The Court of Appeal held that the inventor of a device that has been patented by his employer is entitled to no more than a fair share of the money earned from it, even if the employer has not fully exploited the invention.
The respondent, Professor Shanks, worked for Unilever and invented a measuring device for use in diabetes blood testing kits. Unilever was entitled to ownership of worldwide patents for the invention by virtue of section 39 of the Patents Act 1997 (‘the Act’), which states that an invention created in the course of employment will vest in the employer and not the actual inventor. Unilever did not market the invention for many years and eventually licensed its use to various third party manufacturers of diabetes blood testing kits. It received royalties of approximately £23 million by the time the patents expired. However, Professor Shanks contended that the invention could have generated as much as $1 billion and sought to rely on sections 40 and 41 of the Act, which allows for the payment of compensation to employees whose invention is of outstanding benefit to the employer. Unilever did not dispute his entitlement to a fair share of the money it received but argued that this should be based on the actual income of £23 million generated from the invention. Professor Shanks, however, argued that the fair share should be based on the putative income of $1 billion that would have been generated, had the patent been fully exploited.
Lord Justice Jacob stated in his judgment that applying the putative income could lead to a bizarre result where the fair share that Professor Shanks would acquire could potentially be greater than the actual benefit Unilever derived and that the law did not intend this. Accordingly, he held that the fair share entitlement should be calculated on the basis of the actual income and that it was irrelevant whether the employer had fully exploited its ownership of the patent.
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