The general position is stated in statutory provision namely section 39 of the Patents Act 1977 which states that any invention made by an employee belongs to the employer. It has clauses to satisfy this provision; if they are made, ‘in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties.‘ The act goes on to say, ‘if the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had a special obligation to further the interests of the employer’s undertaking.’
Inventions outside of work hours
It is clear then that any invention or creation made by the employee in the work place during working hours belongs to the employer. But what happens when the employee creates the invention outside of working hours? The Intellectual Property Court considered this matter in the recent case of Prosyscor Ltd v Netsweeper Inc & Ors [2019].
The employee in this case alleged he had created the invention at home in his own time using his own personal computer. He had worked as a software developer for the employer and had created a technique discerning between requests to access websites. The employee had first developed the idea for the software, and then another employee had further advanced the invention. The disagreement concerned the right to an international patent application.
The Intellectual Property Court considered the law on the right to the patent. The Court had to recognise the inventive concepts related in the patent application through the eyes of the skilled person, and then choose which person developed them. The employee’s involvement in the invention was determined to have been done as part of his duties as an employee. The Court highlighted the fact that the employee had posted his idea on an internal company website after the beginning of his employment. This distribution of information by the employee to the employer was a crucial fact in this case. The work involved the development of the invention was very similar to the kind of duties the employee was paid to do by his employers. The fact that he worked in his own time at his home using his own equipment was irrelevant. Hence the Court determined the invention was created in the course of his normal employment.
Outstanding Benefit
Employers should note that employees do have a potential right to work place inventions in particular circumstances. This was discussed by the Supreme Court recently in the case of Shanks v Unilever UK Central Resources Ltd [2019].
The law does recognise that where an employee invention makes an outstanding benefit to an employer, they are entitled to a share of the invention’s profits. The law rewards employees with compensation from their employer where the employer has obtained patent protection for the employees’ invention.
In the case of Shanks v Unilever [2019], the Supreme Court determined that the definition of employer can potentially, extend to a whole group of companies, and not just the subsidiary of that group to which the employee was employed. This was for the purposes of assessing the benefits of a patent, and related employee claim of entitlement to compensation for the invention,
In the 1980’s Professor Ian Shanks was employed at a research laboratory owned by Unilever UK Central Resources Ltd, a subsidiary of the Unilever group. Professor Shanks invented a system for measuring the glucose concentration in blood, serum or urine. The invention was later used for monitoring diabetes. Unilever owned the rights to the invention and later was granted patent protection. Unilever's net earnings from the ensuing licensing and sale of the patents totalled approximately £24 million. Professor Shanks’ earlier appeals before the High Court and the Court of Appeal were rejected. The Supreme Court has now ruled that the patents were of outstanding benefit to Unilever and Central Resources Ltd and that Shanks is entitled to a fair share of that benefit, which the court determined is £2m.
The effect of the wide definition or employer adopted in Shanks v Unilever creates uncertainty for employers as to what establishes an outstanding benefit. The court noted that for smaller businesses a simple comparison of profitability may be enough to determine outstanding benefit, but it also cautioned against a naive approach. The wide reading of outstanding benefit may inspire employee inventors to bring more compensation claims and leave the employers feeling more confused about the level of their rights over any patented inventions.
It may be prudent for employer’s to have in place a clear policy on employee inventions which we at Quest Cover could provide consultancy assistance. We call us on 0333 240 7208 or contact us.
