Oxford University Innovation Limited v Oxford Nanoimaging Limited

Section 39 of the Patents Act 1977 vests an employee invention in the employer where the employee’s duties, considered in their contractual and factual context, were such that an invention might reasonably be expected to result. Status, salary and contractual form are not decisive where the employee was engaged to innovate.

A DPhil student will normally be a consumer for the purposes of the unfair-terms regime, even where the degree advances a future profession or is funded. Intellectual-property terms must be assessed as part of the contract as a whole, including their practical operation, benefits and comparators. Broad wording may create an imbalance, but it is not unfair unless the imbalance is significant and the term is contrary to good faith.

The claimant, Oxford University Innovation Limited, sought royalties under a licence granted to the defendant, Oxford Nanoimaging Limited, for intellectual property relating to the Nanoimager microscope. The University was joined as a third party.

The defendant argued that the licence was void for common mistake because the relevant patent rights belonged to Mr Bo Jing, who had worked first as an intern and later as a DPhil student. It also argued that the University’s intellectual-property provisions were ineffective under the Unfair Terms in Consumer Contracts Regulations 1999.

The court had to determine ownership of inventions made during the internship, whether Mr Jing was a consumer under the unfair-terms regime, and whether the intellectual-property provisions were unfair.

1. Internship inventions. Mr Jing was an employee for the purposes of the Patents Act 1977. His duties included developing the compact microscope, and he was selected because of his relevant experience and ability to innovate. An invention might reasonably be expected to result. The relevant internship invention therefore belonged to the University under section 39(1).
2. Consumer status. The modern CJEU authorities on the Unfair Terms Directive should be applied rather than mechanically transferring the more restrictive Brussels jurisdictional cases. A DPhil student is normally a consumer. Future professional benefit, prior research experience, funding and receipt of a stipend do not by themselves remove that status. Mr Jing was therefore a consumer when he entered the DPhil Contract.
3. Unfairness. The court assessed the intellectual-property provisions as a whole. The former wording claiming rights in intellectual property created by students “in the course of or incidentally to their studies” was broader than provisions commonly used elsewhere and was capable of creating an imbalance. However, it had not been applied to Mr Jing or others in an inappropriate way. The likely circumstances of unfair operation were rare, and the provision was construed restrictively.
4. The package of royalty, equity, commercialisation and dispute-resolution benefits was reasonable. The University’s standardised approach to benefit sharing did not itself create unfairness. The provisions were made and applied in good faith and did not create a significant imbalance to Mr Jing’s detriment.
5. Disposition. The University was entitled to the patent rights licensed to the defendant. The licence was not void for common mistake, and the royalty defence failed. The defendant was ordered to pay £700,000 on account of outstanding royalties by 6 January 2023, with consequential matters adjourned to the form of order hearing.