The law in relation to inventorship and entitlement was recently considered by the Full Court of the Federal Court of Australia in University of Western Australia v Gray [2009] FCAFC 116. The Court accepted that entitlement is assessed by considering three matters:

Identify the “inventive concept” of the invention as defined in the claims;
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
Determine if contractual or fiduciary relationships between the parties at the time of the inventorship give rise to the proprietary rights in the invention.

As noted by French J, the inventive concept marks the boundary between invention and verification. Thus, inventorship ends at the time of conception and is distinct from verification and reduction to practice. He referred to the following principles 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.
An inventor need not know that the invention will work for conception to be complete. The inventor need only show that he or she had the idea. The discovery that an invention actually works is part of its reduction to practice.
It is not the law that the inventor’s definite and permanent idea must include a reasonable expectation that the invention will work for its intended purpose even when it deals with uncertain or experimental disciplines where the inventor cannot reasonably believe that an idea will be operable until some result supports that conclusion.

In Polwood Pty Ltd v Foxworth Pty Ltd [2008] FCAFC 9 the Federal Court noted that in determining inventorship ‘what one is normally looking for is “the heart” of the invention. There may be more than one “heart” but each claim is not to be considered as a separate “heart” on its own’ (per Jacob LJ in Markem Corp.v Zipher Ltd [2005] All ER 377).

Employment

The Full Court in Gray 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.”

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) at [58]:

“... 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.”

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.”

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.” (Sterling Engineering Co Ltd v Patchett (1955) AC 534 at 544) The UK court in Harris’ Patent [1985] RPC 19 found that this “duty” imposed an obligation to invent. This approach was accepted by the Full Court in Gray [2009] FCAFC 116 at [152].

“...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'...”

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. The Court in Gray also considered whether there were any terms which were inconsistent with, or negated, the “duty to invent”.

Amended Reasons

Amended Reason	Date Amended
	18 Oct 2023