Grounds of appeal 1-5 and 8
174 In these grounds UWA challenged almost every aspect of his Honour's reasoning that has been outlined above. The fundamental complaint is that French J erred in not finding the implied term (Ground 1). Two of the remaining grounds focus on alleged errors in his Honour's (i) findings of difference between UWA as an employer and other employers (for which it is said there was no evidence); and (ii) reliance upon the four differentiating factors (at [1366] set out at [173] above), and upon UWA being a university, to negative the implication (Grounds 2 and 3). The remaining two grounds (4) and (5) contend that even if UWA was in a different or special category of employer, the implication should nonetheless have been made in "the specific situation of Dr Gray's employment" as well as because of his Honour's finding concerning the possibility that his research would develop inventions ([1363] noted at [172] above).
175 Given the view we take in this matter, it is unnecessary for us to consider and express a view upon the question whether Ground 4 (which refers to the "specific situation" of Dr Gray's employment at UWA) is in reality no more than an impermissible attempt to have an implication in fact masquerade as an implication in law.
176 We need again to emphasise the distinctive manner in which this matter ultimately has been prosecuted both before French J and on the appeal.
177 First, the case does not, as pleaded or otherwise, raise any question of whether a term governing ownership of inventions made in the course of Dr Gray's employment with UWA should be implied in fact into his employment contract. We are concerned only with an implication in law.
178 Secondly, the case is not about an employee engaged under a special contract with UWA to produce an invention or to do research directed to producing an invention. Such a contract may well warrant the implication in law of a term that the rights in relation to the invention produced would belong to UWA: see [163].
179 Thirdly, at the trial and on the appeal, UWA has dealt with the question of the implied term as if this was isolated from other bodies of law, which either supplement and buttress the implied term (this is particularly so of the law of confidence) or which march in tandem with it, for example, the ownership of the copyright product of academic staff. As French J's reasons show, his Honour was acutely aware of the importance that a duty of secrecy would have if the implication was made. On the appeal this matter was again emphasised as it bore not only on the ability to publish research product freely but also on such issues as collaboration and information exchanges with persons outside UWA and academic staff mobility. UWA has not confronted this issue directly, perhaps for understandable reasons, although we note in passing that the IP Regulations deal expressly, albeit incompletely, with confidential information: IP Regulations, regs 1 and 4(1).
180 Relatedly, if, as we accept, the principle informing the implied term is that identified in Sterling Engineering - ie an employer is entitled to any product of the work which the employee is paid to do - the issue of ownership of other forms of intellectual property produced by the academic staff of a university (and of copyright in particular) marches hand-in-hand with the present: on copyright, see eg Copyright Act 1968 (Cth) s 35(6); and Stephenson Jordan & Harrison Ltd v MacDonald & Evans (1951) 69 RPC 10 at 18, where it is said: "It is inconceivable that because Professor Maitland was in the service at the time of the University of Cambridge … anybody but himself, one would have thought, could have claimed the copyright in [his] lectures." Apart from noting the possibility of such wider implications for intellectual property rights flowing from the view pressed by UWA, we do not further examine the matter of ownership of other species of intellectual property.
181 Although UWA changed its stance on the implied term during the hearing before us, it finally accepted (Transcript 159) that it was required to establish that Dr Gray's employment contract was one of the class or type in which the employee invention term would be implied. To that end, and to put the matter shortly, UWA contended, first, that there was no relevant distinction between a university as an employer and any other employer; and, secondly, that Dr Gray's contractual duty to undertake research was, in the circumstances, sufficient to bring it within the class of contract attracting the implied term.
182 We disagree with both contentions. The first disregards the distinctiveness of universities (such as UWA); the second disregards both the distinctiveness of academic "employment" in universities (such as UWA) and the terms and research circumstances of Dr Gray's own employment. As French J properly recognised, both of these matters had to be considered in determining whether Dr Gray's contract of employment stood within or apart from the class or type of contract that attracted the implied term at law. There was in this sense a "threshold question": [1365].
183 First, there is the distinctiveness of UWA as a university. As we earlier indicated, UWA is a special purpose statutory corporation. It was created to serve the public purposes served by a "university" (as the language of its Act makes plain: see the preamble to the Act and s 2). As such, UWA is, at least, an institution of higher education offering courses and providing research facilities in various disciplines and having amongst its acknowledged powers and privileges that of conferring degrees: cf Shorter Oxford English Dictionary, vol 2 "university" (5th ed, 2002); UWA Act, s 29.
184 We accept that UWA has not been immune from the forces, financial and otherwise, that are forcing changes in the character of the university sector in Australia. As French J noted, UWA has engaged in commercial activities, as have done "most, if not all, universities". The evidence put on by UWA as to the range, character and significance of such activities of UWA was slight, though it hoped on the appeal that we would take judicial notice of these matters: cf Evidence Act, s 144(1) (Cth). What is notable for present purposes is that there is nothing in the evidence to suggest that those commercial activities have displaced, either totally or if in part to what extent, UWA's traditional public function as an institution of higher education in favour of the pursuit of commercial purposes (if it lawfully could do so under its Act). Its function, in other words, was not limited to that of engaging academic staff for its own commercial purposes. Accordingly, we agree with French J that on the evidence Dr Gray was not required to advance a commercial purpose of UWA when selecting the research he would undertake.
185 A further distinctive feature of many, but not all, universities (including UWA) is that their academic staff are part of the membership that constitutes the corporation and as such are bound by the statutes, regulations, etc of the university. Their membership is integral to their status and place in the university. To define the relationship of an academic staff member with a university simply in terms of a contract of employment is to ignore a distinctive dimension of that relationship.
186 Secondly, there is the distinctiveness of academic employment in a university. The two faceted character of an academic staff member's relationship with a university - ie as member and as employee - is "not without significance" as French J observed ([1361]). It probably is the case - though it is not a matter we need explore - that some of the practices revealed in the evidence in this matter (not repudiated by UWA), and the underlying values which seem to inform them, are more likely to be referable to understandings that have been traditionally associated with membership. The seeming freedom to choose the subject or line of research and the manner of its pursuit and the freedom to decide when and how to publish the products of one's research to the extent that these subsist, sit uneasily with employment notions such as the implied duty of an employee to obey all lawful and reasonable instructions of the employer within the scope of the employee's employment, or to maintain the secrecy of confidential information generated in the course of employment. Yet they are apparent manifestations of the contested value of "academic freedom": Cornish, "Rights in University Innovations", at 2-3.
187 We refer to the above "freedoms", not for the purposes of venturing views upon, let alone making findings about, their existence, nature and extent in modern Australian universities. We can safely assume that these are, and will remain, contested matters. Rather we do so for two purposes. First, UWA has been critical of the apparent "influence" of the writings of Monotti and Ricketson on French J and in particular of their views on both implied terms and "academic freedom" and "the essential differences between universities and other organisations". As his Honour observed (at [159]):
… those differences in relation to persons engaged to undertake research at universities are of critical importance.
We have already indicated that considerations of policy and consequentialist considerations are matters properly to be taken into account in deciding whether or not a term should be implied in law into a class or type of contract. As we will indicate below, we consider that it was proper for his Honour to take account of the considerations raised by Monotti and Ricketson in the manner he did in rejecting the implication sought.
188 The second reason we refer to the "freedoms" is that there was evidence of practices by Dr Gray and his research teams in relation to self-determined research, publication of research results and inter-institutional collaboration which were consistent in some degree with what probably is comprehended by academic freedom as a value, but which were inconsistent with the Sterling Engineering principle of employer entitlement that informs the employment obligation as to inventions propounded by UWA. What is to be noted here is that they are matters of which French J could, and properly did, take account.
189 We refer further to these matters below when considering those aspects of Dr Gray's employment and of the research environment in which he conducted his research, on which French J relied to negative the implication. Before dealing with them, we should comment briefly upon the implied term proposed, the terms of which were noted at [85] above. Given our view on the implication, it is unnecessary to consider such terminological difficulties with it as: what is signified by an "invention"?; will a significant trade secret suffice?; why should "authorisation" to solve problems etc suffice given the language of instruction and duty in the case law?
190 The matter of importance is the place such a term would have had in Dr Gray's contract and the employment context it would presuppose. We have already foreshadowed the quite significant collateral impact it would have had on the practices of academics such as Dr Gray and his team (as these have been revealed in the evidence) if the implied duty was underpinned by a duty not to make an unauthorised use or disclosure of confidential information generated in the course of the conduct of the research. Such is the case with private sector commercial entities. It would have prohibited publications (not authorised by UWA) containing information that was "relatively secret"; would have impaired academic collaborations and exchanges because of the potential for participating in breaches of confidence; and would have restricted academic staff mobility. Perhaps expediently, UWA has not contended that such a duty would have accompanied such a term as of course (cf Triplex Safety Glass (patent applied for after termination of employment), yet it would seem to be an inevitable consequence of the Sterling Engineering principle to which we have referred.
191 If, however, one were to assume that the implied term was free-standing, unsupported by a duty of confidence, the rationale of it would have been strange indeed. It would not be that the employer was entitled to all of the product of what the employee was employed and paid to do. Rather it would be that the employer was entitled only to "inventions" falling within the scope of the employment. The employee would have been free to destroy the potential patentability of an invention by progressively putting research results into the public domain.
192 Understandably, this is a consideration that French J emphasised, most notably at [1360] where his Honour contrasted Dr Gray's freedom to publish with the obligation of an employee in a private commercial entity, whose inventions made in the course of employment could benefit or affect the business of the employer. UWA's response, at least, to the publication of research results, is curious and unconvincing. It accepts the fact that universities and university researchers publish the results of their research, but it says that that fact cannot be relevant to whether or not a term as to patentable inventions is to be implied into Dr Gray's contract. It dismisses the problem of prior publication as one of timing and of self-imposed restraint until a provisional patent has been filed. Perhaps anticipating the obvious difficulties with this response, UWA sought to resurrect, but it later abandoned, the duty of good faith and fidelity as the vehicle to restrain publication that would destroy patentability.
193 This leads us to consider the circumstances of Dr Gray's employment and of the research environment in which he worked, upon which French J relied to negative the implication that UWA sought.
194 First, his Honour found that under his contract of employment Dr Gray had no duty to invent anything, though he had a duty to research and to stimulate research: "He was working for a university" (at [1360]). To put the matter as we earlier put it, he had not been engaged to use his inventive faculty in an agreed way or for an agreed purpose, for UWA's benefit. While his duty to research was in an applied science, it cannot for that reason be transformed into a duty to invent, notwithstanding that his actual research, in fact, carried the possibility of developing inventions capable of attracting patent protection.
195 We reject UWA's contention to the contrary and we agree with the primary Judge's reasons and conclusions. The insuperable difficulty in UWA's submissions is that Dr Gray's employment duties did not even require him to perform tasks from which inventions might result. The subject matter and the manner of discharge of his duty to research were in his discretion. He was not employed to invent. UWA put on extensive written submissions criticising French J's use of the formula "duty to invent". The shorthand expression is widely used in scholarly writing: see Dean, 238 ff; Monotti and Ricketson, 6.56-6.67. As so used, and as used by French J, its meaning is self-evident and unobjectionable.
196 UWA has sought to circumvent his Honour's conclusion in the following way. Though Dr Gray was entitled to determine the subject and manner of his research, if what he chose to do required him to bring his inventive faculty to bear, then the doing of that research should, it is said, be regarded as that which he was engaged to do and for which he was paid. Any invention resulting from his so doing should, in consequence, attract the implied term.
197 Such a deemed, contingent duty to invent requires an untenable implication. It is not what Dr Gray's terms of employment required; there is no "necessity" for it being implied by law into the employment contracts of university academic staff; and, importantly, it is inconsistent with the researcher's freedom to share and to publish research results.
198 Secondly, French J regarded the freedom to publish the results of research, including invention, notwithstanding that the publication might destroy patentability, as another circumstance telling against the implication. From what we have already said about the constraining character of the duty of confidence and of its underpinning of the implied term relating to employee inventions, the importance of this particular "freedom" is self-evident. We earlier referred both to Dr Burton's evidence, accepted by his Honour, on the Gray group's "strong commitment to the publication and dissemination of research results", and of Professor Barber's evidence of the "kudos and reputation" that UWA desired "from academic publication in the peer-reviewed literature". While we do not suggest that Dr Gray and his researchers may not have controlled the time and manner of their publications, the evidence clearly suggests that Dr Gray enjoyed the freedom to publish that French J found. He was not constrained by a secrecy obligation.
199 As noted earlier in its submissions, UWA appears to have accepted that this was the case. In its oral submissions, it contended, seemingly for the first time, that a prohibition on publication arose only if and when "an invention" had been developed and then only by virtue of reg 7 of the Patents Regulations. We have already indicated that those regulations were devoid of significance for the purposes of UWA's contract claim. In any event, reg 7 was not itself a free standing prohibition. It was a proscription that arose once a particular point in a regulatory régime was reached. In the circumstances of this matter that point was not, and could not have been, reached, because UWA had abandoned the Patents Regulations régime in favour of an "alternative pathway": see "The Patents Regulations" above.
200 Thirdly, French J considered that the extent to which Dr Gray and those working with him were expected to and did solicit funds for their research was another circumstance militating against the implication. We accept as a starting point that the solicitation of funds from public or private sources for the purposes of conducting research is not a phenomenon unique to universities. It is commonplace in the private sector: cf Industry Research and Development Act 1986 (Cth). What was "a striking feature of this case" ([161]) was the amount of time and effort devoted by Dr Gray and his researchers in applying for research grants, and the extent of their dependence on their success. UWA may have wished to foster, but seemingly could not fund, Dr Gray's research. To the extent that the Sterling Engineering principle has nascent in it the idea that the employer pays the researcher and, in significant degree, for the research itself, it can be said, without criticism of UWA that, if sustained, the suggested implied term would allow UWA to reap where various entities had sown. Importantly, it is implicit in what French J said that Dr Gray was raising the funds for his research, the metes and bounds of which he determined, though UWA received and managed the funds. Further, it also can probably be inferred that the grants were made to Dr Gray as an established researcher and not to UWA as such, although its involvement as institutional manager of the grant would also be taken into account by the funding body. So considered, the "grant factor" can properly be said to be a consideration that further weakens UWA's claim to the benefits of any inventions so generated.
201 UWA seeks to counter this argument by saying that Dr Gray's post-contractual conduct cannot be used to negate an implication into a contract.
202 After referring to this factor and to the necessity, consistent with the kind of work Dr Gray was doing, to enter into collaborative arrangements, French J went on to use Dr Gray's experience to characterise "the role of the researcher at UWA" in the area in which Dr Gray was working. His Honour described that as being "required … to act as entrepreneurs in securing the resources which would enable them to carry out their work": [1366]. It was immediately following this that his Honour made the following important observation:
The circumstances of his employment were a long way removed from the situations which gave rise to the common law implications discussed in the English cases.
In these circumstances we consider that the proper complexion to place upon what his Honour said is that he was describing the known context and shared expectations of the parties in relation to raising funds for research at the time of contracting, using what happened post-contract as the manifestation of what was anticipated. We would add that we were not taken to any evidence which suggested what contractual arrangements, if any, there were as to the raising of funds for research by UWA or by Dr Gray. If there was no such arrangement, we see nothing impermissible in French J having regard to Dr Gray's subsequent behaviour in fund raising to negative the suggested implication.
203 The fourth and final negativing circumstance adverted to by the primary Judge was the necessity, consistent with research of the kind he was doing, for Dr Gray to enter into collaborative arrangements with external organisations. The evidence was replete with instances of such collaborations and of information exchanges between Dr Gray and his researchers on the one hand and between them and researchers in other institutions on the other. Informative examples of both processes at work can be seen in the evolution of the research on the binding of Yttrium90 to microspheres (see [277]-[300]) and the use made in it of notes of Dr Self of St Vincent's Hospital written in 1984: see also [1469].
204 Implicit in his Honour's reliance upon the collaborations is the appreciation that the need for inter-institutional cooperation in the research being conducted tells against the exclusive appropriation of its product to one institution (ie UWA) via an implied term in the event that an invention is made. Further, and we consider importantly, the evidence on collaboration and information exchanges in Dr Gray's field of research suggests that some level of sharing of research results and know-how was a necessary and accepted practice in the particular research community so as to increase "the stock of available knowledge": cf Taylor v Taylor (1910) 10 CLR 218 (Taylor) at 224.
205 As we earlier noted, the principles governing terms implied by law themselves raise a threshold question which French J correctly identified. The onus is on the proponent of the term to show that the contract is of a class, type or kind to which the legal implication applies: [1365]. Save in cases of first impression, the discharge of that onus will pose few problems. Thereafter the question becomes one as to whether the terms agreed by the parties to the contract are inconsistent with, or negate, the implied term. The opponent of the implication bears this onus. The present case is of the former variety.