IP P®OSPE©TIVE

Last week, a landmark decision in a Patent Court in England finally broke ground for employee inventors in the UK trying to receive royalties for their inventions’ added value.  The case, Kelly and Chiu v GE Healthcare Ltd [2009] EWHC 181 (Pat), enforced provisions of UK patent law that had been introduced over thirty years ago and amended recently to add teeth.  Specifically, the provision provides for employee inventors to receive compensation for a patent’s added benefit to corporate value.  As IPKat reports, the decision broadened application of the provision to read that an employee need only prove that the invention added outstanding benefit to the company, and not the patent.  The plaintiffs in the UK case received a combined £1.5M out of the estimated £50M value of the invention. 

This decision raises some interesting questions with respect to comparable U.S. law.  (I posted recently about the difficulty of university employee scientists to finance, and reap the benefits from, their own inventions.  And from the perspective of the employer, I wrote an article for this month’s issue of the Corporate Counselor regarding the legal and business issues associated with employee-created IP).  Generally, employee inventors in the U.S. don’t have these rights.  There are provisions in the Bayh-Dole Act requiring entities receiving federal funding to distribute royalties to employee inventors, but these provisions don’t have any teeth for said employees to use in a private cause of action.  Meanwhile, countries such as Germany and Japan have laws requiring remuneration for employee inventors.  The UK decision will have a significant impact on employment negotiations there, forcing UK companies to create compensation schemes.  Employee inventors will have a greater bargaining position at the table.  In the U.S., while many smart companies have compensation schemes because they recognize the importance for incentivizing innovation and creative employee productivity, most of the schemes only afford such compensation to “patents”, and not “inventions” or other forms of intellectual assets.  As I have asserted before, I believe it is important to afford some remuneration to employees for thinking outside the box and adding value to companies where value did not previously exist.  Therefore, I will keep an IP Prospective earmark on the issue in the UK to follow its progress and its possible implications on U.S. business and law.