In the matter of  University of Western Australia v Gray [2009] FCAFC 116 (UWA)  the Full Court of the Federal Court of Australia (hearing an appeal from an earlier decision by French J) 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.

Notably, a natural person(s) must have contributed to the inventive concept. This follows from the judgment in Commissioner of Patents v Thaler (2022) FCAFC 62 (Thaler). In Thaler the Full Court of the Federal Court of Australia considered various provisions of the Patents Act and historical cases relevant to the question of inventorship and entitlement. They generally noted that, in all these contexts, an inventor has always been considered to be a natural person or persons, and that a fundamental tenet of the patent system is “the reward” that is provided in the form of the grant of a patent for public disclosure of an invention (see [88]). They note at [100] that:

‘“Inventor” has long been held to bear its ordinary English meaning, being the person(s) responsible for making the invention, namely, “the person who makes or devises the process or product”: JMVB Enterprises at [71]-[72]; Atlantis Corporation v Schindler [1997] FCA 1105; 39 IPR 29 at 54 (Wilcox and Lindgren JJ).’”

The Full Court noted at [101] that:

“The inventor for the purposes of s15(1)(a) is the person who is responsible for the “inventive concept””.

and at [102]:

“Identification of the inventor within s15(1) is of central relevance to the operation of the Patents Act and is intertwined with concepts material to the validity of patent applications and patents”.

They concluded at [107]:

“On a natural reading of s15(1), each of ss15(1)(b), (c) and (d) provide for circumstances where a person becomes entitled to the grant of a patent by ultimately receiving that entitlement from the inventor in s15(1)(a). Put another way, there must be a legal relationship between the actual inventor and the person first entitled to the grant. That was the construction adopted by the Full Court in Stack which, after reviewing many of the historical matters to which we refer above, concluded at [21] that “[a] patent may only be granted to the inventor or somebody claiming through the inventor”, a proposition with which we respectfully agree. Such a construction is also consistent with the broad statement as to the intended effect of s15 provided in the Explanatory Memorandum.”

Thus, the Thaler judgement makes clear that the meaning of “inventor” for the purposes of the Patents Act, is a person who invents. Any inclusion of a non-human as an inventor in a patent application will contravene the Act (and fail to comply with formality requirements due to the naming of something that is not considered an inventor as per s15).

However, the Full Court (at [121]) did not accept that a conclusion that an AI could not be named as an inventor meant that an invention devised with the use of an artificial intelligence could not be granted a patent. The Court observed that “the characterisation of a person as an inventor is a question of law”, and noted that whether the relevant application had a human inventor had not been explored.

As noted by French J in his earlier UWA decision, the inventive concept marks a 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.

Where an invention has involved the use of AI, considerations used for assessing joint inventorship are useful in ascertaining whether a person or persons have made a contribution sufficient to be considered an inventor. In Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 4 the approach to joint inventorship arising in Polwood Pty Ltd and Others v Foxworth Pty Ltd and Others [2008] FCAFC 9 (Polwood) is well summarised as follows:

“In Polwood Pty Ltd and Others v Foxworth Pty Ltd and Others [2008] FCAFC 9; 165 FCR 527 the Full Court of this Court considered the concept of joint inventorship. The Court formulated a number of propositions which were based on existing authority. First, whether someone is properly described as a joint inventor is not determined by quantitative contribution, but rather, qualitative contribution. The contribution does not have to be equal to the other person’s and the key question is whether there has been a contribution to the invention.  Secondly, in some cases it may be helpful to look to the claims and in some cases evidence may assist.  It is important to look at what the invention is said to be.  For example, a contribution to the construction of an apparatus may be sufficient where the invention is the apparatus and insufficient where the construction of the apparatus can be done by simply following the instructions in the specification.  Thirdly, the key question is whether the person’s contribution had a material effect on the final invention.  Fourthly, it is sometimes useful to approach the issue by asking who conceived the solution to a problem (Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422 at 432 [22]), but that will not always be so because not all inventions are susceptible to a problem and solution analysis (Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411; Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 81 ALJR 1070; 235 ALR 202). Fifthly, rights to an invention are determined by objectively assessing contributions to the invention rather than assessing the inventiveness of respective contributions and if the final concept of the invention would not have come about without a particular person’s involvement, then that person has an entitlement to the invention (JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at [132]). Finally, and importantly because of the argument put by Bacchus in this case, a person may be considered a joint inventor where they had a general idea of what was required, but someone else was required to put the ideas into effect and did so (Costa v G R & I E Daking Pty Ltd (1994) 29 IPR 241).”

In Polwood  the Federal Court also 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 Sterling Engineering Company Ltd v Patchett (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 Company 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”.

AI-Assisted Inventions

The Act does not preclude artificial intelligence from performing acts traditionally considered inventing. Regardless, for the purposes of the Act, artificial intelligence is not within the meaning of the term inventor and as such artificial intelligence cannot be not named as an inventor. A human(s) who has materially contributed to the final invention is considered an inventor.

Where a person uses artificial intelligence as a tool to arrive at an invention, the considerations identified in Polwood are relevant with the focus being that a person’s contribution must have a material effect on the final invention. It does not matter that such a contribution is small or whether that contribution is objectively inventive. Where such a person or persons exists, and they are named as inventors for the purpose of section 15 of the Patents Act then a patent may be granted. In other words, the Patents Act does not appear to preclude AI from materially contributing towards the generation of a patentable invention, provided there is at least one human inventor whose contribution had a material effect on the final invention. The key considerations in Polwood can be summarised as follows:

Size of the contribution is not important to inventorship, it is the qualitative contribution that is relevant.
The claims and evidence may assist in determining inventorship. For example, the nature of a contribution may differ if the invention is an apparatus vs an apparatus that is described as merely the result of the instructions of the specification.
The key consideration is whether a person’s contribution had a material effect on the final invention.
It can be useful to look to who solved the problem if a problem/solution analysis is appropriate.
A general idea of what is required by the invention may be enough to ensure inventorship if someone or something else put those general ideas into effect.

Thus, AI-assisted inventions are not fundamentally unpatentable and inventorship analysis must focus upon a person’s material effect on the final invention. This is consistent with the function of patents being a reward for human ingenuity. As the Thaler matter confirms, the word “inventor” bears its ordinary English meaning, being the person(s) responsible for making the invention. The fact that an AI system cannot be listed as an inventor of an invention regardless of the significance of the contribution made by an AI system, does not preclude a natural person from inventorship.

In considering the fact that an inventor as a natural person must have a material effect upon the invention’s final conception, the following non-exhaustive principles may be useful in determining inventorship (see similar principles present in USPTO guidance at Inventorship Guidance for AI-assisted Inventions published on the US Federal Register):

The use of AI as a tool in the inventive process does not negate the otherwise material contribution of a person to an invention’s conception. Where AI is used as a significant aspect of the inventing process, but a human has a material effect on the final invention then there may be appropriate inventorship.
A person merely identifying a problem to be solved, or research to be conducted does not necessarily rise to the level of a material contribution, unless invention lies in recognition of the problem to be solved. In this context merely feeding a known problem into an AI system may not give rise to inventorship. If a person constructs prompts in order to elicit a particular solution then a contribution may become sufficiently material.
A person who takes output of an AI and analyses and refines it in view of a particular problem to devise a final inventive concept may be an inventor.
Mere verification and reduction to practice of the output of an AI system is distinct from a material effect on the final invention. If an AI system could produce an output that may merely be appreciated as an invention by a person this appreciation would not appear to amount to a material effect. A final invention must be arrived at because of someone’s involvement for inventorship to be found.
A general idea or foundational aspect from which the inventive concept is derived may amount to a material effect on the final invention. Building, designing, or training an AI system in view of specific problem in order to obtain a particular solution could lead to inventorship.
Mere oversight or ownership of an AI system does not alone appear to amount to providing a material effect on any invention generated. This is analogous to mere oversight and ownership of any tool that may be useful in the inventive process.

Amended Reasons

Amended Reason	Date Amended
Additional inventorship guidance incorporated referencing University of Western Australia v Gray 2009 FCAFC 116 (UWA) and inventorship guidance published by USPTO	08 Jan 2025
	18 Oct 2023