South Africa: Ownership Of Patentable Inventions At Academic Institutions (Part 3)

Last Updated: 28 March 2013
Article by Joanne van Harmelen

Most Read Contributor in South Africa, September 2016

This is the last of three articles dealing with the Intellectual Property Rights from Publicly Financed Research and Development Act 51 of 2008 ('the Act')  and the guideline ('the Guideline') that has been issued by the newly created National Intellectual Property Management Office (NIPMO).  The first article was simply a general overview. The second looked at the meanings of the terms 'intellectual property', 'publicly financed' and 'research and development', in the context of the general rule which is that any intellectual property that flows from research and development which has been publicly financed belongs to the recipient of the funding.  In this article we made the important point that the concept of public financing includes not only direct funding, for example a research grant, but also indirect funding, for example a university employee's salary. We also looked at the concept of a university employee acting within the 'course and scope' of their employment with the university and whether the Act may conflict with the provisions of the Patents Act (Act 57 of 1978). In this article we'll apply what we've discussed thus far to particular scenarios.

The research and development was publicly financed

It seems clear that if the requirement of falling within the course and scope of employment has been met and the research and development was directly or indirectly financed by public funding, then the university will be the owner of the intellectual property.  This will be the case whether the researcher is a part-time employee, a researcher on sabbatical at the university, or a visiting researcher or student.  In the case of a contract worker, the university must ensure that the contract stipulates that intellectual property arising from the contract belongs to the university where the research and development contracted was directly or indirectly financed by public funding.  The contract should also set out the specific course and scope of the research and development to be performed by the contact worker.

But what if the research and development was publicly financed but fell outside the course and scope of the employee's employment? It is probably rare that where a university has received public financing for the direct costs of the performance of research and development undertaken by a researcher that a researcher could argue that the research performed with the means of this funding is outside of the course and scope of his employment.  However, in regard to the use of public money to pay indirect costs for salaries, facilities or overheads etc. it is possible that a researcher might be able to argue, depending on the circumstances, that the actual research and development that was performed with the use of those resources was in fact not within the course and scope of his or her employment.  In this case, the requirement that the intellectual property emanating from this research and development by virtue of the indirect costs that were publicly funded belong to the university may be in conflict with the Patents Act. 

Take for example, a case where a researcher is being paid a salary by the university to teach full-time in the surgery department of the university.  There is nothing in his employment contract precluding him from performing research and development outside of his teaching position.  He performs certain research and development activities using publicly financed university facilities, outside of the hours that he is required to lecture, and in so doing, generates a patentable invention.  In terms of the Act, the university owns the invention, since indirect costs of the research and development were covered by public financing.  However, it might be argued that since he was employed for a specific purpose, that is to lecture, and not to innovate, the invention falls outside of his course and scope of employment.  In terms of the Patents Act, he cannot be required by contract to assign his rights in the invention to the university.

The research and development was not publicly financed

Obviously, where a researcher develops intellectual property outside of the course and scope of his employment (i.e. in his or her own time) and without the use of any publicly financed resources, direct or indirect, the researcher will own the intellectual property and the Act does not apply.  On the other hand, in a case where there has been no public funding to perform the research and development, direct or indirect, the Act does not apply either, and the question of whether the university as the employer owns the patentable invention depends on whether the invention was made during the course and scope of employment and on whether there is a contractual relationship between the employer and employee in terms of which the employer has the intellectual property rights to the employee's invention. 

The research and development cost is reimbursed on a 'full cost' basis

In a situation where a researcher employed by the university is also employed by a spin-off or start-up company of the university, then if the company funds the research and development on a full-cost basis, the Act does not apply.  However, where the research is within the course and scope of employment of the researcher and where public finance from the university has been used, whether direct or indirect, then the university may be owner, or co-owner of the intellectual property.

The research and development is co-financed

Where there has been co-financing, part public and part private, of the research and development of a researcher where the research and development is within the researcher's course and scope of employment at an institution, then in terms of the Act there may be co-ownership of the intellectual property by the institution and the private entity funding, if certain additional requirements have been met.  The additional requirements are fairly onerous and are as follows:

  • the private entity must have contributed resources of some kind, for example background intellectual property;
  • there must have been joint intellectual property creation (i.e. an intellectual input is required from the private partner into the creation of the intellectual property and not merely provision of finance);
  • appropriate benefit sharing arrangements for the intellectual property creators at the institution must be in place; and
  • the institution and private entity must conclude a commercialisation agreement pertaining to the intellectual property.

The researcher personally receives public funding

What about inventions emanating from public financing received directly by the researcher and not through the university?  The wording of the Act does not specifically address this situation.  The ambiguity arises from the definition of the term 'recipient', which is defined as 'any person, juristic or non-juristic, that undertakes research and development using funding from a funding agency and includes an institution'.  The word 'undertakes' is defined in the Oxford dictionary as follows: to 'commit oneself to and begin' or to 'take on'.  If the researcher receives the public funding directly and undertakes the research and development, according to this definition the researcher is the recipient and not the university.  Furthermore, in such a case, the invention may also not be considered to fall within the course and scope of employment of the researcher and therefore if a university tried to lay claim to ownership of these inventions they would fall foul of the Patents Act.  At a recent NIPMO workshop on ownership of intellectual property in terms of the Act in preparation for the publication of Guideline 4, it was proposed that where a researcher receives public funding directly and undertakes the research and development, the researcher, and not the university, is the recipient.

There are many different scenarios that may arise in respect to ownership of intellectual property by a researcher.  Although we hope that the discussion provided here will be of assistance, we are available to advise on ownership of inventions in particular circumstances that may not be covered in these articles.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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