Q: I had an excellent idea for a new manufacturing process. I expected to make a substantial sum of money out of it, but I mentioned it to a friend at a recent trade association meeting and I now find that his company has adopted this process. What can I do?
A: There is no copyright in ideas, and assuming you had not already registered your invention as a patent, there is little you can do. Where ideas of this type are "stolen" the first area the lawyers look at is the law of confidentiality. Did you tell your friend that the idea was strictly confidential? Did you have him sign a secrecy or non-disclosure agreement before telling him? Probably you did not, but you should in future to ensure this does not happen again. Frequently, inventors do not have the funds to exploit their invention. They can only hope to make a profit by getting large companies to take a licence of their rights in the invention. Never disclose the invention, even in preliminary discussions, without first having a confidentiality contract signed by the other side.
The second area which might help could be contract law. If you had your friend sign a contract of which he is now in breach you could sue for breach of contract. However, in your case it seems you made the classic mistake of trusting someone and you may find it difficult to stop your friend. It may be worth sending his firm a solicitor's letter claiming they are acting in breach of your rights and demanding a royalty, but if the case went to court you would not have a very high chance of success.
Inventors Legal Problems
Related further reading by Susan Singleton...
Further Reading:
Editors Note: These articles first appeared as Susan Singleton's very popular column in Inventors World magazine.
Due to the changing nature of the law, Susan has fully updated them for 2015.
Part #2
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Q: I am about to take my invention around various large companies, some of which are notorious for being mean and are tough negotiators. How much should I charge?
A: First decide if you want to continue to own the rights in your invention and simply license it for a royalty and/or a lump sum, or whether you want to transfer the rights outright by way of an assignment. Commercially, it is generally preferable to negotiate a limited licence, so you reserve rights in other product areas and can terminate the licence if the licensee is not exploiting the invention successfully. There are no handy lists of examples of lump sums charged. It is simply a matter of commercial negotiation. Do some research on what similar inventors have been paid in the past and what you think the invention could be worth to the company. Then negotiate. Consider taking your solicitor or an experienced friend to negotiation meetings if you feel you would otherwise be exploited. Examples of royalty percentages negotiated in various industries are given in a book, Intellectual Property - Licensing and Joint Venture Profit Strategies, Smith & Parr, Wiley/Sweet & Maxwell ISBN 0471574457 (see right, Ed.).
Q: I am employed in a research laboratory by a leading company. As part of my job I invented a new process which has made the company thousands of pounds. They gave me £400 as a token of their appreciation. Can I claim a share of their profits instead?
A: If you are employed to invent, as you seem to be, then inventions produced in the course of your employment will be owned by your employer under the Patents Act 1977. Your employer did not have to pay you anything. There are very limited provisions in s.40 of the Patents Act which entitle employees to compensation from employers for certain inventions, but the Intellectual Property Offices knows of few successful cases. The IP Office does, however, issue a form for making a claim. Of the handful of reported cases on this section few inventors have ever been successful in recovering compensation; this is because of the limited wording in the section.
In one case in 2014 Ian Shanks v (1) Unilever Plc (2) Unilever NV (3) Unilever UK Central Resources Ltd O/259/13 a Professor Shanks who used to work for Unilever made one of these claims. In the 1980s he invented an electrochemical test device using capillary action to draw a set volume of analyte into the device. The hearing officer found that Unilever had derived from the patents £24 million. Although this was large it was not given the full extent of Unilever's other general activities “outstanding”. if it had been outstandnig Shanks would have been awarded 5% of the sum.
The 50 page judgment is on line at http://www.ipo.gov.uk/patent/p-decisionmaking/p-challenge/p-challenge-decision-results/o25913.pdf
In an earlier decision he had appeared to have won although the court said his damages should not have been based on what he would have made had Unilever properly exploited the rights better than they had done. Unilever v Shanks (CA [2010] EWCA Civ 1283) ( summary of that 2010 decision at http://nipclaw.blogspot.co.uk/2010/11/patents-unilever-plc-and-others-v.html).
The latest decision makes it clear it is very hard in the UK in contrast with other countries like Germany for inventors who are employees to claim under these provisions.
Compensation is payable where the patent is of "outstanding benefit to the employer" and it is "just" that the employee should be awarded compensation.
The amount of the compensation should be such as will secure for the employee a fair share of the benefit the employer has derived from the invention. It may be worth making an informal claim to your employer, but be cautious. You do not want to jeopardise your employment prospects in putting in a hopeless claim. The problem with the section seems to be that the employer's profits could be attributable to matters such as his marketing skills or other factors and not just your invention.
Another area to explore in such cases is to check that the employer owns the invention. If he does not - where you were not employed to produce inventions, for example - the rights will automatically be yours and your employer should pay you a licence fee.
It is also worth looking at whether your employer has a reward scheme for inventions made by employers. Check the staff handbook or any company Intellectual Property Rights Policy.
Q: A friend and I have been working together at weekends in his garage on a new product which could revolutionise our industry. We have now fallen out. What is the legal position?
A: A solicitor would ask hopefully whether you had drawn up a written agreement in advance which addressed this problem. Almost certainly you did not. Anyone working with a friend or even spouse in this way should consider preparing a simple letter dealing with major issues such as how profits will be split if the invention is successful and who owns the rights in it and what happens if either party wishes to leave the arrangement. If there is an agreement then generally its terms should prevail. If there is potentially a lot of money at stake you should consider consulting a solicitor.
Assuming there is no written agreement, there may still have been a verbal agreement about ownership of any patent, design, copyright and trade mark rights which may have emerged from your collaboration. Also, if you are employed, check whether your employer might own the rights. You may have been in "partnership" together. If so you may need to look at the Partnership 1890 which still sets out English law on partnerships. Assuming there is no agreement about intellectual property rights the legal position depends on what rights are concerned. However, as a general principle you will own the rights in those parts you invented. If it is impossible to say who did which parts of the work, the rights may be jointly owned and there are provisions in the various intellectual property statutes about this. You will need to negotiate a compromise. Perhaps each of you will license the other with rights you own and then go away and work independently, or if one of you wishes to abandon the work you may take a lump sum from the other as compensation. The position on jointly owned registered patents differs between the UK and US so always take local law advice. In the UK a joint owner needs permission from the other owner before selling their half of the rights or licensing them. In the US the legal position is the other way round - no consent needed. It is much better not to rely on implied legal provisions however and set out the position in writing in advance in written contracts before any work is done at all.