How do university IP policies capture student IP?
February 07, 2023
A recent court judgment usefully considers situations in which university IP policies may validly claim ownership of patent rights from undergraduate and postgraduate students, as well as when this may not be the case.
On 23 December 2022, the Patents Court handed down a judgment which considered, for the first time, the applicability of consumer protection legislation on university IP policy terms claiming ownership of patent rights from non-employees (students). The IP policy was found to comply with the relevant consumer legislation on this occasion. We look at why this was the case, as well as situations in which unfairness might arise.
The action began as a claim brought by Oxford University Innovation Limited (the “University”) against Oxford Nanoimaging Limited (ONI) for £700,000 in unpaid royalties pursuant to a patent licence. ONI’s defence was that the university was never entitled to the licensed patents in the first place.
The thrust of ONI’s argument was that the university’s approach to allocation of the benefits of the research was unfair to DPhil students, and specifically to the student concerned (Mr. Jing – now CEO of ONI). To understand why ONI made this argument, it would be helpful to first summarise the legal background.
When researchers are employees (e.g., many post-doctoral researchers, lecturers, professors, research staff), their inventions may automatically belong to their employer in the circumstances defined by Section 39 of the UK Patents Act 1977. This is commonly the case if the invention was made in the course of normal duties of the employee and the circumstances were such that an invention might reasonably be expected to result from the carrying out of his duties.
When researchers are not employees (e.g., undergraduate students, and postgraduate students depending on their funding and any other roles held), their contributions to an invention can automatically belong to a third-party (such as a university) in the circumstances defined by Section 7 of the UK Patents Act. This is commonly the case when there is an enforceable term of any agreement entered into with the inventor before the making of the invention.
IP policies are capable of capturing inventions made by non-employees, but not if their terms are unenforceable for reasons such as unfairness. In particular, if an invention is created by a student who is regarded as a ‘consumer’ rather than an employee, the contract terms would need to comply with relevant consumer contracts legislation. ONI’s argument of unfairness would, if successful, have meant that ONI could escape the patent licence agreement as the patents were never validly owned by the university.
Did the university validly own the patents?
Yes, for the reasons discussed below.
The court considered the matter in two stages: first, Mr. Jing’s brief internship before starting his DPhil, and second, Mr. Jing’s DPhil itself.
Regarding the initial internship, it was agreed that Mr. Jing had been an employee during this time. It was straightforwardly determined that his contributions from the initial internship belonged to the university.
Regarding the DPhil, ONI contended that while Mr. Jing was a DPhil student, he was a ‘consumer’ under the EU Unfair Terms in Consumer Contracts Regulations 1999/2083 (“UTCCRs”). ONI further contended that the university’s IP provisions contravened the UTCCRs and were not binding on Mr. Jing as a result.
The court agreed that a typical DPhil student (or undergraduate) should be treated as a consumer, and that Mr. Jing was a consumer. The court considered that the closer the DPhil/PhD student is to an employed researcher in actual work and status, the less unfair it is to treat the DPhil student in the same way as one would treat an employed researcher.
However, the court applied the UTCCR and considered the university’s IP policy to be compliant (with the exception of a term in an older version of the policy); therefore, the university validly owned the patents. The key principles were whether the terms of the IP policy were “contrary to the requirement of good faith”, and caused “significant imbalance” in the parties’ rights and obligations “to the detriment of the consumer”, which was not found to be the case here.
The university’s IP policy
The university’s IP policy claimed ownership of student IP only where the IP was created:
- “Jointly with anyone else subject to section 5 [e.g. professor]” – the court deemed this to be sensible.
- “Using university facilities or equipment (unless the terms of access for the facility or equipment provide otherwise)” – the court deemed this to be prima facie reasonable although it is possible to envisage circumstances in which it might be unfair to make a claim simply because facilities (such as a library) had been used.
- “In circumstances where that IP is subject to obligations (including obligations imposed by contracts or grants) that the university owes to a third party” – the court deemed this to be reasonable in normal circumstances.
- “Using funding from the university (unless the terms of that funding provide otherwise” – the court deemed this to be reasonable, because this would make the student more akin to an employee.
Unfair, overly-broad IP policies
The above policy had not always been in place. It replaced a previous, broader wording that claimed ownership of student IP made or created “in the course of or incidentally to their studies”. The court deemed this to create a potential imbalance between the student and the university, because:
- This would deprive a student of their IP rights in some circumstances in which the contribution of the university to its creation was negligible.
- Unlike an employee, a student is not paid to invent. To the contrary, the student generally pays to receive education. So, to require a student to assign rights to the university in that blanket way is capable of being unfair and creating an imbalance to the student’s detriment.
- This provision goes beyond national law and further than the provisions applicable to employees.
- It is out of line with that in other universities (note, the court benchmarked the policy against those of other universities).
- The university had recognised this in abandoning it.
Although this brief article cannot hope to fully encapsulate the nuances of the 651-paragraph judgment, we can conclude that there is now more clarity on student IP ownership, as well as a need to review IP policies in light of this judgment. If you have any questions with regards to this article or how Swindell & Pearson can help you and your business with intellectual property, please don’t hesitate to get in touch with the author Tim Gilbert or call +44 1332 367 051.