The UK’s highest court has awarded £2m compensation to a scientist over diabetes technology he came up with while working for Unilever in the 1980s.
Although Professor Ian Shanks accepted that the rights to his device for testing blood sugar levels belonged to Unilever, the Supreme Court agreed that he was still entitled to share in the profits from it.
Judge Lord Kitchin said Prof Shanks’ electrochemical capillary fill device technology (ECFD) was something that many companies operating in the medical area were willing to pay millions of pounds to use and had provided his former employer with “outstanding benefit”.
Intellectual property resources
Contract clause on protection of intellectual property rights for employees
Contract clause on protection of intellectual property rights for third parties
The rewards Unilever enjoyed, the court ruled, “were substantial and significant” because the ECFD technology is now being used in most glucose testing products and Prof Shanks was entitled to a “fair share” of the company’s net benefit of around £24m from patents.
Unilever’s rewards were, said the court, “generated at no significant risk, reflected a very high rate of return and stood out in comparison with the benefit Unilever derived from other patents”.
Prof Shanks had initially applied for compensation in 2006 but lost each step of his legal battle until it reached the Supreme Court. Lord Kitchen stated that Unilever did “relatively little” to develop Prof Shanks’ invention until the late 1980s, when more research into glucose testing was carried out and the company obtained additional patents.
Prof Shanks, now retired, had argued at an earlier hearing that although Unilever ultimately received around £24m from the patents, the company could have earned royalties for “as much as one billion US dollars” had his invention been “fully exploited”.
A Unilever spokesperson said: “We are disappointed with the decision to overturn the previous three judgments and award Dr Shanks a share of the licence revenue obtained by Unilever in addition to the salary, bonuses and benefits he was compensated with while employed to develop new products for the business.”
The Supreme Court ruling is significant in that most intellectual property rights contract clauses specify that the employer owns all such rights to the fullest extent permitted by law. The employee assigns all rights, title and interest in existing and future intellectual property rights. The employee in essence divests all legal and beneficial ownership in the intellectual property rights in the employer and waives all moral rights arising anywhere in the world to the fullest extent permitted by law.
“The appeal raises important issues concerning the circumstances in which such compensation may be awarded and how the amount of that compensation is to be determined,” said Judge Lord Kitchin.