PA 40 & 41 - Compensation of employees

Question 1

What are S40 and S41

Answer 1

S40 Compensation of employees
S41 Amount of Compensation

Question 2

What is S40(1)

Answer 2

S40(1)
IF, while a patent is in force, or WITHIN ONE YEAR of its lapse, an employee makes an application for compensation, and:
a) a patent has been GRANTED for an invention made by the employee and belonging to the EMPLOYER, and
b) the INVENTION AND/OR PATENT is of OUTSTANDING BENEFIT to the employer (factoring in the size/nature of the company), and SO
c) it is JUST that the employer compensates the employee,
THEN
the court or the comptroller MAY award compensation to the employee according to S41

Question 3

What is S40(2)

Answer 3

S40(2)
IF, while a patent is in force, or WITHIN ONE YEAR of its lapse, an employee makes an application for compensation, and:
a) a patent has been GRANTED for an invention made by the employee AND belonging to the EMPLOYEE themselves, and
b) it is assigned or exclusively licensed to the EMPLOYER, AND
c) the benefit to the employee is INADEQUATE in relation to the benefit to the employer of the INVENTION AND/OR PATENT
d) it is JUST that the employer (further) compensates the employee,
THEN
the court or the comptroller MAY award compensation to the employee according to S41

Question 4

What is the difference between S40(1) and (2)

Answer 4

S40(1) deals with when the patent belongs to the employer (i.e. via s39(1))
S40(2) deals with when the patent is assigned or exclusively licensed to the employer (i.e. via S39(2))

Question 5

When do S40(1) and (2) not apply

Answer 5

S40(3)
Subsections (1) and (2) do NOT apply if the employee is in a trade union that has negotiated a pay settlement regarding such inventions

Question 6

What happens to previous contracts or agreements re S40

Answer 6

S40(4)
Subsection (2) overrides any contract or agreement, except re (3) relating to the invention

Question 7

Who deals with matters under S40

Answer 7

S40(5)
Either the Comptroller, or the Comptroller can pass the issue to the courts

Question 8

What does benefit means re S40

Answer 8

Benefit means in money or money’s worth (S43(7))

Question 9

What does outstanding benefit mean re S40

Answer 9

Not merely substantial, but out of the ordinary

Question 10

What can be taken into account for outstanding benefit S40

Answer 10

Future benefit is NOT included
Foreign rights can be taken into account (s43(4))
Must factor out contributions of adverts, and other features etc, in sales
Should be ACTUAL benefit, not theoretical (Unilever v Shanks)

Question 11

Where is the burden of proof for S40

Answer 11

Onus is on the applicant for compensation i.e. the employee to proved it is outstanding
and it is VERY hard, with very few successful applications

Question 12

Does the size of a company matter for S40

Answer 12

Yes, benefit is proportionally less outstanding the larger the employer.
See e.g. Shanks v Unilever - actual employer was subsidiary, and therefore on that basis the contribution was of outstanding benefit

Question 13

What factors may contribute to “just” compensation in S40

Answer 13

If the employer played dirty (equity requires clean hands)
Where balance of power forced an unjust compensation level.

Question 14

Is there a time limit on S40 applications

Answer 14

Yes, applications must be made when the patent is in force or WITHIN ONE YEAR of lapse

Question 15

How best to deal with knowing whether a patent is in force

Answer 15

In the UK use PF49 to request to be informed

Question 16

Can the S40 deadline be extended?

Answer 16

Yes, under R108(1) at the Comptroller’s discretion

Question 17

What amount of compensation should be given for S40

Answer 17

Under S41
1)2) Should be fair share of the benefit to the employer from the INVENTION, the PATENT / APPLICATION and/or the ASSIGNMENT of, or aof any rights in, the invention/patent/application

Question 18

What should be taken into account for amount of compensation under S41

Answer 18

WHILST TAKING INTO ACCOUNT

S41(4)(5)
a) the employee’s duties and existing pay/benefits;
b) the effort and skill in inventing;
c) any co-inventors contribution (esp. other employees); and
d) the employer’s contribution

Question 19

In what form is compensation given under S41

Answer 19

S41(6) payment can be a lump sum or periodic