Employee compensation for creating IPR

June 29, 2009

If the new intellectual property is a patent for a new invention then, under the Patents Act, the employer could face a claim for statutory "compensation" in respect of that invention if:

• it is of outstanding benefit to the employer and
• an award of compensation would be "just"

"Outstanding" means something special or out of the ordinary, and the "benefit" has to be something more than one would normally expect to arise from the duties for which the employee was paid.
There never has been a successful compensation claim under this provision – until now !

The Patents Act was amended to encourage further claims in relation to patents applied for on or after 1 January 2005.  And in the recent case of Kelly and Chiu v GE Healthcare Ltd [2009] compensation was awarded to the employees for the part they played in development of a new drug.

In assessing the amount of the compensation the court took into account the fact that the employees received beneficial remuneration for their work, a team of others contributed to the research and the inventions depended significantly on the contribution of the employer.

These considerations meant that the share was towards the bottom of the scale: 3% of the £50 million benefit split between the complainants – ie £1.5m

Employers cannot contract out of this provision.  However, employers can improve their position in relation to employee created IPR through the terms of their service contracts.  Please contact us for more information about this.

Related pages:

Intellectual property more

Intellectual property for Technology more

Technology, Media & Digital more

icons Addthis Print Contact Register


tel: +44 (0) 20 7628 2000
10 Finsbury Square, London, EC2A 1AF
View map


  • Top Ranked Chambers UK 2014 - Leading Firm
  • Ranked in Chambers Europe 2013 - Leading Individual
  • Ranked in Chambers Global 2014 - Leading Firm
  • Legal 500 - Leading Firm
  • The Lawyer UK 200 - Listed Firm
  • The Law Society Excellence Awards 2012 - Shortlisted
  • Investors in People - Bronze