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Shanks v Unilever Court Ruling

David Knight
10/03/2017
Recent Court of Appeal decision on Shanks v Unilever, as to whether Professor Shanks was entitled from Unilever, his former employer, to an additional financial award for a share of the benefit derived from a patented invention during his employment.

On our IP blog SnIPpets has just been published a piece about the recent Court of Appeal decision in the case of Shanks v Unilever.  The case related to whether Professor Shanks was entitled from Unilever, his former employer, to an additional financial award for a fair share of the benefit Unilever derived from a patented invention made by Professor Shanks during his employment. 

The invention related to a capillary action measuring device which has now found large scale use in home diagnostic kits for diabetes.  The benefit derived by Unilever was disputed, but ultimately was held to be approximately £25 million.  Of this Professor Shanks sought at least 33% (i.e. c. £8 million).  His claim failed, for the reasons more fully discussed on SnIPpets, and even had it succeeded it was held that a fair share would have been 3% (i.e. c. £750,000).

The statutory compensation of employees in the UK for certain inventions can present difficulties for both employer and employee, particularly in the Life Sciences sector.  As Professor Shanks' case amply demonstrates, for employees of substantial corporations (which will be the case for many in the Life Sciences sector) it can be problematic to get over the necessary hurdle of establishing that the invention is of outstanding benefit to the employer "having regard among other things to the size and nature of the employer's undertaking" (sec. 40(1)(b) Patents Act 1977). 

Another difficulty can arise where there are a number of individuals or teams pursuing similar research projects, for example in the pharmaceutical field.  One individual or team may research and find a compound which goes on to be patented and generates enormous and outstanding benefit for the employer.  Another individual or team may be equally as hard working and equally as inventive, and also research and find a compound which also has enormous potential, but which then fails in the clinic trials phase.  Is it right and fair that the first receives a reward of, say, 3 to 5% of the benefit derived from the invention, and the second group nothing when arguably the only difference between the two is luck?  One can foresee the employee disgruntlement that might arise in such a situation, which could cause short and longer term damage, particularly in a smaller organisation.

The statutory right to compensation cannot be excluded (unless agreed between a trade union and an employers' association), accordingly the ability to address these problems is limited.  That said, very few such cases reach the courts.  This is probably due to a combination of factors including: a reluctance among employees to sue their employer; the employer and employee agreeing to a sensible and fair compromise; and there being comparatively few game-changer type inventions that get close to being outstanding.  It is, however, an issue that employers should be aware of and seek to resolve quickly, for example, through a patent reward programme.

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