Inventors' Compensation

The UK Supreme Court last week awarded a former employee £2 million as a fair share of the approximately £24.3 million benefit that his employer had derived from patents to his inventions. [Shanks (Appellant) v Unilever Plc and others (Respondents) [2019] UKSC 45]

The Supreme Court discussed and clarified several issues, but perhaps most noteworthy was their rejection of the notion that some employers may be "too big to pay".

Under UK law, where an employee makes an invention

in the course of their normal or specifically assigned duties, where an invention might reasonably be expected to result from the carrying out of these duties; or in the course of their normal duties where the employee has a special obligation to further the interests of their employer then the invention belongs to their employer.

However, where the employee has made an invention that is of "outstanding benefit" to the employer, then an award of compensation may be given where the court deems it just to do so.

The Supreme Court decision settles many issues, but a key outcome is the guidance provided on how "outstanding benefit" is assessed. The statutory scheme requires that the size of an employer's undertaking is a factor in assessing whether a patent is of "outstanding benefit", and this had led many to conclude that inventions of equal monetary benefit would be assessed as outstanding if the employer was a small concern, but not outstanding if the employer was a large business or part of a large group of companies.

The decision clearly indicates that many factors need to be assessed, including (for example) whether the benefit:-

is more than would normally have been expected to arise from the duties for which the employee was paid; was arrived at without any risk to the business; was not enhanced by factors unconnected with the value of the patent, e.g. intensive marketing; represents an extraordinarily high rate of return; was the opportunity to develop a new line of business or to engage in unforeseen licensing opportunities. In the case in question a highly material consideration was the extent of the benefit of the patents to the group of companies of which the employer was a part, and how that compared with the benefits the group derived from other patents resulting from the work carried out at the employer.

In the case in question the benefit was found to be outstanding as the rewards the employer enjoyed "were substantial and significant, were generated at...