(1)Kelly (James Duncan) (2)Kwok Wai Chiu v GE Healthcare Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Floyd |
| Judgment Date | 11 February 2009 |
| Neutral Citation | [2009] EWHC 181 (Pat) |
| Court | Chancery Division (Patents Court) |
| Docket Number | Case No: HC07C01131 |
| Date | 11 February 2009 |
[2009] EWHC 181 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Before: The Hon Mr Justice Floyd
Case No: HC07C01131
Iain Purvis QC and Will James (instructed by Marks & Clerk Solicitors) for the Claimants
Henry Carr QC and Andrew Lykiardopoulos (instructed by Bristows) for the Defendants
Hearing dates: 3rd-5th, 8th-11th, 15th-16th December 2008
Mr Justice Floyd :
Introduction
This judgment is divided into the following sections:
| Paragraph numbers |
| Introduction |
| 1–4 |
| The Law on inventor compensation |
| 5–61 |
| “Invention belonging to the employer” |
| 9–16 |
| “Outstanding benefit” |
| 17–25 |
| The “but for” argument |
| 26–31 |
| Meaning of “patent” in section 40 |
| 32–39 |
| “by reason of those facts it is just..” |
| 40–41 |
| The use of the word “compensation” |
| 42–54 |
| Section 41 – assessing the compensation |
| 55–59 |
| Summary of the law |
| 60 |
| Technical Background |
| 61 |
| The making of the inventions |
| 62–95 |
| The setting up of the Pioneer Section and the Heart Project |
| 62–73 |
| The Padua Symposium |
| 74–75 |
| Recruitment of Drs Chiu and Latham |
| 76–77 |
| Phosphine research |
| 78–79 |
| The synthesis and testing of P11 |
| 80–82 |
| Ether-functionalised ligands and P30 |
| 83–86 |
| Beyond P30 – tetrakis ethers and P53 |
| 87–95 |
| Product Development |
| 96–115 |
| The animal model |
| 96–99 |
| Clinical trials begin |
| 100–103 |
| The development phase |
| 104–107 |
| Clinical trials, approval and launch |
| 108–109 |
| Manufacturing |
| 110 |
| Distribution |
| 111–115 |
| Sumitomo Joint Venture and Nycomed acquisition |
| 116–120 |
| The Queen's Award for Technological Achievement 1998 |
| 121–123 |
| The importance of patents to Myoview and to Amersham |
| 124–125 |
| The performance of Myoview |
| 126–128 |
| What was the benefit of the patents to Amersham? |
| 129–146 |
| Are all the profits of Myoview benefits of the patents? |
| 130–13 |
| Corporate deals |
| 133–135 |
| RDE would have kept competition out |
| 136–137 |
| Numbers of generic competitors |
| 138–140 |
| Manufacturing difficulties |
| 141–143 |
| Market access |
| 144–145 |
| Cardiolite competitors |
| 146 |
| Were the patents of outstanding benefit to Amersham? |
| 147–150 |
| Is it just to make an award to the employees? |
| 151–160 |
| Valuing the benefit |
| 161–172 |
| Relief from royalty |
| 162–165 |
| Estimating the chances of reduced profits |
| 166–170 |
| What figure to take? |
| 171–172 |
| Share of the benefit |
| 173–201 |
| Section 41(4)(a) |
| 174–179 |
| Section 41(4)(b) |
| 180–182 |
| Section 41(4)(c) |
| 183–185 |
| Section 41(4)(d) |
| 186–189 |
| Amersham's primary case on share |
| 190 |
| Mr Bezant's fair share |
| 191–194 |
| The employees' fair share argument |
| 195–197 |
| The Goldman agreements |
| 198–200 |
| Universities of Cardiff and Keele and the Professors |
| 201 |
| Decision on fair share |
| 202–206 |
| Conclusion |
| 207 |
| Direction |
| 208 |
| Technical Appendix |
| 209–248 |
| Medical imaging and radiopharmaceuticals |
| 209–210 |
| Heart disease and the role of myocardial perfusion agents |
| 211–212 |
| Thallium-201 and its limitations |
| 213–214 |
| Technetium as a radioactive label |
| 215 |
| The preference for technetium-99m as an imaging isotope |
| 216–218 |
| Technetium Radiopharmaceuticals |
| 219–221 |
| 'Technetium essential' and ' non-essential' imaging agents |
| 222–225 |
| Early work on technetium cations |
| 226–228 |
| Phosphines |
| 229–230 |
| Functionalised and unfunctionalised phosphines |
| 231–232 |
| Diphosphines and their role as ligands |
| 233–234 |
| The diphosphine ligand P53, 'tetrofosmin' |
| 235–237 |
| The diphosphine ligand P11and P30 |
| 238–239 |
| Technetium-99m “cold kit” technology |
| 240–242 |
| Stability of the technetium-tetrofosmin dioxo complex |
| 243–245 |
| Manufacture of tetrofosmin |
| 246–248 |
Duncan Kelly and Kwok Wai (“Ray”) Chiu, the claimants in this action, were two research scientists at Amersham International Plc (“Amersham”). They were involved with the first synthesis of a compound called P53, which later formed the basis of a patented radioactive imaging agent which was a highly successful product for their employers. It was sold under the trade mark Myoview. By this action they seek an award of compensation from their employer under Section 40 of the Patents Act 1977. They are claiming a share of the benefit which they say has been derived by their employer from the patents.
Since the time when the invention was made, Amersham has been taken over by General Electric Company and is now called GE Healthcare Limited, the defendant in the action. It is common ground that the relevant undertaking to consider for the purposes of the legislation is the healthcare division of Amersham, which continued to exist under different names after the acquisition. For that reason, when I refer to “Amersham” or “the employer” I am referring to that division.
There are two patents (or more accurately patent families) involved in the action. The first, European Patent (UK) No 0311352 (“352”) has a claimed priority date of 6 th October 1987. The second, European Patent (UK) No 0337654 (“654”) has a claimed priority date of 11 th April 1988. Broadly speaking, the first family of patents expired in 2008 and the second in 2009, although the precise expiry dates are not the same everywhere. Patent protection continues in the United States until February 2010. Three Amersham employees are named as inventors in respect of both patent families: Duncan Kelly, Ray Chiu and a Dr Ian Latham. Dr Latham has not participated in the present claim. In addition, two external academics are named as inventors in respect of 352: Professor Vaughan Griffiths of Keele University and Professor Peter Edwards of Cardiff University. These external academics cannot claim under section 40, as their employers, the Universities, did not obtain the patents. The position of the Universities has been regulated by contracts entered into after Myoview became a success, and the academic inventors have benefited through schemes operated by the Universities themselves.
The Law on inventor compensation
Section 40 (1) of the Act provides as follows
“ Compensation of employees for certain inventions
(1) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that the employee has made an invention belonging to the employer for which a patent has been granted, that the patent is (having regard among other things to the size and nature of the employer's undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation of an amount determined under section 41 below.
(2) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that -
(a) a patent has been granted for an invention made by and belonging to the employee;
(b) his rights in the invention, or in any patent or application for a patent for the invention, have since the appointed day been assigned to the employer or an exclusive licence under the patent or application has since the appointed day been granted to the employer;
(c) the benefit derived by the employee from the contract of assignment, assignation or grant or any ancillary contract (“the relevant contract”) is inadequate in relation to the benefit derived by the employer from the patent; and
(d) by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer in addition to the benefit derived from the relevant contract;
the court or the comptroller may award him such compensation of an amount determined under section 41 below. ”
The section has been amended by the Patents Act 2005 so as to make compensation payable when the invention (and not just the patent) has been of outstanding benefit. The amendments only affect patents applied for after 1 st January 2005. So it is the unamended section which applies here.
With or without the amendment the section presents difficulties of interpretation and application. There is no reported case of a successful contested award made under it, although there are known to have been some settlements. It is perhaps justifiable to note in passing that in the passage of the Bill through the House of Lords, Lord Nelson of Stafford is recorded in Hansard as saying that:
“I have never seen such a collection of vague terms in my life. What compensation, who is responsible, what is outstanding benefit, what value is to be put on this and what on that?” and
“Who is to be the Solomon who will sort out all these vaguenesses at the end of the day and adjudicate on compensation when a claim is made, I hesitate to think.”
With that introduction, I turn to consider the disputes which have arisen.
“Invention belonging to the employer”
The first matter which the applicant for compensation has to establish is that he has made an invention belonging to the employer for which a patent has been granted.
The inventor is the “actual deviser of the invention”: see Patents Act 1977, section 7(3). In Yeda Research v Rhone-Poulenc Rorer [2007] UKHL 43; [2008] RPC 1 Lord Hoffmann said at [20]:
“The word “actual” denotes a contrast with a deemed or pretended deviser of the invention; it means, as Laddie J said in University of Southampton's...
To continue reading
Request your trial
-
Ian Alexander Shanks (Claimant and Appellant) v Unilever Plc and Others (Defendants and Respondents)
...respect to employee compensation under section 40(1) of the 1977 Act was comprehensively reviewed by Floyd J (as he then was) in Kelly v GE Healthcare Ltd [2009] EWHC 181 (Pat), [2009] RPC 12 at [5]–[60]. I shall follow that exposition, which for the most part I shall take as read. It is n......
-
Ian Alexander Shanks (Claimant/Appellant) v Unilever Plc and Others
...of the benefit to award Professor Shanks, he would not have given him more than 3 per cent which was the level of the award in Kelly v GE Healthcare Ltd [2009] EWHC 181 (Pat), [2009] RPC which is the most recent reported case in which the issues of outstanding benefit and fair share have be......
-
Shanks v Unilever Plc and Others
...and that customer would have been the same whether or not a patent had been granted. So, once again, the claim failed. 37 In Kelly and Chiu v GE Healthcare Ltd [2009] EWHC 181 (Pat); [2009] RPC 12 Floyd J reviewed all of these authorities and, at para 60(iv), summarised the position as he......
- Shanks v Unilever Plc and Others
-
Shanks v Unilever - Supreme Court Concludes An 'Outstanding' Legal Saga On Employee Inventions
...Prior to the present judgment, only one major compensation claim has succeeded under S40(1) PA '77 (Kelly and Chiu v GE Healthcare, [2009] EWHC 181 (Pat)). The Kelly case related to a patented invention which was very successful, and without the patents, the patent owner (Amersham, later bo......
-
UK: Drop in the ocean – Employee’s invention not profitable enough for compensation
...in s.40(1); the figures in some cases may be sufficient to speak for themselves (See for example the case of Kelly v GE Healthcare[2009] EWHC 181 (Pat), cited in the Judgment in this case). The Court of Appeal in this case ruled that it was correct for the Judge to have taken a more nuanced......
-
UK: Drop in the ocean – Employee's invention not profitable enough for compensation
...in s.40(1); the figures in some cases may be sufficient to speak for themselves (See for example the case of Kelly v GE Healthcare[2009] EWHC 181 (Pat), cited in the Judgment in this The Court of Appeal in this case ruled that it was correct for the Judge to have taken a more nuanced approa......
-
IP Snapshot - March 2009
...it has been accepted and recorded in writing. For the full text of this decision, click here. Kelly and Chiu v GE Healthcare Ltd, [2009] EWHC 181 (Pat), February 2009 This case has pushed open the door for employee inventors to seek significant financial compensation where an invention, whi......