Kelly & Anor v GE Healthcare Ltd

Under section 40(1) of the Patents Act 1977, an employee inventor may obtain compensation where the employer owns the patented invention, the patent has been of outstanding benefit, and an award is just.

“Outstanding” means something special or out of the ordinary. The patent need not be the sole or dominant cause of the benefit. It is sufficient that it made a genuine causal contribution, although the benefit may require apportionment between several causes. Regulatory data exclusivity is not “other protection” within section 43(4), because it does not confer monopoly protection for the invention.

Where the threshold is met, compensation is assessed under section 41 by securing a fair share of the benefit derived from the patent. Valuation is ordinarily ex post and may take account of commercial benefits beyond product sales.

The claimants were research scientists employed in Amersham’s healthcare division. They were named as inventors of two patent families covering technology used in the Myoview radiopharmaceutical, later marketed by the defendant, GE Healthcare Ltd.

They sought compensation under section 40(1) of the Patents Act 1977, alleging that the patents had been of outstanding benefit to their employer. The principal issues were whether the inventions belonged to the employer, whether the patents had caused an outstanding benefit, whether it was just to make an award, and how any compensation should be valued and divided.

1. The claimants were actual inventors within section 7(3) of the Patents Act 1977. Their inventions belonged to the employer under section 39(1), since they were made in the course of duties from which inventions might reasonably be expected to result.

2. Under the unamended section 40(1), it was the benefit of the patent, rather than the benefit of the invention or product sales as such, which had to be outstanding. “Outstanding” meant something special or out of the ordinary, more than substantial, significant or good, but it did not require an unsurpassable benefit.

3. The court should ordinarily compare the employer’s actual position with the position it would have occupied had the patent not been granted. The patent need only be a cause of the benefit. Multiple causes did not exclude the benefit from consideration, although apportionment might be necessary. The patent’s contribution could include protection against generic competition and increased attractiveness in major corporate transactions.

4. “Other protection” in section 43(4) meant other monopoly protection. Regulatory data exclusivity did not protect the invention or confer monopoly rights and therefore did not fall within the expanded meaning of “patent”. Nevertheless, its practical effect in delaying generic competition was relevant to valuation.

5. The requirement that it be just to make an award prevented an automatic approach, but did not impose a separate requirement that the employee prove financial loss, inadequate remuneration, or effort beyond the call of duty. Those matters were relevant to the fair-share assessment under section 41(4).

6. Section 41 required an award securing a fair share of the benefit derived, or reasonably expected to be derived, from the patent. The valuation was to be conducted ex post, in light of available evidence of actual benefit, rather than by a hypothetical ex ante royalty for the bare invention.

7. Having regard to the patents’ protection against generic competition, their contribution to corporate deals, and the size and nature of the employer’s undertaking, the patents had been of outstanding benefit and it was just to make an award.

8. The benefit was conservatively valued at £50 million. A fair share was assessed at 3 per cent, divided between the inventors as £1 million for Dr Kelly and £500,000 for Dr Chiu. The court made a once-and-for-all award and directed the parties to agree a minute of order.