An employee who makes an invention which belongs to his or her employer from the outset and for which a patent has been granted is entitled to compensation if he or she establishes: first, that the patent is, having regard among other things to the size and nature of the employer’s undertaking, of outstanding benefit to the employer; and secondly, that, by reason of these matters, it is just that he or she be awarded compensation.
“Outstanding” is an ordinary English word meaning exceptional or such as to stand out and it refers to the benefit (in terms of money or money’s worth) of the patent to the employer rather than the degree of inventiveness of the employee. It is, however, both a relative and qualitative term and the context must be considered.
At least in the ordinary case, Parliament intended the term “employer” to mean the inventor’s actual employer. The relevant benefit is the benefit the inventor’s actual employer has derived or may reasonably be expected to derive from the patent, or from the assignment or grant to a person connected with him of any right in the invention, patent or patent application. In assessing the benefit derived or expected to be derived by an employer from an assignment of the patent to a person connected with the employer, the court must consider the position of the actual employer and the benefit which the assignee has in fact gained or is expected to gain.
An “undertaking” is a unit or entity which carries on a business activity, and here the undertaking to be considered is that of the company or other entity which employs the inventor. The correct approach in identifying the relevant undertaking is to look at the commercial reality of the situation. Where a group company operates a research facility for the benefit of the whole group and the work results in patents which are assigned to other group members for their benefit, the focus of the inquiry into whether any one of those patents is of outstanding benefit to the company must be the extent of the benefit of that patent to the group and how that compares with the benefits derived by the group from other patents for inventions arising from the research carried out by that company.
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Shanks v. Unilever Plc and others Patents Act 1977, Sec. 40. “Shanks v. Unilever”. IIC 51, 107–108 (2020). https://doi.org/10.1007/s40319-019-00896-9
- Employee entitled to fair share of benefit
- Notion of employer
- Subsidiary and parent company as undertaking
- Patent assignment to parent company
- Notion of outstanding benefit
- Concrete assessment of benefit