The Royal Children's Hospital v Robert Alexander

[2011] APO 94

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

The Royal Children’s Hospital v Robert Alexander [2011] APO 94

Patent Applications:               2006206051 and 2006222481

Titles:[Virus Recovery Medium, use thereof and Viral Diagnostic Kit including same] and [Viral Diagnostic Method and well for use in same]

Patent Applicant:                   Dr Robert Alexander

Requestor:  The Royal Children’s Hospital

Delegate:  Karen Ayers

Decision Date:  10 November 2011

Hearing Date:  10 August 2011, in Melbourne

Catchwords:  PATENTS - requests under sections 32 and 36 – inventorship –employer-employee relationship- whether employment contract had an implied term to assign inventions to employer - whether applicant had a duty to invent- whether invention was conceived in the course of employment.

Representation:  Patent applicant:  Actuate Legal, Melbourne

Requestor:Norton Rose, Australia

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

Patent Applications:               2006206051 and 2006222481

Titles:[Virus Recovery Medium, use thereof and Viral Diagnostic Kit including same] and [Viral Diagnostic Method and well for use in same] respectively

Patent Applicant:                   Dr Robert Alexander

Date of Decision:                   10 November 2011

DECISION

1. Under section 32, the Commissioner has the power to direct an application to proceed in a different name if she finds that another party is entitled to the invention. In this case, I have found that The Royal Children’s Hospital (RCH) has successfully argued that they are solely entitled to the invention claimed in application 2006206051 (viral recovery medium) because of an employee-employer relationship with Dr Alexander. Subject to any appeal of this decision, I direct patent application 2006206051 to proceed in the name of The Royal Children’s Hospital.

2.   Dr Alexander is solely entitled to the application described and claimed in 2006222481 (well device).   There was no motivation for Dr Alexander to improve the well device in the course of his employment.     

REASONS FOR DECISION

Background

3.   Patent applications 2006206051 (the first application) and 2006222481 (the second application) were filed under the provisions of the PCT on 13 January 2006 and 10 March 2006 respectively.   The first application claimed priority from an Australian provisional application (2005900169) filed on 14 January 2005.  The second application claimed priority from another provisional application (2005901141) filed on 10 March 2005.  Both provisional applications and their corresponding standard applications were filed in the name of Dr Robert Alexander. 

4.   The first application (‘051) was published as WO 2006/074524 on 20 July 2006 and entered the national phase in Australia on 13 June 2007.  It is currently undergoing examination with a first report issued on 6 September 2010.  The second application (‘481) was published as WO 2006/094364 on 14 September 2006 and entered national phase on 30 August 2007.  It also is currently undergoing examination before the Commissioner with a first report being issued on 10 September 2010. 

5. On 23 December 2009, a third party (The Royal Children’s Hospital – hereafter RCH) filed requests under sections 32 and 36 of the Patents Act 1990 (Cth) in relation to both the first and second applications. RCH claimed entitlement to the invention based on an employee-employer relationship and requested that the applications proceed in their name alone. Evidence in the matter was finalised on 24 September 2010 and the matter was set for hearing in Melbourne on 10 August 2011.

6.   The patent applicant was represented by Ed Heerey of counsel instructed by Colin Cheung and Daniel Lo solicitors of Actuate Legal.  The section 32/36 requestor was represented by Adrian Ryan of counsel instructed by Kerin Fortmanis of Norton Rose, Australia.

Statutory Provisions

7.   The entitlement of a person to the grant of a patent is provided for in section 15, which states:

“(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

(d)is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).

(2) A patent may be granted to a person whether or not he or she is an Australian citizen.”

8. Sections 32 and 36 of the Patents Act [1990] both provide mechanisms by which a third party can dispute the applicant’s entitlement to an invention. Section 32 provides as follows:

"If a dispute arises between any 2 or more interested parties in relation to a patent application whether, or in what manner, the application should proceed, the Commissioner may, on a request made in accordance with the regulations by any of those parties, make any determinations the Commissioner thinks fit for enabling the application to proceed in the name of one or more of the parties alone, or for regulating the manner in which it is to proceed, or both, as the case requires."

9.   The term "interested party" is defined in Schedule 1:

"interested party, in relation to a patent application, means the applicant or a joint applicant, or a person who claims to be entitled to the grant of a patent on the application, either alone or jointly with another person”.

10. Section 36(1) provides that:

(1)If:

(a)a patent application has been made … and

(b)an application for a declaration by the Commissioner is made by one or more persons (the Section 36 applicants) in accordance with the regulations; and

(c)the Commissioner is satisfied, in relation to an invention disclosed in the specification filed in relation to the application for the patent:

(i)that the nominated person is not an eligible person, but that the Section 36 applicants are eligible persons; or

(ii)that the nominated person is an eligible person, but that the Section 36 applicants are also eligible persons;

the Commissioner may declare in writing that the persons who the Commissioner is satisfied are eligible persons are eligible persons in relation to the invention so disclosed.

11. The determination of ownership is a matter of fact and will be the same in both the Section 32 and 36 matters and therefore the same evidence has been filed by the parties in both matters. The difference between the 2 provisions resides in the remedies available under the different provisions should the requestor be found to have entitlement in the invention.

Evidence

12. The section 32 requestor filed the following evidence in support:

(a)Statutory declaration of Dr Andrew John Daley dated 23 June 2010 together with exhibits AD-01 to AD-16 (Daley Declaration1); and

(b)Statutory declaration of Kerin Vija Forstmanis dated 23 June 2010 together with exhibits KF-01 to KF-03 (Forstmanis Declaration 1).

13.  The patent applicant filed the following evidence in support:

(a)Statutory declaration of Dr Robert Alexander dated 20 May 2010 together with exhibits RA-1 to RA-3) relating to the ‘051 (viral  recovery medium) application (Alexander Declaration 1A); and

(b)Statutory declaration of Dr Robert Alexander dated 20 May 2010 together with exhibits RA-1 to RA-3) relating to the ‘481 (well device) application (Alexander Declaration 1B).

14. The section 32 requestor filed the following evidence in response:

(a)Statutory declaration of Dr Andrew John Daley dated 24 August 2010 together with exhibits AD-17 to AD-18 (Daley Declaration 2); and

(b)Statutory declaration of Kerin Vija Forstmanis dated 24 August 2010 together with exhibits KF-04 (Forstmanis Declaration 2).

15.  The patent applicant filed the following evidence in response:

(a)Statutory declaration of Martin Earley dated 24 September 2010 together with exhibits ME-1 and ME-2 (Earley Declaration);

(b)Statutory declaration of Daniel Yu-Xi Lo dated 24 September 2010 together with exhibits DYL-1 to DYL-3 (Lo Declaration); and

(c)Statutory declaration of Dr Robert Alexander (undated) and exhibits RA2-1 to RA2-10 relating to both ‘051 and ‘481 (Alexander Declaration 2).

Previous Patent History  

16.  Dr Alexander was the patentee of an earlier innovation patent (2001100242)[1].  This earlier patent was filed on 7 August 2001 and was based on two earlier provisional applications (PQ 9986 and PQ 9263) filed on 8 September 2000.  The innovation patent was granted and published on 30 August 2001.  The innovation patent described a viral detection technique known as Rapid Enhanced Tissue Culture Immunofluoresence (RETCIF).  This technique uses a number of specific cell lines cultured in a single 96-well plate configuration to inoculate and grow viral pathogens from clinical samples. The cultured viruses are then detected in the wells using specific monoclonal antibodies and immunofluorescence staining.

[1] Innovation patent was filed as exhibit AD-11 to Daley Declaration 1

17.  The technique was published in an academic paper (hereafter the RETCIF paper) co-authored by several RCH employees of which Dr Alexander was the first named and primary author:[2]

‘RETCIF’: a rapid sensitive method for detection of viruses, applicable for large numbers of clinical samples by: Robert Alexander, David Lamb, Donna White, Trudy Wentzel, Suzie Politis, John Rijnsburger, Dinah van Ruyven, Nigel Kelly and Suzanne Garland

Journal of Virological Methods 97 (2001) 77-85

[2] RETCIF paper was filed as exhibit AD-10 to Daley Declaration 1

18.  The key advance in the RETCIF technique was in the design of the microtitre assembly tray used in the process.  These trays had a plurality of receptacles which could be separately retained or removed.  This design allowed transfer of individual receptacles to other microtitre trays where different steps of the process could be performed.  Recombining receptacles from multiple plates onto the one plate significantly increased the versatility and efficiency of the system. 

19.  Research work at RCH confirmed that the RETCIF technique was faster, more sensitive and more cost effective than other viral detection methods.  The technique has therefore been continuously used in their Virology Department as their only viral detection method since 2000.  The RCH laboratory is also the only virology laboratory in Australia currently using the RETCIF process.[3]

[3] See Daley Declaration 1 at [46]

20. At the time the innovation patent was filed, Dr Alexander had been employed by the RCH for around 5 years. The section 32 requestor’s evidence and written submissions suggested that the RETCIF methodology was developed and refined by a group of staff (including Dr Alexander) at RCH (then W&CH) between 1996 and 1998[4]. However Dr Alexander argued that the underlying technology had been conceived prior to his employment at RCH.[5] At the hearing, the section 32 requestor conceded this and accepted that Dr Alexander had introduced the technique to the hospital when he arrived in 1996.

[4] See section 32 requestor’s submissions at [20] – the submissions were based on Dr Daley’s EIS but as Dr Daley only commenced employment at the RCH in November 2001, he had no direct knowledge of when and how the RETCIF technique was developed. At the hearing, RCH corrected this misconception and accepted that the RETCIF technique had already been conceived by Dr Alexander prior to working at RCH.

[5] See Alexander Declaration 2 at [41]

The specifications

21.  The subject matter of both applications relate to further improvements in viral diagnostic methods and kits which can be used with (but are not limited to) the RETCIF technique.  The first application ('051) relates to a virus recovery medium.  The medium can be used in any viral detection method where viruses are grown in culture before being assayed. It promotes better growth of viruses which in turn improves the isolation and detection of viral pathogens.

22.  The '051 specification ends with 19 claims, 3 of which are independent.  Claim 1 is the broadest claim.  It  defines:

“A virus recovery medium comprising a cell culture medium supplemented with at least one hormone and at least one enzyme”

23.  Subsequent claims specify that the hormone is a glucocorticoid hormone (such as dexamethasone) and the enzyme is a protease (such as trypsin). 

24.  The second application ('481) relates to a single flat-bed well suitable for use in a viral diagnostic method.  The specification ends with 15 claims, only one of which (claim 1) is independent.  Claim 1 defines:

“A single flat-based well suitable for use in an assay, the well comprising:

(i)a main chamber having an opening to receive a liquid sample; side walls which extend from the opening and a chamber base; and

(ii)a sub-chamber extending from the chamber base of the main chamber adapted to receive a predetermined amount of the liquid sample, wherein the chamber has a flat base.”

25.  The invention (shown in cross section below) is a well which has a smaller well inside it. Using a volume of liquid which exactly fills the smaller well results in a convex meniscus (A) which leads to a smaller variation in depth across the well.  This arrangement ensures that the liquid sample retains a convex surface extending from the sub-chamber but still remains flat at the base to allow more precise analysis.

(for full explanation of numbers and letters, please refer to patent specification ‘481)

26.  For convenience, I will refer to the first application ('051) as the viral recovery medium application and the second application ('481) as the well device application in this decision.

Factual Background

27.  Dr Alexander commenced employment with the Women’s Children’s Health Network (W&CH) on 24 June 1996 as a Grade III scientist in the Department of Microbiology and Infectious Diseases pursuant to a contract of employment entitled “Conditions of Employment”.[6] The W&CH was the predecessor to the Royal Children’s Hospital (RCH) and Dr Alexander was at all material times employed as a senior scientist in the section 32 requestor’s Department.

[6] See Daley Declaration 1 exhibit AD-05

28.  In July 2004, the W&CH was de-amalgamated into two separate entities – the RCH and the Royal Women’s Hospital.  Dr Alexander’s employment was transferred to the RCH where he was specifically employed as the Senior Scientist in charge of the Virology Laboratory.  He remained in that position until November 2009 and continues to be employed by the RCH in a part-time capacity. 

29.  The change in employer (W&CH to RCH) did not alter Dr Alexander’s duties or responsibilities at the hospital and does not otherwise materially affect the issues of entitlement in this case.  Therefore, for the purposes of this decision, I will refer to the employer as RCH on the understanding that at certain times, the employer may have actually been W&CH rather than RCH.

30.  Dr Alexander does not dispute that the inventions claimed in the current application were conceived at some time between 1996 and 2005 when he was employed by RCH.  RCH also accepts that Dr Alexander was the sole inventor of both disputed applications.  The only issue of contention is whether Dr Alexander made these inventions in the course of his employment with RCH and whether there was an express and/or implied condition of his contract that transferred his rights to his employer (RCH).

Dr Alexander’s qualifications and position at RCH

31.  Dr Alexander’s qualifications include a BSc (Hons) in Veterinary Medicine and a PhD in Virology and he has had over 20 years’ experience in Virology and Molecular Diagnostics.  According to his CV[7], he speaks 6 languages and had postgraduate experience in a number of different countries before commencing employment at RCH in 1996. 

[7]Provided with Daley Declaration 1 at AD-03

32.  When Dr Alexander conceived the current inventions, he was Head of Virology at RCH.  This was a busy diagnostic laboratory with upward of 10,000 clinical samples being assayed per year[8].  Dr Alexander’s primary role was to maintain the Virology/Tissue Culture and Molecular Diagnostics service.  In this role, he was responsible for both the quality and efficiency of the viral diagnostic work performed at the hospital.

[8] See the RETCIF paper, page 82 first sentence after Discussion

33.  Dr Alexander also argued (and I accept) that his role was not as senior as his title suggests.  As Head of Virology, he reported to the Unit Manager or scientist in charge (Dr Nigel Kelly).  Above Dr Kelly’s position was the Department Head or Head of Microbiology (previously Dr Suzanne Garland and now Dr Andrew Daley).  Both of these positions reported to the Managing Director (or Director of Pathology) (now Brenda White) who reported to even more senior management at RCH. 

34.  This organisational structure clearly indicates that Dr Alexander is not in a senior managerial position which might attract an additional “duty of fidelity” to forward the interests of his employer even if the position itself did not specifically contain a “duty to invent”[9].  Both parties therefore accepted that the current question of entitlement depends on whether Dr Alexander’s position at RCH contained a “duty to invent” (either express or implied). 

[9] This was discussed in Monotti and Ricketson (2003) “Universities and Intellectual Property” at 5.58-5.59 and recently considered in Stack v Brisbane City Council 47 IPR 525; [1999] FCA 1279 (15 September 1999) at [74]

Relevant law

35.  The law governing disputes over entitlement was recently considered by the Full Court of the Federal Court of Australia in University of Western Australia v Gray [2009] FCAFC 116.

36.  The Full Court acknowledged that there was a principle in common law whereby inventions developed by employees in the course of their employment would belong to their employer as an implied term of contract.  Nettle J summarised this principle in Victoria University of Technology v Wilson [2004] VSC 33 (18 February 2004) 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.”

37.  The implied term of contract arises from the fiduciary nature of the employer-employee relationship as a master-servant.  Lord Reid articulated this concept in Patchett v Sterling Engineering Coy Ltd (1955)[10]:

“... No doubt the respondent was the inventor and in the ordinary case the benefit of an invention belongs to the inventor. But at the time when he made these inventions he was employed by the Appellant as their Chief Designer and it is, in my judgment, inherent in the legal relationship of master and servant that any product of the work which the servant is paid to do belongs to the master. I can find neither principle nor authority for holding that this rule ceases to apply if a product of that work happens to be a patentable invention. Of course, as the relationship of master and servant is constituted by contract, the parties can, if they choose, alter or vary the normal incidents of the relationship, but they can only do that by express agreement or by an agreement which can be implied from the facts of the case.”

[10] Patchett v Sterling Engineering Coy Ltd (1955) 72 RPC 50 (HC) at [58]

38.  However, the mere fact that there is an employee-employer relationship does not necessarily mean that the employer owns the invention even where the employee used the employer’s time and resources to create an invention.   As Nettle J observed in Victoria University of Technology v Wilson [supra]:

“…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.” (my emphasis)

39.  The test for whether an implied term applies is whether the invention was made by the employee in the course of his employment which was part of his duty to make.”[11] The UK court in Harris’ Patent [1985] RPC 19, 29 Pat C found that this “duty” imposed an obligation to invent (“duty to invent”) [12].  This approach was accepted by the Full Court in University of Western Australia v Gray [supra]:[13]

“…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.  To use the shorthand of Electrolux Ltd v Hudson [1977] FSR 312 at 326, was the employee “employed to make or discover inventions at all?” or as French J put it, did the employee have a “duty to invent”…”

[11] Sterling Engineering Co Ltd v Patchett (1955) AC 534 at 544

[12] See discussion in Monotti and Ricketson (2003) “Universities and Intellectual Property at  paragraphs 5.37-5.39

[13] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [152]

40.  In determining whether an employee has a “duty to invent”, the courts will generally give consideration to the nature and seniority of the employee's position, the nature of the employee’s duties and whether the employee received a specific directive relating to the invention.[14] The Full Court in University of Western Australia v Gray [supra] also considered whether there were any terms which were inconsistent with, or negated, the “duty to invent”.[15]

[14] Spencer Industries Pty Ltd v Anthony Collins & Or [2003] FCA 542

[15] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [205]

41.  In that case, the Full Court found a number of circumstances in Dr Gray’s employment which lay against the implication necessary to establish UWA’s property rights - in particular:

1.   The implied term presupposes the common law duty of fidelity and the equitable duty of confidence to protect for the employer’s benefit confidential (and other) information generated during the course of the employment.[16] Given the nature of universities and the public purpose served by such as UWA, there is no basis for implying into the contracts of employment of its academic staff a duty not to disclose the results of research[17]. 

2.   Dr Gray had the academic freedom to select the research he would undertake and was not required to advance a commercial purpose of UWA.  While Dr Gray had a duty to undertake research and to stimulate research amongst staff and students, he had no duty to invent anything for the benefit of his employer.[18]

3.   Dr Gray and his co-workers were expected to, and did, solicit funds for their research, including the development of inventions, from sources outside UWA.  There was also a need, consistent with research of the kind he was doing, to enter into collaborative arrangements with external organisations such as CSIRO.[19]

[16] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [207]

[17] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [129]

[18] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [170]

[19] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [173]

42.  The Full Court therefore accepted that Dr Gray’s employment was a “long way removed from the situations that gave rise to the common law implication of employer ownership of employee inventions that were developed in the course of, and as a product of, what the employee was employed actually to do”[20].  In that regard, the Full Court recognised a distinction between the ownership of employee inventions in universities (whose primary purpose is to generate and disseminate knowledge) and in private sector business entities. ^[21]

[20] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [206]

[21] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [211] and [123]

Is the current case analogous to UWA v Gray?

43.  In the UWA v Gray case [supra], Dr Gray obtained and used external funds to conduct his research inventions and his inventions were unrelated to the primary purpose of the university (to generate and disseminate knowledge).  Dr Gray also had the academic freedom to select the research he would undertake independent from the interests of the University and was not required to advance a commercial purpose of UWA[22]. 

[22] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [195]

44.  In contrast, Dr Alexander was not expected to (and did not) obtain external funding for his research and he was not pursuing individual research interests independent of those of his employer.  While Dr Alexander had some discretion with his line of research, his research was still focused on improving the viral diagnostic techniques used at the hospital.  Since this would enable the hospital to better diagnose viral diseases, Dr Alexander’s research was related to the primary purpose of the hospital and his work therefore directly benefitted his employer and advanced their interests.

45.  Dr Alexander argued that employees at RCH were not required to hold any information secret to preserve the employer’s propriety rights.  He argued that the hospital’s failure to require a “duty of confidentiality” (as would be required in an industrial setting) negated an implied duty to invent as had been found with Dr Gray.  However this has to be considered with all other relevant factors.  In this regard, the fact that there is one contra-indication does not necessarily mean that there is no “duty to invent” if sufficient other factors suggest otherwise.   

46.  In an industrial setting, an employer is interested in commercialising their inventions.  Having an exclusive monopoly to an invention provides a market advantage to the employer and increases their potential profits.  Publication of an invention which destroys the validity of future patent rights would therefore being undesirable. 

47.  In contrast, a hospital has a large public interest role in ensuring the proper diagnosis of viral pathogens so that diseases can be successfully managed and treated.  This public interest is served by disclosing and sharing new methods and techniques with other pathology laboratories so that the best techniques are widely available to the public.  In this context, the hospital does not need to commercialise the invention to benefit from it and the absence of a “duty of confidentiality” in the current circumstances does not necessarily mean that there is no “duty to invent”.   

48.  As a consequence, I do not agree that the current case is analogous to the circumstances in UWA v Gray [supra].  The negative implications against an implied term that existed in that case therefore do not apply in the current circumstances.  However, the guidance provided in Patchett v Sterling Engineering Coy Ltd [supra] (“Sterling principle”) as discussed in UWA v Gray [supra] is still relevant to the current case. This means that in order to establish their claim to entitlement, the section 32 requestor will need to establish that Dr Alexander had a “duty to invent” and created his inventions in the course of his employment at RCH.

Does Dr Alexander have a “duty to invent” in his position as Head of Virology?

49.  Dr Alexander argued that his primary role was to establish and maintain a viral diagnostics laboratory at the hospital and that none of his duties obliged him to provide RCH with anything more than an efficient laboratory.   Dr Alexander noted that his position was required to report and take direction from more senior scientific staff.  The only expectation for him to conduct research was therefore when he was directed to do so by the scientist in charge[23]. 

[23] See applicant’s submissions at [20]

50.  According to Dr Alexander, this removed any expectation (or duty) to invent other than when specifically instructed to do so.   In that regard, he relied on observations made by the Full Court in University of Western Australia v Gray [supra] which indicated that employees who were only employed to invent in specific circumstances would still be entitled to inventions created outside this environment:

“…. if (a) the employee was not engaged to use his or her inventive capacity at all (cf Re Charles Selz Ltd’s Patent Application (1954) 71 ROC 158 or (b) was so engaged only by way of additional duties to use his or her inventive capacity as and when asked (Spencer Industries Pty Ltd v Collins [2003] FCA 542; (2003) 58 IPR 425 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” [24]

[24] See University of Western Australia v Gray [2009] FCAFC 116 (3 September 2009) at [154]

51.  Dr Daley accepted that there was no pure research conducted at RCH.  Instead the main research focus was on improving clinical methodologies [25]:

“For the most part, however, the focus of the Virology Laboratory is on operating as a clinical virology laboratory and processing clinical specimens.  Particularly in recent years, research and development in the Virology Laboratory has been predominantly focused on improving the efficiency and outcomes of clinical testing procedures, specifically the RETCIF process.  In short, the main focus of the RCH’s research and development work is on improving our clinical methodologies, including RETCIF, rather than pure research.”

[25] See Daley declaration 1 at [66]

52.  Making improvements to an employer’s goods was one scenario considered by Monotti and Ricketson as imparting a “duty to invent”[26]:

“Where a person is employed to solve a particular problem and creates an invention to achieve a solution, the employer will own that invention.  Similarly, this will occur where an employee is employed to make a technical design or proposal, to make an improvement to the type of goods his employer manufactured or to make or discover inventions” (my emphasis)

[26] Monotti and Ricketson (2003) “Universities and Intellectual Property” at 5.56

53.  Dr Alexander accepted that he had a role in improving the clinical testing procedures at the hospital[27]  and his duty statement specifically highlighted a job requirement of identifying potential areas for improvement in the diagnostic service.[28]  Prima facie, this provides both a “duty to invent” and an agreed purpose as required in the UWA v Gray case [supra]. 

[27] See Alexander declaration 2 at [42]-[44]

[28] See point (3) in [50] above

54.  Dr Daley suggested that RCH was actively involved in improving and developing their clinical techniques.[29]  He noted that it was Dr Alexander’s responsibility to develop and implement improvements to the RETCIF process as the Senior Scientist in charge of the Virology Laboratory[30].  He also acknowledged that Dr Alexander had initiated many improvements or adjustments to the RETCIF process over the years[31].

[29] See Daley declaration 1 at [57]

[30] See Daley declaration 1 at [61]

[31] See Daley declaration 1 at [62]

55.  Dr Daley admitted that most of the improvements were minor[32] but he also provided some examples where more substantial changes were made – in particular where a particular cell line or monoclonal antibody had been replaced.[33]  I note that both types of changes were only necessary because there was a problem with supply of the cell line/antibody in the course of normal clinical diagnostic work.[34]  Dr Alexander argued that these changes were simply the result of routine “trouble-shooting” in response to a specific need or problem in the Virology laboratory.[35]   He considered that the changes related to “applications” of the technique rather than the underlying technique itself[36].   He accepted that he had a duty to adapt the technique for different circumstances but did not believe that this extended to improving the underlying methodology itself.

[32] See Daley declaration 1 at [57]

[33] See Daley declaration 1 at [58]

[34] See Daley declaration 1 at [61] and [67]

[35] See Alexander declaration 2 at [43]

[36] See Alexander declaration 2 at [42]-[44]

56.  While I accept that Dr Alexander’s “day to day” duties did not involve research into the underlying RETCIF methodology, he still has a broad responsibility as Head of Virology to ensure that the diagnostic techniques used at the hospital are as effective as possible.   This implicitly means optimising (or improving) the methodology where the opportunity arises in the course of his employment regardless of whether the improvement relates to the underlying methodology.  This is consistent with the high level of technical expertise required in the position.  It is also reflected in the specific job requirement to identify “potential areas for improvement in the diagnostic service” which, I note, is separate to the requirement to “trouble shoot and take appropriate corrective action” (referred to by Dr Alexander[37]).   

[37] See Alexander declaration 2 at [43]

57.  However, I also note that the lack of continued development of the underlying methodology at RCH and the lack of support for Dr Alexander’s research[38] will inevitably limit the opportunities for Dr Alexander to identify improvements in the course of his employment.  The opportunities to pursue more substantial improvements appear even more limited.  The evidence establishes that although RCH was active in making minor (routine) adjustments to the protocol, they did not pursue more substantial improvements to the technique unless there was a clear impetus or motivation to do so.  RCH even actively constrained research activities by not funding Dr Alexander’s requests for key laboratory equipment because the benefits were untested.[39] 

[38] See Daley declaration 1 at [69]

[39] See Daley declaration 1 at [95]

58.  In my view, this means that Dr Alexander only has a “duty to invent” (outside a specific research project) when there was a clear motivation which arose in the course of his employment.  In that context, the specific job requirement to identify “potential areas of improvement” seems to be limited to improvements which clearly have potential rather than encompassing original research where an invention might possibly result. 

59.  There seem to be two broad circumstances where Dr Alexander would be clearly motivated to identify an improvement in the course of his employment:

·     Where there was a recognised problem which he would have been reasonably expected to resolve; and

·     Where he was otherwise motivated to pursue a particular avenue of research in the reasonable expectation of identifying potential improvements.

60.  I will consider these circumstances in relation to the current inventions to determine whether they were invented in the course of Dr Alexander’s employment.

Were the current inventions created in the course of Dr Alexander’s employment?

(i) viral recovery medium application ('051)

61.  The viral recovery medium application ('051) relates to improvements in the medium used to inoculate and grow viruses.  It specifies two key ingredients (an enzyme and a hormone) which unexpectedly improve growth of viruses in culture.  The preferred embodiment is a combination of a specific protease (trypsin) and a glucocorticoid hormone (dexamethasone). 

62.  A virologist would understand that any improvement in the growth of the virus or its ability to infect a cell line is likely to enhance the recovery of the virus and hence increase the speed or reliability of the technique.  The RETCIF paper had already recognised that hormonal supplementation (in particular dexamethasone) enhanced the technique by shortening assay time[40].  The paper had also used both trypsin and dexamethasone in the maintenance medium (albeit not in combination[41]).

[40] See RETCIF paper – in particular Abstract and Discussion on pages 83-84

[41] See Daley declaration 1 at [88] - Trypsin was added to LLC and MDCK cells and dexamethasone which was added to A549 and MRC-5 cells

63.  The current claims are an extension of the work commenced in the RETCIF paper. The skilled worker would recognise from this work that media supplementation was a potential avenue of research where further improvements could be made. Given Dr Alexander’s technical background and expertise, it was an avenue of research which Dr Alexander would be expected to investigate further in the reasonable expectation of identifying potential improvements.  This provides the clear motivation to making the claimed improvement in the course of Dr Alexander’s employment.

64.  This means that the invention described in '051 was the product of research which a skilled worker would undertake when trying to optimise the techniques used at the hospital.  I therefore accept that the invention was conceived in the course of Dr Alexander’s employment.  

(ii) well device application ('481)

65.  The well device application ('481) relates to an improvement in the single well design in a microtitre tray.  The well has a sub-chamber extending below the main chamber base of the well.  This arrangement allows a liquid sample to be placed in the sub-chamber without forming a meniscus up the side walls.  Because the design allows a flatter distribution of cells and a more even distribution of media, it could provide a more precise analysis of samples.   

66.  There was no evidence that the existing device was in need of routine trouble-shooting.  Rather the evidence suggests that the existing design was effective and a substantial improvement was neither likely nor needed.  There was therefore no clear motivation for Dr Alexander to pursue this avenue of research in the reasonable expectation of identifying improvements.

67.  I also note, as an aside, there is no evidence that the well device has actually been made or its theoretical benefits tested.  This would involve a significant capital expenditure which seems to be the type of research which RCH appeared to have actively discouraged.[42]

[42] See Daley declaration 1 at [95]

68.  As a consequence, I find that the invention in '481 was not created in the course of Dr Alexander’s employment and properly belongs to Dr Alexander. 

Does the existence of an IP Policy affect the outcome of the decision?

69.  RCH argued that since at least 2002, they (and previously the W&CH) had an Intellectual Property Policy (IP Policy) in place which states[43]:

Intellectual Property generated by employees during the course of their employment with Women’s and Children’s Health, is in the absence of any other contract or agreement, the property of Women’s and Children’s Health.  This policy is designed to enable Women’s and Children’s Health, as the owner of such intellectual property to share intellectual property with its employees and any other interested party.

[43] See Daley declaration 1 exhibit AD-06

70.  According to RCH, the provisions of the IP Policy were imported into Dr Alexander’s employment contract because it stated that his appointment was subject to:

i.The by-laws of the W&CH

ii.Such network policies as may apply from time to time.

71.  RCH argued that the employment contract has an explicit provision for transferring the rights of any invention from the employee to the employer.  However (as was conceded by the parties at the hearing), this provision really adds nothing extra to the common law position because it only refers to intellectual property generated by the employee in the course of their employment. 

72.  As a consequence, the existence (or otherwise) of the IP Policy makes no material difference to the outcome of this decision.

Conclusion

73.  RCH has successfully argued that they are solely entitled to the invention claimed in application 2006206051 (viral recovery medium) because of an employee-employer relationship with Dr Alexander.   The invention described in '051 addressed a recognised problem in the art and was the product of research which a virologist would undertake when trying to optimise the techniques used at the hospital.  I therefore accept that the invention was conceived in the course of Dr Alexander’s employment.

74.  In contrast, Dr Alexander is solely entitled to the application described and claimed in 2006222481 (well device).  The prior art well is a stable design which has been successfully used for a number of years without any changes.  There is no evidence that there were known problems with the prior art well design or that the skilled worker had recognised the flaw in the prior art design.  There was therefore no motivation for Dr Alexander to improve the well device in the course of his employment. 

Costs

75.  In proceedings before the Commissioner, it is normal for costs to follow the event.  In this case, each party was found to be entitled to one of the patent applications but neither successfully argued their case for sole entitlement to both applications.  In such circumstances, it is not appropriate to make an award of costs.

Karen Ayers
Delegate of the Commissioner of Patents