Thursday, 29 May 2014

9 Points on Shanks v Unilever [2014] EWHC 1647 (Pat), a UK Patent Case on Employee Compensation

This is the latest case in the long running saga of Professor Shanks trying to obtain employee compensation from Unilever.  The points below represent what caught our eye as we read through it, and are not an attempt to summarise the case.

1. This is an appeal from a decision of the UK Intellectual Property Office (IPO) on employee compensation where the IPO had decided that Professor Shanks was not entitled to compensation because there had not been outstanding benefit to Unilever.  It was decided under the pre-January 2005 version of Section 40 of the Patents Act which awards compensation to an employee inventor where a ‘patent’ has been of outstanding benefit to the employer. [The new version of the Patents Act refers to benefit being derived from ‘the invention or the patent’.]

2. The decision notes that the case law sets a high hurdle for what an ‘outstanding benefit’ is.

3. The decision discusses in depth what the role of an appeal court should be.  A lot of weight is given to the decision of a Hearing Officer of the IPO, and ‘multi-factorial assessments’ which are part of that decision should not be overturned unless there is an error of principle.

4. Unilever licenced the invention and therefore it was clear that the benefit to them was due to the patent.

5. Professor Shanks argued that when assessing outstanding benefit the fact that Unilever ordinarily has large profits should not amount to the conclusion that Unilever are too big to give employee compensation.  The decision agreed this should not be the case.

6.  Unilever derived a benefit of £24.5 million from the patent.  The IPO had decided that was not of outstanding benefit, and the present decision did not find fault with that.  Unilever’s size and their consequent ability to derive more benefit from a patent was clearly relevant, as were many other factors.

7.  The decision also considered what a ‘fair share’ would have been for Professor Shanks. The IPO had decided it should be 5%, saying that the higher rates which academic inventors receive are not relevant in this industrial context.  The present decision agreed.

8.  The decision also considers whether Professor Shanks would be entitled to higher compensation that his co-inventors and concludes that he would not.

9.  More generally, the decision is in line with UK case law in this area which makes it very difficult for employee inventors to obtain compensation for an outstanding benefit.

The decision can be found here.

You may also be interested in related articles 10 Points on Arbitration and Advice to Scientists Setting up a Company.

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