Shanks v Unilever – again – but this time before Justice Arnold
Professor Shanks, who was employed by Unilever UK Central Resources Ltd from 5 May 1982 to 3 October 1986, has failed in his recent appeal against the Comptroller of Patents decision as to whether his patents were of ‘outstanding benefit’ to Unilever, and therefore failed in his claim for compensation pursuant to section 40 of the Patents Act 1977. It seems that in spite of the benefit to the company of the Shanks’ patents (being in the sum of £24m), in the larger scheme of things, and the size of Unilever generally, this contribution to Unilever’s bottom line, was something of a drop in the ocean.
Professor Shanks had assigned his rights in the inventions (related to an Electrochemical Capillary Fill Device, an ECFD) – which were inventive in the blood glucose testing field, and were assigned by confirmatory patents to the company by the inventor in 1985 and 1990. It was common ground that the inventions belonged to Unilever as employer pursuant to section 39 of the Patents Act 1977.
This latest Shanks v Unilever case is an important addition to the paucity of cases examining the operation of the Patents Act 1977 sections 39 to 41 in respect of employee contributions. Prior to this recent case, it is arguable that GE Healthcare v Chiu was the single authority on the operation of sections 39 to 41 of the Act.
(Unilever) too big to pay?
On preliminary view, Justice Arnold – appears to answer his own ironic question at the subject heading above his paragraph 67, (at paragraph 65, quoting from the Hearing Officer’s decision at paragraphs 222 and 223) and does appear to support the Hearing Officer’s basic conclusion at 222 which was:
‘But Unilever makes profits at an order of magnitude greater on other inventions – albeit primarily by manufacture and at a much lower rate of return than was provided by the Shanks patents. Further, this is not such a case as Kelly, where Floyd J held that without the patents in that case, Amersham would have faced a crisis. There was no suggestion from either party that the Shanks patents were crucial to Unilever’s success.’
The coup de grace was delivered by the Hearing Officer at paragraph 223:
223. In my view, taking account of the size and nature of Unilever’s business, the benefit provided by the Shanks patents falls short of being outstanding.”
Although Justice Arnold at paragraph 71 emphasises that a multi-factorial test is what has been upheld, on another reading, cynics might be left unpersuaded by this, and that Unilever only succeeded because their economic clout did indeed make them ‘too big to pay’. This aspect of the Judgment requires closer reading to be sure.
The GE Healthcare decision and the reference by Justice Floyd to Universities paying researchers’ one third exploitation income
There is insufficient space here to explore the decision in GE Healthcare, but it serves as a useful hook to emphasise that prior to this Arnoldian decision, the lead authority for employee compensation pursuant to sections 39 to 41 of the Patents Act 1977 was arguably the GE Healthcare decision. The ‘comparables’ and discussion in that case perhaps rightly concentrated on what Dr Chiu and his colleagues would have received were they University researchers who invented, and were employee inventors constrained by section 39. The reader can revisit Justice Floyd’s judgment using the link below.
There is now in most ‘remuneration’ cases, always ‘an issue as to unjust enrichment’, in this case neatly closed off by Justice Arnold, as too lofty a cause for inclusion in the statutory compensation provided in the 1977 Act (see paragraphs 32 to 43 and his analysis of Sempra Metals  UKHL 34, that although that case had generally recognised a right to recovery of sums made by mistake of law – ground-breaking to run alongside recovery of sums for causative mistakes of fact, and the right to claim compound interest, unjust enrichment in Sempra was only generally nodded to, but as a high level principle that the time value of money (or a right to interest) was generally recognised. But not here, alas.