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BREAKING: UKSC finds Unilever is not too big to pay - Shanks v Unilever [2019] UKSC 45

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This morning the UK Supreme Court handed down its decision in Shanks v Unilever ([2019] UKSC 45) concerning Professor Shanks' long battle to receive compensation for his invention from his former employer, Unilever. Professor Shanks failed in his previous attempts to receive compensation at a UK IPO Hearing, in the Patent Court and in the Court of Appeal. Today's UKSC decision, led by Lord Kitchin, dramatically upheld his appeal. In an unanimous decision, the UKSC awarded Professor Shanks £2 million compensation from Unilever.

According to Section 40 of the UK Patents Act (UKPA) an employee may be awarded compensation for their patented invention if the patent or invention has provided an “outstanding benefit” to the employer. One of the difficulties is that outstanding benefit must be determined in the context of the employer's normal business activities; an outstanding benefit to a small start-up may be run-of-the-mill for a global multinational.

In the case in question, the invention related to technology used in glucose testing for diabetics invented by Professor Shanks whilst he was employed at Unilever. Unilever did not commercialise the technology itself, but unusually for the company, licensed the technology out. Unilever eventually sold the patents for the technology as part of the sale of it diagnostics business Unipath. Whilst the exploitation of the patents earned Unilever millions in profits, these profits were small compared to Unilever’s overall profits. A key issue in the case was whether the lower courts and the UKIPO hearing office had erred when applying the test for outstanding benefit. In particular, did the Hearing Officer misapply the law by only determining the benefit to Unilever in terms of the comparison, in cash terms, between the benefit from the patents and Unilever’s total profits? Under such an analysis, the claimant argued, Unilever would always be “too big to pay”.

What is “outstanding benefit”?

As established by the first case in which an employee was awarded compensation (Kelly & Anor v GE Healthcare [2009] EWHC 181 (Pat)), “outstanding benefit” cannot be defined. In determining whether an invention has provided “outstanding benefit” to an employer, the court must take into account the “size and nature of the employer’s undertaking” (Section 1(1)(b) UKPA). Therefore, for a benefit to be outstanding, it must appear so in the context of an employer’s normal business activities (Memco-Med [1992] RPC 403). Furthermore, the disparity between the employer’s benefit and employee’s remuneration (or other benefits) should be extreme.

However, an important principle of employee compensation is that an employer should not be “too big to pay”. Particularly, the outstanding benefit test should not be a simple comparison between the income from a patent and the overall profits of the employer, to the exclusion of all other relevant factors. Other factors contributing to a more nuanced assessment of outstanding benefit may take account of, for example, turnover and profitability.

Deciding the fair share

Professor Shanks and Unilever

Professor Shanks was employed by UK Central Resources Ltd (CRL), a subsidiary of Unilever, for 4 years in the 80’s. Professor Shanks was employed to invent biosensors. During the period of his employment, Professor Shanks used, at home, slides from his daughter’s microscope kit and some bull-dog clips to build the first prototype of an electrochemical capillary fill device (ECFD). These activities were considered to fall under the scope of Professor Shanks' duties as an employee. Unilever filed patents for the EDFD.

Following expansion of the glucose testing market in the 1990s, ECFD technology began appearing in most personal glucose testing products, with the majority of companies in the field licensing the technology from Unilever. An important aspect of the case was that patent licensing is not a normal business activity of Unilever, who predominantly have patents to protect their own business activities. The licence income from the Shanks patents was therefore unusual.

Professor Shanks first brought his case for compensation at the UKIPO (BLO/259/13). The Hearing Officer calculated the total gross profit obtained by Unilever from the Shanks Patents as £24.5 million (£24.3 million net benefit after costs). The Hearing Officer determined that this amount was not “outstanding” in view of Unilever’s normal activities. This decision was upheld on appeal first in the Patents court ([2014] EWHC 1647 (Pat), IPKat post here) and then in the Court of Appeal ([2017] EWCA Civ 2., IPKat post here).

The Court of Appeal decision - Was Unilever “too big to pay”?

In the Court of Appeal, Patten LJ considered whether the Hearing Officer had erred by only considering “outstanding benefit” in terms of a simple comparison between the benefits from the Shanks patents and Unilever’s overall profits. In cash terms, the revenue from the Shanks Patents was small compared to Unilever’s overall profits. However, Professor Shanks argued that other factors should have been properly considered, for example the unusually high rate of return from licence fee income provided by the patents.

Patten LJ dismissed the appeal, finding that the Hearing Office had properly considered the issues, including the licence fee benefits. Patten LJ particularly found that the Hearing Officer had correctly found a lack of outstanding benefit on the basis that “the benefits in terms of income the patents produced came in over an extended period of time and produced no obvious benefit to the business as a whole other than in terms of cash” (para. 62). As found by the Hearing Officer in first instance, Pattern LJ agreed that Unilever had been outwardly unaffected by the Shanks patents, so no outstanding benefit could be attributed.

The Supreme Court decision

IPKat is still digesting the UKSC decision and will provide a more detailed analysis in coming days. In summary, the UKSC, led by Lord Kitchin found that the Hearing Officer had incorrectly applied the test for outstanding benefit. Particularly, the UKSC found 4 things wrong with the Hearing Officer's approach:

1. The Hearing office started his analysis from Unilever as a whole, as opposed to the research arm of Unilever (CRL) at which Professor Shanks was employed.

2. Irrespective of the starting point, the analysis should have focused on the extent of the undertakings of CRL, and should not have focused "upon the overall turnover and profits generated by Unilever, as illustrated by the size of its business in making and selling ice cream, spreads and deodorants"

3. The Hearing Officer did not properly take into account the fact that the size and success of Unilever’s business as a whole did not play any material part in securing the benefit it has enjoyed from the Shanks patents.

4. The Hearing Officer, having warned against applying an analysis that would render certain employers "too big to pay", had proceeded to apply such an analysis:

the hearing officer appeared rightly to disavow an approach which involved assessing the extent and nature of the benefit derived from a patent simply by comparing it to the patent owner’s overall turnover or profits. But he also indicated these matters might be relevant if, for example, an undertaking’s size enabled it to exert greater leverage. Yet, having apparently rejected such an approach, he then adopted it. There was no justification here for simply weighing the sums Unilever generated from the Shanks patents against the size of its turnover and overall profitability in products such as Viennetta ice cream, spreads and deodorants and yet this formed an important part of his assessment

The UKSC has therefore reaffirmed that the assessment of "outstanding benefit" should not render an employer too big to pay. Has Lord Kitchin ruled out any comparison between the total profits of an employer and the benefit of the patent? It seems perhaps not. The difference between the business activities of Unilever as a whole and the research arm in which Professor Shanks was involved was emphasised as a determining factor throughout the decision of the UKSC to award compensation. Furthermore, throughout its entire passage up through the courts from the Hearing Officer's decision, there was agreement that an employer shouldn't be "too big to pay".

The different approach by the UKSC appears, at least to this Kat, was merely to divorce the activities and purpose of the diagnostics research arm of Unilever from Unilever as a whole. The UKSC decision therefore reaffirms the importance of the appropriate context for determining the meaning of "outstanding benefit". Context is the crucial element in avoiding an analysis in which an employer will always be too big to pay.

Further commentary on the UKSC decision can be read here.

No compensation, no consolation -- or no thanks, Shanks

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While she may be officially on sabbatical, Catherine Lee (alias Cat the Kat) has not taken her eye of the array of recent judicial attractions that have flowed like water into a host of eager in-boxes. One such attraction has ended up in a blogpost from her. It's Shanks v Unilever Plc & Others [2014] EWHC 1647 (Pat), a Patents Court for England and Wales ruling of the indefatigable Mr Justice Arnold. Like the judgment, this blogpost is of some length. But never mind, it's well worth the read. Writes Catherine:

Having drafted the odd confirmatory patent assignment in her time, this Kat knows that employee inventions are always a controversial issue. On one hand, employees are engaged and paid as part of their normal duties to invent, so any financial benefit flowing from their inventions should belong to their employers. However, if that financial benefit to the employer is so great, should the employer keep all of the financial benefit while the employee merely receives their standard wage?

This Friday Mr Justice Arnold delivered the latest decision in the proceedings involving Professor Ian Shanks, Unilever plc and an invention which led to a patent for measuring activities which was later used in diabetes blood testing kits [Kat plot-spoiler alert: after 124 paragraphs of his usual high structured thoroughness, Arnold J at [123] dismissed Professor Shanks' appeal against the decision of the Comptroller General of Patents that the patents on his invention were not of outstanding benefit to Unilever and that, therefore, he was not entitled to an award of employee compensation under section 40(1) of the Patents Act 1977. For earlier episodes in this long-running drama, see Katposts here and here].

Background

This was an appeal by Professor Shanks against a decision of 21 June 2013 on behalf of the Comptroller-General of Patents (BL O/259/13), dismissing his claim against Unilever for employee compensation for European Patent (UK) 0 170 375 (“EP375”) and related patents (collectively “the Shanks Patents”) under section 40(1) of the Patents Act 1977. After hearing extensive witness testimony and reviewing significant volumes of documentary material, the hearing officer concluded that (a) the benefit to Unilever from the Shanks Patents was £24.5m, (ii) that this benefit was not outstanding, and (iii) if (contrary to his conclusion) the Shanks Patents were of outstanding benefit, a fair share of the benefit for Professor Shanks would be 5%. Both sides challenged this decision. Professor Shanks challenged both the hearing officer’s conclusion that the patents were not of outstanding benefit and his conclusion as to fair share. By a respondents’ notice Unilever challenged his conclusions as to the amount of the benefit and as to fair share.

The value of a confirmatory assignment?
For those who are new to these proceedings, Professor Shanks was employed by Unilever UK Central Resources Ltd (CRL) from 5 May 1982 to 3 October 1986. CRL employed all of Unilever’s UK-based research staff: it was not a trading company, but a wholly-owned subsidiary of Unilever plc. It is common ground that, as between Professor Shanks and CRL, the rights to any inventions created by Professor Shanks belonged to CRL according to section 39(1) of the 1977 Act. In accordance with standard Unilever policy, CRL assigned the rights in the invention to Unilever plc for £100. Professor Shanks was asked to sign, and did sign, two confirmatory assignments, for which he received $1 each. The application for EP375 was filed by Unilever on 12 June 1985 with Professor Shanks and two other inventors claiming priority from two UK patent applications of which Professor Shanks was the sole inventor -- 8414018 (for an Electrochemical Capillary Fill Device (ECFD)) and 8415019 (for an Fluorescent Electrochemical Capillary Fill Device (FCFD)). EP375 was granted on 16 May 1990; other patents for this invention were also obtained in Australia, Canada, Japan and the USA. All the Shanks Patents expired on 11 June 2005 except for the US Patent, which expired on 25 August 2009.

Between 1992 and 2001 most of the companies operating in the blood glucose testing field took fully paid-up non-exclusive licences for the remaining life of the Shanks Patents under which the licence fees were payable in instalments. Professor Shanks had little involvement in the licensing of the Shanks Patents and did not develop the technology, nor push forward the commercial exploitation, in any other way. In 1994 Unipath, a subsidiary of Unilever, took over the bulk of Unilever's medical diagnostics business. In 2001 Unipath was sold to Inverness Medical Inventions. As noted above, the hearing officer calculated that the total gross benefit which Unilever obtained from the Shanks Patents was £24.5m.

What was the benefit to Unilever?

Both sides challenge the hearing officer’s conclusion that the benefit which Unilever derived from the Shanks Patents was £24.5 million. Professor Shanks contended that the hearing officer ought to have included an additional sum to reflect the time value of the money to Unilever (ie Unilever had the use of the money and that was in itself an economic benefit to Unilever which should be taken into account). Unilever contended that the hearing officer ought to have reduced the total to reflect (i) corporation tax paid by Unilever, (ii) research and development costs and (iii) a greater percentage of the licensing income being attributable to non-Shanks Patents.

Providing
a benefit
Arnold J rejected Professor Shanks' argument and gave five reasons why it was not a 'benefit … derived … from' the Shanks Patents within the meaning of section 41(1) of the 1977 Act. On the three Unilever arguments, Arnold J agreed with Unilever on the corporate taxation point, namely that in the circumstances of this case, the benefit derived by Unilever from the Shanks Patents is the benefit net of tax. However, in determining the benefit derived from the Shank Patents, Arnold J agreed with the hearing officer that £250,000 for the costs of filing, prosecuting, maintaining and licensing the Shanks Patents could be deducted, but not the £1.75m research and developments costs attributable to the technology from 1984 to 1994 (at [58]). Further, Arnold J agreed that the hearing officer was wrong not to allocate a greater percentage of the licensing income being attributable to non-Shanks Patents (at [60]).

Was the benefit outstanding?

It was common ground that the test of outstanding benefit is a qualitative one (at [66]). The hearing officer considered the benefit from a number of different perspectives: in the light of Unilever’s profits and turnover; in relation to patents in general; in the context of Unilever’s licensing activities; in view of Unilever’s patent activities; and compared to Unilever’s activities in general. In particular he stated that 'there was no suggestion from either party that the Shanks patents were crucial to Unilever’s success. In my view, taking account of the size and nature of Unilever’s business, the benefit provided by the Shanks patents falls short of being outstanding.'

Professor Shanks challenged the hearing officer’s conclusion that the benefit was not outstanding on no fewer than seven grounds: In particular, his criticisms were that the hearing officer (a) was wrong to decide that the benefit which Unilever obtained from the Shanks Patents was not outstanding because of the large profits which Unilever ordinarily made in the course of its business (ie £23m in royalties was not a lot by Unilever standards, although it may be for smaller companies of a different nature); (b) failed to take into account the disparity between what he received from the Shanks Patents and what Unilever received; (c) was wrong to conclude that how the benefit was obtained (ie primarily by licensing and selling them, rather than exploitation by manufacture) was irrelevant; (d) placed insufficient weight on Unilever obtaining the benefit from the Shanks Patents with very little commercial risk and at a very high rate of return; (e) was wrong to conclude that the benefit was not outstanding in the context of the Unilever group as a whole given his own findings; (f) failed to take account the inability of Unilever to establish the benefit obtained from any of their other patents; and (g) overlooked significant concessions made during cross-examination by Unilever’s witness as to the significance of the Shanks Patents to the sale of Unipath.
Arnold J was not satisfied that the hearing officer made any error of principle in concluding that the Shanks Patents were not of outstanding benefit to Unilever.

What would a fair share have been?

For completeness, Arnold J considered the points on fair share. As noted above, the hearing officer concluded that if (contrary to his earlier finding) the Shanks Patents were of outstanding benefit, a fair share of the benefit for Prof Shanks would be 5%.

Professor Shanks contended that 5% was too low for no fewer than nine different reasons. For Arnold J, the main points that require consideration under this heading were that the hearing officer (a) wrongly distinguished this case from the situation envisaged by Floyd J in Kelly v GE Healthcare in 2009 (ie university practice of typically paying academic inventors a third of exploitation income -- noted very briefly on this weblog here); (ii) failed to take into account the time value of money; (iii) failed to take into account the costs incurred by Professor Shanks in bringing this claim and that his representatives acted on CFAs; (iv) failed properly to appraise Unilever’s licensing activities (ie Unilever's efforts to licence the Shank Patents were poor in that they could and should have negotiated higher royalties) and (v) failed to take into account the very high rate of return obtained by Unilever. Arnold J systematically rejected each of these arguments.

In response, Unilever contended that 5% was too high for three main reasons: these were that (a) the hearing officer failed properly to consider the contribution made by the employer (ie the critical role of Unilever’s size and financial clout in extracting licence fees and seeing infringement proceedings through to the end, particularly in circumstances where there was unchallenged evidence that the validity of the Shanks Patents was open to question); (b) the hearing officer failed properly to consider the relative contribution of Professor Shanks and his co-inventors in making the invention so that Professor Shanks as lead inventor had 'scooped the pool'; and (c) the award was inconsistent with that in Kelly where 2% was awarded to the lead inventor. Arnold J accepted Unilever's submission on (a) and (c) . However, with some hesitation, Arnold J did not accept Unilever's submission in respect of (b).

The IPKat notes Arnold J's obvious displeasure that 'a claim of this nature should take seven years to reach a first instance determination', and endorses his I'm-throwing-no-stones' exhortation to the UK IPO 'to ensure that such claims are determined within a reasonable time of commencement' at [124].

Merpel's just glad she's not an inventor. The Patents Act 1977's employee compensation scheme provides an incentive to litigate, but not much more comfort than that.

Lord of the Flies buttons down ill-drafted statute provision

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This handy device is useful for
dealing with unwanted flies in court ...

When one sees the words "fly" and "Shanks" in a shared context, many a reader may involuntarily summon up an unsavoury image of annoying insects hovering around a leading brand of bathroom fixtures, However, this is far from the case with today's post.

Back in December 2009, in the Patents Court for England and Wales, Mr Justice Mann gave a ruling in Shanks v Unilever plc and others [2009] EWHC 3164 (Ch), noted here by the IPKat. The case was a dispute over Professor Shanks' claim for compensation as an employee inventor. The Patents Act 1977, sections 39-42 provides a set of rules for dealing with employees' inventions, as well as for rewarding those inventors whose patents are particularly beneficial to their employers.. Anyway, Mann J's decision hinged on the interpretation of the Patents Act 1977, s.41 which provides, in relevant part:

"An award of compensation to an employee ... in relation to a patent or an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent ...

(2) ... the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of–(a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or

(b) the property or any right in the invention; to a person connected with him

shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him" (emphasis added)

So what were the facts? Shanks' invention led to a patent for measuring activities which was later used in blood testing kits for diabetics. In June 1984 his employer, Unilever Central Resources, transferred the patent to a related company Unilever plc for a nominal consideration. After an initially slow start, Unilever plc licensed its use to various persons and derived licence royalties of around £23m [Enough to buy a reasonably good soccer star, notes Merpel, but not to pay his wages].

Having commenced proceedings for compensation under the Patents Act 1977, s.40, Shanks applied to admit a supplementary statement of case that required consideration of the true interpretation of the words 'that person'. According to the hearing officer, 'that person' referred back to a connected person, and thus referred to that specific person, modified only by considering what that specific person would have done if such a person had not been connected with the employer. He explained his reason thus:

"If a hypothetical person had been intended, the legislator could have said "a person" instead of "that person". As a matter of English, the use of the word "that" would seem to clearly indicate that the specific person previously identified is the one referred to".

He then refused the application. Shanks' appealed successfully to Mann J. The judge was asked to consider whether the 'deemed counterparty' to the hypothetical transaction was the actual counterparty with the connection element removed, but with all the other attributes of that person in place, or whether it should simply be treated as being a normal unconnected arms-length purchaser with no special attributes. In his view Parliament, in using the formulation in question, had intended to refer to a notional non-connected counterparty operating in the appropriate market at the appropriate time. That understanding was not inconsistent with the assumption, in the case of other actual transactions leading to benefits, that an employer was likely to want to exploit the patent properly and not give away its benefits, even though the words used did not impose a positive obligation on the employer to do so. The words 'that person' could not sensibly be taken as being the actual purchaser: to do so would risk introducing absurdity into the hypothesis, leading to absurdity in the result. He said:

"42. I therefore conclude that the hearing officer's final formulation of the meaning of "that person" in section 41(2) is wrong. One does not treat that person as being the precise real person with all the same characteristics (commercial warts and all) as that person has but simply without the connection. I consider that in using the formulation that it did, Parliament was, perhaps a little clumsily, intending to refer to a notional non-connected counterparty operating in the appropriate market at the appropriate time. This is not inconsistent with its assumption (in the case of other actual transactions leading to benefits) that an employer is likely to want to exploit the patent properly and not give away its benefits, albeit (as I have observed) that it did not impose a positive obligation on the employer to do that.".

Today the Court of Appeal, in [2010] EWCA Civ 1283, disagreed. Lord Justice Jacob, with whom Mr Justice Kitchin and Lord Justice Longmore noddingly concurred, said

"31. The Judge only departed from the "natural meaning" of "that person" as meaning the actual assignee because he thought it could produce uncommercial results. But that was predicated on the basis that one is to exclude the known facts about exploitation. Once one brings them in the uncommercial results fall away. And in any event the Judge's conclusion can lead to equally uncommercial results the other way [as Jacob LJ demonstrates earlier in his judgment].

32. In truth this is one of those provisions which is so ill-drafted ... that one has to be guided by its evident purpose (ascertainable from the paradigm case) to ascertain its meaning. My old head of Chambers, Thomas Blanco White QC, used to call this approach to construction of an ill-drafted provision "sewing the fly buttons on the statute"".

The IPKat wonders how many young readers are even familiar with the fly button, the cause of many a problem for whose with poor dexterity or whose fingers were numbed by lack of central heating.

Merpel notes that the term "fly buttons" has somewhat changed of late.

Old Levi's Fly Button commercial here
Lord of the Flies here

Mann interprets vegislation in blood-test patent appeal

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'Who is that person?' was the question before the court in Shanks v Unilever plc and others [2009] EWHC 3164 (Ch), a decision of Mr Justice Mann in the Patents Court, England and Wales, yesterday. This dispute involved compensation for employee inventors whose patents are particularly beneficial to their employers, a topic which is again under scrutiny (earlier this year the quantum of compensation was the subject of Kelly and Chiu v GE Healthcare, noted by the IPKat here). Yesterday's decision however hinged on the interpretation of the Patents Act 1977, s.41 which provides, in relevant part:

"An award of compensation to an employee ... in relation to a patent or an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent ...

(2) ... the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of–(a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or

(b) the property or any right in the invention; to a person connected with him

shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him".

In 1984 Shanks came up with an invention leading to a patent for measuring activities which was later used in blood testing kits for diabetics. In June of that year his employer, Unilever Central Resources, transferred the patent to Unilever plc for a nominal consideration. After an initially slow start, Unilever plc licensed its use to various persons and derived a satisfactory chunk of licence royalties in the region of £23m.

Having commenced proceedings for compensation under the Patents Act 1977, s.40, Shanks applied to admit a supplementary statement of case that required consideration of the true interpretation of the words 'that person'. According to the hearing officer, 'that person' referred back to a connected person, and thus referred to that specific person, modified only by considering what that specific person would have done if such a person had not been connected with the employer. He added:

"If a hypothetical person had been intended, the legislator could have said "a person" instead of "that person". As a matter of English, the use of the word "that" would seem to clearly indicate that the specific person previously identified is the one referred to".

He then refused the application either on the basis of treating the application as an application for an amendment which ought not to be allowed because it was unsustainable, or by the striking out of a claim that could not be maintained in law. The appellant appealed.

The issue for determination was whether the deemed counterparty to the hypothetical transaction was the actual counterparty with the connection element removed, but with all the other attributes of that person in place, or whether it should simply be treated as being a normal unconnected arms-length purchaser with no special attributes.

Mann J allowed the appeal. In his view Parliament, in using the formulation in question, had intended to refer to a notional non-connected counterparty operating in the appropriate market at the appropriate time. That understanding was not inconsistent with the assumption, in the case of other actual transactions leading to benefits, that an employer was likely to want to exploit the patent properly and not give away its benefits, even though the words used did not impose a positive obligation on the employer to do so. He added that the words 'that person' could not sensibly be taken as being the actual purchaser: to do so would risk introducing absurdity into the hypothesis, leading to absurdity in the result.

The IPKat thinks the judge got it right in terms of reaching a sensible result, but wrong in terms of imputing any sort of intention to the legislature at all. Anyone who can remember the events leading up to the inclusion of an employee invention code in the Patents Act 1977, and who can recall the reasons why it took the form it did, will know that the legislature had little or no idea what it was doing and may have passed the whole of sections 39 to 42 in a zombie-like legal vegitative state. Merpel says, is there a word for this -- vegislation, perhaps?

Blood tests here

Test your own blood here

Blood pudding recipe here

Cat blood donors here

Why do employees' inventions topics come in threes?

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Often bathed in the shade of obscurity, the subject of employees' inventions is enjoying an unusual degree of exposure at the moment.

Only last week the IPKat broke the news here of what appears to be the first court-ordered pay-out to a pair of inventors under the invention compensation provisions of the Patents Act 1977 (the unamended version, which is pretty hard to manipulate in favour of a pay-out).

Second, the IPKat has received a fresh, sparkling copy of a new book by Michael Trimborn, Employees' Inventions in Germany: a handbook for international businesses. This book, published under the Carl Heymanns Verlag imprint of Wolters Kluwer, is described by the publishers as follows:

"The economic and international property relations between German-based research and development facilities and their employees are extensively defined under German law. Businesses with R & D resources in Germany cannot afford to be less than knowledgeable in this area, particularly concerning the provisions of Germany’s Law of Employees’ Inventions.

This practical guide for professionals and managers in patent and HR departments, both in Germany and abroad, provides a quick and reliable introduction to this important law. Among the book’s very useful features are the following:

* an expert overview on all relevant practical problems which might arise from employees’ inventions in Germany;
* diagrams which visualize how service inventions are treated from the moment that they are created to the final remuneration;
* checklists that sum up in a nutshell the guidance for making decisions regarding employees’ inventions and R & D co-operations with German universities;
* forms (like “Template for Registering Inventions”) that serve as an extensive briefing for employers and can, in principle, be used worldwide, even for expatriates;
* a synoptic bilingual presentation of the text of the Act and the Official Remuneration Guidelines; and
* a glossary of essential keywords in both English and German".

The bit the IPKat found most interesting -- apart from the glossary -- is Chapter Two, which is entirely dedicated to a chart of "going rates" for inventions in different industrial or commercial sectors. Pages 7-8 also contain an extremely useful flowchart that not only explains the logical structure of the process that leads to a determination of a remuneration award but puts it within a time-frame too. The book gives little clue to the author's identity but the IPKat wonders if he is not, purr-chance, the same Michael Trimborn who happens to be a partner in the Cologne office of Osborne Clarke. The Kat thinks we should be told.

Bibliographic data: hardback, x + 186 pages. ISBN 9041128263; ISBN 13 9789041128263. Price US$119. Rupture factor: low. Web page here.

The third employee-invention event of the moment is the scholarly activity of one Hans-Christian Hausmann of Berlin, who is currently writing his PhD thesis in that fair city on "Employees' inventions in UK and Germany - a comparative study". While he has plenty of German companies to speak to, he informs the IPKat:

"I have unfortunately no contacts with British enterprises. Can you help me or can you recommend a British enterprise for my studies?The information would have only an academic character and I would treat all information received as being strictly confidential".

This member of the blog team is totally sympathetic since, researching the same topic in 1973-1975, he found it very difficult to find anyone on the industrial side who was willing to speak to him -- and he remembers with great gratitude those who eventually agreed to discuss their employee invention policies with him. If you can help Hans-Christian, please email him here and let him know.

German Employee Inventors Law: are their changes on the way?

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The eldest member of the IPKat blogging team (Jeremy) spent his formative days as a legal researcher delving into the laws relating to employee inventors. He was fascinated by the German law which, based on early 20th century collective agreements, seemed to him to resemble a vastly complicated but brilliantly balanced machine -- a machine which was almost resistant to tinkering because any one change would spoil the balance. He has now learned from a News Flash from the 24IP Law Group of Munich patent and trade mark attorneys Sonnenberg Fortmann that the German law may at last be in for a major overhaul. According to the News Flash:

"The German government is currently discussing major changes to the German Act on Employees’ Inventions to simplify and streamline the existing provisions. The most significant of the changes is the replacement of the current requirement to claim the rights to the invention by a “fictive claiming” of the inventions by the employer. The current law states that an employee must inform their employer about any invention that the employee makes. This information must be filed as an invention disclosure in writing and signed by the inventors. The employer had to actively claim the rights to this invention within 4 months from the date of receipt of the invention disclosure. Should the invention not be claimed within this time
period, then the invention becomes the inventor’s private property. He or she is
entitled to file a patent or utility model application and to license the invention to other companies (including competitors).
Once the changes become law, the employer will not longer be obliged to actively claim the rights to the invention. The rights to the invention will simply be
transferred to the employer once the four month period has expired. The risk to employers of losing their rights to the invention will be removed. The company will no longer need to monitor the deadline.
Other formal changes are also being discussed. In future it will be possible to file
invention disclosures or make other submissions in any “text form”, i.e. not just in writing with a signature. It will be possible for an employee to file an invention disclosure by email or even by mobile phone text. It will be necessary to demonstrate that the email or message was received.
The changes in the law will not remove the need to pay compensation to the inventors for use of the invention or change the method of calculating the level of reasonable compensation due.
Changes have been proposed in the past, but those proposals have found no consensus and will therefore not be introduced at this stage".

Some great German inventors here (the video console), here (the petrol powered automobile), here (the electric elevator) and here (the extraction of alumina from bauxite). The IPKat is fascinated by the notion of making invention disclosures by text message -- but Merpel says, think twice before using Skype unless you want to gift your invention to the Chinese too!