Supreme Court awards compensation to a Professor for an invention created during his employment
A recent decision by the Supreme Court in Shanks v Unilever PLC has supported the right for employees to receive compensation for patented inventions if the invention is of ‘outstanding benefit’.
A recent decision by the Supreme Court in Shanks v Unilever PLC has supported the right for employees to receive compensation for patented inventions if the invention is of ‘outstanding benefit’.
Under English Law an invention made by an employee shall be taken to belong to his employer if it was made in the course of his normal duties. However, pursuant to section 40 of the Patents Act 1977 (“the Act”), employees are entitled to compensation in respect of a patented invention if he or she establishes:
- The patent is of outstanding benefit to the employer (having regard to the size and undertaking of the employer’s undertaking); and
- It is just that he or she be awarded compensation.
The Case
Professor Shanks was an employee of Unilever’s UK subsidiary, CRL, and was responsible for creating and developing the Electrochemical Capillary Fill Device (“ECFD”). It was accepted by Professor Shanks, that the right to this invention belonged to CRL in accordance with the Act. CRL later assigned all of these rights to Unilever who subsequently filed successful international patent applications. Once the glucose testing market expanded considerably the ECFD technology eventually appeared in most glucose testing products resulting in Unilever’s net benefit from the patents amounting to around £24.3m.
Having witnessed the success of his invention, Professor Shanks made an application under section 40 of the Act back in 2006; after a number of unsuccessful appeals, the Supreme Court has now ruled that the benefit provided by his patents was ‘outstanding’, awarding him £2m in compensation.
The Supreme Court in its judgment has given guidance and clarification about the circumstances in which courts might award compensation under the Act and what approach should be adopted when determining what constitutes a “fair share” of the benefit. In particular it held that:
- The meaning of outstanding in “outstanding benefit” means exceptional or such as to stand out in respect of the benefit received by the employer. They stated that it must be “something out of the ordinary and not such as one would normally expect to arise from the results of the duties that the employee is paid for”. Unilever argued that the financial contributions made by the patents were insignificant compared to the group’s overall profitability, however the Supreme Court instead concluded that the ECFD patents had made a significant contribution in comparison to other inventions protected by patents.
- 5% was an appropriate “fair share”. This percentage, which the hearing officer had arrived at, had regard to Professor Shanks’ duties and that he was employed to invent, his remuneration which was commensurate with his level of responsibility, the effort and skill he expended in making the invention, and the contribution made by Unilever in developing the invention and its licensing effort.
Implications for Employers
Unlike the case of Kelly v Healthcare Limited, which held that the ‘outstanding benefit’ was crucial to the company’s success, the Supreme Court in Shanks v Unilever adopted a wider scope when determining whether the test in section 40 of the Act had been met., Specifically by considering the profitability of the patent in respect of the company’s wider income. This wide interpretation of ‘outstanding benefit’ may result in an increased number of claims under the Act.
Related expertise
You may be interested in...
Opinion
Gender pay gap reporting – what are my obligations?
Opinion
Employment claims: the new rates and limits from 6 April 2023
Opinion
Plans to amend NHS pension rules to bolster NHS workforce approved by government
Opinion
Increase to 20 hour limit on supplementary employment for Health and Care Worker visa holders
Article
New report highlights risk of sidelining ED&I in school trusts
Opinion
Mopping up after a leak – how businesses can take steps to protect their confidential information
Online Event
Wellbeing and financial considerations – practical solutions for challenging times
Press Release
Browne Jacobson collaborates with The GLAA and University of Nottingham to tackle modern slavery and human trafficking
Legal Update
Teacher strikes – lessons learnt so far
Opinion
Can toilet facilities amount to sex discrimination?
Opinion
Consultation launched on minimum ambulance service levels during strike action
Opinion - Maternity services
Changes to redundancy protections for employees post-maternity leave
Opinion
BMA issues medical locum rate card for junior doctors
Legal Update
Employee who refused to wear a face mask fairly dismissed
Opinion
New toolkit to support safer recruitment in the care sector
On-Demand
Employment update webinar
Opinion
Term-time school worker entitled to national minimum wage for unworked basic hours
Opinion
Fire and re-hire – draft statutory code
Opinion
Menopause and the workplace
Opinion
Consultation on holiday entitlement – part-year and irregular workers
Opinion
Government introduces new “anti-striking laws” to be discussed in Parliament
Opinion
Twitter facing employment claims following mass redundancies
News that Twitter is being threatened with multiple claims by UK employees following mass redundancies provides a reminder of the risks that comes with an employer implementing large scale redundancy exercises.
Legal Update
Industrial Action and Minimum Service Levels
Legal Update
Discrimination comes of age
Legal Update - Shared Insights
Shared Insights: Looking ahead to 2023 – what Health and Care employers need to know
Opinion
Rising Employment Tribunal backlog
Legal Update
Official statistics demonstrate a new wave of age discrimination claims
Opinion
Menopause and the NHS workforce addressing the female brain drain…
Opinion
4-day working week a success?
The Covid-19 pandemic drastically changed the world’s way of working, with increased flexibility being greatly desired by employees. Earlier on in the year, a number of organisations trialled the concept of a 4-day working week – which has clearly been a success for many.Legal Update
Coming of age
Official statistics show that 15,336 claims which included a complaint of age discrimination were received at the Employment Tribunals between March 2020 and March 2021.
Published Article
Starling Bank employment tribunal
The outcome of the Employment Tribunal claim brought by Gulnaz Raja against Starling Bank Limited (1) (Starling), and Matthew Newman (2) was reported last month.
Published Article
EU banks show slow progress on gender diversity
Opinion
Rising wages ahead
In the Autumn Statement delivered on 17 November, rises to the National Living Wage and National Minimum Wage rates were announced, to take effect from 1 April 2023.
Opinion
World Cup 2022 – how employers can avoid scoring an own goal!
The World Cup kicks off in Qatar on Sunday 20 November 2022, with the final taking place on Sunday 18 December 2022. Undoubtedly, this is a huge sporting event, and many employees will be keen to show their support for their favourite teams. However, due to the time difference, start times for the matches are between 10 a.m. and 7 p.m. UK time, which could have an impact on employers if employees who wish to watch the matches are scheduled to work.
Legal Update
Settlement agreements – what are the limitations?
Settlement agreements are commonplace in an employment context and are ordinarily used to provide the parties to the agreement with certainty following the conclusion of an employment relationship.
Press Release
Court of Appeal makes plea for legally enforceable arbitration for FRAND disputes
In the ongoing complex litigation between Optis Cellular Technology LLC and Apple Inc., the Court of Appeal ([2022] EWCA Civ 1411) has upheld the High Court’s findings that implementers of standard-essential patents (SEPs) cannot refuse to accept a FRAND license and continue activities in the meantime which constitute infringement: that party must commit to accept a court-determined license if it wishes to avoid an injunction.
Legal Update
The Starling Bank disability discrimination decision
Opinion
The vanishing dismissal
Where an employee appeals against their dismissal under a contractual appeal procedure and their appeal is successful, reinstatement to their previous role is automatic and does not require approval or agreement from the employee.
Opinion
Settlement agreements – what are the limitations post Bathgate?
Settlement agreements in an employment context are ordinarily used to provide both parties with certainty following the conclusion of an employment relationship – but what happens when there is alleged discrimination after entering into a settlement agreement?
Legal Update
IR35 rules here to stay after government U-turn
A few weeks ago we brought you news that following the Government’s mini-budget it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 would be scrapped from April 2023.