IP Information & News

Innovating in 2020 — how the changing employment landscape could affect your patents

Dr Terence Broderick

By Dr Terence Broderick

Patent Attorney

If your company invests in R&D to drive innovation, it’s almost certain that some of your employees are expected to invent. In the UK, any resulting patents usually belong to the employer. However, the working environment is changing drastically, meaning that patent ownership isn’t always so clear cut.

Here’s a look at some of the key takeaways from 2019 to ensure that your working environment doesn’t cost you when it comes to protecting innovation.

1. Working from home doesn’t affect patent ownership

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The traditional ‘nine to five’ day is pretty much dead. Working from home is increasing, whether throughout the day or outside of traditional working hours.

In light of this ever increasing trend, the Courts have decided that it doesn’t matter when and where an employee was devising an invention — patent ownership is decided by whether the work took place within the bounds of the normal or specifically assigned duties of that employee.

So even if an employee devises an invention while working from home, the resulting patent is owned by their employer.

2. It’s vital to properly consider confidentiality

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Whether you work alongside other companies, external consultants or across different locations, today collaboration is more common than ever before. However, any form of collaboration can introduce legal difficulty when it comes to patents.

One of the most pressing issues that collaboration introduces is the differing requirements of confidentiality. When documents and confidential information are frequently passed between organisations, while an employee has an implicit duty of confidentiality to their employer, the collaborator may not.

This year, the European Patent Office (EPO) considered this exact point, examining the public availability of shared documents in the context of a disclosure which would prejudice the patentability of an invention.

The documents were produced as part of the MPEG standardisation process. Standardisation can often involve collaboration between organisations and the employees involved will often pass documents between each other without stopping to consider the confidentiality implications.

However, in this particular case, the EPO found that the documents could be passed without any legal barrier to individuals not bound by confidentiality. The documents were found to be publicly available as it was possible for them to be accessed by individuals not bound by an explicit confidentiality obligation.

So, if your employees are collaborating with others and sharing confidential information, you must ensure that all of the parties are bound by explicit obligations of confidentiality. Otherwise, you may find that one of your employees has accidentally invalidated one of your patents before it’s filed.

3. Ensure IP ownership is laid out from the start of any project

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The development of your business may often require skills from outside your organisation. The development of new technologies may not be the original reason for seeking external support, so the ownership of any resulting IP might not be at the front of your mind when the project’s legal documentation is drawn up. However, it’s important to be ready for this outcome, as it could well be your employee contributing the key inventive concept.

The absence of an explicit agreement on the ownership of IP was also discussed this year. Ultimately, it’s essential to ensure that, where employees are involved in a project with another organisation (even if you’re funding the project), the ownership of any resulting inventions and the corresponding patents is clearly and explicitly assigned from the start. This will avoid any drawn-out legal proceedings and substantially reduce your risk.

4. You can’t hide behind corporate structures and you’re never too big to pay

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Among larger organisations, it’s common to form separate companies which are solely responsible for generating or holding IP. Such companies often don’t generate income as they don’t sell products or services. Therefore, the employees responsible for innovating are often said to work for companies that don’t generate income.

This issue came to the fore in possibly the highest profile patent case of 2019 (Shanks v Unilever [2019] UKSC 45). The key discussion point centred on the “outstanding benefit” an employer derived from an invention developed by an employee. In this case, the inventor worked for a subsidiary of the Unilever group of companies which was set up only to perform R&D. The invention in discussion was deemed by the Supreme Court to be of outstanding benefit to Unilever, but Unilever submitted that the invention didn’t make it any money as the inventor was formally employed by a company responsible for performing R&D, not selling any products.

This was eventually dismissed by the Supreme Court, which held that the overall commercial reality should be considered (i.e. the benefit to the group of companies as a whole) when considering the benefit of an invention to an employer.

This is a clear indication to employers that separating the ownership of patents from other commercial operations isn’t a way to avoid recognising the contribution of people who devise commercially successful inventions.

The key teaching here is that it doesn’t matter how big you are as a company — every employer must ensure that they fairly recognise the contribution their inventors, especially if those contributions are generating substantial revenues.

Four key learnings for 2020

Innovation is an important part of business and developing new products drives growth. While UK law is relatively pro-employer, employers must continue to learn from legal developments in this area, particularly in view of the changing employment landscape.

In 2020, employers must ensure that they provide the following:

  • training for employees around the ownership of IP rights and their obligation of confidentiality
  • infrastructure to help employees maintain confidentiality wherever they’re working (i.e. secure email servers and the opportunity to encrypt and protect documents)
  • clear rules around collaboration so that the individuals involved are bound by confidentiality obligations and to make clear the ownership of any IP
  • proper recognition and reward structures to fairly value contributions made by employee-devised inventions

If you have questions about any of the topics discussed in this article, feel free to get in touch with me at tsb@udl.co.uk to discuss further.

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