As patent attorneys, we frequently advise both employees and employers that inventors rarely benefit financially from being named on patents, despite the provisions of S40 of the Patents Act. However, a recent ruling by the Supreme Court changes the outlook for employee inventors and may see more of them successfully claiming compensation.

The case, which has received plenty of media exposure, involves Professor Ian Shanks, who invented a bio-sensing electrochemical capillary fill device (EFCD) in 1982, whilst working for a subsidiary of Unilever. EFCDs are now commonly used by diabetics to monitor their blood sugar levels.

Unsuccessful claims

Professor Shanks’ invention was patented by Unilever plc in 1984, with the Professor named as the inventor. Unilever licensed the patent rights and, with the widespread use of EFCDs, eventually earned about £24.55m from them. In 2006 Shanks started his compensation claim for his share of Unilever’s earnings, but was unsuccessful in the initial hearing and subsequently at the High Court and the Court of Appeal.

Rulings overturned

These decisions were finally overturned when he took his case to the Supreme Court, which earlier this month ruled that Unilever had made “substantial and significant” earnings from the patents and Professor Shanks was indeed entitled to his fair share, calculated at £2m.

Although the Patents Act states that employees who invent something from which their employer receives an “outstanding benefit” deserve a “fair share”, cases where they actually secure compensation have been rare. Valuing this fair share has traditionally been difficult. However, this new case law will provide guidance going forward.

Setting a precedent?

Professor Shanks believes his ultimate success will give future inventors hope of being appropriately rewarded. Given the Professor’s 13 year legal battle and the complexities of many patent cases, we’re not expecting a sudden deluge of claims.

All the same, the ruling is incredibly significant and, though the statute has long included the provision, this decision is surprising and long overdue. It potentially does mean a brighter, more financially rewarding outlook for inventors who are employees – albeit for a limited number of patents.