Patents and Employee Inventors

Section 39(1) of the Patents Act 1977 stipulates that the patent for an invention made in the normal course of employment will belong to the employer and not the employee. Section 40 states that an employee may be entitled to compensation if the invention, patent or both are deemed to be of outstanding benefit to the employer and that it is just the compensation be awarded to the employee.

Section 41 of the Act states that the amount of compensation should be a fair share. The section also lists the relevant factors to be taken into consideration when determining what constitutes a fair share. These include the nature of the employee’s duties, their remuneration and the benefits they derive from their employment the effort and skill devoted to making the invention the effort and skill devoted by any other employee who is not a joint inventor and the contribution of the employer in creating the invention.

In the case of Garrison’s Patent (1997), the court held that an invention which provided less than 3% of the turnover for a small company was not of outstanding benefit and no compensation under section 39(1) was awarded. The court may have handed down a different judgment, had the company or the turnover been larger. In practice, the courts will look at the circumstances of any given case and will consider each claim for compensation on its own particular merits.

In Unilever Plc v Shanks (2010), a claim for compensation under section 39 was not disputed, although the amount to be awarded was contested. Professor Shanks created an invention in the course of his employment for Unilever Plc which resulted in £23 million being received by the time the patents for the invention expired. Professor Shanks, however, felt that the invention could have generated up to $1 billion, had it been marketed properly and argued that the fair share should be based on the sum of $1 billion and not £23 million. The Court of Appeal disagreed, stating that he could not acquire an award greater than the actual benefit derived. The fair share was therefore held to be based on the sum of £23 million.

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