the originally estimated consulting charges for the whole project, as mentioned earlier. In this respect the desire for NFC to obtain patent protection for the project intellectual property is also understandable.
The filing of the parent application by the patentee at the time may also explain the expediency with which NFC sought to secure the patent rights through the MOU and have the MOU’s commencement date set at 12 April 2013. On the other hand if the patentee were to rely on the MOU, then the patentee was not entitled to any patent arising from the relevant intellectual property at the parent application’s filing date and also possibly for some time thereafter. The MOU, if executed, allowed the parties one month from that date to get the requisite agreements and assignments in order. The last clause in the MOU though also held that, in the event of a patent not being granted or any of the agreements not being entered into, then neither party shall hold the other liable on account of any non-fulfilment of any undertakings. It may also be noted that the parent application and the innovation patent were filed in the name of the parent company and not that of the trading name, NFC, as stipulated at item (c) above of the MOU.
In at least one instance the MOU appeared to indicate that NFC may have been in two minds about ownership of the relevant intellectual property. NFC believed XM Co had no claim to the intellectual property but nonetheless appeared to seek to ensure its position and investment was protected by negotiating with Mr Hastings. It is noteworthy that the discussions were never resolved ([107] of the evidence). Moreover, at [84] of his evidence, Mr Hastings stated that he did not execute the draft MOU. Overall though, the conduct of the parties, as per the parties’ discussions and the exhibited documents, suggests an understanding between the parties that Mr Hastings or XM Co, rather than the patentee, owned the relevant intellectual property.
On the available evidence the rationale for the patentee to have presented Mr Murphy as a co-inventor remains entirely speculative.
ENTITLEMENT
On Mr Hastings’ duties and his consultancy arrangement with NFC, I would find as indicated above that the alleged invention would belong to Mr Hastings. On the ownership communications that took place between the parties, I would similarly find that the alleged invention would belong to Mr Hastings.
The patentee’s stated entitlement in the notice of entitlement associated with the present innovation patent is as follows:-
“The Fruit Company Limited … has entitlement from the actual inventor(s) (e.g. by assignment, agreement, etc).”
On the face of it, the above statement of entitlement is rather unspecific and essentially states, by non-limiting examples, no more than that the patentee relies on one or more of all available means by which entitlement may be obtained from an inventor. The patentee had opportunities to provide evidence to support its entitlement to the invention but chose not to provide either evidence in support or evidence in response. On balance I conclude that the patentee has not acquired the rights to the present alleged invention from Mr Hastings or anyone else.
DEED OF ASSIGNMENT
The evidence included an intellectual property deed of assignment executed 14 August 2015 (exhibit JH-17), relating to the avocado technology, from Mr Hastings to the requestor. In evidence the entities on Mr Hastings’ side have variously been Mr Hastings, XI Co and XM Co. As mentioned previously, the latter two were companies on whose behalf Mr Hastings, as sole director of those companies, performed consultancy work at different times.
From the evidence there may be a question as to whether Mr Hastings had previously assigned the relevant intellectual property to XI Co or XM Co, and thus was subsequently not in a position personally to assign the intellectual property to the requestor. Insofar as NFC sought assignment of the intellectual property, part 7 of the draft shareholders agreement (exhibit JH-11) required Xylem to assign the intellectual property. The draft is non-specific as to whether XI Co or XM Co was meant. Similarly the draft MOU required XM Co to assign the intellectual property to NFC. Since these documents purportedly originated from NFC, it may be argued that NFC misunderstood the intellectual property ownership position at the time between Mr Hastings and his companies. In the present case, if it were a misunderstanding, it is relatively easy to see how such a misunderstanding could have arisen. The very first purported documentary agreement between the parties was the letter of engagement which named XI Co and NFC as the parties. On the other hand, as mentioned earlier, intellectual property was not mentioned in the letter of engagement. Moreover Mr Hastings maintained that he owned all intellectual property arising from the project unless otherwise assigned by him (at [66] of the evidence). There is no evidence on file of any assignment from Mr Hastings to XI Co or XM Co or anyone else. On balancing the evidence, I conclude that Mr Hastings was in a position to validly assign his rights to the requestor at the time of execution.
The exhibited deed of assignment defined the assigned intellectual property in relatively broad terms. That is, the assigned intellectual property was any intellectual property rights created or developed by the assignor in connection with the development of food processing techniques, methods of work, machinery, packaging and designs relating to avocados (Schedule 1, JH-11).
While patents and patent applications are covered in general terms in section 5 of the deed, a specific PCT application is also mentioned which appears to be erroneous. The indicated PCT number seemingly cannot be associated with any legitimate application. A subsequently executed document (exhibit JH-18) stated amongst other things that, before the execution of the deed of assignment (exhibit JH-17), Mr Hastings and the requestor acknowledged and agreed to the assignment from Mr Hastings to the requestor of all rights to the invention the subject of the present innovation patent 2014101330. It is unclear from the evidence whether this was in response to the generalities in the deed of assignment relating to patents and patent applications, and/or to the specific error with the PCT application in that document, or for other reasons. In any case I am satisfied the deed of assignment is effective and thus the requestor is entitled to have the present innovation patent assigned to it from Mr Hastings.
CONCLUSION
I have found that Mr Hastings was the sole inventor of the inventive concept in this case. Mr Christopher Murphy is presently listed as a co-inventor which is incorrect on the available evidence.
I have also found that the requestor, and not the patentee, was entitled to have the patent for the present alleged invention assigned to it. Consequently I am satisfied on the balance of probabilities that the Register of Patents does not properly record a person’s entitlement to the patent.
Under Section 191A, a declaration and directions will be made to reflect the above outcomes, as in the “Decision” section above.
Pursuant to Sub-section 191A(6), an appeal lies to the Federal Court from this decision.
COSTS
Costs normally follow the event and I see insufficient reason to depart from that approach in the present case.
The requestor has been successful with its Section 191A application. Accordingly, in the present circumstances, I award costs in accordance with Schedule 8 against the patentee, The Fruit Company Limited.
M. G. Kraefft
Delegate of the Commissioner of Patents