Liffe Administration and Management v Pinkava & Anor Rev 1

Under section 39(1)(a) of the Patents Act 1977, an employee’s invention belongs to the employer where it was made in the course of normal duties or specifically assigned duties, and the circumstances were such that an invention might reasonably be expected to result. The statutory requirement is not satisfied merely because some invention might result from the employee’s activities. The invention must also be connected with the duties being performed. However, the invention need not achieve only the particular aim initially contemplated. A sufficiently broad assigned task may encompass a more fundamental or different solution to the problem, provided it arose in the course of carrying out that task.

LIFFE sought declarations that it owned inventions devised by Dr Pinkava concerning systems for trading credit derivatives, interest rate swaps and inter-bank loan transactions on an exchange. Dr Pinkava had been employed in LIFFE’s Interest Rate Product Management team. He argued that the inventions fell outside his normal duties, were not within the specifically assigned project to develop a credit derivatives future, and were not inventions that could reasonably have been expected to result from his duties.

Dr Pinkava had also commenced proceedings under section 12 of the Patents Act 1977 seeking a determination of ownership and entitlement to apply for patent protection. The central issue was whether the inventions belonged to LIFFE under section 39(1)(a).

1. Ownership. LIFFE’s claim succeeded. The proceedings commenced by Dr Pinkava were dismissed.

2. Dr Pinkava’s normal duties included developing new futures and options within the Interest Rate Product Management team, but did not extend to creating wholly different products such as over-the-counter swaps for exchange trading. The inventions therefore did not belong to LIFFE by virtue of his normal duties alone.

3. The project assigned to Dr Pinkava in December 2003 was to investigate and develop an exchange-tradable credit derivative. References to a “business as usual” solution and to a “future” did not restrict the assignment to a conventional futures contract. The terms were used in a broader commercial context, and the project remained live when the inventions were made.

4. The CDS and CIS inventions were made in the course of the specifically assigned duties. The related inventions concerning interest rate swaps, overnight index swaps and inter-bank loan transactions also arose from the same inventive ideas and were treated as part of the same assignment.

5. The requirement that the circumstances be such that an invention might reasonably be expected to result was satisfied. LIFFE had an established interest in developing new products and systems. Dr Pinkava’s duties required creativity and product development, he was recognised as technically able and innovative, and the assigned problem had no obvious solution. The exceptional size or originality of the invention was not determinative.

6. The approach in Harris’ Patent [1985] RPC 19 was accepted insofar as section 39(1)(a) does not cover any invention whatsoever. However, the specific formulation concerning the aim or object of the employee’s efforts had to be read in context and did not replace the statutory test.