The UK Patents Court has made an award of compensation to the inventors of patents which were found to have been of “outstanding benefit” to their employer. The claimants in Kelly and Chiu v GE Healthcare Limited were awarded £1,000,000 and £500,000, respectively, in respect of patents covering “Myoview”, a successful radiopharmaceutical heart imaging agent.

Under UK Patent Law, inventions made in the course of employment are normally owned by the employer. However, the Patents Act includes a self-contained code for determining when compensation should be awarded to UK-based employee-inventors in relation to such patents, particularly patents which have been of “outstanding benefit” to the employer. In the past, employees have found it difficult to obtain compensation because of the vague terms in which the code is framed and the difficulty in showing that the outstanding benefit was due to the existence of the patent. Although the law was amended in 2005 to require employees only to show that the invention (rather than the patent) has been of outstanding benefit, the present case was decided under the law prior to amendment.

The Judge in the present case held that “outstanding” means “something special” or “out of the ordinary” and more than “substantial”, “significant” or “good”. The benefit to the employer must be something more than one would normally expect to arise for the duties for which the employee is paid for it to be outstanding. On the other hand, it is not necessary to consider whether the invention itself is outstanding (although this might affect the level of compensation awarded).

It was also held that although the patent must have been a cause of the benefit, it need not be the only cause. Foreign patents may be taken into account when assessing the benefit to the employer, but not regulatory data exclusivity (RDE) regimes enjoyed by new chemical entities. The benefit is to be valued ex-post. To obtain compensation, the employee does not need to show a “loss”, for example by reference to inadequate remuneration, since in this context “compensation” refers to the disparity between the benefits received by the employee and the benefits received by the employer. Nor is it a requirement to show the expenditure of skill and effort beyond the call of duty.

According to the Patents Act, where an employee has shown that a patent has been of outstanding benefit, the amount of compensation is to be determined in the light of all of the available evidence so as to secure a just and fair reward to the employee. Based mainly on the exclusion of generic competition and the positive influence of the existence of the patents on various corporate deals, the Judge in the present case decided that there was clearly an outstanding benefit to the employer.

The Judge based the award of compensation on an “absolute rock bottom” figure for the benefit of the patents of £50 million. It was said that, in principle, the employee’s share of the benefit might lie somewhere in the broad range from nil to 33%. In the present case, the Judge said he had taken a conservative figure of 3% of the benefit as a just and fair award, which equated to £1.5 million. It is interesting to note that this equates to around three days worth of profit made from the patented product at current rates.

In the light of this decision, organisations may wish to reconsider the arrangements by which UK-based employees are compensated for inventions made in the course of employment. Although the possibility of applications for compensation under the above provisions being made cannot be prevented, it will generally be in the interests of all concerned to reach an agreement an early stage. Meanwhile, employee-inventors will be encouraged by the decision, which is believed to represent the first successful application for compensation under the Patents Act since its enactment in 1977.