Supreme Court awards £2 million to Unilever ex employee for invention created 40 years ago

Background – Shanks v Unilever

During the course of his employment with Unilever, Professor Ian Shanks developed technology that is now found in most glucose testing kits. Unilever patented the invention and went on to sell licences to other companies to use the technology, generating £24.55 million in income as a result.

There was no dispute that ownership of the Intellectual Property Rights (IPR) rested with Unilever as it had been created during the course of Professor Shanks’ employment. However, Professor Shanks claimed that he should be awarded compensation because the patent was “of outstanding benefit” to his employer under section 40 of the UK Patents Act.

Decision

The Supreme Court held that the “outstanding benefit” test was satisfied in finding that the rewards enjoyed by Unilever were substantial and significant and stood out in comparison with the benefit derived from other patents.

In determining the level of compensation, a fair share of the £24 million earnings was assessed as being 5% with an adjustment made to reflect an annual average inflation rate of 2.8% from 1999 thus arriving at a figure of £2 million.

Implications for Employers

This is an unusual case and for the majority of inventors and employers this will not change the status quo as demonstrating “outstanding benefit” is a high threshold to meet.

However, any business reliant on IP should have a clear IP Policy and a mechanism for assessing whether employees could meet the outstanding benefit test given that some inventor employees may now be more inclined to seek compensation given the publicity generated by this case.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Employment Team at Cleaver Fulton Rankin for further advice or information.