Mon 18 Nov 2019

Employee awarded £2m for workplace invention

Employers must pay employees a "fair share" when their invention has "outstanding benefit" to company.

Professor Shanks invented a device for measuring glucose levels in diabetes patients during his employment with Unilever UK Central Resources Ltd (CRL).  Under the Patents Act 1977 the intellectual property rights to the invention belonged to CRL, as it had been created in the course of his normal duties for his employer.  This was not disputed by Professor Shanks.   CRL assigned those rights to Unilever plc for £100. 

The Patents Act also provides that where an invention is of outstanding benefit to the employer the employee is entitled to a fair share of the benefit the employer has derived.   In June 2006, Professor Shanks applied to the courts for compensation.  At a hearing before the Comptroller-General of Patents it was found that the benefit derived by Unilever fell short of "outstanding".  It appeared Professor Shanks had something of an uphill struggle in that department, not least because of the size of Unilever's business.  Although the patent made in the region of £24.3 million for the company it didn't have a significant impact on its overall profitability.

Professor Shanks appealed unsuccessfully to the High Court, and was then partially successful in the Court of Appeal, but not to the extent that he was awarded any compensation.  Thirteen years after his legal action started, Professor Shanks got to the Supreme Court.  In its judgement  the Supreme Court looked at the overall benefit of the invention to Unilever taking into account  the investment in development, the effort put into commercialising it and the risk involved in doing so, and compared that to the benefit the company has had from other inventions.   Where the risk and investment is low but the benefit is high (as in this case) an employee may be able to establish outstanding benefit.    Having concluded that Professor Shanks patent did stand out compared to other patents generated from work at CRL, the Court found he was entitled to a fair share of the benefit derived and valued that at £2million.

Employers are not able to contract out of the employees' statutory right to bring a claim for compensation under the Patents Act.  In light of this case employers may want to look at how they might be able to mitigate their exposure to any such claims.  Recording the success of inventions and, when appropriate, proactively dealing with it could in the long run limit the potential value of a claim - much of the award to Professor Shanks was because it took into account inflation from the time Unilever had benefitted in the late 1990s - as well as associated legal costs. 

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