More than 30 years ago the Patents Act 1977 introduced Sections 39 – 42 which set out a regime entitling employees to compensation for patented inventions which are of outstanding benefit to their employers.
The law was changed in the Patents Act 2004 because of concerns that the patent (rather than the invention) had to be shown to be of "outstanding benefit" to the employer but, interestingly, the case was decided under the old law where the employees had to satisfy the difficult test of proving that the "outstanding benefit" to the employer came from the patent itself, rather than from the invention.
In the 3 decades since the compensation regime was introduced, no employee had been successful in bringing proceedings under those sections of the Act – until now.
In the case of Kelly and Chiu v GE Healthcare Limited, Dr Kelly and Dr Chiu were employed as research scientists by Amersham (which GE Healthcare acquired). The two Doctors (along with others who were not involved in the court action) were involved in the first synthesis of a compound which then formed the basis of a radioactive imaging agent which was protected by patents. The product became very successful and was sold under the trade mark Myoview.
It can be very difficult to assess the benefit derived by the employer. Mr Justice Floyd considered evidence that total sales of Myoview from 2002 to 2007 amounted to £1 billion. He assessed the benefit that the patents provided and took the view that the figure for the benefit from the patents was £50 million. Mr Justice Floyd then looked at the employees' duties, remuneration and other advantages and also looked at the level of effort and skill and the contribution of others and came to the decision that in the case of Dr Kelly a 2% award (£1 million) and in the case of Dr Chiu a 1% award (£500,000) would be fair and just.
This is the first successful case where employees have sought compensation. In this case, based on the facts, the shares of the benefit that the court awarded were towards the bottom of the scale but this case may encourage employees to make claims that their contributions to the success of their employers' businesses are of outstanding benefit and should be compensated under the Patents Act regime.
Many employers already provide compensation for their inventors by way of contractual provisions, many of which are generous (for example, in many academic or research bodies), but all employers should now review their position on compensating inventive employees so as to mitigate the risk of claims of this nature.