In general, any invention which is created by an employee in the normal course of his employment will belong to his employer. It is possible however for an employee to claim compensation from an employer under section 40 of the Patents Act 1971 (the "Act") in 'exceptional circumstances'. Section 40 sets out that the employee must have made an invention for his employer which has been patented and that this patent, and not the invention (for patents filed before 2005), must be of outstanding benefit to his employer and as a result, it would be 'just' that the employee was compensated.
Until now there had been no successful claims brought before the courts under this section of the Act; however, in a case brought before the English High Court (Kelly and Chiu v GE Healthcare), £1.5 million in compensation was awarded to two employees of GE Healthcare Limited who had invented an extremely successful drug in the course of their employment which had resulted in significant profits for the company.
The court in this case addressed some important questions for the future and in doing so, has perhaps given greater confidence to employees who may wish to make similar claims in the future.
It is up to the Court to decide whether or not the patent has been the cause of an outstanding benefit to the employer and exactly how much of this benefit has been generated by the existence of the patent; the Court must also determine how much the benefit is actually worth and how much compensation should be given to the employees in accordance with Section 41 of the Act; it is only the employees who actually invented the patented product who are entitled to compensation and such an award must be 'just', or to put it another way, it should be inconceivable that these employees would not receive compensation. The fact that the employees in the Healthcare case went over and above what was expected of them in their duties as employees, suggests that the patent should not have been expected to have arisen during the normal course of employment.
It is important to note that the patent in this case had been filed before 2005 and before the enactment of the Patents Act 2004 which amended the 1971 Act. For patents which have been filed after 2005 there is now a new test which is less strict. This new test allows for a benefit to have come from the invention itself and not just the patent.
Given the fact that there is now a more lenient test in place, along with the fact that the courts have, for the first time, ordered a significant award in compensation to be paid to employee inventors, it will most likely follow that there will successful claims being brought in the future.