On 11 February 2009, the High Court handed down an unprecedented decision in the case of James Duncan Kelly and Kwok Wai Chiu v GE Healthcare Ltd  EWHC 181 (Pat). The case is significant as it is the first time that compensation has been awarded by a court to inventors for their involvement in the creation of a highly successful invention for their employer.
The claimant research scientists co-invented Myoview whilst employed by the defendant. Myoview is a medical imaging product which highlights reduced activity in the heart.
Generally, an invention made by an employee in the course of his employment vests in his employer. However, the Patents Act 1977 entitles employee inventors to compensation where a patent is of 'outstanding benefit' to the employer.
The court set out the key requirements for an award of compensation to employee inventors under the 1977 Act:
- the inventor must be the 'actual deviser' of the invention, not a mere contributor;
- the patent must be a cause of 'outstanding benefit' to the employer. 'Outstanding' means 'something special', or 'out of the ordinary' and is more than 'substantial', 'significant' or 'good'; more than one would normally expect to arise from the employee's paid duties;
- in assessing whether a benefit is 'outstanding' it will normally be of use to compare the likely position of the business had the patent not been granted;
- it must be just to make an award of compensation. However, the employee is not required to show a loss or the expenditure of effort and skill beyond the call of duty.
The court decided that the patents were of outstanding benefit to the defendant, based in particular on the facts that the patents were worth at least £50 million to the defendant and had been a crucial factor in securing corporate mergers and acquisitions for the company.
Value of the benefit
The court stated that an employee's share of the benefit could, in principle, range from zero to 33%. The appropriate percentage in this case was 3%, divided 2% (£1 million) for Dr Kelly and 1% (£500,000) for Dr Chiu. The court took into account a number of factors in calculating the amount of compensation due to the claimants:
- the claimants' careers had already benefited from their association with Myoview;
- the level of effort and skill which the employees had devoted to the invention of Myoview was high;
- the contribution of the defendant was significant in terms of assumption of risk and provision of facilities among other things.
As the patents were registered before 1 January 2005, the relatively strict test under the Patents Act 1977 was applied. The Patents Act 2004 has lowered the hurdle in relation to patents registered after 1 January 2005; an employee will be entitled to compensation if (s)he can show that the patent, the invention, or both, are of outstanding benefit to the employer.
Businesses may see an increase in claims being brought by employees who have developed highly successful inventions for their employer. The decision could also lead to reduced co-operation amongst employee inventors and reluctance to work on projects that are unlikely to result in a significant invention. Employers cannot contract out of the compensation provisions but can put in place a voluntary compensation scheme which will often reduce the risk of disputes.