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Who owns patents to State-financed inventions?

Update: November, 07/2012 - 10:27

Le Xuan Hoang, Winco IP Law Firm

(VNS) Under the Law on Intellectual Property, the following organisations and individuals have the right to patent an invention: the individual who created the invention by his or her own efforts and expense, and organisations or individuals who have provided the inventor with funds and materials in the course of employment or from the State budget, unless otherwise agreed upon by the parties.

Government Decree No103/2006/ND-CP further provides that, when an invention is created on the basis of full financial, material and technical investment by the State, the right to register the patent on such invention belongs to the State, with the organisation or state agency assigned by the State to act as the "investor" representing the State in exercising that right. If the invention has been created on the basis of capital contributions by the State (either in funds or material and technical facilities), part of the right to patent such invention belongs to the State in proportion to its capital contribution.

When an invention is created on the basis of research and development co-operation between a state agency or organisation and another organisation or individual, unless it is otherwise provided for in the research and development co-operation agreement, part of the right to registration of such invention belongs to the State in proportion to such state agency's or organisation's contribution to the co-operation. The state agency or organisation which takes part in the research and development co-operation represents the State in exercising that right to registration.

The term "investor" in this context is not defined in the Law on Science and Technology, the Law on Technology Transfer or the Law on Intellectual Property. So, it is necessary to clarify the term "investor" as subjects or projects of scientific research and technological development which use funds and material and technical facilities from the State budget.

In practice, the agencies distributing the budget have been viewed as the agencies assigned by the State to act as the investor and represent the interests of the State. As a result, these agencies are the owners of the research results. They include ministries, universities, and research institutes. If this understanding is affirmed, these agencies are responsible for representing the State in registering inventions created using funds and materials and technical facilities from the State budget.

This practice is consistent with the provision in the Law on Technology Transfer which states, "Unless otherwise provided for by law, the State shall transfer the right to own a technology created from State budget-funded research and development to the organisation in charge of research and development of that technology."

Nevertheless, a more specific regulation, such as a Government decree or a circular of the Ministry of Science and Technology, needs to more clearly enshrine this understanding in the laws and regulations pertaining to patents. Many countries have entirely different procedures in place to deal with the problem of ownership of inventions created with State budget funds. In the US, the Bayh-Dole Act of 1980 is a typical case. Under that law, "universities and small enterprises have the right to own any patent which is the result of research funded by any federal agencies."

Agencies which use State budget resources to invest in research and development may also contract with a private enterprise or university to conduct research. If, in so doing, this subject creates a technical solution which can be registered as an invention, who has the right to own the patent? This situation can be distinguished from cases in which the right to a patent is assigned to a university or research institute. The law is not yet clear on this issue.

Vesting the right to patent an invention developed with funds, materials and technical facilities paid for by the State budget in universities and research institutes without strict regulations to ensure that this vesting serves State and public interests is a shortcoming in the law. Once these universities, research institutes or enterprises are granted ownership of a patent, they have the lawful right to use, permit others to use, exclude others from using, and otherwise profit from such invention.

The Bayh-Dole Act gets around this problem by creating this exception: "In case of ineffective use or it becoming necessary to public health or safety, the government reserves the right to request compulsory or exclusive license to use the invention."

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