Under UK patent law, inventions made by employed inventors during the course of their normal duties will belong to the employer – unless there is an express agreement specifying otherwise. In return for remuneration to employees, employers will normally expect to own the intellectual property related to any inventions made by those employees.
While employers will often derive some – and in some cases substantial – revenues from their employee’s inventions, there are exceptional cases when unusually large profits will be generated. It might appear reasonable that an employee who generates an invention that proves to be a financial goldmine should receive some form of reward commensurate with benefit derived by the employer.
UK patent law addresses this point by having an “employee compensation” provision. It states that where an employee’s invention (or the patent) is of “outstanding benefit” to his/her employer, the employee should be awarded compensation, and that the award should provide a “fair share” of the benefit.
However, in practice, it has proved extraordinarily difficult for employees to obtain such an award from the UK courts. So it is not surprising that the latest appeal decision, in the most recent case trialled by the UK court on this topic, was greatly anticipated.
The employer was Unilever, a company operating worldwide in a multitude of sectors. Professor Ian Shanks, a Scottish scientist, was hired by Unilever Central Resources Ltd (CRL) and during his time with the company invented a device for monitoring blood sugar levels. Unilever maintained its patent on the device, and licensed the technology to third parties for a number of years leading to financial benefit considered to be around £24 million. Despite this, Professor Shanks was unsuccessful in seeking additional compensation under the UK Patents Act 1977.
While £24m might be considered a significant sum by many, the core consideration was whether or not this represented an “outstanding benefit” to Unilever.
When assessing the potential outstanding benefit, one interesting consideration was which undertaking (ie which company) should be considered relevant. In this case, despite Unilever operating in many different and often distinct areas of technology, the relevant undertaking was deemed to be the entire Unilever group.
This is of critical relevance. While £24m might have been considered to represent an outstanding benefit to a specific business unit of Unilever, the sum is less significant in view of the group’s total revenues. Based on this interpretation, it was therefore concluded that the benefit the employer derived could not be considered “outstanding” – meaning no compensation was awarded to the employee.
Some companies may welcome this judgement, however, it may come as a disappointment to those who believe that creative, innovative, and productive employees should be rewarded for the financial gains an employer derives from their inventions.
It would also appear that, based on the current approach, those working for a large business perhaps have smaller prospects of obtaining outstanding benefit compensation than those working for a smaller company. There may, of course, still be developments in this nebulous area of UK patent law – not least because this decision can be appealed before the Supreme Court.