In this recent case, two employees were awarded £1.5 million in compensation under the Patents Act 1977 for the ‘outstanding benefit’ that their invention conferred on their employer.
The general rule is that an inventor is the owner of the subsequent patent. However, there is an exclusion to this rule. Under the Patents Act 1977, where an employee is the inventor, the patent will belong to the employer if the invention was made in the course of the employee’s normal duties, provided an invention might reasonably be expected to result from his duties.
Under s 40 of the 1977 Act, an employee who invents something may be entitled to compensation where the patent belongs to the employer. This is the case if, 1) having regard among other things to the size and nature of the employer’s undertaking, the invention or the patent for it (or the combination of both) is of outstanding benefit to the employer: and 2) it is just that compensation is awarded.
It is well known that compensation under this section is rarely ever awarded. This is because the criterion is the benefit of the patent or the invention, not the benefit of the product which was sold in the marketplace. This judgment is the first time that an employee has successfully sought compensation under the Patents Act 1977.
Mr Justice Floyd in this case awarded the two employees, Dr Kelly and Dr Chui, £1,000,000 and £500,000 respectively. The two doctors played a key role in the first synthesis of a compound (known as compound P53) which formed the basis of a patented radioactive imaging agent. The imaging agent became a commercial success for the defendant employer and was sold around the world under the brand name, ‘Myoview’. The judge recognised that Dr Kelly and Dr Chui’s contributions involved significant thought and creativity.
The Court was presented with evidence that the total sales of Myoview between 2002 and 2007 amounted to some £1 billion. However, Mr Justice Floyd recognised the difficulties in quantifying the value of the benefit to the employer. He assessed what he considered to be the “absolute rock bottom figure for the benefit from the patents” to the employer as £50 million. He then considered the nature of the employees’ duties, remuneration and other advantages from the employment and concluded that Dr Kelly and Dr Chui were entitled to a 2 per cent (£1,000,000) and 1 per cent (£500,000) share respectively of the benefit derived by the employer from their invention. In the context, the judge decided that these figures represented a fair and just reward to the employees.
This is certainly a new development and it is unclear whether this decision could lead to a number of employees claiming compensation for their inventions from their employers.
It is clear, however, that a high threshold of ‘outstanding benefit’ remains.