Thursday, 3 March 2011

Epilogue: UWA v Gray

In 1985, Dr Bruce Gray was appointed to a prestigious role as Professor of Surgery at the University of Western Australia. A medical doctor, Gray had worked his way up as a specialist surgeon. Also pursuing an academic research career, in 1981 Gray had secured the esteemed John Mitchell Crouch fellowship, offered by the Royal Australasian College of Surgeons. This supported his research into cancer treatments.  In court in 2008, Australian Federal Court judge Robert Shenton French said that he had no doubt that Gray was a very difficult man to work with. Perhaps Gray’s arrogance had been somewhat earned.

As soon as Gray started at the University of Western Australia, he staked out territory: research staff were hand-picked, space was negotiated, equipment purchased; resources to enable some important research. Gray was working on microparticles that could target cancerous cells in the liver. At the University of Western Australia, this research led to the invention of a technology Gray called microspheres.  They worked spectacularly.

Having thus succeeded simultaneously in the aggressively competitive fields of surgical specialization and medical research, Gray next navigated the uncompromising world of medical technology commercialization. Gray worked hard at attracting substantial external grant income. For Gray, this somewhat offset the fact that, paid a university salary, using university resources, drawing on the expertise of university colleagues and trading on the status of a university professorship, new commercial products were developed and sold through a publicly listed company called Sirtex.

In 2010, the Australian Stock Exchange listed Sirtex as sixteenth in the top 100 of the health and biotechnology sector, worth $273 million.  From the early 2000s, Bruce Gray personally owned a $75 million share. He began living like the very wealthy man he now was. The University of Western Australia did not receive a cent.

Leaders of the University of Western Australia tried to talk to Gray, to invite him, in a spirit of collegiality, to share the financial benefits of his research with the university. When that did not work, the university took legal action. The legal fracas that followed was messy. The case UWA v Gray included other claims and cross-claims, for example: the University of Western Australia against Sirtex; Sirtex against Gray; Gray against the University of Western Australia; Sirtex against the University of Western Australia and Gray against a fellow researcher. The central question, however, and that which attracted the higher education sector’s attention, was who owned the intellectual property in Gray’s inventions, Gray or the university?

The University of Western Australia argued that, as an employee of the university, Bruce Gray’s work was the property of the institution. The court found that, while Gray was certainly contracted to teach and conduct research, there was no requirement – or even implied expectation – that he would invent. That is, invention was not what he was paid to do. If he invented, which he clearly did, he owned the intellectual property himself.

The university submitted their intellectual property policy, demonstrating they had claimed the whole of an academic’s professional time. This was the source of some embarrassment. Like other universities in the confusing post-Dawkins period, the process of developing the policy had been patchy, the responsibilities for intellectual property protection unclear. While developed and even officially adopted by the time Gray patented the microspheres, the new policy had not been properly communicated to the university community – it had not been ‘promulgated,’ as the court called it.

This did not help the university’s case. But it was not the main issue, according to Justice French. In fact, he described it as “the least of their problems”.  The university argued that, even if the policy may not have been entirely in force at the time, ownership of intellectual property was implied in Gray’s employment contract. The policy merely demonstrated the inherent rightfulness of their claim. The court was not persuaded. Justice French found that “UWA cannot, by regulation, acquire property from its staff members”. 

The University of Western Australia pointed to Gray’s responsibilities as an employee. His ‘fiduciary obligations’ required him to protect the university’s property, university lawyers argued. But this too was a problem. Not only was Gray’s invention not the university’s property, the court found that there was also some doubt about Gray’s status as an employee. Gray was not really an employee in the sense used in other cases of failed fiduciary obligation. Properly speaking, Gray was a member of the university. Gray was not under managerial direction, indeed it was necessary to the work that he controlled his research himself. Gray’s membership in the university, Justice French found, was a precondition to his academic freedom. And that academic freedom was what enabled the university to fulfill its legal obligations.

Theoretically, if the purpose of the university was the commercial production of intellectual property, Gray might have some fiduciary obligation to protect it. Was this the purpose of the university?

It was understandable, said Justice French, that lawyers for the University of Western Australia were reluctant to discuss something as abstract and contested as the purpose of the university. French was willing to do so, however, based on that legal document defining this particular institution: the Act of parliament that created the University of Western Australia. In examining that Act, Justice French found that the protection of the commercial value of intellectual property was clearly not a primary obligation of either the institution collectively or any of its individual members. Knowledge, not intellectual property, was the legal purpose of the university.

It was the obligation of the university – and the court – to protect the university’s capacity to foster knowledge. This required academic freedom – that is, the truthfulness of the university’s knowledge was dependent on expert members individually and collectively, pursuing and communicating knowledge without interference or bias from the institution. If the university – as it appeared to do in the case of UWA v Gray – prioritized the protection of financial interests over academic freedom, it failed to accomplish its task as outlined in the Act.

Therefore, as a member of the university, Gray’s obligation to knowledge superseded any responsibility to protect the institution’s financial interests. This obligation required that Gray own the intellectual property: as owner, he could do with it what he wished. Choosing to use that knowledge for personal financial gain might be morally dubious, but it was nevertheless his legal right.

To the shock of the Australian higher education sector, Justice French found, in a 544 page decision, for Bruce Gray. The $75 million was Gray’s alone. Universities were shaken, but none were as traumatized as those who had the most to lose from the decision: the sector’s intellectual property lawyers. Legal commentary declared the judge to be out of touch with the realities of the modern university. Justice French is imagining universities to be ivory towers, they ranted. Of course universities have a commercial purpose, they screamed in the media, where have you been? 

University technology transfer units rightly assumed that the University of Western Australia would appeal. The decision seemed so obviously erroneous that many also assumed that the university would win.  They were wrong. The 2009 decision of the full bench of the Federal Court confirmed everything Justice French had said. Justices Lindgren, Finn and Bennett even went a little further in contemplating the relationship between academic freedom and academic ownership of intellectual property. A fundamental attribute of academic freedom, they agreed, was the right to publish. The kind of knowledge that was the university’s responsibility  – what in old-fashioned language might be called truth – was defined by this public attribute. 

Publishing research findings prior to commercialization destroys the patentability of a piece of knowledge. The criterion for a patent is that the knowledge in question is not in the public domain – it must necessarily be privately owned. If, under principles of academic freedom, an academic has the right to publish and thus the right to destroy the commercial potential of knowledge, the court considered this to be firm evidence that they own it. Patent attorney Rob McInnes said that the destruction of commercial potential through publication was just like an academic taking a sledgehammer to their own laboratory. Publication in this sense was a destructive behaviour that amounted, he argued, to a waste of public money. 

But the court had shown that academic freedom was not just an antiquated tradition. It was the legal responsibility of the university.  The universities had for some time been behaving like commercial entities, Justice French acknowledged. But the law required that they protect knowledge first. If the universities were not going to uphold this primary purpose, the court, it seemed, would do it for them.


References have been left out for the blog and are available on request. I would like to add this footnote, however, which I think addresses one of the most worrisome pragmatic implications of the case:

Justice French’s 2008 judgment is excessively long partly because he offers the higher education sector a great deal of advice along the way. Universities could not claim automatic ownership over invention as an employer’s right, he shows, but they could, in their employment contracts, require staff to assign their intellectual property rights to the university.


M-H said...

How fascinating! I hadn't really known about this (immigrant that I am!). It's a great explanation of the issues. I'm presently writing about Michael Noonan, a PhD student whose confirmation hearing at QUT went horribly wrong and ended up in the National press, to show how ordinary pedagogical events that are introduced as part of the PhD process can have unintended consequences, but also how the University stands by its ethics approvals - although Noonan's life was and continues to be horribly scarred by the incident, he was able to finish his PhD.

Anonymous said...

This blog is lacking in some factual content and appears to be swayed by bias against Bruce Gray. I worked alongside him during those years and he was easy to get along with and open to alternative input. We tried in vain to get the University to take the research on board and it was not until years later, when old rivals sought gain, that the issue of ownership was raised via the courts. The dialogue on Frenchs ruling seems appropriate.