Employer Pays Millions in Compensation for Employee's Invention

The recent case of Shanks v Unilever illustrates how this works in practice.

Background

In 1984 Professor Shanks invented a blood glucose measuring device for use in diabetes testing kits whilst working for CRL, a Unilever subsidiary. CRL assigned this invention to Unilever. Unilever went on to patent the invention which has since earnt them over £23 million in royalties.

The Supreme Court

Professor Shanks brought a claim for compensation against Unilever on the basis that his invention had been of outstanding benefit and that he was entitled to compensation. Following various decisions that went against him, Professor Shanks was given leave to appeal to the Supreme Court.

The Supreme Court found that when assessing whether the benefit was outstanding, the analysis should focus on the benefit to the actual employer, rather than the wider business entity that had exploited the invention. In this case, the benefit could be viewed as an outstanding benefit from CRL's perspective, when compared with the other patents exploited by Unilever that had been developed by CRL.

On this basis, the Supreme Court found in Professor Shanks' favour and awarded him £2m, a fair share of the outstanding benefit being assessed at 5%.

Key Points

This case provides useful guidance on the meaning of outstanding benefit under the Patents Act 1977 and how benefit to the employer will be assessed.

Employers with employee-inventors should consider having clear provisions in their employment contracts to ensure that those employees understand how intellectual property rights arising from their work is owned. Developing a fair compensation scheme for inventors may also be appropriate to avoid litigation such as in this case.

For more information please contact Mark Stevens in our Employment Law team on 0117 314 5401 or complete the form below.