Inside demo.html, if you replace ng-model="data.custom":

<ui-select ng-model="data.custom">
  ...
</ui-select>

by ng-model="myItem":

<ui-select ng-model="myItem">
  ...
</ui-select>

$scope.myItem never gets set.
It's like ngModelCtrl.$setViewValue(newVal) cannot bind to a simple variable $scope.myItem.

It will work only if ng-model is an object:

• demo.js: $scope.myItem = {}
• demo.html: ng-model="myItem.data"

I could not figure out why, any idea?