Key points
  • Although not a matter that is likely to be of particular concern to every employer, there will be occasions when an employee invents a machine, product or process that is new and capable of industrial application.
  • The question may arise as to the ownership of such an invention. That question has largely been resolved by sections 39 to 43 of the Patents Act 1977 in respect of inventions made after 1 June 1978.
  • Section 39 of the 1977 Act states that an invention made by an employee will be taken to belong to his employer if:
    1. it was made in the course of the normal duties of the employee in circumstances such that an invention might reasonably be expected to result from the carrying out of those duties; or
    2. it was made in the course of the duties of the employee, and the nature of those duties and his particular responsibilities were such that he had a special obligation to further the interests of his employer's undertaking.
In any other circumstances, an invention made by an employee is his own property.
  • There are very few people who are employed specifically to invent tools, plant, machinery or equipment. If a kitchen porter in a hotel designs a new type of dishwashing machine, his (or her) employer would be hard put to it to convince a court that doing so was within the scope of the porter's normal duties.
  • If the ownership of an invention clearly vests in an employee, he (or she) has the right to apply for and obtain a patent and to be named as the inventor. The form of application to be used is Patents Form 2/77. The inventor may subsequently grant a licence or licences to another person or persons (including his employer, if he chooses) to supply the product or work the invention, as the case may be, on reasonable terms.
  • If an employer owns an invention produced by one of his employees, that need not be an end to the matter. Once a patent has been granted, the inventor has every right to apply to the Comptroller-General of Patents, Designs and Trade Marks or, if need be, to the High Court (or the Court of Session) for an award of compensation – that is to say, a fair share of the benefit that his employer has derived, or may reasonably expect to derive, from the patent. In determining what constitutes a 'fair share', the court or the comptroller will, among other things, take into account:
    1. the nature of the employee's duties, his remuneration and any other advantages he derives, or has derived, from his employment;
    2. the effort and skill that the employee has devoted to making the invention;
    3. the effort and skill that any other person has devoted to making the invention jointly with the employee concerned and other assistance contributed by any other employee who is not a joint inventor of the invention; and
    4. the employer 's contribution to the making, developing and working of the invention, eg by giving advice, by providing the necessary facilities and other technical assistance, and by offering his managerial and commercial skills.
An order directing an employer to pay compensation to the employee may be an order for the payment of a lump sum or for periodical payments, or for both.
  • An employee's application to the Comptroller-General for an award of compensation must be made on Patents Form 26/77, accompanied by one copy of the Form and a statement in duplicate setting out fully the facts relied on. The application may be submitted at any time after the relevant patent is granted to the employer, but not later than one year after the patent ceases to have effect.
Contract of employment
  • Any term in a contract of employment that purports to diminish an employee's statutory rights in inventions of any description made by him, or in or under patents for those inventions (or applications for such patents), is void and unenforceable. Notwithstanding such a term in his contract, the employee may still pursue his claim for ownership of an invention, or an award of compensation, as the case may be. His right to do so does not, on the other hand, derogate from any duty of confidentiality that he may owe to his employer by virtue of his contract of employment.
Collective agreement
  • If a collective agreement between a trade union and an employer provides for the payment of compensation in respect of employee inventions, the relevant terms of that agreement will supersede the rights of the individual employee under sections 39 to 43 of the 1977 Act. However, the agreement must encompass all employees of the same description as that employee, and must envisage inventions of the same description as the invention produced by the employee. In the event of a dispute, it will be for the courts to determine the issues.
  • Under section 11 of the Copyright, Designs & Patents Act 1988, the copyright in any literary, dramatic or artistic work produced by an employee in the course of his (or her) employment (that is to say, arising out of the duties of his employment) belong to his employer – unless there is an agreement to the contrary.

Section 11 of the Copyright, Designs & Patents Act 1988 reads as follows: '(1) The author of a work is the first owner of any copyright in it, subject to the following provisions. (2) Where a literary, dramatic, musical or artistic work is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary…'
  • Thus a public relations executive (as an employee) cannot claim ownership of any material written by him for the purposes of advertising or promoting his employer's business. That is what he is paid to do. On the other hand, a security guard in a factory, who writes a best-selling book when he should have been patrolling his employer's premises, may be dismissed for gross misconduct but would retain the ownership of the copyright in his book (section 11, Copyright, Designs & Patents Act 1988).

Under UK law, copyright comes into existence when an original literary, dramatic or artistic work is produced. There is no formal procedure for registering the ownership of the copyright in any such work. Copyright protection persists tor the lifetime of the copyright owner and for 75 years after his (or her) death (increased from 50 years on 1 July 1995, to accommodate EC legislation).

  • Employers all too often lose sight of the fact that many of their personnel (eg, computer programmers, research chemists, public relations experts, advertising managers, copywriters, training officers, personnel executives, and the like) are routinely employed to write software programs, reports, statistical analyses, advertising and promotional copy, training manuals, etc, that should not be published or divulged to unauthorised third parties. So far as the issue of copyright ownership is concerned, employers should perhaps insert a clause in the contracts of employment of such persons to the effect that 'any publicity material, brochures, training manuals, software programs, research reports or documents [etc] produced or prepared by you in the course of your employment by the company shall be the sole copyright of the company'.
  • If need be, personnel engaged in sensitive work should also give a written undertaking to submit the manuscripts of magazine articles, theses, etc, for scrutiny by a senior member of management (or by the company's solicitors or legal department) before that material is released for publication.
  • Contracts of employment should likewise remind employees of their common law duty to return all company property in their possession (documents, notes, manuals, computer discs, etc) on the termination of their employment. They should, at the same time, be asked to sign a form accounting for any readily-identifiable property known to be in their possession, as well as a declaration to the effect that they have not retained any other documents, copies of software programs, etc, that are properly their employer's property.

It is curious that while an employer is legally entitled to a fair share of any benefit that accrues to his (or her) employer from an invention he has made in the course of his employment, there is no equivalent provision in the 1988 Act that gives an employee the legal right to claim a share of the royalties earned by his employers from the sale of a book which the employee has researched and written on their behalf (although there is nothing to prevent some contractual provision to that effect).