Shanks v Unilever – Compensating employee inventors
The Supreme Court recently gave its judgment in the long-running employee compensation case of Shanks v Unilever.
As the government furlough scheme comes to an end in September 2021, and with employers now having to make a larger contribution to employees’ wages, it is likely that companies and employees will now have to start making some tough decisions about the future. As part of any restructuring exercise, the question of the ownership of IP assets is crucial. Getting this right can increase the attractiveness of the company to new investment or ease a divestment of a department or product line.
The following specific areas should be reflected upon, as part of the process.
These should contain provisions which clearly set out the employee’s obligations and the employer’s rights in relation to IP. It might be worth having these checked over by a commercial solicitor and IP specialist now, to ensure that there are no obvious loopholes which can be exploited by an employee in the future, after they depart from the company.
You many need the cooperation of employee inventors in relation to patent applications. They may need to sign various documents, and this should ideally be done before their departure from your company. If you sense that an employee inventor may be about to leave your employment and there are recent patent applications on file for which they are named as inventor, do notify your patent attorney, so that they can ensure they have all the relevant signed paperwork, well in advance of any inventor employee leaving your employment.
A lot of the know-how associated with how a business is run is not protected through registered IP rights and keeping those matters secret will be the only way they can be protected. So, particularly at this time, consider carefully who in your business should have access to your data and know-how.
Reducing your headcount may mean that certain functions are outsourced to third parties. Much outsourcing takes place either without a formal contract, or under ‘standard’ terms and conditions the contractor will impose on their client unless they negotiate a different arrangement. Be aware that in the absence of agreement to the contrary, the contractor may end up owning copyright and design rights and may be held to be the owner of inventions they create on your behalf. Their situation is markedly different to the position applying for employees, where inventions, copyright and design rights are generally held to be owned by the employer, if produced while the employee is under a contract of employment.
So, when dealing with contractors, we strongly recommend you always have a contract in place and that you review any terms and conditions or contract you are asked to sign extremely carefully, negotiating changes to the contract as necessary. You should also aim to get documentation, such as a confirmatory assignment, in place and signed in relation to IP which passes from the contractor to you, particularly because contractors are likely to move on from projects more quickly than employees and become more difficult to contact.
If you have not sought to register your trade marks, a disgruntled employee can cause quite a lot of havoc for your business by registering your brands as trade marks before you have managed to do so. Trade mark registrations are powerful commercial weapons considering their relatively modest cost, particularly given that they are often used as a basis for ‘take down’ notices submitted through on-line trading channels such as Amazon and eBay. Putting in place your own trade mark registrations as early as possible is important at any time, but doubly so in a commercial environment which will see increasing employee turnover.
Note that in the field of patents, employees can be entitled to additional payment, over and above their salary, if a patent in relation to which they are the inventor is held to provide a particular benefit to the employer as patent owner, or to the employer as assignee or exclusive licensee of a patent owned by the employee inventor.
If you are in the fortunate position of owning a patent or having an exclusive licence under a patent which has provided or is likely to provide particular benefit to your organisation, we recommend you review the takeaway points from the Shanks v Unilever dispute discussed in our article here.
At Wilson Gunn, we help businesses to protect their valuable intellectual property. For further information about managing your intellectual property get in touch to speak to one of our attorneys.