Inventors finally rewarded by the Court for their outstanding investions

In February 2009 the English High Court made the first ever award of compensation of £1.5 million to employee inventors because of the ‘outstanding benefit’ of their invention to their employer.

The Claimant employees, Dr Kelly and Dr Chiu, made a claim for compensation under the Patents Act 1977 against their employer, GE Healthcare Limited (GE) for an important invention that they had jointly made.

Normally an inventor is the owner of any patent granted for his invention. Where the inventor is, however, an employee the patent will usually belong to the employer and the employee will not benefit from his invention. However, the Patents Act has a provision to compensate an employee for an invention he has made if the resulting patent is of ‘outstanding benefit’ to his employer. Compensation has rarely been sought and has never before been awarded.

In this case, the inventors developed a radioactive bio-imaging agent for which a patent was granted. The imaging agent was marketed as ‘Myoview’ and its total sales between 2002 and 2007 were estimated at around £1 billion. Myoview was a huge success and assisted GE in completing corporate deals with major pharmaceutical companies. These factors contributed to the judge’s decision that the inventors should receive appropriate compensation.

The judge had no difficulty in concluding that the patents were of outstanding benefit to GE and went on to say “the benefits went far beyond anything which one could normally expect to arise from the sort of work the employees were doing.” The patents benefited GE by reserving the market to themselves and maintaining a high price for the product. Valuing the ‘benefit’ was less straightforward.

Not surprisingly, the parties’ valuations of the benefit were very far apart. The judge took a conservative estimate of the financial benefit that GE had gained at £50 million, (which he regarded as the “rock bottom” figure) and awarded the inventors 2% and 1% of this figure, respectively £1 million and £500,000. The Judge felt that this was a just and fair reward for the inventors’ contribution.

After years where no case for compensation was successful, this case will clearly be an encouragement to makers of important inventions to seek compensation, though it seems unlikely that it will open the floodgates.

The case has shown that an employee inventor, in the right case, can be awarded significant compensation. However, the inventor will have to think seriously about the considerable costs involved and the effect of the application on the inventor’s future relationship with his employer.

What it means is that companies should now look more closely at putting in place procedures to reward their researchers properly if they make important inventions.

For more information on the protection of inventions, please contact Pina Mazzotti on pina.mazzotti@harveyingram.com or call 0116 257 6166.