Essay question

Individuals who, whilst in the course of their employment, create inventions patented by their employers, were granted the right to be compensated (Patents Act 1977). However, in practice, this right was rarely successful.

With specific reference to appropriate case law, discuss whether this statement remains correct.

Answer:

•   In relation specifically to patents, the PA 1977 provides at s. 39(1) that inventions created by employees will belong to an employer where this was created during the normal course of employment and relating to the employee’s duties at work.

•   In Re Harris’ Patent, where an employee had made an invention that was patentable, the fact that he was a salesman with no requirement or expectation to invent resulted in the invention belonging to him, not the employer.

•   Contract terms in contravention of the Patents Act 2004, regarding patents and their ownership, will be considered unenforceable.

•   PA 1977 s. 40 provides that where an employee makes an invention which belongs to their employer, and the invention is patented, and that patent is or outstanding benefit to the employer, the employee is entitled to a fair share of the resulting benefit (insofar as this is just). Note that 'outstanding' has been interpreted as something special or out of the ordinary not merely significant. The problem has traditionally been demonstrating the 'outstanding benefit' but case law has recently assisted in this matter.

•   A relatively new case has provided the first example of employees being successful under PA 1977 s. 40 - Kelly and Chiu v Ge Healthcare Ltd. Research scientist employees were successful in receiving a 3% share in a patent’s worth to their employers as joint inventors (rather than just contributors) to the patent application.

The consequences of Kelly and Chiu are that employers are likely to be very selective as to who is named as the inventor on a patent application and perhaps make effective use of ex gratia payments to limit claims (which may be made up to one year after the expiry of the patent).