1 March, 2009
On 11 February 2009, the High Court of England and Wales handed down a groundbreaking judgment awarding two inventors compensation totaling £1.5 million.1 The award was made in view of the benefit derived by the inventors’ employer from patents granted for their inventions and this is the first time that any inventor in the UK has successfully made a claim for this sort of compensation.
Under UK law, an invention made by an employee in the course of their employment duties often belongs to their employer and the employer has the right to be granted a patent in respect of that invention. The inventors may well receive compensation for these inventions as part of their salary or in the form of bonuses or other remuneration. If the invention goes on to prove a huge success, this compensation may turn out to be inadequate in comparison to the benefit obtained by the employer and, as a consequence, the law also gives employees the right to apply for additional compensation.
To win an award of compensation, the inventor must overcome several hurdles and the lack of previous successful compensation claims illustrates the difficulty in doing this. A first hurdle is that the patent itself, not the invention or the sales record of the end product, must have benefited the employer. The employer may have maintained a strong market share even without the patent and it would need to be shown, for example, that the patent was necessary to exclude competitors or that it benefited the employer in other ways.
The other major hurdle is that the benefit to the employer must have been “outstanding” in regards to, for example, the size and nature of the employer’s undertaking. As a consequence, even if the patent resulted in large profits for the employer, if the employer were a large multinational corporation this might not be anything out of the ordinary.
In this particular case, Drs Duncan Kelly and Ray Chiu had been involved in the first synthesis of a compound called P53 in 1987. This compound later formed the basis of a blockbuster radioactive imaging agent branded Myoview. Their employer, Amersham International Plc, obtained patents for this agent around the world. In looking at how the patents had benefited Amersham, the judge found that, at least between 2002 and 2008, the patents had helped to protect Amersham against generic competition. Also, the fact that Amersham had
patents on a blockbuster radiopharmaceutical was a major factor in achieving deals and acquisitions that transformed Amersham as a company.
Against this background, the judge had no difficulty in deciding that the patents had been of outstanding benefit to Amersham. The judge went on to determine that the value of that benefit was at least £50 million and that the two inventors, between them, were entitled to a 3% share of this. Dr Kelly, who directed the research and was even one of the first human test subjects for P53, was awarded £1 million while Dr Chiu, a more junior employee but a very able synthetic chemist, was awarded £500,000. The judge noted that the benefit and fair share estimates were quite conservative but considered that the final award, which represented about three days’ of the profits from Myoview, was just and fair in light of all of the evidence.
Overall, this judgment should satisfy both employees and employers. For employees it shows for the first time that obtaining awards of compensation from their employers is a practical reality. At the same time, employers fearful that they might now be subject to a flood of compensation claims will be relieved that the awards were not disproportionate.
The conservative nature of the awards will be particularly reassuring to employers in light of some recent changes in the law on inventor compensation. These changes reduced the first hurdle to obtaining compensation by permitting the benefit obtained from both the patent and the invention to be taken into consideration. The second hurdle, that the benefit must be outstanding, still remains. Nevertheless, it is expected that the new law will make it easier for inventors to win awards of compensation. Unfortunately for inventors, the new law applies only to patent applications filed from 1 January 2005 and since, as this judgment shows, it can take many years until an employer gains significant benefit from a patent, the old law and this judgment will retain significance for the next two decades.
1 Kelly & Anor v GE Healthcare Ltd  EWHC 181 (Pat) (11 February 2009) http://www.bailii.org/ew/cases/EWHC/Patents/2009/181.html