A Joint Venture Research Agreement

Naturally harvested seafood typically contains high levels of omega-3 fatty acids obtained from their diet, with three of the more important variants in human physiological being linolenic acid (ALA), eicosapentaenoic acid (EPA) and docosahexanoic acid (DHA).¹ Humans are incapable of synthesizing these fatty acids, despite their importance in maintaining physiological health, and require regular consumption of these nutrients.² However, farm-raised seafood requires supplements be fed to the fish to elevate the fatty acid levels to those of naturally-caught seafood.³ The industry researched avenues to supplement fish FA levels, with BASF and CSIRO looking into synthesizing the desired compounds from the canola plant (Brassica napus),⁴ which could be fed to farm-raised seafood.⁵ Both BASF and CSIRO looked into introducing enzymes into canola to use alpha-linolenic acid, which was naturally made by the plant, as a starting molecule for EPA and DHA.⁶

The two companies entered into a joint venture research agreement, allowing analysis of using genes from both companies.⁷ The year following expiration of the research agreement, BASF developed a canola line capable of synthesizing EPA and DHA, and licensed the technology.⁸ Shortly thereafter, in the mid-2010’s, CSIRO filed patent applications that claimed priority to provisional applications filed prior to the JV, which it licensed.⁹ BASF attempted to secure a license from CSIRO, and after negotiations broke down, filed a declaratory action against CSIRO and its licensees,¹⁰ arguing that the patents were invalid for lack of written description, or jointly owned based on the research agreement.¹¹

The Court addressed the lack of written description, noting that numerous sections of the specification discussed using canola, specific examples of fatty acid-producing Arabidopsis crops- a commonly accepted model for canola, and scientific rationale supporting the likelihood of canola producing the fatty acids, showing that a skilled practitioner in the field would understand that CSIRO had invented what was claimed.¹² The fact that CSIRO did not actually produce the fatty acids until after the provisional filing was dismissed by the court, noting actual reduction to practice is not required, and that the work in the Arabidopsis model as a highly predictive indicator of success in canola, was critical to the written description determination.¹³ However, the Court also found that claims to a broader group of crops was not supported.

On the issue of joint ownership of the patents, the Court noted the claim relied solely on the research agreement, and analyzed the agreement terms to determine the validity of the claim.¹⁴ The Court took a narrow view of the terms, finding that the joint ownership applied only to inventions that include gene constructs from both BASF and CSIRO, information and data that originated from evaluating the BASF-CSIRO gene combinations, and IP that comprises the gene constructs or information above.¹⁵ After concluding the CSIRO patents did not claim any combinations of BASF and CSIRO gene combinations, the Court found BASF’s position- that the CSIRO patents were obtained by drawing on the experiments from the joint research, was unreasonable and declined to overrule the finding that CSIRO was the sole owner of its patents,¹⁶ highlighting the importance of terms in a contract.