Compensation for employee inventors

Under section 40 of the Patents Act 1977 an employee who invents something that is patentable may be entitled to compensation where the patent belongs to the employer.

The considerations are:

a) bearing in mind the size and nature of the business, whether the invention or the patent is of outstanding benefit to the employer and

b) is it just that compensation is awarded.

The test above is difficult to apply in practice as it relates to the benefit of the patent / invention and not the benefit of the product actually sold in the marketplace. Section 41 of the PA 1977 gives guidance as to the level of compensation.

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