Shanks v Unilever Plc & Ors

On a renewed application for permission to bring a second appeal, the court granted permission where important provisions of the Patents Act 1977 had not previously been considered by the Court of Appeal and the proposed challenge was sufficiently arguable. The assessment of an employee invention’s outstanding benefit under section 40(1) was treated as evaluative and multi-factorial. The employer’s size and nature were relevant, but the issue whether they had produced an unduly severe assessment required consideration on the substantive appeal. The court did not decide whether the invention had in fact provided outstanding benefit.

Professor Ian Shanks claimed statutory compensation as an employee inventor after his invention for testing blood glucose was exploited through licences. The hearing officer found a benefit of about £24 million but concluded that it was not outstanding having regard to Unilever’s size and nature. Arnold J dismissed the appeal in his judgment of 23 May 2014. Professor Shanks renewed his application for permission to bring a second appeal. The central issue was whether the hearing officer and Arnold J had applied too severe an approach to outstanding benefit, particularly by giving weight to Unilever’s overall organisation and profits.

1. Permission granted. Lord Justice Floyd granted the renewed application for permission to appeal. The proposed appeal was a second appeal, and the claim had already been considered by the IPO and the Patents Court, but those matters did not prevent permission being granted.
2. Procedural context. The court noted that Rule 52.13(2) of the Civil Procedure Rules 1998 did not apply directly to the renewed application. Nevertheless, the previous consideration of the claim by specialist tribunals was material. The possibility of substantial further costs was a relevant concern, but it did not outweigh the importance and arguability of the issues.
3. Appellate restraint. The court recorded the view of Arnold J and Lewison LJ that whether an invention provides outstanding benefit under section 40(1) of the Patents Act 1977 is an evaluative judgment. Appellate courts are slow to interfere with such a judgment in the absence of a clear error of principle. The merits of the proposed challenge were not finally determined.
4. Arguable statutory issue. The applicant argued that the hearing officer had applied too severe a test by treating the benefit as insufficient in comparison with Unilever’s larger profits and organisation. The court considered that there was at least some merit in the argument, particularly because the Court of Appeal had not previously considered the relevant statutory provisions. An earlier dictum in the same litigation, Shanks v Unilever Plc [2010] EWCA Civ 1283; [2011] RPC 12, formed part of the context, but the present court did not determine the substantive meaning or application of section 40(1).
5. Directions. The question of a protective costs order was not resolved and was left for further directions after hearing counsel.

• Court of Appeal (Civil Division) — On 17 June 2015, Lord Justice Floyd granted the renewed application for permission to bring a second appeal. The protective costs order question was left for directions.
• High Court, Chancery Division (Patents Court) — Arnold J’s judgment of 23 May 2014 and related orders dismissed Professor Shanks’s appeal from the hearing officer.
• IPO hearing officer — Mr Julian Elbro’s decision of 21 June 2013 concluded that the benefit from the invention was not outstanding.