Today we have a guest post from David Knight of Field Fisher Waterhouse LLP on the Shanks v Unilever case and the issue of employee compensation. This article first appeared on the SnIPpets IP blog and is reproduced here with the permission of the author.

Three years have passed since we reported on the appeal on an interim point in the case of Shanks v Unilever, a case relating to Professor Shanks’ (a former employee of Unilever) right to compensation as an inventor of patents of outstanding benefit.  (The patents related to a capillary action measuring device which has now found large scale use in home diagnostic kits for diabetes.)

Amazingly the case continues to rumble on, and the High Court (Arnold J) has recently issued a Judgment on appeal from the UK Intellectual Property Office (UKIPO) on the substantive part of the case.

By way of reminder, section 41 of the UK Patents Act provides that an employee inventor may be entitled to compensation if two conditions are satisfied:

• that the patent is of “outstanding benefit to the employer”; and if so
• that it “is just” that he should be awarded compensation.

Once these requirements are fulfilled the employee should receive such a fair share of the benefit the employer has derived, or may be expected to derive from the patent or the invention.

The case was brought in the UKIPO which, together with the courts, has jurisdiction to hear cases relating to employee compensation.  After a marathon nine day hearing at the UKIPO, including three expert witnesses, the Hearing Officer decided that:-

1. the benefit of the patents to Unilever was £24.5m;
2. the benefit was not outstanding;
3. but had the benefit been outstanding, Professor Shanks’ fair share would be 5%.

Professor Shanks appealed the second and third point above; Unilever appealed against the first and third point.  Many issues were thrown up by the parties in support of their respective appeals; we comment below on those that are more likely to have general relevance in other employee compensation cases. (more…)