Liffe Administration and Management v Pinkava & Anor

Under section 39(1)(a) of the Patents Act 1977, an employee’s duties must be determined realistically. They may evolve through the parties’ conduct and need not be confined to everyday work or the initial written contract.

The reasonable-expectation requirement is objective. It asks whether an invention might result from carrying out those duties. The employer need not have expected the particular invention, a similar invention or a solution directed to a pre-identified aim. The majority held that the employee’s known abilities may form part of the circumstances, provided the expectation arises from performing the duties rather than merely from possessing those abilities.

An employee responsible for developing new products for a financial-futures exchange devised systems enabling swaps and related financial instruments to be traded through an exchange’s existing infrastructure. He filed four United States patent applications and claimed ownership of the inventions.

Kitchin J held in [2006] EWHC 595 (Pat) that the inventions fell outside the employee’s normal duties but arose from duties specifically assigned to him. The circumstances were also such that an invention might reasonably be expected to result. The judge therefore declared the employer to be the owner.

The employee appealed. The employer challenged the finding concerning normal duties by respondent’s notice. The principal questions were whether the inventions arose from normal or specifically assigned duties and whether the reasonable-expectation condition in section 39(1)(a) of the Patents Act 1977 was satisfied.

1. Appeal dismissed. The inventions belonged to the employer under section 39(1)(a) of the Patents Act 1977. The Court of Appeal differed from Kitchin J by holding that the inventions were made in the course of the employee’s normal duties. If that conclusion were wrong, the Chancellor and Longmore LJ would also have upheld the finding that they arose from specifically assigned duties.

2. An employee’s normal duties are not limited to ordinary, everyday or primary tasks. Their principal source is the employment contract, including terms implied by law, but the contract may evolve through the conduct of employer and employee. Extra duties can therefore become normal duties through a continuing process of variation. The relevant duties must be assessed realistically at the time of the invention.

   By July 2004, developing an exchange-tradable credit derivative had become part of the employee’s normal duties. The project remained active and was not confined either to a conventional future or to a business-as-usual solution.

3. The reasonable-expectation condition is an objective test applied after identifying the normal or specifically assigned duties. It does not require the actual invention to resemble what was expected, solve a pre-identified problem or further the particular aim towards which the employee’s efforts were directed. It is enough that an invention might reasonably be expected to result from carrying out the relevant duties. The novelty or scale of the actual invention does not prevent the condition from being satisfied.

4. The Chancellor, with Longmore LJ agreeing, held that the particular employee’s known intellectual and inventive abilities were relevant circumstances. The expectation must nevertheless arise from his performance of the duties, rather than merely from his personal abilities. Jacob LJ disagreed on this point. He considered that ownership should not vary with the employee’s individual brilliance, but agreed that the difference did not affect the result.

5. The condition was satisfied for all the related inventions, including the credit-derivative, interest-rate-swap and pooled-bank-deposit applications. They flowed from an interconnected system developed while performing the employee’s innovation duties.

1. Court of Appeal (Civil Division): Dismissed the employee’s appeal in [2007] EWCA Civ 217. It upheld the employer’s ownership, although on the primary ground that the inventions arose in the course of the employee’s normal duties.
2. High Court, Chancery Division (Patents Court): Kitchin J held in [2006] EWHC 595 (Pat) that the inventions arose from specifically assigned duties and that an invention might reasonably be expected to result. He declared the employer to be the owner and dismissed the employee’s application for a declaration of entitlement.