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Former employee compensated for invention generating ‘substantial and significant rewards’

06 Nov 2019

After a 13-year legal battle, Professor Ian Shanks was awarded £2m in compensation by the Supreme Court for an invention now used by many diabetics. The Professor developed technology (now known as the electrochemical capillary fill device) to measure the concentration of glucose in the blood during his time as an employee at a subsidiary of Unilever, nearly 40 years ago. 

Despite the employer’s payment of salary, bonuses and benefits to its employee, the Supreme Court found that the invention produced “outstanding benefit” to the employer which entitled the Professor to a “fair share” of the company’s royalties, amounting to approximately £24m.

Very few cases have been heard by the Court on this issue and even fewer have succeeded. Professor Shanks commenced his legal action in 2006 which was subsequently dismissed until it reached the Supreme Court. Whilst this result shows the Court’s willingness to award compensation, the legal threshold outlined below, under s40 of the Patents Act 1977, is still significant.

Under s40 Patents Act 1977, the Court is willing to compensate employees who have created an invention where:
  1. the employee has made an invention belonging to the employer where a patent has been granted;
  2. that invention, taking into account the employer’s business, is of outstanding benefit to the employer; and
  3. it is just that the employee should be awarded compensation by the employer
Whilst employers should bear s40 in mind, each claim will be determined on a case-by-case basis and particularly when assessing “outstanding benefit”.  At an earlier hearing in the case, the Court of Appeal concluded  that the term “outstanding” should be measured against the facts in each case, with careful consideration of the turnover and profitability of the employer (Shanks v Unilever PLC [2017] EWCA Civ 2).

If you are concerned about a potential or historical claim  it is worth seeking advice on the specific circumstances. Please get in touch with our Technology, Media and Telecom’s team for an initial discussion.

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