Schedule 1paragraph 9, sub-paragraph (4) Section 10 – Compensation of employees for certain inventions
61.Section 40 of the 1977 Act provides for compensation to be awarded to employee-inventors in certain limited circumstances. The invention must have been patented, and must belong to the employer (or rights in the invention or the patent must have been assigned to the employer by the employee). Furthermore, the existing section 40 requires the employee to show that the patent for the invention has been of “outstanding benefit” to the employer (or in the second case that the benefit to the employee is inadequate in relation to benefit derived by the employer from the patent). Thus compensation cannot be awarded unless it is shown that the benefits in question result from the invention having been patented, rather than merely from the intrinsic merits of the invention itself: see the judgment of the Patents Court in Memco-Med Ltd’s Patent [1992] RPC 403.
62.Subsections (1) and (2) provide a limited extension of the scope to claim such compensation, by substituting a new section 40(1) (and making a corresponding change to section 40(2)(c)). Although, as before, compensation may be awarded only in respect of inventions which have been patented, it will no longer be necessary to show that the benefit in question flows from the patent itself (as opposed to the invention). Such benefits flowing from the patent will continue to be taken into account; however, if the invention has been beneficial for other reasons, those benefits may now also be taken into consideration. What constitutes an outstanding benefit will continue to depend on such factors as the size and nature of the relevant undertaking, which may be the whole or a division of the employer’s business.
63.Subsections (3) to (5) make consequential changes to section 41, which lays down how the amount of compensation awarded under section 40 is to be assessed. Subsection (6) makes consequential changes to section 43.
64.Subsection (7) ensures that, for the purposes of assessing benefits under section 40(1) or (2), and for the purpose of calculating the amount of compensation under section 41, those benefits which arise after the relevant patent has ceased to have effect (whether by expiry, surrender or revocation) cannot be taken into account.
65.Subsection (8) is a transitional provision which ensures that the amended provisions do not apply to existing patents, nor to a patent for which an application is made before the amendments come into force.