It is UK law that inventions made by employees in the normal course of their duties belong to the employer unless an agreement to the contrary exists.
In addition, the Patents Act 1977 provides that employee inventions will also belong to the employer if they were made in the course of duties falling outside the employee’s normal duties, but which were specifically assigned to the employee and were such that an invention might reasonably be expected to result from the carrying out of those duties.
The recent Court of Appeal case of LIFFE Administration and Management v Pinkava & De Novo Markets Limited explores the concept of how far an employee’s “normal” duties extend.
Dr Pinkava was employed by LIFFE (operator of the London Futures Exchange) as a Senior Manager. His duties involved developing the interest rate product derivative range, and promoting and recommending enhancements and new products to maximise trading volumes and revenue.
LIFFE and Dr Pinkava had been exploring the possiblilty of trading in a number of products on exchange, rather than over the counter. For some products, it had previously been thought to be impossible to trade in such a way. While at a seminar, Dr Pinkava realised how the problems that LIFFE and its competitors had previously experienced could be overcome and how the eletronic trading of products could be expanded much further than LIFFE had originally envisaged. He presented a draft brief setting out his ideas, and was subsequently promoted. As part of his promotion some of his responsibilities were described as “development of OTC markets on Exchange”.
LIFFE wanted to seek patents in the inventions, however, Dr Pinkava was of the view that the inventions belonged to him and not LIFFE.
The Court of Appeal considered the Patents Act and held that the invention was made in the normal course of Dr Pinkava’s duties.
In considering what “normal” duties are, the Court found that the parties must look at the duties the employee is actually performing, rather than simply the wording of the contract. These duties may of course evolve over time, especially in an industry which is developing and changing. Accordingly, a duty which may have been specifically assigned at one point can, over time, become a “normal duty”.
The Court of Appeal also held that the particular nature of the employee’s invention does not have to be reasonably expected to result from his/her duties. This is because, an invention, by its very nature, is likely to be something which is wholly new and unexpected.
What this means for employers
This case is very helpful for employers, as it clarifies that normal duties may change over time and that, where duties are specifically assigned to an employee, an employer does not have to predict that a specific invention will result from the performance of those duties for the invention to belong to the employer.
However, where an employee is given unusual or incidental duties, employers should still take care to ensure that those duties have been specifically assigned to the employee and that evidence (preferably written) is available to show this. This will strengthen an employer’s position if the employee subsequently argues that the invention was made outside the course of his/her employment.