Sydney Law Review
In 1993, the Australian Vice-Chancellors Committee (AVCC) issued a discussion paper on ownership of intellectual property in universities. This responded to requests for advice from universities on how to deal with issues they confront concerning ownership of intellectual property. This paper stressed the urgent need for universities to have clear policies on ownership of the intellectual property generated within their institutions. It addressed the importance of certainty of ownership and the actual allocation of intellectual property rights. Many universities found the issues complex and the AVCC prepared a 1995 revision of this paper to provide greater clarity and assistance where it appeared necessary. Both documents recognised the autonomy of universities and aimed to serve merely as reference documents. They did not attempt to provide universities with a model policy or clear recommendations on how to approach the allocation of ownership. On the other hand, the active involvement of the National Tertiary Education Union (NTEU) in many negotiations on intellectual property policies prompted it to produce a model Intellectual Property Policy for universities to consider. This policy emphasised academic freedom and vested all copyright in the originator. All other intellectual property, such as patentable inventions, designs and new plant varieties that an originator creates in the course of employment vests in the university. An individual agreement could change this initial allocation of rights. This policy was influential in a number of universities, with some adopting a substantial number of its provisions. However, there has not been general acceptance of the stance taken by the NTEU for allocating ownership. Instead, its policy has been often one of a range of other factors that have influenced universities in the process of developing their own policy. The process has been lengthy and while many policies and statutes are complete for the time being, a number are still being finalised. The ultimate choice in whom to vest ownership is important because it is the owner of intellectual property who has the ability to decide the means for maximising benefits. This may be to publish immediately. On the other hand, it may be to develop and market a commercial application of the intellectual property.
The allocation of ownership that universities adopt varies. All universities use their intellectual property statutes or policies to assert their rights to own intellectual property that their staff create in pursuance of their duties of employment with one important qualification; they either expressly waive or vest rights in copyright in the staff originator in a variety of scholarly works. As it is arguable that staff already own the copyright in works of this nature, its vesting in the academic removes the doubts that may otherwise arise. In addition, it appeases the strong desire for academic staff to own their scholarly works.
A large number of universities not only assert their statutory and common law rights to ownership but also use their intellectual property statutes and policies to make additional claims to ownership of intellectual property that their academic staff and students create with the use of defined resources. These claims may or may not be incorporated as terms of employment or enrolment. They are referred to as extended ambit claims in this article because they assert ownership over general classes of future intellectual property to which a university otherwise has no automatic legal right. These extended ambit claims are to be contrasted with individual agreements that an originator signs before commencing particular research.
This article has two objectives. These are:
to describe the extended ambit claims that universities make and to analyse their legal validity;
to examine whether a university is justified in making extended ambit claims, or whether it is better to negotiate specific agreements where these are necessary.
Another dimension of allocating ownership is not debated in this article but deserves some reference. This concerns the extent to which a university should vary the statutory and common law principles of ownership in favour of the academic employee. The statutory and common law principles presume that the employer should own all intellectual property that its staff create in the course of employment because the employer takes all the risks and provides all resources. An active debate surrounds the relevance of this presumption to universities that were seen traditionally as different from commerce and industry. There are those who argue that the bases for this model do not apply generally within universities because ownership and academic freedom are often inseparable.
The question of who should own intellectual property that is created in the course of employment is both important and complex. It is beyond the scope of this article because it needs to be considered in a theoretical framework that identifies the appropriate role and mission of a university. However, its final resolution does not affect the major focus of this article because some form of intellectual property that originators create in the course of employment will vest inevitably in the university. There will therefore be the question of the moral and legal validity of extended claims that universities make in respect of this intellectual property.
The article comprises two parts. Part I considers the powers of universities to enact legislation and formulate policies concerning intellectual property. Secondly, it discusses the statutory and common law principles that vest ownership in each form of intellectual property. Thirdly, it presents some results of a survey of university intellectual property statutes and policies and identifies the extended ambit claims that universities make. Part II alerts universities, academic staff, visiting scholars and students to constitutional and statutory limitations that apply to extended ambit claims to ownership. These limitations may render a claim inoperative if it is inconsistent with Commonwealth legislation and invalid if it is ultra vires the powers of a university. It also alerts all interested parties to ineffective means to overcome these limitations. However, it recognises that there may be circumstances where originators and Universities accept some limitation on their intellectual property rights and analyses the possible ways in which a binding agreement may be reached. Finally, it examines whether a university is justified in making extended ambit claims and if so, in what circumstances.
There are a number of additional caveats that must be placed on the scope of this analysis. First, it does not consider the ways in which economic rights can be distributed between a university and the originator when ownership is vested in one or other party. Secondly, it does not grapple with the difficult moral questions of how employed inventors and other originators of intellectual property are and should be rewarded. Finally, the article concentrates on the position of academic staff. While there is some commentary concerning students and the legal and moral validity of claims to own their intellectual property, this is incomplete. The relationship of a university and its students raises a number of other issues that are too complex to be dealt with adequately in this article.
Individual statutes publicly funded universities as a body corporate with extensive powers of self governance. All statutes provide for the Council, a Board of Governors to be the governing authority and to have the entire control and management of the university. The legislative powers of the Council, Board of Governors or Senate generally are not exclusive and enable the body to make statutes with respect to a wide range of matters. These include admission and enrolment of students, granting of degrees, regulating employment of staff and discipline. There is also the ability to empower any authority or officer of a university to make rules, regulations or other delegated legislation. All valid legislation is not an agreement, but a law binding on all persons to whom it applies, whether they agree to be bound or not.
There is little authority that considers in respect of whom the legislation of any particular university applies. In the case of Melbourne University, this is clear. Subsection 4(1) of the Melbourne University Act 1958 provides specifically that the university consists of certain persons including a council and its members, the graduates, the professors, members of academic staff, members of the faculties and boards of studies, the graduate and undergraduate students. Subsection 4(3) provides that the persons referred to in subsection 4(1) are members of the university and are bound by its statutes and regulations. This latter provision is unusual. Most university enabling acts only include a provision that is similar to subsection 4(1) that defines the composition of the university. They do not expressly state that those persons are members of the university and are bound by its legislation. Such a university is likely to provide specifically in its conditions of appointment that A staff member shall hold office subject to the statutes and regulations of the university ..... Similarly, a student may have to declare in his or her enrolment application that I acknowledge that I am bound by the statutes and regulations of the university. However, irrespective of these separate acknowledgments, it is reasonable to assume that all valid legislation applies to staff and students and binds them automatically because they are part of the university as defined in the enabling Act. This is consistent with the courts statement in Ex parte Forster; Re University of Sydney that its by-laws or regulations are binding upon, amongst others, the Senate. The explanation for this specific reference to the Senate is because, at the time of this decision, the University and University Colleges Act 1900-1959 (NSW) made express reference only to the fact that the University of Sydney consisted of a Senate.
Apart from legislation, resolutions and policies of the governing body have an important place in the scheme of government. They may serve to define, for the time being at any rate, a policy or principle intended to be followed in dealing with some class of subject matter. Resolutions and policies do not have the generality of operation and binding force as does university legislation and may be used merely for reference in the exercise of a discretion. The benefit of taking this course is flexibility, both in its application in the individual circumstances and to enable quick amendment or rescission. Provided that a university can show that a policy is adopted for legitimate reasons, it may apply the policy in all cases unless there is something exceptional in a particular case. However, the policy cannot be applied inflexibly and a university must be willing to listen to substantial argument on any issue. Flexibility in the area of vesting ownership in intellectual property may be preferred by an originator but will be unacceptable to a university that wants to state with certainty where ownership vests. Of greater concern is the fact that the policy itself must be valid if it is able to govern the exercise of discretion in ordinary cases. This article argues that a provision in a universitys intellectual property policy or statute that expropriates intellectual property is ultra vires and therefore invalid. If a university aims to alter vesting of ownership of intellectual property in its own favour, and bind originators to these provisions, it should incorporate appropriate provisions in individual contracts, or find some other way in which to bind the originators. If such steps are not taken, an originator has a strong basis on which to challenge an extended claim to ownership that is made in the intellectual property policy or statute alone.
B. Power to Enact Legislation and Policies Concerning Intellectual Property
Universities have either finalised or are in the process of finalising, legislation or policies to deal with intellectual property ownership and exploitation. The authority to do so comes from the terms of each enabling Statute. Many of the newer universities and some others make specific reference to intellectual property in their enumerated legislative powers. The authority in such cases is clear. An example is subsection 33(1) of the Royal Melbourne Institute of Technology Act 1992 (Vic) that authorises the Council, with the approval of the Governor in Council, to
make Statutes for or with respect to all matters relating to the organisation, management and good government of the university and in particular, without affecting the generality of the foregoing, for or with respect to
(t) intellectual property
Others may seek to rely upon a statutory power to control and manage real and personal property that is vested in or acquired by the university, combined with a general power to make Statutes concerning the university. Alternatively, or in addition, they may rely upon a specific power to make statutes with respect to control and investment of property of the university. In both instances, the justification is on the basis that all categories of intellectual property, except confidential information, Finally, universities without such specific powers may claim legislative authority by relying upon a general power to make Statutes with respect to all matters concerning the university, together with the power to have the entire control and management of the university.
All enabling statutes provide for the governing body to have the entire control and management of the university as well as extensive legislative powers. Therefore, rather than act under the legislative powers to enact intellectual property legislation, a university may decide to act under this general power of management and formulate an intellectual property policy. The presence of enumerated legislative powers does not of itself cut down the generality of the broad powers associated with the governing body having the entire control and management of the university. It remains free to act under the general power provided that it does not trespass beyond the limits of matters relevant to the objects of the statute or transgress any existing intellectual property legislation. However, as discussed earlier, a policy on intellectual property will operate merely to provide guidelines for the exercise of discretion. It has no binding force on its own.
A primary reason for passing an intellectual property statute or policy is to clarify ownership issues. Any assessment of the powers of a university to claim ownership of intellectual property that is created within a university must be within the framework of its legal rights to do so. Is it merely stating the position at law when it claims ownership of a staff members course materials or a graduate students computer program? Is it instead attempting to expropriate intellectual property that the person owns? If it is the latter, the method chosen for enforcement is more complex than merely including a section in an intellectual property statute or policy. Such a provision is likely to be invalid for reasons that are explored later. Consequently, the assessment of university powers to make such claims requires an initial brief summary of the principles that establish ownership of intellectual property.
A. Patents for Inventions
A patent for an invention can be granted only to the inventor or a person who derives rights from the inventor. There is no express provision protecting an employers right to an invention that its employee creates. The employers rights to an invention rest upon either an express agreement to that effect with the employee or exist because of the application of the general principles of employment law. The latter impose an implied term in the contract of employment that an invention made by an employee in the course of employment is the property of the employer. An express agreement may replace this implied term with more expansive claims. It may require the employee to assign all inventions that are made during employment, irrespective of whether they are created in the course of employment duties. Such a covenant may attract the doctrine of restraint of trade. If it is declared unenforceable as an unreasonable restraint, the employee remains bound by the implied term that the employer owns all inventions created in the course of employment. The legislation therefore recognises the existence of employers (and others) rights in the context of someone being entitled to be assigned rights by the inventor after grant.
B. Trade Marks
The registered trade mark is owned by the registered owner, and the person who has the right to apply for registration is the person who claims to be the owner of the trade mark. A person bases a claim to ownership on being first to use the mark. If the mark is so far unused, the basis is likely to be on the combined effect of authorship of the mark, the intention to use it upon or in connection with the goods and the applying for registration. As with patents for inventions, there is no statutory provision concerning ownership of trade marks created by an employee. However, the employees duty of fidelity would require that the employee who authors a trade mark in the course of employment holds it in trust for the employer.
C. Plant Breeders Rights
A breeder of a plant variety may make application for a Plant Breeders Right. Upon acceptance of the application, the right is granted to the applicant, namely the breeder. The Act defines Breeder to mean the person or persons who bred the variety. If a person breeds the variety in the course of performing duties or functions as a member or employee of a body (whether corporate or unincorporate), that body of which the person is a member or employee is the breeder. This provision is broader in its scope than similar provisions in other intellectual property statutes. It extends the rights of the body, namely the university in this case, to encompass varieties bred by both employees and members in the defined circumstances. As most university enabling statutes expressly provide that the university consists of a Council, professors, members of the teaching staff, graduates and students of the university and other defined classes, it is possible that all these persons will be members for the purposes of this legislation. If this is the case, a university can claim ownership of plant varieties that are bred by students in the course of research and studies.
D. Registered Designs
The author of an unregistered design is the owner of the design. However, if that design is made by a person in the course of his employment with an employer, the employer is the owner of the design. Only the owner of the design can apply for its registration.
The Copyright Act 1968 (Cth) provides different treatment for ownership of works and ownership of other subject matter. The author of a literary, dramatic, musical or artistic work is the owner of copyright subsisting in the work. However, if he or she makes the work in pursuance of the terms of his employment by another person under a contract of service or apprenticeship, the employer is the owner of copyright.
In the case of sound recordings and cinematograph films, the maker of the recording is the owner of copyright, unless it is made as a commissioned work. It is significant that the maker can be a body corporate. There are no specific provisions dealing with rights of employers for either sound recordings or cinematograph films, essentially because these provisions protect manufacturers rather than authors. The maker of a sound recording is the person who owned the first record embodying the recording. Consequently, where university staff and students make sound recordings using university property, the maker will be the university. Furthermore, a statement on a label on the recording that the university is the maker of the recording is prima facie evidence of that fact. In the absence of a claim based upon contract or the duty of fidelity, the university may not be the maker if the academic purchases the tapes using her own funds or research grant funds to which the university has made no contribution.
The position with ownership of a video or film may present universities with a different problem from other intellectual property rights. Copyright in a film is owned by its maker, who is defined as the person by whom the arrangements for making the film were undertaken. Making the film means the doing of the things necessary for the production of the first copy of the film. Copyright does not arise in the film until the production process is complete, including necessary editing. One commentator describes the owner as the producer who arranges the production of the first negative or tape of the film. If that person is acting as agent for the employer in the production of the film, the employer will own copyright. Alternatively, where the production of videos is within the scope of employment duties, it is arguable that the duty of fidelity and good faith would impose an obligation on the employee to hold such films and sound recordings on trust for the employer. The obligations imposed by this duty are not easy to define; nor are they closed. Accordingly, by analogy with the term that is implied into a contract of employment concerning inventions perhaps a similar term can be implied into the contract of employment. This is consistent with the general thrust underlying the following statement of Viscount Simonds in Sterling Engineering Co v Patchett:
It appears to me that it is ... an implied term, though not written at large, in the contract of service of any workman that what he produces by the strength of his arm or the skill of his hand or the exercise of his inventive faculty shall become the property of his employer.
As with all forms of intellectual property, it may not be easy to identify whether a person makes the film in the course of employment. It may also be difficult to identify the maker where a member of staff makes all arrangements for the production but the university production services physically produce the film. It is not clear how a court will interpret the meaning of arrangements necessary for the production of the first copy of the film in the university context. The university is presumed to be the maker of the film if its precise name appears as the producer on publicly available copies of cinematograph films. Hence, other factors such as funding the production and publishing the full name of the university on copies of the video are significant in determining university ownership. If a staff member uses external funding and engages the services of an external film production company, the university may have no claim to copyright in the film. This will be particularly the case if the academic staff member is not acting in the course of employment and publishes his or her name on the cover as the producer.
F. Eligible Layouts
The position of eligible layouts is similar to that of copyright works. The person who makes an eligible layout is the first owner of the EL rights in it. However, the Act deems the employer to be the maker and hence the owner of EL rights where the employee makes the eligible layout under the terms of his or her employment by another person under a contract of service ... .
G. Trade Secrets and Confidential Information
To describe a person as owning information implies a proprietary quality which remains contentious and is unlikely to be appropriate. The High Court has recently confirmed that there is no property in information per se. Trade secrets and confidential information are therefore in a different category from other forms of intellectual property that are all identified as personal property. The more accurate emphasis is on who has the right to restrain unauthorised disclosure of the information, rather than on who owns the information. It is therefore questionable whether this type of intellectual property is appropriate for inclusion in intellectual property policies that provide for ownership of rights. The right to prevent unauthorised disclosure of information often arises under a contract where there is either an express or implied term to that effect. The right may also arise in the absence of any contractual relationship under the equitable action of breach of confidence. The elements of this action require that confidential information is imparted in circumstances that import an obligation of confidence and is used or disclosed without authorisation. Therefore, in the absence of any contractual relationship, the party who possesses the confidential information and who communicates that information in confidence has the right to restrain unauthorised disclosure. For example, a student who discovers a secret formula in the course of research and who conveys this in confidence to a supervisor, can prevent the supervisor disclosing that formula.
Confidentiality in the employment context requires some qualification of the above principles. During the term of employment the employee has a duty of fidelity to the employer that prevents disclosure of information acquired during employment. This duty of fidelity is a strict one and offers more extensive protection for the employer than an action in breach of confidence. It enables the employer to restrain disclosure of information that is acquired during the course of employment, even though it is not confidential in the strict sense required for an action in breach of confidence. The latter action is still available for use during employment but its more limited scope renders it of less importance in this context. Therefore, during employment a wide range of information can be protected by the employer under the general duty of fidelity. This protection is not dependent upon the existence of a contractual term.
After employment ceases, the position is quite different. The employers right of control over disclosure and use of information that is created by or provided to the employee must be balanced against the right of the individual to use knowledge and skill in subsequent employment. Therefore, a former employee can use any properly acquired information without breaching the duty of fidelity. If the employer wishes to control disclosure of information after employment ceases it has two options. First, the duty of confidentiality which is distinct from the duty of fidelity continues after the termination of employment and an action in breach of confidence is available to restrain disclosure of secret information. Secondly, a common practice is the use of a restrictive covenant to extend the employees obligations to encompass a broader range of information than is protectable under the breach of confidence action.
H. General Comments
The common factor in most forms of intellectual property is the vesting of ownership in the originator in the first instance. Students and visitors who have no employment relationship with the university own the intellectual property that they create in the course of their research or studies at the university. Likewise, the employee who creates intellectual property outside the course of employment owns that intellectual property. If the employee creates intellectual property in the performance of duties of employment or in the course of employment, then ownership vests instead in the employer. Therefore, in the absence of an agreement that alters the above principles for vesting, a university generally will own intellectual property only where it is created in pursuance of duties of employment. The terms and conditions of each employment contract will help identify those duties and the range of intellectual property involved. However, it is important to state that a university cannot assert ownership merely because it has contributed facilities, resources, funding, apparatus or existing intellectual property owned by a university. Creation of the intellectual property in pursuance of the duties of employment alone determines that right to automatic vesting. The relevance of these other factors is that they may justify an agreement to alter the common law and statutory vesting principles.
Each university intellectual property statute or policy has been or is being formulated after varying degrees of consultation within the university community. Although the stated aims underlying these statutes and policies vary, there are certain common goals that appear in many policies. These are to encourage creativity and to promote excellence in research, to maximise the benefit of intellectual property resources and to encourage and facilitate their commercialisation. The statutes and policies attempt to clarify ownership of intellectual property and to specify the respective rights of the various parties in that intellectual property. They also provide for procedures for its protection and identification and mechanisms for distribution of profits from successful commercialisation.
There are three broad approaches to the allocation of ownership of intellectual property rights that can be identified from the current university policies and statutes. First, the common law and statutory position is maintained in respect of all intellectual property other than copyright and confidential information. Secondly, the common law and statutory position is maintained in respect of all intellectual property other than copyright in certain defined scholarly works. The majority of universities take one or other of these two approaches. The third approach balances the interests in a different way and Universities make extended claims to ownership that may take account of the type of intellectual property and the circumstances of its creation. This latter approach is probably influenced to some extent by the AVCC discussion papers. These papers identify a number of circumstances which universities may consider justifies an extended claim to own intellectual property. However, the paper makes no positive recommendation for either extended claims or negotiated agreements to this effect and recognises that cost recovery or reimbursement for making resources available are other options to consider.
Universities generally waive claims to ownership in particular circumstances, notably in the case of scholarly works. The various university policies and statutes define this class of works in different ways. The University of Melbourne vests ownership in the author of,
a literary work (other than a computer program), a dramatic work, a musical work or an artistic work which is created by the author in pursuance of his or her employment ....
Monash University provides that an originator owns copyright in certain prescribed copyright works, the subject matter of which is primarily concerned with scholarship, research, artistic expression, creativity or academic debate. It excepts certain listed works from this definition that include course material. The University of Western Australia takes a different approach and vests all copyright works in the originator, subject to other specific provisions in its Intellectual Property Regulations. The policy of James Cook University of North Queensland takes another angle again. It provides in subsection 4.1 that:
The university agrees that academic and general staff own the copyright in any work or subject matter created by them in the course of their employment with the university.
In addition, a number of universities grant the employee author a non-exclusive licence to use the university-owned intellectual property that he or she creates for teaching, research and perhaps professional purposes. A number of universities also claim an automatic, non-exclusive, royalty-free and irrevocable licence to do certain acts in relation to copyright that they vest in or assign to the creator. This licence is generally restricted to the use of the work for such things as the universitys own educational and research purposes. In addition to the licence to the university, the University of Melbourne claims in subsection 141.11(3)(b) of its intellectual property statute:
the right to recover from the income (excluding public lending rights) received by the author of the work any substantial direct costs met by the university in directly contributing to the production of the work.
Two other common provisions concern specific agreements for ownership of intellectual property. One is that the university owns intellectual property it commissions. An example of such a provision is the assertion by Edith Cowan University of ownership of any lecture notes, courses, radio broadcasts, audio visual material and multimedia material specifically commissioned by the University. The other confirms the power of the university to enter into specific agreements concerning intellectual property ownership and exploitation. Finally, a number of universities specifically accept certain obligations concerning protection of the authors moral rights in a copyright work. This is important where the university claims ownership. The University of New England provides in subsection 2.8 of its Rules on Intellectual Property that:
Where the university publishes ... a copyright work owned by the university without adaptation or modification, the university shall ensure that the authorship is acknowledged in the publication. If adaptation or modification is proposed, the university shall consult with the originator concerning possible acknowledgment.
In the case of modification or adaptation, Monash University provides not only for consultation but provides it shall obtain the agreement of the originator of the work on whether the authorship of the work is to be acknowledged and if so the form of the acknowledgment. It also undertakes to impose similar obligations on the licensee or purchaser in any licence or assignment of the copyright work. Where the university has the right to adapt the copyright work, James Cook University requires that it will take reasonable steps to consult with the originator before doing so.
From a recent survey of all Australian universities, it is possible to discern the following models for claims to ownership of intellectual property created by staff, students and visiting scholars.
A. Claims Involving Staff-Created Intellectual Property
There are two discernible models for intellectual property that is created by academic staff. Both models have one thing in common the university either expressly waives claims to or assigns ownership of copyright in certain scholarly works.
The university only asserts ownership of intellectual property to which it is otherwise entitled under the operation of the statutory and common law provisions.
The university claims ownership of intellectual property in a number of additional circumstances. These include a claim to ownership where university-owned intellectual property is incorporated in or contributed to the creation of the intellectual property concerned. A common extended claim that universities in this group make concerns use of university resources or facilities. An example is the claim by Griffith University to any discovery or invention made in the course of or arising from any research work or project utilising any University facility of any kind. A variation is to base ownership entitlement upon the specific contribution, or in some cases substantial contribution, of funding, resources, facilities or apparatus. In some instances, a university will regard the substantial contribution of supervision or salary as justifying a claim for extended ownership. All of these claims are made irrespective of whether the intellectual property is created in the course of employment and therefore constitute claims to intellectual property ownership that otherwise vests originally in the creator.
B. Claims Involving Student Created Intellectual Property
There are four discernible models of approaches to student-created intellectual property. However, all have one thing in common they all recognise the students rights to ownership of copyright in his or her thesis. The models identified are as follows:
Model A: Student Ownership
Subject to agreement to the contrary, both undergraduate and postgraduate students own all intellectual property that they create. Under this approach, the university can negotiate with the student if and when it seems necessary or appropriate. James Cook University of North Queensland provides that any agreement that permits the university to obtain rights must be fully explained to the student and treat the student no less favourably than employees. While the University of Newcastle, in its policy, makes no claim to intellectual property rights, there is provision for postgraduates to grant a non-exclusive licence to the university. Edith Cowan University takes a similar approach and provides that the university may seek a non-exclusive licence from undergraduate students participating in cooperative education projects. Both append a form of licence to the policy documents. Such a licence excludes works such as books, articles, theses, computer programs without commercial potential, and artistic, musical or dramatic works. However, this exclusion does not apply if the university requests their creation.
Model B: Category and Circumstances Approach
Ownership of intellectual property vests either in the students or in the university according to the type of intellectual property and the circumstances of its creation. The usual approach with this category is for the students to own all intellectual property. They then agree to assign to the university such things as,
a patent-worthy discovery or invention in respect of the creation of which the university has made a specific contribution of funding, resources, facilities or apparatus.11
The University of Melbourne claims ownership of all intellectual property (with the exception of copyright), that is created in pursuance of studies, scholarship or research with or at the university or the creation of which has been contributed to substantially by the university ... by way of funding, salary, resources, facilities, apparatus or supervision.
Model C: Circumstances of Creation Approach
Ownership of intellectual property vests either in the students or in the university only according to circumstances of its creation. Except for protecting the rights of the student to copyright ownership of his or her thesis, the university draws no distinction between the types of intellectual property. The circumstances of creation that cause a university to claim ownership include the following; in the course of studies, working in a team or using university resources or facilities, students working in collaboration with another researcher, a research team or an outside body and use of pre-existing intellectual property.
Model D: University Ownership The university owns all intellectual property created in pursuance of studies and using resources or facilities material to the development of those rights.
C. Claims Involving Intellectual Property Created by Visiting Scholars
Some universities extend claims to intellectual property created by visiting scholars to the university. For example, both the University of Adelaide and the University of South Australia claim substantial ownership of intellectual property deriving from work performed by such visiting staff within the university .... In many cases, the university incorporates the claim to intellectual property of visiting scholars in its broad claim to own intellectual property of originators. For example, the University of Melbourne defines an originator as any person who creates, whether in or not in conjunction with other persons, any intellectual property. The university then claims to own all intellectual property (other than copyright) created by the originator in certain circumstances. However, some universities say nothing about visitors, and make claims only to intellectual property that staff create. The University of Canberra claims intellectual property created by a staff member in the course of fulfilling his or her contract of employment with the University. These provisions may include a visiting scholar if university procedure is to employ those scholars for the period of their
The above discussion illustrates that many universities are making broad claims to ownership of intellectual property. In many instances, the general principles vest ownership initially in the creator the employee, student or visitor but the statute or policy purports to alter this vesting and to claim ownership for the university. Such extended claims have several potential benefits for a university. First, there is a wider pool of intellectual property to consider for commercialisation. It is debatable whether this represents a benefit or an administrative nightmare. Secondly, there is the possibility of a return on its investment in facilities, equipment, resources or existing intellectual property. Thirdly, it simplifies negotiations with third parties if a university owns intellectual property that several people create. Finally, in the case of employees, it can divert the emphasis from the difficult factual questions that arise in determining whether an intellectual creation is produced in the course of employment.
What are the pitfalls that universities face in making these claims? What is the relevance of these pitfalls for individual academics and students who are pursuing their scholarly work?
A. Inconsistency with a Commonwealth Statute Section 109 Constitution
Clearly, the university can assert ownership of intellectual property that is created in the course of employment. This merely states the legal position. However, any claims beyond this in university legislation may be inconsistent with a Commonwealth statute and therefore invalid to the extent of that inconsistency. A provision in the Monash Intellectual property statute illustrates the potential difficulties. Subsection 2.1 of the Statute provides that:
Subject to section 2.4,130 the university owns intellectual property, other than intellectual property created by a student
2.1.1 which is created by an originator in pursuance of the originators employment under a contract of service with the university; or
2.1.2 in respect of the creation of which the university has contributed other university-owned intellectual property or has made a specific contribution of funding other than salary payable pursuant to a contract of employment, resources, facilities or apparatus.
Intellectual property is defined to mean:
any copyright work, circuit layout, eligible layout, design, patent, invention, confidential information, know-how, plant variety, trade mark or other insignia of origin, and any related right.
Originator is defined to mean any person who creates, whether or not in conjunction with another person, intellectual property referred to in subsection 2.1. This could include anyone other than a student and therefore can extend to visiting scholars to the university. The effect of subsection 2.1.2 is to purport to vest ownership of any intellectual property that is created in these circumstances in the university.
It is submitted that this provision is inconsistent with Commonwealth legislation that vests intellectual property ownership in the creator. Section 109 of the Commonwealth Constitution provides that [w]hen a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. The inconsistency arises in the following manner. Certain Commonwealth statutes vest intellectual property ownership in the creator, unless the intellectual property is created in the course of employment. A person, not being the employer in those circumstances, can gain rights in the intellectual property from the author only by way of contract, the operation of equitable doctrines, will or devolution by operation of law. The Monash University Act 1958 is a statute of the State of Victoria, and the intellectual property statute is subordinate legislation made pursuant to powers set out in the enabling Act. That statute is therefore a law of a State within the meaning of section 109. Accordingly, as the State law takes away a right conferred on the originator of the intellectual property by Commonwealth legislation, it is inconsistent with the respective Commonwealth statutes. The State law is therefore inoperative to the extent of the inconsistency.
The following examples illustrate circumstances in which inconsistency may occur. First, an academic staff member creates a computer program outside the duties of employment but with a specific contribution of resources, facilities or apparatus that are earmarked for the purpose of creating intellectual property. Secondly, a visitor to the university creates an eligible layout with the benefit of a specific university grant or with the benefit of university-owned intellectual property. The eligible layout is not made under the terms of his or her employment by another person under a contract of service or apprenticeship. In both examples, a Commonwealth statute vests ownership initially in the staff member or visitor. The academic staff member as author of a literary work, in this case a computer program, owns the copyright in that work. The visitor, as the maker of the eligible layout owns the EL rights in it. The university may acquire rights in the computer program or the eligible layout but is not vested by statute as the original owner. Therefore, in each case, the provision operates in a way that is inconsistent with the Copyright Act 1968 (Cth) and the Circuit Layouts Act 1989 (Cth) respectively because it purports to alter that statutory vesting in certain limited circumstances. Such a provision is therefore directly inconsistent with the rights granted by each Act. Similar conclusions may arise in particular circumstances where the intellectual property created is a design or plant variety. However, in the latter case, this will depend upon the meaning that is given to performing duties or functions as a member or employee. For example, there may be no inconsistency if the visiting scholar breeds a plant variety with the benefit of university-owned intellectual property when that scholar has the status of a member of the university.
Patents for inventions may need to be differentiated from the other rights considered above. The Patents Act 1990 permits anyone to apply for registration but provides in subsection 15(1) that 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 ...142
This provision recognises that first rights vest in the inventor at common law, and also recognises that another person may have acquired those rights to be granted the patent before the patent application. There is no express provision that establishes rights of employers or the means by which others can derive these rights. The subsection is generally taken to include the rights that employers have in any inventions that are created in the course of employment. Those rights are determined by the express terms of any contract of employment and the common law and equitable principles that govern the employment relationship. However, the subsection is not restricted to employment relationships and could extend to any circumstances where a person gains rights to the invention before grant. There is therefore no express direction and no immediate reason to exclude an entitlement that arises from a unilateral expropriation of rights. If this is correct, a provision in a university statute claiming ownership of a patentable invention that is created outside employment but using substantial resources specifically targeted to that research is not directly inconsistent with section 15 The university statute operates to require the inventor to assign the rights in the invention to the university, and gives it the rights set out in section 15 of the Patents Act. In so doing, it does not create any textual collision between the provisions of the Australian Act and of the State Act but fills in the background to the operation of section 15.
Although there is no direct inconsistency in the provisions, an indirect inconsistency can arise when a State Act intrudes into a field that is intended to be exhaustively regulated by a Commonwealth Act. Patents is recognised as such a field and the Patents Act 1990 intends to provide exhaustive and complete regulation of that subject matter. Therefore, perhaps a university statute intrudes into the field of regulating the subject matter of patents when it includes provisions that expropriate the rights of an inventor. The difficulty with this analysis is the observation above that subsection 15(1)(b) of the Patents Act 1990 recognises the entitlement to have the patent assigned on its grant but does not specify the circumstances in which those rights may arise.
This raises the question of whether the control of those circumstances is within the exclusive field of patents to regulate. On the one hand, perhaps the means by which a person acquires rights in an invention is outside the exclusive field of patents. A university intellectual property statute that enables the university to compulsorily acquire an invention can be used to fill the deliberate gaps left by subsection 15(1)(b) in the same way as an employment contract or the duty of fidelity may give rights to an employer. On this interpretation there is neither direct nor indirect inconsistency with the Patents Act 1990. On the other hand, it can be argued perhaps more persuasively that the presence of subsection 15(1)(b) is a clear indication that the Commonwealth regards the means for acquisition of rights in an invention as within the subject matter of patents. Therefore, a State Act that purports to introduce a new means of acquiring rights in an invention, namely by way of compulsory acquisition, will intrude upon the exclusive field of patents and be inoperative to the extent of that inconsistency. The absence of express provisions that define when a person is entitled to be assigned a patent does not abdicate the field to state legislation. Instead, it indicates an intention that the federal common law fills the deliberate gaps in sub-section 15 (1)(b) and completes the statutory patterns enacted by the Parliament.
Of course, the above arguments concerning inconsistency of a State Act with a Commonwealth Act are inapplicable to the many universities that have intellectual property policies as opposed to intellectual property statutes or regulations. However, if universities follow the advice of the AVCC to make the policies binding by means of legislation, they will then risk falling foul of the s109 inconsistency provisions. The consequence for individual academics, visitors and students is that the university claims in such statutes alone cannot bind them to assign intellectual property that vests initially in the originator.
B. Power of University to Expropriate Intellectual Property
Another potential source of invalidity is that the claims of both State and Territory universities may be ultra vires the powers of the university set out in their enabling statutes. In determining the extent of those powers, the university can do only what is expressly authorised and whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised. Its powers do not enable the university to extend the scope of the operation of the enabling statute or to add new and different means of carrying them out or to depart from or vary the plan which the legislature has adopted to attain its ends. The test for determining whether a regulation or other piece of delegated legislation is ultra vires is whether it complements rather than supplements a regulation making power.
When a university claims to own intellectual property, the ownership of which is vested in the originator by common law or statute, it is expropriating the personal property of that originator. This is because, with the exception of rights in confidential information, all intellectual property rights are personal property. If there is an express or implied power to expropriate personal property in the enabling statute, then there will be the power to pass an intellectual property statute or policy that expropriates the vested intellectual property of a staff member, visiting scholar or student who is bound by the statutes of the university. This proposition is always subject to the legislation being consistent with relevant Commonwealth legislation. Is there such a power? There is often an express power to acquire land compulsorily for the purposes of the university but there is no similar provision that expressly empowers the university compulsorily to expropriate personal property. Can one be implied as necessarily intended by the words used in the Statute?
Three examples illustrate the issue. The University of Ballarat Act 1993 provides that the university may acquire, hold and dispose of real and personal property. It also contains both an express legislative power to make statutes for or with respect to intellectual property and one for generally prescribing or providing for any matter or thing authorised or directed to be prescribed or provided for the purposes of this Act. The combination of these provisions suggests extensive powers of acquisition. However, two further provisions that deal specifically with acquisition suggest that it is unlikely that a power to expropriate intellectual property can be implied. First, the Minister has the power to acquire land compulsorily, but there is no similar provision that deals with personal property. The express provision for compulsory acquisition of land implies the deliberate exclusion of this power in relation to personal property. Secondly, there is an express provision that empowers the university to acquire property by gift, grant, bequest or devise. These means of acquisition all involve a concept of voluntary transfer and cannot contemplate compulsory acquisition.
The position is similar under the Monash University Act 1958. The university is capable in law of taking purchasing holding demising ... real and personal property for the purposes of and subject to this Act and has extensive legislative powers for generally prescribing or providing for any matter or thing authorised ... by this Act or necessary or expedient ... for the good government of the University. However, as with the University of Ballarat, there is express provision for compulsory acquisition of land. Furthermore, a section that deals with creation and administration of trust and other funds, limits the power to acquire property to a purchase, gift, grant, bequest or devise; all examples of a voluntary disposition. A variation is seen in the Australian National University Act 1991 in that it is empowered to buy, take on lease or otherwise acquire real and personal property ..... Unlike the Universities of Ballarat and Monash, there is no power for compulsory acquisition of land but it is most unlikely that the words otherwise acquire could imply the power to expropriate intellectual property. It is more likely that ejusdem generis applies to limit the words or otherwise acquire to consensual acquisition or voluntary disposition.
The fundamental principle of statutory interpretation that legislation is presumed not to interfere with vested proprietary rights supports an interpretation that limits powers of acquisition to consensual arrangements or voluntary dispositions. The effect of this presumption is to reject the implication of a power to expropriate intellectual property unless there is a manifest intention to rebut or override it. While there may be a clear intention that a university can acquire any property rights, there must be a manifest intention that the method of acquisition can authorise the compulsory taking of property.
How does this presumption apply to the claims to ownership made in university intellectual property statutes and policies? It seems that intellectual property legislation does interfere with vested proprietary rights when extended claims are made to ownership of copyright, eligible layouts and plant breeders rights. The relevant Commonwealth legislation vests initial ownership rights to this intellectual property in the originator upon creation. Any claim to ownership, other than pursuant to transmission by way of agreement, will or devolution by operation of law or by operation of equitable principles, amounts to an interference with that statutory vesting. In the case of copyright, property arises when the work is reduced to a material form or the other subject matter is made. Similarly, the proprietary right in eligible layouts arises when it is made. The Plant Breeders Rights Act 1994 (Cth) expressly provides that both the right to apply for a Plant Breeders Right and the Plant Breeders Right itself are personal property.
The position is not so clear where designs and patents for inventions are concerned. The rights of an owner of a registered design are expressly provided to be personal property, but there is no such provision concerning rights in an unregistered design or the right to apply for registration of the design. The fact that the owner of the unregistered design may assign his interest suggests these rights are also proprietary, but this is not clear. In the case of patents for inventions, the exclusive rights of the patentee are again expressly stated to be personal property. Although the Act contemplates that an agreement to assign the invention may have been made before a patent is granted, there is no express statement that proprietary interests exist in that invention prior to the grant of a patent. Moreover, the fact that interests may be assigned or derived does not of itself establish their proprietary character. After all, even though confidential information can be assigned and bequeathed and the rights in that information are enforceable against third parties, those qualities alone do not establish that the rights in the information are personal property.
The nature of the rights in an invention before grant may depend upon whether an application for a grant of patent has been made. Prior to that date, the nature of the rights in the invention is debatable. In his analysis of the position under the 1952 Act, Ricketson considers that the Act recognises proprietary rights may subsist in an invention before applying for a patent. This assessment is upon the basis that rights may have been acquired in the invention from the inventor before grant. Subsection 15(1) supports such an interpretation when it refers to a person who derives title to the invention. In analysing the 1990 Act, other commentators recognise that rights may be dealt with before application for grant, but question the proprietary nature of those rights. The authors suggest that at least protection may be provided for the information relating to the invention under the doctrine of breach of confidence. There seem to be two classes of possible rights prior to application rights to the invention and the rights attaching to the information relating to the invention. The proprietary nature of any of these rights is inconclusive. After making an application for a patent, the position may be different. There are a number of provisions that suggest that rights in the invention that is the subject of a patent application may be recognised as proprietary. It is not clear whether these rights can be equated with the rights in the application itself. This suggestion arises first from the fact that a patentee is granted exclusive rights to exploit the invention for twenty years from the date of the patent. The exclusive rights to exploit the invention are described as personal property. As the term of the patent commences on the date on which a complete specification is filed, the exclusive rights can be exercised during the application period. This strongly suggests that the rights in the invention during the application period are proprietary, even though the invention as described in the complete specification may differ from that which is finally patented. Any changes in that definition will affect the extent to which the patentee can enforce the rights against third parties but should not affect the proprietary nature of the rights before grant. Other provisions that support the proprietary nature of rights in the invention before grant are those that relate to acquisition of inventions or patents by the Commonwealth. Subsection 171(1) provides that [t]he Governor-General may direct that a patent, or an invention that is the subject of a patent application, be acquired by the Commonwealth. There is the obligation that the Commonwealth pays compensation for this acquisition. The assumption is that both the rights in the patent and in the invention that is the subject of the patent application are personal property and that this legislation is providing for acquisition of property on just terms from any ... person ....
Because the proprietary nature of these various rights is inconclusive, a claim by a university to assignment of rights before grant, whether before or after application for grant, may or may not amount to an expropriation of vested personal property. Hence, it may be inappropriate to use the presumption that legislation does not interfere with vested proprietary interests as a guide to interpretation. Nonetheless, it is possible to challenge the validity of university claims that require the originator to assign ownership of unregistered designs and patentable inventions to the university on another footing. Legislation is presumed not to invade common law rights and will never be construed as taking away an existing right unless its language is reasonably capable of no other construction. The right to choose if, when and to whom rights in an invention or design are assigned must be a fundamental common law right of an inventor or designer. Whilst there are no decisions that establish this proposition, an analogy can be drawn with the common law right to enter into a legal contract and the right of periodical tenants to assign, sublet or otherwise dispose of an interest in a lease. This latter example involves assigning a proprietary interest, so the case may be distinguished upon that basis. However, the right is a contractual right to assign or dispose of a valuable right and there is no obvious reason to limit the subject matter of the contractual right to one that is proprietary. If there is such a fundamental common law right vested in the inventor or designer, then the University Acts of Parliament will only be construed as removing those rights if this intention is expressed with irresistible clearness.
Irrespective of which presumption is considered, there remains in force the general principle that there must be a clear intention to expropriate rights. There is no doubt that a university can voluntarily acquire intellectual property of its employees, students and others; there is considerable doubt as to whether this acquisition can be authorised by way of expropriation in the absence of an express provision to that effect. A university can meet its objectives without this power of expropriation if it wishes to acquire intellectual property it can do so by means of agreement. Therefore, in the absence of an express power, an implied power that permits expropriation is likely to be an addition to the express provisions of the statute, rather than a filling in or a fulfilment of the plan or purpose which the main provisions of the Act have laid down or ... have outlined or sketched . Consequently, provisions that purport to expropriate intellectual property and interfere with the originators right to enter into contracts concerning that intellectual property will be ultra vires. The effect of this is to render those provisions void. The ownership of intellectual property will remain with the originator in whom it first vested.
Finally, although a staff member or student may be bound by the statutes and regulations and possibly policies of the university, depending upon the action taken by the university, he or she will be bound only by those provisions that are validly passed. If the above arguments are correct, any provisions that purport to expropriate intellectual property will be invalid or unenforceable. The relevance of this conclusion for individual academics and students in the course of their scholarly work is significant as it provides them with a strong basis for a challenge to the validity of such claims. In the absence of an agreement that creates some equitable rights in the intellectual property in the university, the provision and use of university equipment or facilities, university-owned intellectual property or university funds on their own fail to give the university an enforceable claim to the intellectual property.
C. Alienation of Vested Proprietary Interests Without Adequate Compensation
Legislation is presumed not to alienate vested proprietary interests without adequate compensation. Therefore, assuming that a university has power to pass legislation that expropriates intellectual property, the relevant provisions must be read subject to this presumption. Universities generally grant originators of intellectual property a share of royalties or profits that arise from successful exploitation. While this grant seems to satisfy the requirement to provide compensation, its adequacy would be a question of fact. It is worth noting that an employer is under no obligation to provide an employee with a share of royalties that arise from intellectual property he or she is employed to invent. However, most universities do not discriminate between intellectual property of the latter kind and intellectual property which they expropriate.
In view of the above discussion, new and existing members of staff, students and visitors may not be bound by certain provisions of intellectual property statutes and policies. The following discussion alerts all interested parties to ineffective means that are used to overcome these issues. However, it recognises that there may be circumstances where originators and Universities accept some limitation on their intellectual property rights and analyses the possible ways in which a binding agreement may be reached.
In the AVCC discussion paper, there is an extensive discussion of the content of a contract of employment and the means by which a new member of staff can be bound by the provisions of an intellectual property statute or policy. and of any enterprise agreement being incorporated as part of the employment relationship, the employment contract itself will usually include the terms of a letter of offer, perhaps the terms and conditions of university statutes and regulations, policies in a staff handbook, terms implied as part of the employment relationship and any number of possible other written and oral representations. Whether or not the terms of an award form terms of the contract of employment will depend upon the agreement of the parties. In the absence of agreement, they are enforceable by reason of their legislative status and not as contractual terms. The employment relationship is therefore stratified, with layers of common law contract principles, and superimposed levels of State and Federal Acts and Regulations, industrial awards and enterprise agreements. Because a university owns intellectual property that is created in pursuance of the duties of employment, a clear description of the duties of employment will minimise argument concerning who owns what. For example, if it is important for a university to claim ownership of copyright in lecture notes and teaching materials, it can stipulate that the production of this material is within the duties of employment. However it will never be possible to avoid the potential for dispute in this area due to the difficulties in defining the nature of an academics duty to research and teach.
One way of minimising these problems is for the university also to claim ownership of intellectual property that is created using university resources, existing intellectual property or funding. An academic has access to these resources as a consequence of employment and is likely to be acting in the course of employment when they are made available and used. As this is often a difficult and contentious matter, the additional claim to own intellectual property created using these resources changes the focus of the enquiry. It is no longer limited to whether the intellectual property is created in the course of employment but includes whether it is created in any of the defined ways. Where a university takes this approach, these extended claims are likely to amount to an expropriation of intellectual property and will be inoperative unless validly incorporated in the contract of employment. Clearly the university can contract with the originator to change the operation of the various intellectual property regimes that vest intellectual property in the originator. This is an important way in which to minimise disputes over ownership of intellectual property.
(i) Restraint of Trade
A condition in an employment contract that requires a person to give up some freedom which otherwise he or she would have had concerning ownership of intellectual property is potentially vulnerable to application of the restraint of trade doctrine. What sort of clause is appropriate must depend upon the nature of the work done by the employee. As long as the clause imposes only a reasonable restraint on the employees freedom to pursue the trade it will be enforceable. A restraint is reasonable if it affords no more than adequate protection to the party in whose favour it is imposed.
In all cases such as this, one has to ask oneself what are the interests of the employer that are to be protected, and against what is he entitled to have them protected.
Earlier authorities are of limited assistance when reasonableness of a restraint is assessed by reference only to the facts of each case. However, one case provides a useful comparison to identify the issues. In Electrolux Ltd v Hudson, a covenant that purported to claim ownership of inventions that were created outside the duties of employment was unenforceable as being an unreasonable restraint of trade. The covenant required the plaintiffs to disclose and assign upon request an extremely broad array of inventions that they discovered during the period of employment. There were a number of reasons for Whitford J refusing to enforce the covenant. First, the first defendant was not employed to make any invention or discovery. He was merely a storekeeper. Secondly, the invention was made outside working hours and without the use of the employers materials. Thirdly, the covenant itself was too broad in its potential application to an immense diversity of possible inventions.
This case is distinguishable from that of an academic who is employed to research and teach in a university and who is required to assign intellectual property that is created using university resources. There may be genuine doubt as to whether the academic was acting in the course of employment when any or all of these resources were used. Therefore, a clause that claims extended ownership on one or more of these bases arguably provides the university with no more than adequate protection for both its interests as an employer and for those of the public by whom its teaching and the bulk of its research is funded. Additional provisions in all intellectual property policies and statutes reduce the likelihood for successful application of the doctrine. The first concerns the university contribution of funds and administrative services toward commercialising the intellectual property. The second offers the academic a percentage of profits realised from successful commercialisation. A third that appears in many but not all policies and statutes is the grant to the academic staff member of a non-exclusive royalty free licence to use the intellectual property for teaching and research purposes.
(ii) New Contracts of Employment
For all new contracts of employment, the AVCC recommends that the institutions policy, guidelines or internal legislation on ownership are attached to the letter of offer and be expressed as forming part of the employment contract. Annexing the policies to the letter of offer will effectively incorporate the terms of those documents as express terms of the contract when acceptance of the letter of offer is signed and returned to the university without variation. Although provisions in an intellectual property policy or statute may be challenged as being invalid on constitutional grounds or because they are ultra vires, when those provisions are appended to and become express terms of a written contract they will bind both parties.
Rather than appending the express terms to the letter of offer, a general clause may provide that the employee agrees to be bound by policies and legislation of the university as varied from time to time. Clearly, employees will be bound by validly enacted internal legislation of the university, irrespective of when that legislation is enacted. They are bound by their statutory force and not by virtue of agreement. However, the position with policies is not so clear because the only way in which they can bind is by agreement. The extent to which the general condition binds an employee to the terms of policies as they exist at the time of the contract will be a matter of interpretation in each case. However, it cannot be effective to incorporate otherwise invalid or unenforceable provisions in a policy, whether they exist at the time of the contract or are unilaterally introduced at a later date. If the employee is bound by the terms of certain existing policies, is the general condition effective to bind the employee to subsequent valid variations of those policies? The area within which a university is given latitude of choice by such a clause is likely to be too broad to render such a term enforceable. Subsequent variations in policies may not have contractual force but will remain as important references for the exercise of a discretion. If the proposition that terms that expropriate intellectual property are invalid is not accepted and if an intellectual property policy contains valid terms that 217 LEstrange v F Graucob Ltd  2 KB 394. effectively expropriate intellectual property, those terms may bind the academic only if there is adequate notice. Such terms can be described as onerous because they reduce the property rights of the prospective employee. Hence, if a university does not specifically draw them to the attention of the staff member at the time of or before entry into the agreement
(iii) Existing Staff
For existing staff, the position is more difficult again. Their employment contracts set out the duties of employment. Therefore, an interpretation of these will identify the intellectual property that they create in pursuance of the terms of the contract of employment. The originator owns anything that falls outside their scope. As contracts often express these duties in general terms, it is difficult to predict with confidence the intellectual property concerned and the university may find that it cannot necessarily claim ownership. For example, an originator may thwart a university claim to ownership of copyright in course materials created in pursuance of the terms of employment if the originator proves there was no duty to create them. If the university alternatively asserts ownership of these course materials on other grounds such as use of resources or facilities for its creation, the originator may challenge that claim as ultra vires or inconsistent with the Copyright Act 1968 (Cth).
Whereas contracts for new staff can define their duties more precisely to reduce conflicts of this kind, the description of duties in the employment contracts of existing staff remain unless varied. The extent to which a university can modify duties of employment by means of its statutes is dependent upon its legislative powers. For example, subsection 28(1)(b) of the Monash University Act 1958 authorises the making of statutes for or with respect to the number remuneration and manner of appointment and dismissal of the professors and the teaching staff and the officers and servants of the university. The University of Melbourne Act 1958 authorises statutes with respect to employment of staff. General provisions of this nature cannot authorise statutes that unilaterally vary terms of employment after the appointment is made.
In this case, the relevant statutory power ... is simply one to employ staff. Obviously that, taken together with the general power to contract, empowers the University to enter into contracts of employment, to make consensual variations of employment contracts and to enter into new contracts with existing employees. But I cannot see how it is possible to construe a mere power to employ staff as enabling the university unilaterally to vary its contracts with its employees or to impose on them, without their consent, conditions which legally bind them except, of course, to the extent that contracts of employment may themselves empower the University to make determinations which will be binding on the employees concerned: (see, eg, Thorby v Goldberg  HCA 41; (1964) 112 CLR 597).229
In the absence of an enforceable provision of this nature, it is only if the legislative power is more specific and gives the university powers to determine terms and conditions of employment at any time that the university can unilaterally change relevant terms and conditions after the time of commencement of employment. However, universities make these decisions in an industrial relations context, where unilateral changes to terms and conditions of employment would inflame, rather than maintain and improve industrial relations at a university. The terms of recently concluded enterprise agreements are now likely substantially to affect a decision of a university to exercise such a power if it is available. Section 8 of the Monash University Enterprise Agreement 1995, provides for consultation about change and includes the following subsections that impose practical restrictions upon the university unilaterally changing any important terms and conditions of employment:
8.2 The University undertakes to consult with union/s and staff where a proposed significant or substantial change will affect staff. 8.3 If a decision to proceed is made by the University, then management will consult or negotiate as appropriate with unions and staff about the implementation of that change, particularly where the change is likely to have an impact on the work, conditions and career prospects of staff ... .
Even if duties are defined more precisely in the contract of employment, this will not resolve the invalidity of university claims to own intellectual property that an academic creates outside the scope of those duties but using university resources, intellectual property or funding. Accordingly, any variations of the employment duties and resolution of invalidity of extended claims must be effected by individual agreements or through certified enterprise agreements or federal industrial awards. The idea of incorporating the agreement in a certified enterprise agreement is appealing because this ties in with negotiation of other employment issues. Some enterprise agreements include a general obligation to consider intellectual property issues, so there is no reason to exclude more specific provisions on ownership being included as terms of the agreement. However, this suggestion suffers at least two limitations. First, it will take time to negotiate and may not be successful. This is not an unreasonable expectation when the preferred position of the NTEU is to reject claims by the university to ownership over and above its statutory and common law entitlement. Secondly, the agreement with a Union may not be effective to impose obligations upon an employee who is not a member of that Union.
The position with students is similar to that of employees who create intellectual property outside the terms of their employment. They will own intellectual property unless they agree to assign it to the university or another party. They may enter the agreement at the time of enrolment or at a later time before the student commences work on the particular project. Whatever time is chosen for entering this agreement, the same limitations on its validity apply as discussed above in relation to employees. However, there are additional issues that arise because of the relationship between students and a public university. This relationship is complex and has not been conclusively identified in legal terms. Two aspects of the relationship are clear. First, enrolled students are bound by university laws statutes, by-laws and regulations irrespective of their agreement to be bound to the particular terms. Secondly, enrolled students are not automatically bound by policies or resolutions of the university. However, the question of whether there are other aspects to this relationship, such as a legally binding contract formed on enrolment, some special obligations of the university based upon the doctrine of in loco parentis or perhaps a fiduciary relationship, has substantially escaped both judicial and academic attention in Australia. The existence and extent of these further aspects of the student-university relationship are relevant to the validity of any extended claims that a university makes to ownership of student intellectual property.
First, there is the issue of whether the enrolment constitutes a contract. Arguably, the enrolment can at least be analysed as a legal contract to the following extent; the student, on registration or payment of fees, enters into a contract with the university whereby he agrees to be bound by its statutes and regulations. It is the enrolment that then subjects him or her to the powers of management of the university and provides the opportunity to study and graduate in a chosen course. There has been very little judicial or academic comment on the issue, but limited support for the existence of some contractual relationship between a student and the university can be found in the United Kingdom If the enrolment is a contract, a condition that is included in the enrolment documents that requires the student to agree to assign intellectual property may be a term of that contract. If so, its legal validity may be subject to challenge on several bases. The first may be to argue that there is insufficient consideration for the promise to assign intellectual property.
The second may be to accept the existence of the contract but to challenge its validity on the grounds of unfairness in the bargaining process and method of making the contract. This may be on the basis of undue influence that occurs where one party unconscientiously uses any special capacity or opportunity that may exist or arise affecting the alienors will or freedom of judgment in reference to such matters. Alternatively, it may be on the basis of unconscientious dealing, the elements of which are,
exploitation by one party of anothers position of disadvantage in such a manner that the former could not in good conscience retain the benefit of the bargain.
The third may be to argue that this agreement is in restraint of trade. As the doctrine is not confined to trade in a limited sense but extends to the exercise of a persons profession or calling it could apply to agreements with students, even if the student-university relationship is not contractual. The fourth may be to argue that universities are subject to statutory provisions that concern unfair contracts and misleading and deceptive conduct.
(ii) In Loco Parentis
If the university is in loco parentis to its students, this will establish a special relationship from which certain presumptions and duties may arise. It may create a presumption that undue influence is exercised when the student is required to agree to assign intellectual property as a condition of acceptance into a course. It may provide a basis from which to argue that a university has a duty to protect the economic welfare of a student that opens it to negligence actions for economic loss suffered by a student who has assigned intellectual property. There has been no judicial or academic recognition that a university assumes the relationship of in loco parentis in Australia, although its existence in the United States of America has been the subject of extensive debate.
(iii) Fiduciary Relationship
Another aspect of the student-university relationship may be fiduciary. The consequences are that equity imposes proscriptive obligations not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. This is not one of the accepted fiduciary relationships of trust and confidence or confidential relations; ... trustee and beneficiary, agent and principal, solicitor and client, employer and employee, director and company and partners. However, as the categories of fiduciary relationships are not closed, courts occasionally find fiduciary relationships outside these accepted categories. It seems that a significant aspect of the relationship is that the fiduciary must act in a representative character in the exercise of his or her responsibility. The essence of a fiduciary relationship is described as:
that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense.
The issue that arises is whether courts are likely to find a fiduciary relationship in the university/student relationship that may impose obligations in the area of intellectual property.
All of these issues are important and complex and require a separate article to explore them in depth. The significance of raising them in this article is to alert both students and Universities to other possible sources of legal invalidity of claims to ownership of intellectual property that a student creates. C. Visiting Scholars The position of visiting scholars is similar to that of students who have no employment relationship with the university. In the absence of an enforceable contract that alters the statutory or common law vesting of ownership of intellectual property, the visiting scholar owns intellectual property he or she creates. Therefore, a university that wishes to claim some interest in this intellectual property will need to include the provisions as express terms in a contract. If it proposes to make claims to a percentage of the intellectual property rights, the university and the visitor must check what rights the visitors home institution may validly claim in this intellectual property.
The legal validity of the way in which claims are made was discussed above, but the fundamental issues remain for consideration. Should universities make ambit extended claims to intellectual property that is created by academic staff and students and if so, in what circumstances are such claims justified?
A. Academic Staff
(i) Preliminary Questions
Before one can ask whether extended claims are justified, one must first define the scope of the intellectual property in respect of which a university may wish to make such claims. This will be limited to intellectual property in which a university asserts its statutory and common law rights to ownership. For example, if a university asserts ownership to all intellectual property other than copyright, it is illogical to make extended claims to copyright. Defining the scope of this intellectual property requires answers to the following questions:
The answer to these questions depends upon ones view of whether intellectual property laws should apply equally to universities and their employees as they apply to other commercial enterprises. A person who views the role of the university and its academic staff in a commercial light is likely to accept that the statutory and common law principles should apply in all or most situations. Such a person may accept the vesting of a limited class of scholarly works in the originator but otherwise recognise university rights to all other forms of intellectual property.
A person who maintains a more traditional view that ownership of some creations is inextricably bound up with academic freedom will demand the vesting in the originator of a wider class of intellectual property. For example, in his Herchel Smith Lecture for 1991, Professor Cornish drew a distinction between rights that arise without formality (copyright and confidential information) and rights that require formal applications to a granting authority (patents, plant breeders rights, designs). He argued that universities should own rights of the latter kind only and saw this as an exception to the general principle that would vest intellectual property in the academic creator. He based his proposal on the premise that universities are different from other employers and employees who engage in a profit seeking enterprise. Only academics should exploit the information and ideas which they create. He considered that it would be inconceivable for universities to control publication and have rights to require an academic who leaves employment to leave his research, that innermost part of his intellectual existence, walled up in his old university for use as its own prerogative.
It is a fundamental and complex issue to find whether there is a theoretical model for a university which can provide a means for resolving the above questions. As this debate is beyond the scope of this article, there can be no conclusions as to the appropriate answers. However, irrespective of the final resolution it is likely that all sides of the debate may accept the right of the university to assert statutory and common law ownership in respect of a particular class or classes of intellectual property (defined intellectual property). A discussion of whether universities should make extended ownership claims can proceed in respect of these theoretical and undefined classes without having to resolve those classes.
(ii) Should Extended Claims be Made?
There seem to be two ways in which to allocate ownership in defined intellectual property that academic staff create and these equate with the two models that universities adopt. The first, Model A, rejects the concept of extended ambit claims. It retains the statutory and common law principles as the only criteria but recognises that there may be the need for specific agreements that govern ownership of intellectual property that staff create in particular circumstances or using specific resources. The second, Model B, rejects the statutory and common law principles as the sole basis on which to allocate ownership and includes an extended ambit claim in all employment contracts to divert attention from employment duties alone.
Model A: No Extended Claims
Undoubtedly, a decision to define ownership according to whether or not the academic creates defined intellectual property in the course of employment duties will create difficulties and uncertainty in individual circumstances. It is not simple to identify intellectual property when the duties are framed in generalities of teaching, research and administration. The nature of an academics lifestyle means that the usual guidelines of whether the work is created at home or out of hours do not necessarily establish ownership by the academic.
The AVCC recommends more detailed position descriptions in employment contracts to make it less difficult to ascertain whether or not any particular item of intellectual property was generated pursuant to the terms of a contract of employment. This may be possible to some extent for all new contracts. However, leaving aside employment as a research assistant or in connection with a specific research project, it is difficult to see how the duty to research can be anything other than unspecified for an academic. A fundamental academic freedom is to engage in research of ones own choice. The need to publish works of scholarship dictates that the research must advance the understanding and knowledge in the field. However, the field itself and its particular focus are within the complete discretion of the academic. Similarly, the types of intellectual property that arise from the research are also entirely within the discretion of the academic.
A university would have no reason or interest in defining the duty to research more specifically, so this uncertainty must remain. Hence, rewriting employment contracts to specify duties does not necessarily resolve uncertainty as to whether or not a particular item of intellectual property is created in pursuance of those duties.
The inherent uncertainties in the formula can be reduced with the use of specific agreements in circumstances where the parties consider there should be a clear understanding that the university will own any resulting intellectual property. It seems sensible for a university to identify the particular resources, intellectual property or facilities the use of which justifies its claim to ownership. Having done so, it can establish procedures for individuals to sign agreements before the intellectual property is made available, or the resources or facilities are used.
Apart from the increased certainty of ownership of intellectual property, there are other advantages in pursuing the use of specific agreements. A university will become more focussed in the type of intellectual property that it wants to own if it is forced to identify the intellectual property, resources and facilities from which it seeks a return. Originators will be alerted to the value of those resources and to the significance of maximising that value for the benefit of all parties. They will have the opportunity to discuss rights in intellectual property before embarking on the research and, consequently are more likely to view a claim to own intellectual property that results from the use of expensive capital equipment or valuable intellectual property as fair.
Where there is use of university-owned intellectual property, specific agreements offer an additional opportunity. Each faculty or department can establish databases that identify its significant university-owned intellectual property. It will be simple to locate patents registered in the name of the university, but it will not be an easy task to identify other university-owned intellectual property. The exercise may uncover claims by individuals to ownership of that intellectual property. Assuming that it is possible to resolve any resulting disputes, a university can develop a procedure whereby no-one can use that intellectual property without first signing an appropriate agreement. The entry into agreements for its use will provide data that may identify the creation of new and valuable intellectual property. In conjunction with databases that detail recipients of external research funding, they can provide a short-cut for an annual technology audit. These resources will be then useful for those who are charged with the obligation to maximise the benefits that arise from this intellectual property.
Model A is appealing. It is also a practical solution to leave extended claims to the realm of specific agreements where there are some controls on the availability of resources. For example, use of certain facilities and resources such as video equipment lend themselves to prior agreement. They are located in a separate department and require someone independent of the research team or faculty to make them available. However, it will not be always practical to enter specific agreements where academic staff have access to resources by virtue of their employment. The administrative burden and the risk of non-compliance may be too high when they regularly use equipment and intellectual property without asking anyone. In the absence of specific agreements, resolving the issue of disputed ownership will inevitably require detailed analysis of employment duties. Consequently, while Model A may appeal to academic staff because it maintains the status quo, it may not be the most sensible way in which to allocate ownership when its application in particular circumstances is open to genuine doubt.
Model B This option superimposes upon Model A extended claims in respect of some or all of that intellectual property when it is created according to identifiable criteria. It enhances clarity of ownership when those criteria are present because it diverts attention from duties of employment alone. For example, assume that the parties agree that the university owns all patentable inventions that staff create in pursuance of their duties of employment. An academic creates a patentable invention using university-owned intellectual property but disputes university ownership on the grounds that its creation is outside the duties of employment. He or she argues that there is no express duty to invent. This dispute will not arise when there is an enforceable ambit claim under which the university owns patentable inventions that staff create using university-owned intellectual property. The extended criteria help to plug the gap that the necessary vague descriptions of an academics duty to research create. Model B does not exclude specific agreements that control use of particular facilities and resources, but provides a fall-back position where it is impractical to seek such agreements. While extended ambit claims have the potential to enhance clarity of ownership in these circumstances, an individual originator may nevertheless view their use as an unfair encroachment of the university upon his or her rights. This means that the various parties who represent the interests of the university and its staff must discuss and agree upon the scope of ambit claims and the rights that the originators retain. The balance between extended ambit claims and academic rights becomes a package that enhances certainty of an agreed allocation of ownership and the rights that comprise ownership.
There appear to be potential benefits for all parties if extended ambit claims are used for this purpose. It means that the parties must agree upon (a) the criteria according to which a university is entitled to claim ownership and (b) the rights that the originator retains in that intellectual property. Assuming that universities have autonomy in relation to both these matters, it is important that staff view the criteria that a university uses for its extended claims and the rights that they retain as fair and reasonable.
(a) Criteria for Extended Claims There are two points worth mentioning that concern the identification of criteria according to which a university makes its ownership claims.