Patents and Employees

30 April 2010

Patents and Employees

Overview

As with all types of intellectual property, there is always the question of who owns the rights to something that has been created in the course of employment. With copyright and designs it is clear that the employer will own the rights to everything created in the course of employment by an employee.

So what happens if a person invents something in the course of their employment which goes on to be patented?

Section 39(1) of the Patents Act 1977 states that if an employee creates an invention whilst in the course of his employment, the resulting patent will belong to the employer. However the invention must have been made in the normal/ usual duties and if it was reasonably expected or acknowledged that such inventions would/ could result from the usual duties of the employee. This is also the case if the inventor owes the employer a duty of care which is often the case when considering inventions by Directors of a company.

Quite simply if an employee works for a car manufacturer and invents a new kitchen appliance at home, this will not likely fall within section 39(1) of the Patent Act. However if the same inventor invented a more efficient fuel system for a vehicle this would likely fall under the Act and the invention and resulting Patent would be owned by the Employee.

Compensation

Whilst an invention made during the course of employment will likely belong to the employer, there are provisions in the Patents Act to reward inventors in such situations.

Section 40 of the Patents Act 1977 states that an employee who invents something may be entitled to compensation if;

(a) if the patent is an outstanding benefit to the employer given consideration to the size and nature of the business;

(b) compensation is just.

It can often be difficult to establish the above and to derive a perceived benefit on the employer. If it is considered just then the amount of compensation will depend on various factors including how beneficial the patent is to the employer, the size of the employer and the nature of the employees work including pay.

Whilst the Patents Act does not allow for opting out of such provisions, any employee worried about the rights of an invention created when an employee could request that their contract clearly sets out what duties they hold and what types of inventions (if any) they would be expected to create. This then allows clarity when considering what has and what has not been invented in the course of employment.

Jody Tsigarides is a commercial solicitor who specialises in intellectual property law.

jody.tsigarides@lawdit.co.uk