The risk of unclear contract terms and evidentiary deficiencies to entitlement claims

Contracts play a critical role in clarifying the ownership and transfer of IP, but frequently define the IP with reference to broad and non-specific terms. A recent Australian Patent Office decision in ThermoChem Recovery International Inc. v FULC JV LLC [2026] APO 14 highlights how inadequate evidence of the specifics of the contract provisions and the contributors to the inventive concept can jeopardise patent entitlement claims.

Entitlement Kat

Background

The ThermoChem decision concerns four applications filed on dates spanning 20 April 2021 to 5 July 2024 by Fulcrum Bioenergy, Inc. (Applications). While two of the Applications were related as parent and divisional applications, the other two were directed to broadly similar subject matter but were otherwise unrelated.

Assignments of the Applications from Fulcrum to FULC JV LLC were recorded at the Australian Patent Office on 30 October 2025, and ThermoChem Recovery International, Inc. (TRI) challenged FULC's sole ownership of the Applications pursuant to s 36 of the Patents Act 1990 (Cth). TRI submitted that the Applications related to jointly developed "Combination Technology" that entitled it to co-ownership.

Principles of entitlement

The Hearing Officer usefully summarised the principles in relation to entitlement in Australia. Australian case law has established that determining entitlement requires identifying the "inventive concept", determining who contributed to the inventive concept, and having regard to any relevant fiduciary or contractual obligations: University of Western Australia v Gray [2009] FCAFC 116. Further, the "inventive concept" is to be ascertained by reference to the specification as a whole, including the claims: Polwood Pty Ltd v Foxworth Pty Ltd [2008] FCAFC 9.

The principles established by US appellate courts in relation to conception were also referenced and are generally well accepted in Australia. These include:

• Conception is the touchstone of inventorship.
• Conception is the "formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention".
• Conception is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice.
• An inventor need not know that the invention will work for conception to be complete; the discovery that an invention actually works is part of its reduction to practice.

With respect to contractual and fiduciary duties, an invention developed by an employee in the course of their employment is generally owned by their employer, although this will of course depend on the relevant facts. The relevant question in ThermoChem was whether contractual agreements gave rise to entitlement by TRI.

Fatal evidentiary deficiencies

While the Australian Patent Office has the discretion to make declarations in relation to entitlement under s 36, the Hearing Officer declined to do so in ThermoChem. In particular, the Hearing Officer identified several difficulties in making such a declaration, most notably that TRI did not adequately identify in its evidence the nature of the Combination Technology, which was purportedly defined in a separate undisclosed license agreement.

TRI, which appeared to be unrepresented and did not file any written submissions before the hearing, provided seemingly inconsistent evidence and did not identify an "inventive concept" created by TRI that would entitle it to ownership rights in the invention. This lack of evidence, combined with other evidentiary deficiencies, meant the Patent Office was not convinced that the Applications should proceed in the names of FULC and TRI.

Final thoughts

The decision in ThermoChem highlights the importance of ensuring contractual obligations relating to IP ownership are clear from the outset. Further, in this case, the Hearing Officer did not clearly decide that TRI was not entitled to co-ownership of the Applications; rather, its evidentiary deficiencies meant that no clear determination could be made. It is possible the outcome could have been different had TRI been represented by an experienced attorney who could have provided guidance on evidentiary standards and legal arguments to support its entitlement case.