Case: Shanks v Unilever (UK Supreme Court)

The UK Supreme Court has overturned earlier decisions by the Patent Office, the High Court and the Court of Appeal, ruling that an inventor-employee was entitled to the £2m of the benefits which his employer, Unilever, had obtained from a patent on his invention.

The law requires that, where an employee’s invention leads to an outstanding benefit, having regarding inter alia to size and nature of the employer’s undertaking, then the court may award the employee a compensation reflecting a fair share of that benefit. In an appeal by Prof Shanks against his employer, Unilever UK Central Resources Ltd, the Supreme Court overturned previous decisions by the Patent Office, the High Court and the Court of Appeal and made Prof Shanks an award of compensation.

The decision is important because it clarifies the meaning of “outstanding benefit” and the circumstances when such an employee award is due, and how the compensation may be determined, as well as the meaning of “employer’s undertaking”.

Lord Kitchin, for the Supreme Court, found that the benefit of the Shanks patent should be assessed in relation to other Unilever patents, rather than in relation to Unliver’s overall turnover, as this would include income unrelated to patents, and found the Shanks’ patent “stood out” from the other patents, provided an outstanding benefit to Unilever. The Supreme Court rejected Unilever’s claims that such an approach would lead to a “too big to pay” scenario. On "employer's undertaking", it said the benefit was that derived to the whole Unilever group and not just Prof Shanks’ immediate employer. On these bases Lord Kitchen adopted the £24m figure originally used by the patent office as a measure of the Unilever group’s total earnings from the Shanks patent.

The fair share due to Prof Shanks should be 5%, as originally suggested by the Patent Office, but reduced, without proper basis, by the High Court to 3%. Lord Kitchin said the time value of money should be taken into account. Applying an annual inflation rate of 2.8%, he assessed the Prof Shanks’ fair share to be £2m.

While the 5% level for the fair share may cause some concern to employers, the Supreme Court decision does confirm that, in order for a fair share award to be contemplated, any employer benefit needs to be outstanding.

Full judgment may be found here: Shanks v Unilever Plc & Ors [2019] UKSC 45 (23 October 2019)

 

Angel IP is pleased to announce its main practitioner's success in obtaining revocation by the UK High Court of RegenLab’s UK patent EP(GB)2073862 in the case RegenLab SA v Estar Technologies Limited et al [2019] EWHC 63. Angel IP’s founder, David Sant, who (as lead solicitor at his previous firm) successfully acted for the three Defendants, Estar Technologies, Medira Limited and Lavender Medical Limited, and obtained the court’s declaration of invalidity of the patent.

The invalidity case hung primarily on prior disclosure by the Claimant without any burden of confidentiality.

In a judgment published on 18 January 2019 His Honour Judge Hacon held that all claims of the patent lacked novelty due to prior disclosure of the invention in Japan in June 2005 and would have been obvious to a skilled team on receipt of the Claimant’s product with instructions for users. The judge held that the patent as applied to be amended by the Claimant would also be invalid.

The decision is also noteworthy for its treatment of the patent in respect of the doctrine of equivalence set out in the Supreme Court’s case of Actavis UK Ltd v Eli Lilly & Co [2017] UKSC 48; [2017] RPC 21.

The full judgment is available at https://www.bailii.org/ew/cases/EWHC/IPEC/2019/63.html

 

 

At the time of writing this article it is not only the form of a future Brexit that is uncertain, but also whether the UK does actually leave the EU. Nearly two years after the UK’s referendum on EU membership, the UK parliament ratified the UPC Agreement, on 26 April 2018. However, the UK’s future participation in the UPC is uncertain. On the assumption that the UK does ceases to be an EU member state, this article considers the likelihood of the UK nevertheless participating in the UPC.