Hospitals who wish to commercially benefit from health and medical research need to know who is involved in that research, their level of contribution and their relationship with the hospital.

Many hospital operators are involved in health and medical research and their relationship to researchers is relevant to who owns the intellectual property rights arising out of that research.

Research may be carried out under many different circumstances. For example, where:

  • The hospital is the institution at which clinical trials are carried out.
  • The research is connected with educational activities carried on at the hospital.
  • The hospital engages in joint research efforts with colocated public hospitals.
  • The hospital carries out joint research with universities and health and medical research institutes.
  • The hospital initiates and sponsors research.

The research can involve a number of people including health care practitioners who are employees of the hospital, health care practitioners who are contracted as independent contractors to the hospital, medical practitioners who are accredited at the hospital, hospital staff and students. In many cases medical practitioners may also be academics with universities or associated with universities and/or health and medical research institutes. In some cases researchers commence their research at one institution and continue at another. In other cases a myriad of institutions and/or their employees become involved in research projects. Each of these different relationships is relevant to the ownership of intellectual property in any works or inventions which arise from the research.

Asserting Ownership Rights

If the hospital wishes to assert ownership rights over valuable intellectual property (by way of registration, licence, sale or commercialisation), then the hospital will need to establish who was involved in creating or inventing those works and inventions, the level of their contribution and their relationship with the hospital. A prospective funder, investor or purchaser of the intellectual property will require proof of ownership and will undertake due diligence.

The law regarding the ownership of intellectual property rights has finally been settled with the High Court refusing special leave to appeal in the case of University of Western Australia v Gray [2010] HCATrans 11 (22 February 2010), from the Full Federal Court's decision in University of Western Australia v Gray (2009) 259 ALR 224 (UWA v Gray).

The Case

In UWA v Gray Dr Gray was appointed as a Professor of Surgery with the University of Western Australia (UWA). He changed from full time employment to a fractional thirty percent appointment, focussing on clinical work at the Royal Perth Hospital while remaining Professor of Surgery.

As a full time employee, Dr Gray was required by the terms of his appointment to teach, to conduct examinations and to direct and supervise the work in this field and to undertake research, to organise research and generally to stimulate research among the staff and students.

Dr Gray was involved in inventions which involved the production and use of microparticles or 'microspheres' for the targeted treatment of cancerous tumours in humans, notably in the liver.

In 1997 Sirtex Medical Pty Limited (the second respondent) acquired from Dr Gray and the Cancer Research Institute (the third respondent and a body that had been established to support Dr Gray's research work), intellectual property rights arising out of the inventions. A substantial number of shares in Sirtex were issued to Dr Gray in consideration for the assignment of the intellectual property rights.

UWA claimed that Dr Gray, by reason of his employment, had obligations to UWA in respect of the inventions and therefore UWA had proprietary (ownership) rights in the patents. UWA claimed that Dr Gray had breached his employment contract and had breached his fiduciary obligations. UWA's case depended on the proposition that it was an implied term of Dr Gray's employment contract that intellectual property developed in the course of his employment belonged to UWA.

The primary judge reviewed the history of Dr Gray's employment, the people with whom he worked and the work they carried out, the various relationships and Dr Gray's attempts to commercialise the technologies. Prior to his appointment with UWA, Dr Gray had, for some years, including at the University of Melbourne and at St Vincent's Hospital in Melbourne, been engaged in researching the treatment of liver cancer by using microspheres injected into the blood vessels of liver to deliver anti-cancer therapies to tumour sites.

The complexities of university and hospital involvement and the relationships in this case are common to Australian health and medical research generally.

The primary judge found that under his contract of employment, Dr Gray had no duty to invent anything, though he had a duty to research and to stimulate research. He had not been engaged to use his inventive faculty in an agreed way or for an agreed purpose for UWA's benefit. The Full Federal Court agreed with the primary judge's reasons and conclusions. Dr Gray's employment duties did not even require him to perform tasks from which inventions might result. The subject matter and the manner of discharge of his duty to research were in his discretion. He was not employed to invent. Also, UWA's claims (including obligations of confidentiality) were inconsistent with the researcher's freedom to share and to publish research results. Further, many of the funds were granted for Dr Gray's research as he determined. In addition, it was necessary for the research to involve collaborative arrangements with external organisations.

Therefore, in conclusion, the Full Federal Court held that the UWA did not own any proprietary rights in the inventions. In the words of the Full Court, 'the employee invention implied term is a particularly blunt instrument to settle the ownership of employee inventions' (emphasis added).

Practical Implications

This case clearly demonstrates the need for hospitals involved in health and medical research who wish to commercially benefit from that research to do the following:

  • Keep a record of research activities at the hospital, including identifying the research, who is involved, their tasks and involvement and their relationship with the hospital.
  • Clearly set out in contractual documents with researchers, and policies and procedures with both employees and independent contractors, clauses which expressly set out the ownership in intellectual property rights and obligations of confidence.
  • Implement an intellectual property policy and procedure.
  • Seek legal advice regarding the registration of intellectual property.

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.