Employees, inventions and compensation
Employees, inventions and compensation March 2017
If a UK employee creates an invention in the course of his or her employment, in most cases such invention will belong to their employer. However, sections 40 and 41 of the Patents Act 1977 (the “Act”) allow employees to claim compensation in certain cases where the patent/invention is of outstanding benefit to the employer. In practical terms, it has always been difficult for employees to qualify for such compensation and the recent Court of Appeal decision in Shanks v Unilever Plc & Ors hasn’t helped. In that case, Professor Shanks created an invention during the course of his employment to Unilever and assigned the intellectual property in it to Unilever for a nominal sum of $2.00. The approximate benefit of the invention to Unilever was £24million, and Professor Shanks claimed that he should be entitled to additional compensation under the Act as the invention was of outstanding benefit to his employer. The Court of Appeal disagreed and held that the patent had not been of outstanding benefit to his employer. This case confirms that the standard of an “outstanding benefit” is very high and cannot be determined simply by comparing the income generated by the patent with the overall turnover of the employer’s business; it is a relative concept which should be measured against all relevant issues in each case, including the size and nature of the employer’s business. Whilst Sections 40 & 41 of the Act seem employee friendly at first glance, the courts have again confirmed that they really are not.
Dawn McKnight, Partner Commercial
Aisling O’Hare, Solicitor Commercial
Email:[email protected]
Email:[email protected]
Telephone: +44 (0) 28 90 348 917
Telephone: +44 (0)28 9034 8847
We do more. Better. Murray House, Murray Street, Belfast BT1 6DN | Tel: +44 (0)28 9024 4951 | Fax: +44 (0)28 9024 5768 | www.carson-mcdowell.com
If a UK employee creates an invention in the course of his or her employment, in most cases such invention will belong to their employer. However, sections 40 and 41 of the Patents Act 1977 (the “Act”) allow employees to claim compensation in certain cases where the patent/invention is of outstanding benefit to the employer. In practical terms, it has always been difficult for employees to qualify for such compensation and the recent Court of Appeal decision in Shanks v Unilever Plc & Ors hasn’t helped. In that case, Professor Shanks created an invention during the course of his employment to Unilever and assigned the intellectual property in it to Unilever for a nominal sum of $2.00. The approximate benefit of the invention to Unilever was £24million, and Professor Shanks claimed that he should be entitled to additional compensation under the Act as the invention was of outstanding benefit to his employer. The Court of Appeal disagreed and held that the patent had not been of outstanding benefit to his employer. This case confirms that the standard of an “outstanding benefit” is very high and cannot be determined simply by comparing the income generated by the patent with the overall turnover of the employer’s business; it is a relative concept which should be measured against all relevant issues in each case, including the size and nature of the employer’s business. Whilst Sections 40 & 41 of the Act seem employee friendly at first glance, the courts have again confirmed that they really are not.
Dawn McKnight, Partner Commercial
Aisling O’Hare, Solicitor Commercial
Email:[email protected]
Email:[email protected]
Telephone: +44 (0) 28 90 348 917
Telephone: +44 (0)28 9034 8847
We do more. Better. Murray House, Murray Street, Belfast BT1 6DN | Tel: +44 (0)28 9024 4951 | Fax: +44 (0)28 9024 5768 | www.carson-mcdowell.com
