HOW TO PROTECT YOUR IP

The final note in our series contains general comments on some steps which can be taken to maximise the prospects of ensuring inventions created by employees, belong to your company. We would be delighted to offer more tailored advice to suit your company’s needs should you require that.

If you missed Part 1 you can read it here and if you missed part 2 you can read it here.

Background

One way of ensuring your company's IP is protected is to ensure that any new and novel inventions are subject to patent applications in the name of the company.  Once granted, a patent allows the owner to prevent others from making, using, offering for sale, selling, or importing the claimed invention, without consent.

As an example, the oil and gas sector is one where novel ideas and technology enable differentiation from the competition.  Companies pay significant salaries to highly-skilled employees with technical expertise in providing cutting-edge solutions to new ideas. As a result of this kind of work, it is to be expected that employees such as these, will create inventions which are capable of being patented. The key question then is: who owns that invention, and any resultant patent?

The position under patent law

The answer can be found in the Patents Act 1977. Section 39 of the Patents Act provides that such inventions belong to the employer if:

• it was made in the course of the normal duties of the employee or…[duties] specifically assigned and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of these duties; or
• the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of these duties and the particular responsibilities arising from the nature of his duties, the employee had a special obligation to further the interests of the employer’s undertaking

What are "normal or specific duties of employment"?

The answer of what could be considered the normal course of duties of an employee, will vary from case to case.  Clearly, the better defined an employee’s duties are, the easier it will be for the employer to prove that they own the invention. There is case law to suggest that normal duties of employment do not require to be defined. However, it should go without saying that it is preferable to define and agree the scope and duties related to an employee’s role at the outset of employment, than seeking to retrospectively argue that an invention came within an employee’s perceived duties.

The law also acknowledges that an employee’s duties can vary and evolve over time, perhaps as an employee becomes more experienced or receives more responsibility.

For those employed in inventive or creative roles within the company, it would be easier to argue that an invention might reasonably be expected to result from the employee carrying out their duties. However, for those not in such roles, a possible way to ensure that such inventions belong to the employer would be to define any specific duties of employment, which might result in patentable inventions.

When does a "special obligation" arise?

The second part of section 39 also provides some comfort for employers, particularly where certain kinds of employees do not fall within the “normal” or “specified” course of duties section.

The types of employees who could owe a “special obligation” to their employer are those who are charged with furthering the employer’s business interests, such as company directors. The more senior, the more likely an employee shall be held to owe such a “special obligation”.

Compensation for "outstanding benefit"

It is also worth noting that even if the invention is held to belong to the employer, an employee may still be able to make a claim under section 40 of the 1977 Act. This allows for compensation to be payable where the invention can be said to be of “outstanding benefit” to the employer.

Whether or not the invention is of outstanding benefit will be decided on a case by case basis and regard will be had to (i) the nature of the invention, (ii) the size and nature of the employer’s undertaking (iii) the salary/ other remuneration of the employee and (iv) the commercial benefit to the employer as a result of the invention.

The test for claiming compensation under this section of the 1977 Act is a high one. It would have to cover an invention which offered substantially greater than the normal benefit an employer would gain from an invention.

Some suggestions for your company to ensure inventions created by employees for the benefit of the company belong to the company, are set out below:

• Define duties
  Try to capture an employee’s “normal” and “specified” duties in both the contract of employment and job specification. Keep the “normal” duties broad and wide- ranging (whilst ensuring they are still relevant to the role) and use “specified” duties to firm up the broader duties;
• Regular review of documentation
  Keep all duties of employment under review and update job descriptions (as opposed to the contract of employment) to take account of new technology and/ or added responsibility given to employee. However, keeping the duties sufficiently broad, should ensure such reviews are normally only required once per year;
• “the special one”
  If the employee is one who may owe a “special obligation” to their employer, make that explicitly clear in the contract of employment and job description;
• Seek early employee engagement in patent applications
  If an invention is likely to be the subject of a patent application, act early and gain employee co-operation whilst they are still employed by the company; and
• Employee declarations
  The use of a signed declaration which makes clear that the employee confirms that the invention was created (i) during the course of normal duties of employment (ii) during the course of specific duties of employment or (iii) the employee’s role is such that they owe the employer a special obligation, which means the invention belongs to the employer. Tying such a declaration to the wording of the 1977 Act is recommended.