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Patents - Law on Employees' Inventions - United Kingdom

In general, inventions made by employees during their usual duties and employed in the UK will belong to the employer. As such, the employer will generally own the invention and have the right to exploit the invention howsoever it wishes, without requiring an assignment from the employee, or having to pay additional compensation to the employee.  Ownership applies to foreign patents as well as UK patents. However, if a patent is granted to the employer, and the invention is judged by a Court or the Comptroller of Patents to be of outstanding benefit to the employer, the employer may have to pay additional compensation to the employee.

This article sets out the key rules and considerations relating to employee inventions in England and Wales.


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-When does the law on employees' inventions apply?

Inventor

When determining questions of ownership relating to employees' inventions, it is necessary first to determine the identity of the "inventor". The PA 1977 gives very little guidance beyond stating that the inventor is "the actual deviser of the invention"*.  This has been explained by the courts as requiring consideration of what the inventor's concept, or heart of the invention, is and then assessing who contributed that.

Employee

An "employee" is defined in the PA 1977**  as "a person who works or (where the employment has ceased) worked under a contract of employment or in employment under or for the purposes of a government department or a person who serves (or served) in the naval, military or air forces of the Crown".

The rules on employees' inventions in the Patents Act do not apply to non-employees.  Thus, inventions made by consultants, directors, contractors or other third parties are not caught by these provisions. Thus, if the company wishes to retain ownership of inventions made by such persons, appropriate contractual arrangements must be made to ensure ownership is assigned to the company.

It should also be noted that there is a territorial restriction on these rules: they apply only to employees "mainly employed" in the United Kingdom at the time the invention was made. 

*  ss7(3) PA 1977

*ss130(1) PA 1977 



-Who becomes owner of employee inventions?

The statutory rules for determining ownership of employees' inventions are set out in sections 39 to 43 of the Patents Act 1977 (click for link)   (as amended) (the "PA 1977").

Section 39  of the PA 1977 (click for link) sets out the general assumption that employee inventions shall be taken to belong to the employer provided certain conditions are met, such as the invention being made during the course of the employee's normal duties, or where the employee had a special obligation to further the interests of the employer's undertaking.  

Any other inventions made by the employee shall be taken to belong to the employee*.

It is a question of fact as to whether the invention was made in circumstances which would fall within the scope of these provisions. Thus, it is generally advisable that individuals who have made an invention, and in particular, those individuals who are not specifically employed to invent (pursuant to section 39 of the PA 1977), should be asked to enter into an assignment agreement to transfer the rights in the invention to the employer. This should be done prior to any patent applications being filed.

* ss39(2) PA 1977 



-Which duties do employers have in relation to employee inventions?

The employer is under no obligation to file a patent or to protect an employee's invention in any other way.


-Is the employee inventor entitled to additional remuneration?

Under certain circumstances, a Court or the Comptroller of Patents may award an employee additional remuneration for an invention. The employee must apply to the Court or Comptroller of Patents for compensation during the period from grant of the patent to one year after it ceases to have effect, or within six months of any application to restore the patent has been refused.  

In order for an award to be made, the Court or Comptroller must decide that (1) the patent is of outstanding benefit to the employer; and (2) it is just that the employee should be granted additional compensation.



-How is the remuneration calculated?

The amount of remuneration awarded is determined in accordance with s41 of the PA 1977. The sum shall be such as to give the employee a fair share (having regard to all circumstances) of the benefit which the employer has derived or may reasonably be expected to derive from the patent.


-Are contractual agreements possible?

It is not possible for individual employers and employees to contract out of these provisions.  It is possible to compromise a claim, but not to do so in the case of prospective inventions.


-Procedural issues

The question of ownership of employees' inventions generally arises during entitlement disputes. An employee who wishes to claim ownership of an invention made during the course of their employment must make an application to the Comptroller in accordance with the relevant provisions of the PA 1977 .

An employee seeking additional compensation for an invention which belongs to the employer and which has given rise to a patent application of outstanding benefit to the employer must submit an application on Patents Form 2/77 within one year of the patent ceases to have effect.



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