EWHC 181 (Pat)
In a judgment handed down on 11 February 2009 Mr Justice Floyd held that two of the inventors of two patent families relating to the radioactive imaging agent Myoview were entitled to compensation under section 40 of the Patents Act 1977. This is the first case in the UK in which an application by an inventor has succeeded. The invention was made when the inventors were employed by Amersham International, now called GE Healthcare. The case required detailed interpretation of sections 40 (entitlement to compensation) and 41 (amount of compensation) of the Patents Act 1977, as well as extensive factual and accounting evidence. It should be noted that since the patents were applied for before 1 January 2005 the amendment to section 40 by the Patents Act 2005 (whereby compensation is available when the invention – not just the patent – has been of outstanding benefit) did not apply.
In addressing entitlement to compensation the judge summarised the principles as follows:
i) Section 40 is available to an inventor in the sense of the “actual deviser” of the invention, but not to those who merely contribute to the invention without being joint inventors;
ii) Section 40 is available to an employee who makes an invention (which is subsequently patented by the employer) in the ordinary course of his employment or in the course of duties specifically assigned to him;
iii) Under the section prior to its amendment, it is the patent (as opposed to the invention) which must be of outstanding benefit to the employer, having regard to the size and nature of the employer’s undertaking;
iv) “Outstanding” means “something special” or “out of the ordinary” and more than “substantial”, “significant” or “good”. The benefit must be something more than one would normally expect to arise from the duties for which the employee is paid;
v) On the other hand it is not necessary to show that the benefit from the patent could not have been exceeded;
vi) Section 40 is not concerned with whether the invention is outstanding, although the nature of the employee’s contribution may fall to be considered at the section 41 stage, if it is reached;
vii) It will normally be useful to consider what would have been the position of the company if a patent had not been granted, and compare this with the company’s position with the benefit of the patent;
viii)The patent must have been a cause of the benefit, although it does not have to be the only cause. The existence of multiple causes for a benefit does not exclude the benefit from consideration, although the benefit may have to be apportioned to isolate the benefit derived from the patent;
ix) “Patent” in section 40 does not include regulatory data exclusivity (RDE) (Myoview is a “medicinal product” within Directive 2001/83 – it is a “substance…which may be used or administered to human beings...with a view…to making a medical diagnosis”). Thus the scenario without patent protection is one where RDE nevertheless exists;
x) It must be “just” to make an award: the consideration of what is just is not limited to the facts set out in section 40;
xi) It is not a requirement of obtaining compensation that the employee can prove a loss (for example by reference to inadequate remuneration for his employment) or by the expenditure of effort and skill beyond the call of duty. These are nevertheless factors to take into account under section 41;
xii) The valuation of any benefit is to be performed ex-post and in the light of all the available evidence as to benefit derived from the patent: not “ex-ante”;
xiii)Where the employee shows that the invention has been of outstanding benefit, the amount of compensation is to be determined in the light of all the available evidence in accordance with section 41 so as to secure a just and fair reward to the employee, neither limiting him to compensation for loss or damage, nor placing him in as strong a position as an external patentee or licensor; and
xiv)What is being compensated for is the disparity between the benefits received by the employee and the benefits received by the employer. The judge observed that compensation is not available where, under section 40(3), a “relevant collective agreement provides for the payment of compensation” (for example an agreement negotiated by a trade union).
Having considered the evidence on the benefit to the employer, the judge chose to look at the sales of Myoview during the patent term after expiry of regulatory data exclusivity (in fact he looked at figures for the period 2002 to 2007, though broadly speaking the first family of patents expired in 2008 and the second in 2009), which amounted to (in round terms) £1 billion. He then assumed that generic entry would, had there not been the patents, have led to a price erosion of 10% on 50% of those sales, giving a very conservative estimate of the benefit to the employer of £50 million. Turning to the share of the benefit to which the claimants were entitled, the judge concluded on the evidence that they were entitled to 3% of the value of the benefit to the employer. On the evidence he considered that Dr Kelly was entitled to 2% and Dr Chiu to 1%, that is £1 million and £500,000 respectively.