Shanks v Unilever plc & Ors (compensation to employee’s for certain inventions)

The Supreme Court has overruled the decision of all previous Courts and defined the meaning of ‘outstanding benefit’ under section 40 of the Patents Act 1977.

During his employment, Shanks invented a device that would measure levels of glucose in blood, serum or urine. The rights to the invention belonged to Unilever. This is because inventions that are made during an employee’s normal duties belong to the employer, unless there is an express agreement.

Over several years, Unilever licensed patents for the invention to various companies that operated in blood glucose testing. The invention was such a success that Shanks brought a claim for compensation under the Patents Act 1977. A hearing officer for the Comptroller General of Patents established that Unilever generated £24.5 million from the invention. However, it was ruled that £24.5 million was not an ‘outstanding benefit’ in comparison to the total income of Unilever. On appeal to the High Court this decision was maintained.

In the Court of Appeal, Shanks argued that comparing the benefit to the company’s overall income would mean that many companies would be ‘too big to pay’. The Court agreed that the concept of ‘outstanding benefit’ should be relative. It should not be decided purely on the comparison between the profits of the invention and the overall income of the company. However, the size of Unilever still appeared to be the largest influence and the Court ruled that £24.5 million was not ‘outstanding’.

After nearly thirteen years since Shanks initially applied for compensation, the case reached the Supreme Court. On the 23rd October 2019, in a unanimous decision the Supreme Court overruled the previous courts. It determined that £2 million was a fair share of the £24.5 million that Unilever profited from the invention. This will be a victory for all inventors when the financial gain of the invention is often relatively small, compared with the overall turnover of the corporations that employ them.

As the patent for Professor Shanks invention was applied for before the 1st January 2005 the law that applied was sections 39 to 43 of the Patents Act 1977.

Several sections of the Patents Act 1977 were revised with the Patents Act 2004. Section 10 of the 2004 Act correlates to section 40 of the 1977 Act. When it comes to compensation to employee’s for certain inventions the 2004 Act states that with, ‘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’. We can see that the 2004 Act does take the size of the company into consideration when determining whether an invention is of ‘outstanding benefit’. However, the Supreme Court’s definition of ‘outstanding benefit’ will be useful to any future cases.

If you need advice or assistance with anything regarding Intellectual Property, then please get in touch with the Lawdit team.

Written by Samuel Killoran who is a Law Student at Solent University

share this Article

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Recent Articles