News Item
Landmark inventor compensation claim in healthcare battle
11 February 2009
Kelly and Chiu v. GE Healthcare Limited
In a landmark ruling in the High Court today, GE Healthcare has been ordered to pay compensation of £1.5 million to two of its former employees, for their contribution in creating a diagnostic tool for detecting heart defects. The case is the first of its kind, in which an employee inventor has successfully been awarded compensation under the UK Patents Act 1977. Marks & Clerk Solicitors acted for the employee inventors.
Dr. Duncan Kelly and Dr. Ray Chiu were formerly scientists employed by Amersham International, which was taken over by General Electric in 2004 and renamed GE Healthcare. They were co-inventors of a radiopharmaceutical heart imaging agent called “Myoview”. This has been a huge success for GE Healthcare over the past several years and remains a mainstay of its business, with sales exceeding £1.3 billion. Myoview has become a routine tool for investigating heart problems and is now used throughout the world.
Gregor Grant of Marks & Clerk Solicitors acted as lead partner for the representation of Dr. Duncan Kelly and Dr. Ray Chiu. He comments:
“This is a landmark ruling. It is the first successful claim of its kind in the UK. Previous claims had all failed, and many had thought that a successful case was virtually impossible. Yet the obvious success of Myoview as a diagnostic tool for the GE Healthcare business convinced the judge that the patents were of outstanding benefit to the company, and warranted compensation to those inventors whose creative effort made this product possible.
“Today’s decision ought to encourage employers to reconsider the arrangements they have with their employees so that we see much greater financial remuneration for the inventive contribution of staff in the UK. Arrangements like these are surprisingly rare in industries driven by research and development, yet a strong framework of recognition and financial reward is of benefit to everyone in fostering the culture of innovation and discovery which we need in UK industry.”
The difficulty surrounding inventors’ compensation rests with the fact that, to qualify for compensation, they must demonstrate the patent in question has been of “outstanding benefit” to the employer. In practice, this has made it very difficult for an applicant to succeed, for a patent is simply a monopoly right (and in many cases it will be difficult to quantify the benefit from the patent itself).
Consequently, the law was amended in 2005 to make compensation easier to obtain. It is now the case that the “invention” itself has to be of outstanding benefit, not just the patent. However, as it takes several years to apply and be granted a patent, the effects of this important revision are yet to filter through. Moreover, the Patents Act 1977 gives no assistance in how to assess the necessary “outstanding benefit” of a patent, nor how to determine the “fair share” that should be paid to inventors.
In today’s ruling, the compensation figure was reached through a calculation by the judge into the success of the Myoview product, its relative importance to the GE Healthcare business and the impact generic competition would have had (if it had not been granted patent protection). Assuming that generic competition would halve Myoview sales and lead to a 10 per cent price reduction, he reached a figure of £50 million. He said that this was a very conservative figure, and was “the absolute rock bottom figure for the benefit from the patents”. Three per cent of that £50 million figure was then awarded to the two inventors, resulting in the payout. At current rates, this figure represents about three days of Myoview profits.
Where the UK has struggled to secure a payout for inventors, many countries outside the UK have fared considerably better. Most famously, Japan saw a successful suit brought by Dr. Nakamura, inventor of the blue LED, in 2004, who was awarded many millions of dollars. In Germany, the right to inventor compensation is assessed according to a structured formula, and does not require the patent or invention to be “outstanding”.
For more information on this case contact Gregor Grant at ggrant@marks-clerk.com or Will James at wjames@marks-clerk.com