Shanks (Appellant) v Unilever Plc And Others (Respondents)

On 23rd October 2019, the Supreme Court in the UK issued its decision in Shanks v Unilever [2019] UKSC 45 directing that an employee whose invention delivered significant profits to his employer was entitled to £2m compensation.

The Supreme Court overturned previous decisions in the case by the UK Intellectual Property Office, the Patent Court and the Court of Appeal. The Supreme Court examined the considerations to be taken into account when deciding whether it is appropriate to award compensation to an employee for an invention made during employment. The Supreme Court also considered how to assess the amount of compensation to be awarded.

Section 40(1) of The Patents Act 1977 defines the situation in which compensation can be awarded to an employee for inventions belonging to the employer. Among other things, it is required that "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". The decision of the Supreme Court provides additional guidance on how it is to be assessed whether an invention and/or the patent for it is of outstanding benefit to the employer.

The exact amount of the compensation is to be determined in accordance with Section 41 of The Patents Act 1977, which requires that the employee is awarded a "fair share" of the benefit which the employer has derived (or may reasonably be expected to derive) from the invention and/or the patent. To determine what constitutes a "fair share", Section 41(4) provides a number of matters that must be taken into account, including the nature of the employee's duties and remuneration, the effort and skill which the employee has devoted to making the invention, the contribution of other employees (be they joint inventors or not) and the contribution of the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, opportunities, and managerial and commercial skill.

In the present case, Professor Ian Shanks was the inventor of technology used in glucose testing for diabetics whilst he was employed at Unilever UK Central Resources Ltd ("CRL"), a wholly-owned subsidiary of Unilever Plc. CRL served as a research facility for Unilever Plc and employed all of the Unilever group's UK-based research staff. In deciding that Professor Shanks's invention was of "outstanding benefit" to his...