Oxford case (5): fairness to students

This is the fifth article that focuses on detailed issues that arise from the judgment in the case of Oxford University Innovation Ltd v Oxford Nanoimaging Ltd [2022] EWHC 3200 (Pat). Previous articles discussed the judge’s conclusions on the fairness of the university’s IP policy generally, and the fairness of the shareholdings taken by the university, both under consumer protection laws. This article considers another aspect of fairness, namely whether the way the university treated junior researchers was fair.

References below to paragraph numbers are the paragraph numbers in the judgment as published on the BAILII website.

As was mentioned in an earlier article, the judge summarised the ONI case as follows:

8. The thrust of ONI’s case is that Oxford’s approach to allocation of the commercial fruits of such research was unfair to DPhil students and, more particularly, unfair to Mr Jing in the circumstances of the case. More specifically it is said that Oxford’s policies are unfairly weighted in favour of the University and senior academics, who may have contributed less to the detail of the work than more junior researchers or inventors.

In a little more detail, IP Draughts would summarise the arguments of Mr Jing, a former DPhil (PhD) student at Oxford, and later CEO of ONI, as follows:

(1) The relevant invention was an improved design of microscope, which formed part of a product commercialised by ONI under the name Nanoimager. The invention was made solely by Mr Jing, at his own initiative and using skills and experience that he had gained in previous jobs and study. Previous work on a prototype, before he joined the team, had not led to a useful product.

(2) However, the patent application named him, his supervising professor at Oxford (Professor Kapanidis) and another academic who had worked on a prototype before Mr Jing joined the academic team. The inventor’s share of licensing revenue under Oxford’s IP policy was wrongly split between the three of them. This was the result of unfairness in the way junior academics of lowly status were treated at the university. As was mentioned in an earlier article, the judge understood that Mr Jing was bringing his claim (via ONI) as part of a more general campaign about the unfair treatment of junior researchers.

(3) There was also unfairness in the IP policy requiring students to assign their IP to the university, and in the shares taken by the university. (These topics were covered in earlier articles on this blog.)

(4) In light of these different aspects of unfairness, “his” IP had not been validly assigned to the university, and accordingly the licence agreement under which this IP had been licensed to ONI was not legally enforceable. Accordingly, OUI’s claim for £700,000 in unpaid royalties should fail.

The detailed legal argument on item (4) focused on an area of contract law known as “common mistake”, ie did the parties enter into the licence agreement on the mistaken common assumption that Mr Jing had assigned his IP to Oxford. This article won’t focus on this aspect, as the judge found that there was no unfairness, Mr Jing had validly assigned his IP to Oxford, and therefore these legal arguments didn’t arise. This also meant that the judge decided he didn’t need to delve into the question of whether, even if Mr Jing’s patented invention had not been validly assigned to Oxford, there might be enough other Oxford-generated IP (eg know-how) that related to the Nanoimager that was validly licensed, such that the licence agreement was still enforceable.

The main focus of this article will be on items (1) and (2) above.

The judge devotes several paragraphs of his judgment to describing how Mr Jing’s work on the microscope fitted into the larger project being run under Professor Kapanidis’ leadership, and how the design of the microscope was part of the project for which the team had received funding. The judge clearly viewed Mr Jing’s work as part of that larger project, and he thought Mr Jing was overstating his personal contribution.

This can be seen from some of the judge’s comments:

43. Mr Jing’s evidence shows that he views this as a situation in which the University has been acting unfairly to entrepreneurial research students such as himself. He uses the language of “preying on its most vulnerable”. For reasons I explain in detail below, I do not believe this is a justified criticism of the University…

76. On the whole he was a good witness, but he had developed a rather rigid view that Oxford had treated him and other entrepreneurs unjustly and were unfairly benefitting from his work and others in similar position.

78. I think his specific world-view (that he was essentially the saviour of this project that was going nowhere from which he thought that Oxford and others had received too much credit and financial benefit) led him to misremember the full extent to which he was originally engaged to work on the microscope work and certain other aspects of detail of the work done by others. I think he also had a characteristic, sometimes exhibited by clever and self-confident people, namely something of a blind spot when it comes to recognising the extent to which their success was built on the foundations – and sometimes failures – of others. He therefore somewhat distorted the true position with respect to the work he did at Oxford and the significance of his doing so in the group, describing Professor Kapanidis as being “massively over-rewarded” as a result of some of the arrangements made for sharing benefits.

Thus, Mr Jing’s arguments here are two-pronged: (a) he made most or all of the intellectual contribution, but (b) due to the university’s unfair treatment of junior staff, his contribution was not sufficiently recognised. Neither of these points was accepted, or fully accepted, by the judge.

As part of OUI’s processes, the academics were required to agree among themselves on their respective shares of licensing revenues. The judge describes what happened:

159. The IP Provisions enable researchers to make their own agreements as to how their share will be split. ONI says that the agreement that was reached as to contribution was unfair in principle and did not reflect Mr Jing’s much greater contribution. Looked at on a narrow basis of contribution to the claims of the patents, Mr Jing may have a point. Had this case been developed as a pure inventorship dispute or there had been a question as to how the court should apportion benefits from the patents in issue, the view might have been taken on the evidence that the fair result would have been for the lion’s share to go to Mr Jing.
160. However, that is not the right way to look at a situation of this kind. It is legitimate to consider whether, looked at in the round, it was unreasonable for those working on the project to agree equal shares at that stage.
161. There is, in my view, sufficient basis in these facts for the three named inventors on the patent applications and the then collaborators on the project reasonably to agree initially that there should be an equal thirds split on the basis of (i) Professor Kapanidis’ and Dr Crawford’s work over the course of the whole E. coli Project and (ii) Mr Jing’s then more recent microscope work which all recognised was important. Although it is possible that a different agreement could have been made at the outset, what they agreed was reasonable. I explain in greater detail below why but, in summary, an agreement between researchers does not have to follow the exact contours of the law on inventorship of a patent (or, more precisely, given claims of a patent) in order to be fair.
162. There were, moreover, subsequent discussions between Professor Kapanidis and Dr Crawford the upshot of which was that Dr Crawford’s contributions on the IP forms were amended to 10% with Professor Kapanidis and Mr Jing each having 45%. Again, this shows that there was flexibility in recognition of the various contributions which were agreed to be changed without undue difficulty with all concerned ultimately recognising that a different split was more appropriate.

Thus, it is reasonable to look at the larger project when agreeing revenue shares. IP Draughts is in two minds about this. While he can see the judge’s argument, he has previously assumed that the revenue share should be for the IP being assigned. If the parties identify a package of other IP such as know-how that also forms part of the assignment, this argument feels stronger. To avoid this being a sham, in IP Draughts’ view the assigned know-how should, in the words of the Technology Transfer Block Exemption Regulation, be “secret, substantial and identified”. If, however, the assignment refers only to the invention and associated patent application, there would seem to be a potential for unfairness in sharing the revenue with people who did not contribute directly to the assigned invention, eg a supervising professor.

The next aspect that ONI complained about was the power dynamic between a professor and their junior researcher, which might lead them to agree terms that were not fair. As IP Draughts has mentioned in earlier articles, he has experience of advising PhD students in this type of situation, and he think this is, sometimes, a real issue.

The judge addresses this point as follows:

163. ONI contends that the procedure for agreeing the shares was affected by the power dynamic between Mr Jing and Professor Kapanidis in particular and that he would not have felt comfortable in disagreeing with what Professor Kapanidis proposed at the time. I accept Professor Kapanidis’ evidence that the third share split was not finally agreed at the meeting on 8 July 2013 although I also accept Mr Jing’s evidence that it was regarded by him as effectively “settled” at that point. Indeed, it was Mr Jing who had proposed that share.
164. I formed the view that Mr Jing was not overawed either by Professor Kapanidis or Dr Crawford. He has a great deal of self-confidence, much of it justified and a strong sense of justice.
165. The relevant IP2 form which formalised the split was not signed until August 2013 and in the intervening period, it would have been possible for Mr Jing to raise any concerns he wished about that split. He did not do so. To the contrary, he confirmed this split in the IP2 form. If he had felt that this was inappropriate, he would have raised the issue. He did make a somewhat intemperate complaint about Dr Crawford retaining a third share at a later stage (which may have been instrumental in it being reduced) denigrating his contribution, and I have little doubt that, had he thought that the initial third share or the subsequently renegotiated 45% share to him and Professor Kapanidis was fundamentally unfair, he would have pressed the point. In reality, agreeing a third share initially and renegotiating it in 2015 were both reasonable things for all concerned to have done.
166. Moreover, the IP Provisions (and the way in which OUI and the University operate generally in this area, which is not inflexible) would have provided routes through which Mr Jing could have raised concerns. It is true that as a junior intern he was not very well placed to challenge a senior professor and prospective DPhil supervisor’s entitlement to a third share in the fruits of a project conceived in the professor’s laboratory.
167. However, this was his own original proposal and if Mr Jing had felt particularly strongly that it was wrong, he could potentially have held up providing his signature on the necessary patent documentation until the other parties agreed to a larger share (or deployed an alternative form of dispute resolution). Holding up signature would probably have been regarded as a nuclear option since it could have put the patent strategy and the whole project in jeopardy. There is some evidence that this was at least a possibility in some e-mail correspondence in which the University raised the point that there had been a delay in Mr Jing assigning his IP to the University. In any event, a situation of this kind is not one in which an individual researcher is powerless. Mr Jing was not without leverage in this specific negotiation and that the agreements that he made as to royalty sharing between the researchers (both originally and as later amended) were appropriate.
168. I did not find Mr Jing’s explanations convincing for having agreed to a third share for reasons other than that it was reasonable to do so (academic credit basis, because the product had limited potential, avoidance of argument). In my view, Mr Jing’s proposal that there should be a third split was justifiable at the time and the renegotiated provision in 2015 giving him and Professor Kapanidis equal higher shares (and Dr Crawford a lower share) was also reasonable.
169. In particular, without Professor Kapanidis’ work and leadership, there would have been no Nanoimager project at Oxford. Without Mr Jing’s work, the detailed development is unlikely to have proceeded as quickly or possibly in the specific direction it did. Dr Crawford also helped the project to a material extent. That situation seems to me a clear one for the two researchers most involved respectively (i) at a higher level on overall design over a long period and (ii) a shorter period of detailed design contributing more to the patents to share equally the larger portion of benefits with the individual making the lesser contribution throughout entitled to a lower share which is ultimately what was agreed.
170. I find that there was nothing unfair to Mr Jing about the process whereby that was the position reached. In making that evaluation I do not say that it is always appropriate (or fair) for a head of a project or department to share equally with some of those more junior who undertake more of the work and, sometimes, it can be appropriate to provide for independent review processes by those not involved (as are provided under the IP Provisions discussed below). It was however appropriate in this case.

IP Draughts didn’t hear Mr Jing give evidence, so he should be cautious about criticising the judge’s interpretation of that evidence. But he does have several decades’ experience of working with academics and hearing their complaints. In general, IP Draughts thinks it is perfectly possible for a junior researcher to be intellectually self-confident but aware that he is very dependent on the goodwill of his superiors for his future career. This might lead him to propose terms that he thinks would fit in with others’ expectations of what is usually done. His perception of what is fair might change once he has left the academic world and is no longer dependent on that goodwill, or when his thinking and experience develop.

To avoid this potential unfairness, a university might consider producing a guide to factors that should be considered when the inventors agree revenue shares, or give an inventor a right to have this decision farmed out to an independent expert, eg a patent attorney not instructed by the university.

Other arguments were made in the case, which have not been discussed in this series of articles, including alleged conflicts of interest and complaints about Oxford’s dispute resolution mechanism. None of these arguments succeeded.

IP Draughts will be interested to see whether ONI appeals the judgment or accepts the judge’s advice (set out in the judgment) to stop litigating and focus on their commercial success. What ONI decides to do may depend partly on the dynamics within its Board of Directors and among its shareholders: how much influence does Mr Jing have, and is the company’s main focus commercial or campaigning? If the commercial focus is dominant, he thinks it more likely than not that the Board will accept the judge’s advice.