Employee’s inventions that result in exceptional success on the market for their employer may entitle that employee to a share of the benefit, if the invention is protected under the Patents Act 1977. Exceptional success is judged by looking at the commercial reality and business of the employer and the impact the invention has upon this.
Shanks v Unilever Overview
Professor Shanks was an employee of Unilever UK Central Resources Ltd (CRL), a subsidiary of the Unilever group. The invention in question was a type of biosensor which measured serum glucose levels. Unilever had little to no interest in home diabetic testing kits. As the market continued to grow over the years it resulted in Unilever receiving a financial benefit through licensing of £24m. Professor Shanks, in 2006, applied for compensation of this £24m on the basis that his invention provided outstanding benefit to his employer. He claimed for 20% plus an uplift for the effect of passage of time on money’s-worth.
Judgment
The UK Intellectual Property Office held that s.40 of the Patents Act 1977 proved that the benefit Shanks provided was not outstanding when you considered the “size and nature” of Unilever. Furthermore, they held that had it been outstanding, the hearing officer would have awarded Shanks 5% with no consideration of the uplift that he claimed for.
Shanks appealed this but was again dismissed by both the High Court and the Court of Appeal.
The UK Supreme Court provided a different judgment after considering s40-43 of the Patents Act 1977. The Supreme Court stated that the benefit provided by Shanks was ‘outstanding’ when compared with the other patents developed by CRL. The ruling was that it was wrong to compare the monies generated by Shanks’ patent to the overall turnover of Unilever. Rather it should be the benefit to the Unilever group, CRL, and whether this was ‘outstanding’ in comparison to other patents by this subsidiary.
The Supreme Court awarded Shanks £2m (5%), adjusting this figure to reflect firstly, the role of Unilever to bring this patent to market and secondly, Shanks duty to invent (his employment).
Result
The Supreme Court’s decision to not compare the money earned from the patent to the overall turnover of the company as a whole prevented a situation where it would be nearly impossible to claim successfully against large groups.
Awarding Shanks 5% rather than the 20% he claimed showed that the Supreme Court clearly recognised the part played by Unilever, in resources and funding, and without them the product will have had a lesser chance at succeeding to be marketed and commercialised.
