Inter-company transfer does not defeat employee right. Shanks v Unilever plc

The Patents Act 1977 normally provides that an employee who creates Intellectual Property (IP) as a result of their work for their employer does not own the IP thus created. Although the patent rights will remain with the employer, the employee is able to claim compensation where these confer a ‘substantial benefit’ on the employer.

Recently, industrial giant Unilever faced a claim from an employee under the Act. The patent concerned had been transferred from one member of the Unilever group, for whom the man who had created the IP worked, to another. The sum paid for the transfer was £200. Years later, the second company began to earn very substantial sums from the patent rights. Unilever argued that the sale of the patent rights from one company to another meant that no payment was due to the employee. Whilst agreeing that a strict reading of the law led to that interpretation, the High Court ruled that this could not have been the intention of Parliament. The employee was entitled to compensation.

	News & Events	The Patents Act 1977 normally provides that an employee who creates Intellectual Property (IP) as a result of their work for their employer does not own the IP thus created. Although the patent rights will remain with the employer, the employee is able to claim compensation where these confer a ‘substantial benefit’ on the employer. Recently, industrial giant Unilever faced a claim from an employee under the Act. The patent concerned had been transferred from one member of the Unilever group, for whom the man who had created the IP worked, to another. The sum paid for the transfer was £200. Years later, the second company began to earn very substantial sums from the patent rights. Unilever argued that the sale of the patent rights from one company to another meant that no payment was due to the employee. Whilst agreeing that a strict reading of the law led to that interpretation, the High Court ruled that this could not have been the intention of Parliament. The employee was entitled to compensation. Back to top

Back to top