Case No. IP-2017-000169

(1) Notwithstanding anything in any rule of law, an invention made by an employee shall, as between him and his employer, be taken to belong to his employer for the purposes of this Act and all other purposes if – (a) it was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties; or (b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had a special obligation to further the interests of the employer’s undertaking. (2) Any other invention made by an employee shall, as between him and his employer, be taken for those purposes to belong to the employee. 17.The sole issue between the parties in relation to s.39 was whether any invention made by Mr Kite during his employment was made in the normal course of his duties as an employee of Netsweeper within the meaning of s.39(1)(a). It was not argued that any invention had been made in the course of duties specifically assigned to Mr Kite. Nor was it in doubt that if made in the normal course of his duties, the circumstances were such that an invention might reasonably be expected to result from the carrying out of those duties. 18.In LIFFE Administration and Management v Pavel Pinkava [2007] EWCA Civ 217; [2007] RPC 30, Dr Pinkava had been employed by LIFFE, the operator of the London Futures Exchange, as a manager in its Interest Rate Management Team. He devised a system and related inventions which permitted the trading on an electronic exchange of financial instruments not previously so traded. Dr Pinkava filed four applications for US patents. LIFFE claimed that it was entitled to the applications. One of the issues was whether Dr Pinkava had made the inventions in the course of his normal duties as an employee. 19.The Chancellor (Sir Andrew Morritt) said: “[56] The only contrast drawn by s.39 between one sort of duty and another is to be found in the alternatives ‘normal’ and ‘specifically assigned’. Unless the invention was made in the course of a duty falling within one or other description, which are in terms mutually exclusive, s.39(1) cannot apply and the invention will belong to the employee. It may be that there is a third category of duty, such as that adverted to by the Banks Committee in para.469 of their report (see [39] above), but it is unnecessary to decide the point because it is irrelevant. Further the emphasis is on a duty of the relevant description. The source of an employee's duty is primarily contractual, though some of the terms are implied by law, cf Patchett v Stirling (1955) 72 R.P.C. 50, 56 and 58. But the contract evolves in the course of time such that, in my view, it is unsafe to have regard only to the terms contained in an initial written contract of employment. The actions of employee and employer in performance of the contract may give rise to an expansion or contraction of the duties initially undertaken by a continuous process of subtle variation. I do not think that any extra or different duties so undertaken should be regarded only as duties ‘specifically assigned’. It is quite possible for them, in the course of time, to have become ‘normal’. [57]The suggestion that what is ‘normal’ is to be ascertained by reference to some other standard such as ‘ordinary’, ‘day to day’ or ‘primary’ must also, in my view, be rejected. Parliament has chosen the word ‘normal’. It is not for the courts to substitute for that ordinary English word some other test which may or may not be quite the same. It is for the courts to apply the test selected by Parliament in accordance with its normal meaning. Thus I agree with Falconer J. in Harris' Patent [1985] R.P.C. 19, 28 that the cases decided before the enactment of s.39 can only be guidance in relation to the assessment of an employee's duties in the circumstances of that case. For my part I doubt if they are helpful in even that limited context. [58]It is not in doubt that the duties of an employee may evolve in the course of time, see Armstrong Whitworth Rolls Ltd v Mustard [1971] 1 A.E.R. 598 and Carmichael v National Power Plc [2000] I.R.L.R. 43, [33]. Accordingly, I agree with counsel for LIFFE at least to the extent of examining the judgment of Kitchin J. on this part of the case to see if he did pay sufficient regard to the possibility of the evolution of duties as normal over and above those set out in the initial contract of employment. …” 20.Longmore LJ agreed with the Chancellor. Jacob LJ did too, save with regard to one matter which is not in issue here. Jacob LJ also considered ‘normal duties’. He pointed out first that s.42(2) of the 1977 Act overrides any term in a contract of employment which limits an employee’s rights to his invention, so that that such rights are governed solely by s.39(1) and (2). Jacob LJ continued: “[97] It is against that background that one comes to s.39(1). Both (a) and (b) focus on the employee's duties (‘normal’ or ‘specifically assigned’ for (a) and a ‘special obligation to further the interests of the employer’ for (b)). How then does one ascertain the nature of the employee's duties? ‘Duty’ is the language of obligation. As between the employer and employee the primary source of a duty are the terms of the contract. What is it that he is employed to do must be the key question. That is not the same thing as was suggested by Mr Tritton – what is his day-to-day work? Take for instance a research chemist working on a cancer cure for the last 10 years. Suppose he came up with a cure for arthritis. He could not seriously contend that he owned the invention because he was dayto-day working on a cancer cure. His duty as a research chemist is clearly wider than his day-to-day work. [98]On the other hand the contract cannot be sole arbiter of the duty. Otherwise employers would be able to include overbroad duties in contract terms and s.42(2) would not operate to make the contract unenforceable. As I have noted, that was specifically a matter of concern to the Banks Committee. Section 42(2) will have effect to deal with overstated duties. The ‘duties’ of s.39(1) are determined realistically. [99]Since one cannot go by the contract alone I do not think one can be too precise about how the duty is to be ascertained. The contract and the general nature of the job both call for examination. It is not possible to be too analytical about this. In the end one is asking whether the employee is employed to try to innovate and, if he is, what general sort of areas his innovation duties cover. It is here that I think Kitchin J. got too far into the detail of Dr Pinkava's day-today work, accepting that he was under a duty to innovate new types of future of a conventional kind but not other types of product which would be of commercial interest to LIFFE. [100]Clearly another factor relevant to the determination of duties is the extent to which the common law imposes a duty of confidence on the employee. Section 42(3) makes it clear that Parliament was not intending to abrogate this duty in relation to employee inventions. So if in the course of his work an employee comes up with an idea which the common law would require him to hold as confidential to his employer, that will be covered by s.39. Any other conclusion leads to the absurd result that an invention would belong to the employee and yet he would owe a duty of confidence to his employer. Parliament cannot have intended such a stalemate. It follows that to some extent at least, although s.39(1) is a complete code, it lets the common law back in via the concept of ‘duty’. [101]The section provides that the invention must be made ‘in the course’ of the employee’s duties. This clearly draws on the well-known common law concept of ‘in the course of employment’. The classic contrast is ‘a frolic of his own’. In practice once the duties are ascertained this requirement should cause little difficulty.” 21.I draw from these judgments the following principles relevant to this case: (1)An invention made by an employee will belong to him unless it was made in the course of the categories of duty expressly identified in s.39(1): ‘normal duties’ or ‘duties specifically assigned to him’ under s.39(1)(a), or duties of a nature such that the employee has ‘a special obligation to further the interests of the employer’s undertaking’ under s.39(1)(b). (2)The two categories under s.39(1)(a) are mutually exclusive. (3)The meaning of ‘normal duties’ in s.39(1)(a) is not to be resolved by reference to characterisations such as ‘ordinary’, ‘day to day’ or ‘primary’ duties. (4)The starting point in defining normal duties is the contract of employment; having considered the terms of the contract one must ask: what was the employee employed to do? (5)However, the contract of employment is not the sole arbiter of normal duties. The overall question is whether the employee was employed to try to innovate and if so, what general sort of areas his innovation duties covered at the relevant time, i.e. the date on which the invention was made. (6)The duties of an employee may evolve over the course of time. The actions of employee and employer may give rise to an expansion or contraction of the duties initially undertaken and/or those specified in the contract of employment, so that they become (or cease to be) normal duties. (7)The duty of confidence owed by an employee to an employer may provide a guide to the scope of his normal duties. If the circumstances are such that the employee would owe an equitable duty of confidence to his employer with regard to the invention, the invention will belong to the employer pursuant to s.39. (8)An invention is made ‘in the course of’ an employee’s normal duties under s.39(1)(a) generally in contradistinction to being made in a frolic of his own.