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CIPA JOURNAL Incorporating the transactions of the Chartered Institute of Patent Attorneys

December 2019 / Volume 48 / Number 12

Outstanding benefit – Shanks v Unilever

Analysis of the PEB's 2018 examinations Julia Gwilt

Re-thinking legal services regulation Stephen Mayson

Amicus curiae brief – G 3/19 Life Sciences Committee

IP and Brexit – continuity and certainty in trade negotiations

A Patent Guide to Christmas Day Jonathan Foster

UP FRONT

CIPA JOURNAL Editor Deputy Editors Publications Committee Production and advertising Design Cover design Contact

Alasdair Poore Sean Gilday; Jeremy Holmes Bill Jones (Chairman) Iain Ross, 020 3289 6445, sales@cipa.org.uk Neil Lampert Jonathan Briggs editor@cipa.org.uk

Published on behalf of CIPA by Ross-Limbe Communications. The Institute as a body is not responsible either for the statements made, or for the opinions expressed in this Journal. No papers read before the Institute or extracts from its Proceedings may be published without the express permission of the Council and without the simultaneous acknowledgement of their source. CIPA Journal is sent to all members of the Institute as part of the benefits of membership. It is also available on subscription at £130 per annum (plus postage for overseas addresses: Europe £35, Other £70). Individual copies may be purchased at £14 (plus postage for overseas addresses: Europe £4, Other £6). The Editor welcomes the submission of articles, news and correspondence for possible publications including photographs, tables, charts, etc, when appropriate, and any contributions should be sent by email to editor@cipa.org.uk. Iain Ross (iain@ross-limbe.co.uk) will be pleased to discuss any queries regarding submissions and advertising. Copyright in material submitted for publication Material submitted to the CIPA Journal will be accepted for publication on condition that the author, or each of them, grants the Chartered Institute a non-exclusive licence to publish the material: i. in paper form first; and ii. after paper publication, also on its website www.cipa.org.uk, in the members’ area with the ability for members to download them. When sending material, the author(s) should confirm acceptance of this condition and also that the submission is free of any third-party rights or other encumbrances. Past contributors The Institute is in the process of putting on its website past articles not covered by an express agreement as set out above. Any contributor wishing to object to their work being treated in this way should write to the editor at editor@cipa.org.uk. Editorial deadline dates for receiving submissions are on the 10th of the preceding month. Please contact editor@cipa.org.uk to discuss any ideas for articles or submissions. © The Chartered Institute of Patent Attorneys 2019 2nd Floor, Halton House, 20–23 Holborn, London EC1N 2JD ISSN: 0306-0314

CIPA CONTACTS

Julia Florence President

Richard Mair Vice-President

Stephen Jones Immediate Past-President

Gwilym Roberts Honorary Secretary

Committee Chairs Business Practice Matt Dixon; Computer Technology Simon Davies; Congress Steering John Brown; Constitutional Alasdair Poore; Designs & Copyright Alicia Instone; Education Vicki Salmon; IP Commercialisation Catriona Hammer; IP Pro Bono Stephen Jones; Informals Matthew Veale; Internal Governance Catriona Hammer; International Liaison Richard Mair; IP Paralegals Julia Tribe; Life Sciences Simon Wright; Litigation Matthew Critten; Media & Public Relations Jerry Bridge-Butler; PEB Michael Yates; Patents Tim Jackson; Protected Titles Lee Davies; Regulatory Affairs Chris Mercer; Textbooks & Publications Bill Jones; Trade Marks Keith Howick. Head of Membership Dwaine Hamilton Membership Officer Frances Bleach Events and Professional Development Officer Emma Spurrs Events Co-ordinators Grace Murray, Kathryn Espino Chief Executive Lee Davies Deputy Chief Executive Neil Lampert Executive Assistant Charlotte Russell Head of Qualifications Angelina Smith Head of Finance Spurgeon Manuel HR Officer Lea Weir-Samuels Communications Officer Amy Williams External Affairs Officer Abby Lever Admin Generalist Kereiss Isles General enquiries 020 7405 9450; mail@cipa.org.uk; www.cipa.org.uk

Contents

36 UP FRONT

ARTICLES

EDUCATION

Outstanding benefit: Shanks v Unilever

62 61

Non-institute events Computers and IP

China update

63 76

Institute events IPO visit with the Informals

IPReg upgrade

Chris Smith 3

Lee Davies

NEWS 5

Improved guidelines launched Toby Mak 41

Brexit update

The importance for the IP sector in trade negotiations 8

EPO and IPO work cooperation

Overseas update

Indonesia update

IPO update

IP Inclusive update

Professor Stephen Mayson

in2scienceUK

Letter to the Editor

67 68 70 75

Obituary: David Barron Obituary: Sheila Lesley OBE Yellow Sheet Announcements

DECISIONS

Patent working requirement Mirandah Asia

IPO decisions

Design reform

EPO decisions

Trade marks

Life Sciences Committee

Volume 48, number 12

PERSONAL 64

Patent decisions

Amicus curiae brief in case G 3/19 – article 164(2) EPC

Sanam Habib

Andrea Brewster Luke Mckelvey

Beck Greener

Shanks v Unilever

David Pearce & Callum Docherty

Designs & Copyright Committee 13

Dr Monique Henson

Re-thinking legal services regulation

Dr Amanda R. Gladwin

Statistics on PEB Examinations

Analysis of the 2018 results Julia Gwilt

New ways to renew your IP rights at the IPO

IPO update 6

Chris Ryan

Council Minutes

Bristows Bird & Bird

THE PINKS 77-92 Courses & Events; International; Recruitment

DECEMBER 2019

CIPA JOURNAL

CONSULTATION

Enforcement of designs and understanding the design rights of others Criminal sanctions Criminal sanctions for the deliberate copying of registered designs was introduced. It would be interesting to know how many cases have been brought under these provisions (CIPA and CITMA have not heard of any). It remains the case, even if prosecutions have not been brought in practice, that the provisions present concerns in the spare parts business or other businesses involved in the supply of essentially functional designs. Typically, such a product will be a copy of, or differ in only immaterial details, from the original. The legislation provides a defence that the person (the accused) reasonably believed that the registration of the design was invalid; however, the typical basis for invalidity in these case will be the appearance of the product is solely dictated by technical function, or relevant features must match/must fit or are not visible in normal use. There is considerable uncertainty as to when a design is invalid on these grounds and the possibility of reproducing such functional parts being a criminal offence is an undesirable principle where there is such uncertainty. It is also undesirable because it often necessitates the business seeking legal

DESIGN REFORM

advice on the issue to provide support for their opinion, and such legal advice may not be unequivocal. It is suggested that, if the offence is retained, it should include the requirement that the registration is shown to be clearly valid, or at least that the defence is amended to provide that the accused reasonably believed that the registration was not clearly valid. We understand that certain stakeholders are lobbying for these sanctions to be extended to also cover unregistered designs. We would strongly argue that any extension be resisted, firstly on the basis that unregistered rights are not always certain, definite and clear (see our comments above, for example). There can be much confusion in determining who owns the rights and what rights exist and we do not consider it appropriate for such rights to be subject to criminal sanctions. In particular if no cases or only a few cases have been brought under the criminal sanctions available for the deliberate copying of registered designs this would also support that the provisions should not be extended, as this would put yet more pressure on Trading Standards. Design Opinions Service We note that the non-binding Design Opinions Service has not yet been introduced and we look forward to the introduction of this service in the future.

Appeal to Appointed Person We are pleased to note that this has been introduced and gives greater flexibility to users of the system who need to appeal. Other things to improve the design IP framework Hague Agreement We are pleased that the UK has now joined the Hague Agreement in its own right. Inspection of documents We are pleased that an online filing service has been brought in and that number of views to file has been expanded to 12 following the initial limitation to seven. We understand that the IT focus has been elsewhere within the IPO of late and look forward to the IPO being able to refocus its efforts in relation to online inspection of documents and obtaining documents electronically in the not too distant future. Full review of unregistered design law after Brexit We would strongly be in favour of a full review (and simplification) of unregistered design law once the UK has left the EU, provided the existing protection afforded by UK unregistered design right is retained. Prepared by Alicia Instone (Fellow), CIPA’s Designs & Copyright Committee

Intellectual Property Enterprise Court course Wednesday 18 March 2020 (CIPA) • Thursday 16 – Saturday 18 April 2020 (Residential) CIPA is organising the Intellectual Property Enterprise Court course for 2020. With the growing popularity of the IPEC amongst SMEs, and its more EPO-like procedures, more patent attorneys are taking the opportunity to offer competitive litigation services. The aim of this course is to provide experienced patent attorneys (3+ years PQE) with an understanding of the procedures of the IPEC and the skills required to run litigation (the skills being transferable to the UPC) by running a patent case study from issue to trial. Much of the time will be spent in groups of four or five working on the case study, under the supervision of a tutor. There will also be plenary sessions dealing with procedural law, case management and practical aspects of running a case and preparing for trial. There is nothing like a “long weekend” course, with hands-on experience for delivering the required levels of competency and confidence to act. See the CIPA website for more details.

CIPA JOURNAL

DECEMBER 2019

www.cipa.org.uk

AMICUS BRIEF

EPO – G 3/19

Amicus curiae brief in case G 3/19 – article 164(2) EPC On 30 September 2019, pursuant to Article 10 of the Rules of Procedure of the Enlarged Board of Appeal, CIPA submitted an amicus curiae brief that represented CIPA’s position on G 3/19. See the brief in full online. Prepared by CIPA’s Life Sciences Committee.

1. Questions Referred The President of the EPO has pursuant to article 112(1) (b) EPC, referred the following questions to the Enlarged Board of Appeal (EBA). 1. Having regard to article 164(2) EPC, can the meaning and scope of article 53 EPC be clarified in the Implementing Regulations to the EPC without this clarification being a priori limited by the interpretation of said article given in an earlier decision of the Boards of Appeal or the Enlarged Board of Appeal? 2. If the answer to question 1 is yes, is the exclusion from patentability of plants and animals exclusively obtained by means of an essentially biological process pursuant to rule 28(2) EPC in conformity with article 53(b) EPC which neither explicitly excludes nor explicitly allows said subject matter? The document submitted by the president that contains these questions shall hereinafter be referred to as “the Referral”.

2. CIPA’s Views on the Referral 2.1 Executive Summary For reasons explained in more detail below, CIPA’s views on the Referral are as follows. • Question 1 is seeking to obtain a “second opinion” from the EBA upon the basis of views expressed by bodies that are not law-making bodies for the EPC (i.e. the European Commission, the EU Council and the European Parliament) or, in the case of the EPO’s Administrative Council, that do not have the necessary authority to amend article 53 EPC in circumstances where neither the requirements of article 33(1)(b) nor of article 35(3) EPC have been satisfied)1. • The Referral is inadmissible because each of Questions 1 and 2 fails the test for admissibility under article 112(1)(b) EPC. Questions 1 and 2 both relate to points of law for which: – there are no “different” decisions in the sense of article 112(1)(b) EPC; and Volume 48, number 12

– there is already legal certainty and uniformity by virtue of the decisions of the EBA in G 2/ 12 and G 2/ 13 as followed in T1063/ 18. Further answers from the EBA are not required to establish legal certainty or uniformity. • The EC Notice2 is not a relevant “legal development” because it has no legal authority. That Notice therefore does not cure the inadmissibility of Question 2. • The interpretative supremacy afforded to the Boards of Appeal means that the interpretation afforded to an article of the EPC by the Boards of Appeal shall prevail in the event of any divergence in views between the AC and the Boards of Appeal. There is therefore no basis in the EPC for application of article 112(1)(b) EPC “by analogy”. • Even if the EBA agrees that the Referral is inadmissible, CIPA is of the view that there is a pressing need for the EBA to make a clear statement to the effect that the EC Notice is not “an international treaty relating to patents or European DECEMBER 2019

CIPA JOURNAL

AMICUS BRIEF

bring to the attention of the EBA is article 267 of the Treaty on the Functioning of the European Union (TFEU). That article sets out the preliminary reference procedure, whose purpose that procedure is to provide “a fundamental mechanism of European Union law aimed at enabling the courts and tribunals of the Member States to ensure uniform interpretation and application of that law within the European Union”11. According to case law of the CJEU12, any “court or tribunal against whose decisions there is no judicial remedy under national law” must use the preliminary reference procedure in circumstances where interpretation of a provision of EU law is relevant to national proceedings and the interpretation is neither: – acte éclairé (that is, already the subject of a ruling from the CJEU); nor – acte clair (that is, so obvious that no reasonable doubt is left). This is precisely the situation for the interpretation of article 4(1) (b) of the Biotech Directive as set out in the EC Notice, on the grounds that: – the CJEU has not yet interpreted article 4(1)(b) of the Biotech Directive (meaning that the interpretation in the EC Notice is not acte éclairé); and – the prevailing, judicial interpretation of article 4(1)(b) of the Biotech Directive (i.e. that provided in the decision of the Court of Appeal of The Hague in Cresco v Taste of Nature) is directly contradictory to that in the EC Notice, which latter interpretation is therefore self-evidently not acte clair. Thus, without breaching the provisions of article 267 TFEU, the interpretation of article 4(1)(b) of the Biotech Directive as set out in the EC Notice cannot be applied (at this time) by a final instance court or tribunal of an EU Member State unless and until the CJEU has ruled that said interpretation is correct. The EBA is clearly a “court or tribunal against whose decisions there is no judicial remedy under national law”. The EBA’s rulings also have effect in (or in respect of) EU Member States. However, according to G 2/06: “Whereas EPO Boards of Appeal have been recognized as being courts or tribunals, they are not courts or tribunals of an EU member state but of an international organization whose contracting states are not all members of the EU” (emphasis added). In the light of G 2/06, it is therefore clear that the EBA is incapable of making the reference to the CJEU that, at this time, would be mandatory under EU law for any court or tribunal of final instance contemplating applying the interpretation of article 4(1) (b) of the Biotech Directive as set out in the EC Notice. CIPA acknowledges that the EBA is bound only by the provisions of the EPC, and so is not obliged to ensure that the EPC is interpreted in a manner that honours EU law obligations 30 CIPA JOURNAL

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EPO – G 3/19

of EPC Contracting States. Nonetheless, CIPA is of the view that it will be important for the EBA to take into consideration the facts that: – applying (to article 53 EPC) the interpretation of article 4(1)(b) of the Biotech Directive as set out in the EC Notice would lead to rejection or invalidation of claims to plants or animals produced by essentially biological processes, and would thereby make it impossible for patent applicants or patent proprietors to secure the preliminary reference to which they are entitled under article 267 TFEU; but – maintaining the interpretation of article 53 EPC as set out in G 2/12 and G 2/13 would, if it led to the grant of patents containing claims to plants or animals produced by essentially biological processes, enable courts of EU Member States to make a preliminary reference to the CJEU in connection with any disputes relating to the validity of such claims. In other words, CIPA is of the view that it will be important for the EBA to take into account that only maintenance of the interpretation of article 53 EPC as set out in G 2/12 and G 2/13 would lead to an outcome that honours the obligations of the EU Member States under article 267 TFEU.

2.6 CIPA’s Proposed Answer to Questions 1 and 2 In the event that the EBA admits or comments on the Referral, CIPA proposes the following answers to Questions 1 and 2. Firstly, for the reasons discussed in sections 2.5.1 and 2.5.3 above, CIPA’s view is that Question 1 should be answered as follows. In view of article 164(2) EPC, the meaning and scope of an article of the EPC, as established in an earlier decision of the Boards of Appeal or the Enlarged Board of Appeal, cannot be modified by way of an Implementing Regulation to the EPC that is deemed applicable to patents and applications filed before the date of entry into force of that Implementing Regulation, and also cannot be modified by the Administrative Council other than by way of amendments (to Parts II to VIII and Part X of the EPC) that satisfy the requirements of both of articles 33(1)(b) and 35(3) EPC. Finally, CIPA’s view is that, for the reasons discussed at sections 2.5.4 to 2.5.13 above, Question 2 should be answered as follows. The exclusion from patentability of plants and animals exclusively obtained by means of an essentially biological process pursuant to rule 28(2) EPC conflicts with article 53(b) EPC. According to article 164(2) EPC, the provisions of article 53(b) EPC therefore prevail. Prepared by CIPA’s Life Sciences Committee. The brief can be seen in full on CIPA’s website. www.cipa.org.uk

Shanks v Unilever In October 2019, the Supreme Court decided in Shanks v Unilever [2019] UKSC 45 that an employee whose invention delivered significant profits to his employer was entitled to £2m compensation. By Chris Ryan (Associate)

he journal has reported previously on the earlier stages of Professor Shanks’ 13-year battle to obtain compensation for the patented invention he made while an employee within the Unilever Group. The basic facts of the case are probably well known by now. For convenience they are summarised in the box opposite. As the case came before the Supreme Court in February 2019 the questions to be determined1 were these.

1. Was it the case that, “having regard among other things to the size and nature of the employer’s undertaking” £24 million constituted an “outstanding benefit” to that employer – section 40(1)? 2. If so what payment to the employee would constitute a “fair share (having regard to all the circumstances) of the benefit which the employer has derived… from the patent…” – section 41(1)? 3. Should any fair share payment be increased to reflect the impact of time on the real value of the payment? The answers were provided in a single judgment given by Lord Kitchin, with which the other four members of the Court agreed2. Each issue will be considered in turn.

Outstanding benefit Lord Kitchin said that the word “outstanding” was: “…an ordinary English word meaning exceptional or such as to stand out and it refers here to the benefit (in terms of money or money’s worth) of the patent to the employer rather than the degree of inventiveness of the employee.” (paragraph 39) In assessing whether the benefit generated by the Shanks patents was outstanding in those terms the Court sought answers to a number of subsidiary questions.. Volume 48, number 12

The first question was whether the “employer” was the Unilever research subsidiary that entered into the contract of employment with Ian Shanks, or the Group Parent that took an assignment from the subsidiary of all rights in the invention and thereafter patented the invention and earned the income derived from the patents? £24 million dwarfed the modest income normally earned by the non-trading subsidiary but was itself dwarfed by the turnover and profit achieved by the Group Parent, especially when the royalty income was spread over the years during which the various licences existed. The Supreme Court decided that the research subsidiary was “the inventor’s actual employer”. The second question was what benefit did that employer receive. At its simplest, it received just £100 in exchange for assigning its rights in the invention to the Group Parent. But Parliament evidently anticipated that intra-group transfers for a nominal consideration might be used to thwart an employee’s rights. So, it provided, in section 41, that if the benefit arose, not from direct exploitation, but from an assignment to a “person connected with the employer” then the benefit “shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that [connected] person had not been connected with him.” The Court of Appeal considered this point at an earlier stage of the same proceedings. That was in 2010 on an appeal, via the High Court, from a preliminary determination by the IPO hearing officer3. The Court of Appeal decided that the research subsidiary, as assignor, should be treated as having benefited from the full £24 million in fact paid to the parent company assignee. As the assessment of what an outstanding benefit is must be considered “having regard to the size and nature of the employer’s undertaking” the Supreme Court next had to address the third question of what the employer’s undertaking was. It might be said that the use of the possessive descriptor “employer’s” indicated that the undertaking to which it refers DECEMBER 2019

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UPDATE

CHINA

Comments: I believe these changes were introduced due to invalidation petitioners changing their mind on the above issue during hearing. The above changes are sensible, as after all the Re-examination and Invalidation Department of the Patent Office (RID, formerly known as the Patent Re-examination Board) has to find a starting point for inventiveness attack with multiple combinations of references. The message is: if you do not give us one, we are going to use the default.

Conclusion

(j) Changes on order of examination

• • •

The major changes are as below: 1. The order of preliminary examination for invention patent, utility model and design patent is generally in accordance with the order of the filing of the application. 2. The order of substantive examination for invention patent application is in accordance with the order of the filing of the request for examination. 3. For applications having great significance to the interest of the State or the public, it is possible to prioritize the examination of these applications upon request of the applicant or the competent authorities concerned. However, for applications in which both invention patent and utility model application have been filed (on the same day to avoid double-patenting), no priority on examination will be given.

It could be noted that many of the above proposed changes are practical and should be welcomed by applicants and practitioners. In particular, the following changes are encouraging, at least to me: •

Changes to allow inventions involving technologies for separating or obtaining stem cells from human embryo fertilized within 14 days without any in vivo development. Examination of inventiveness. Stipulations on interview with examiner. Changes on order of examination, and permitting delay to examination.

The implementation of these changes is expected to bring the practice at CNIPA closer to the international norm. On the other hand, measures on divisionals, particularly further divisional from an already filed divisional, and on assignments are worrying. The message I got is the filing of divisional is not welcomed. Toby Mak (Overseas Member), Tee & Howe Intellectual Property Attorneys.

4. Delay of examination of an invention patent application or design patent application from between one and three years may be requested by the applicant. For an invention patent application, the request for delay of examination shall be filed at the filing of the request for examination. For a design patent application, the request for delay of examination shall be filed at the filing of the design patent application. While CNIPA could remove the delay on its own initiative, the revised guidelines do not specify whether the applicant is allowed to lift the delay. Comments: At present, the only way to accelerate examination of a Chinese invention patent application filed by a foreign applicant is by PPH. Although (3) would be a welcomed change, this is less attractive than PPH as it is subject to CNIPA’s determination on whether the application has great significance to the interest of the State or the public. (4) is another welcome change. At present there is no formal mechanism to delay the examination of an invention patent application. As the readers may be aware, there are numerous reasons to delay examination, for example maintaining pendency of a parent application as long as possible to retain the chance to file divisionals voluntarily to cover various important commercial aspects of an invention. 40 CIPA JOURNAL

DECEMBER 2019

www.cipa.org.uk

Statistics on PEB Examinations PEB is an examination agency accredited by IPReg to run both foundation and final examinations. The analysis of the 2018 results shows that completing a longer training period before sitting the examination for the first time appears to be beneficial with the pass rate rising to 80% and 70% for PEB foundation candidates who waited two years before sitting FD1 and FD4, respectively. The exemption from FD2 and FD3 for candidates who are successful in the corresponding EQE examination appears to be used by a significant proportion of candidates and the removal of the separate chemical and electromechanical papers in the EQE in 2017 does not appear to have had any noticeable impact. By Julia Gwilt. (Fellow)

As shown in Figure 1, for all the examinations except FD1, the candidate numbers peaked in 2017 and have dropped away slightly in 2018. The numbers are still higher than in 2014, which suggests that the number of trainee attorneys being recruited into the profession has increased in this time frame. There are considerably more candidates sitting FD1 and FD4 than FD2 and FD3, which suggests that many candidates are relying on their EQE exemptions. Figure 1 also shows that the number of first-time sitters for each of FD1 and FD4 is approximately equal to the total number of candidates sitting FD2 and FD3. Figure 2 shows how many different candidates have enrolled in the UK examinations between 2014 and 2018 and the proportion who are yet to pass. The total number of candidates for FD1 and FD4 in this five-year period is over 700 and is significantly higher than the total for FD2 or FD3. In this time frame, over 40% of the candidates who have attempted FD2 at least once have not passed the drafting examination. Figure 1 suggests that many UK candidates are not attempting FD2 and FD3 and Figure 2 shows that even if candidates attempt FD2, a large proportion are ultimately not successful. This suggests that a significant proportion of candidates are relying on the EQE exemption for drafting to qualify.

Figure 1: Number of candidates from 2014-2018 290

Number of candidates

General trends

FD1 (Total) 240 FD1 (new) FD2 190

FD3 FD4 (Total)

140

FD4 (new)

90 2014

2015

2016

2017

2018

Figure 2: Proportion of the total number of candidates who have not passed

Repeat sitting Figure 1 also shows the number of new candidates who are sitting FD1 and FD4 for the first time each year and this is examined in Volume 48, number 12

DECEMBER 2019

CIPA JOURNAL

ARTICLE

REGULATION

would instead offer an additional route into regulation. In principle, the same regulatory requirements should be applied to those who hold a professional title as to those who do not. To do otherwise would be to create an unlevel regulatory playing field. The report accepts that there might once have been – and in many cases continues to be – a compelling need for lawyer advice and its regulation, justifying the traditional reservation of certain activities to those who are legally qualified. However, it also allows an alternative in relation to those activities or situations where such a monopoly has become inappropriate in the 21st century. Such an alternative approach need not be seen necessarily only in terms of an increase in the scope of sector regulation. The position now is that in fact all legal services are within the scope of regulation if they are provided by someone who is already legally qualified and authorised to practise. Unfortunately, the current structure will not admit those who are not legally qualified. This is now an unnecessary restriction that inhibits further access to legal advice and representation as well as to regulated innovation, competition and technological substitution.

(c) Adopting such a risk-based approach would mean that more of the cost and burden of regulation could be selfselected and cumulative, depending on the commercial or operational choices that providers elect to make. As such, it would offer a more targeted and proportionate response to the public and consumer risks within the legal sector.

The case for change

(f ) A framework that is constructed around ‘providers’ of ‘legal services’ could apply regulation in ways that the current framework cannot to the providers of lawtech that substitutes for lawyers

The potential benefits of the alternative approach explored in the interim report are:

(d) This approach would enable those who are currently unable to enter the regulatory structure to choose to do so, for the benefit of their consumers. This should lead to an increase in regulated access, competition and innovation in legal services. (e) This approach could also apply to those providers who are moved (or move themselves) outside the current regulatory framework, for instance by having been struck off, disbarred, or even simply retired. It would constrain their current option to set themselves up as an unregulated paid adviser in respect of non-reserved activities.

(a) It would be easier for consumers to check whether their provider or prospective provider is registered or not (including for higher-risk activities that attract additional regulatory requirements and protection). This is a simpler starting point for consumers than the current complex mix of factors.

An important question for the interim stage of the Review is whether such a longer-term alternative approach would sufficiently address the identified shortcomings of the current framework, and whether these projected benefits would be worthwhile.

(b) A ‘layered’ approach to regulation would allow before-, during-, and after-the-event interventions to be applied to providers based on the risks of the services that they actually offer.

Professor Stephen Mayson, Honorary Professor, Faculty of Laws, University College London. See more at: www.ucl.ac.uk/ethics-law/ publications/2018/sep/independent-review-legal-services-regulation

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DECISIONS

PATENTS: UK

Patent decisions The UK patent court case reports are prepared by John Hull, Anna Hatt, Nick Bebbington, Deborah Hart, Matthew Ng and Sarah-Jane Crawford of Beck Greener. All the court decisions listed in this section are available on the free-to-use website www.bailii.org.

Compensation of employees for certain inventions | Outstanding benefit | Fair share Shanks v Unilever Plc & Ors [2019] UKSC 45 • 23 October 2019 Lady Hale, Lord Reed, Lord Hodge, Lady Black and Lord Kitchin This Supreme Court decision relates to the compensation of employees for certain inventions under section 40 of the Patents Act 1977. The appeal was upheld and the appellant found to be entitled to compensation of £2m. The lead judgment was given by Lord Kitchin, with the other judges agreeing. The decision was discussed on the IPKat blog (http://ipkitten.blogspot.co.uk) on 23 October 2019. The Court of Appeal judgment was given by Patten, Briggs and Sales LJJ ([2017] EWCA Civ 2), and the High Court judgment was given by Arnold J ([2014] EWHC 1647 (Pat)). The decision in the first instance was given by the Comptroller-General of Patents (acting by Mr Julyan Elbro, Divisional Director) (BL O/259/13). European Patent (UK) No. 170375 resulted from an invention made by Professor Shanks during his employment at Unilever UK Central Resources Ltd (“CRL”) who later assigned the patent to Unilever plc. The patent related to an Electrochemical Capillary Fill Device or ECFD. Biosensors incorporating this technology went on to play a key role in the commercialization of glucose testing products from which Unilever derived licensing income. Professor Shanks made an application for compensation under section 40. At first instance, the hearing officer found that, having regard to the size and nature of Unilever’s business, the benefit provided by the Shanks patents fell short of being outstanding. The hearing officer went on to consider what a fair share of the benefit would have been had he considered it to be outstanding and concluded that 5% would have been appropriate, amounting to about £1.2m. He declined to increase this figure to take into account the time value of money. An appeal to the High Court against the hearing officer’s decision was dismissed, the judgement holding that the hearing officer had made no error of principle in finding that the Shanks patents were not of outstanding benefit to Unilever. The judgment held that a fair share of the benefit would have been only 3% and also held that it was not appropriate to take into account the time value of money. An appeal to the Court of Appeal was Volume 48, number 12

also dismissed on the basis that the hearing officer had made no error of principle in considering the issue of outstanding benefit. However, the court held that there would be cases where the change in the value of money over time would have to be recognised in determining whether the benefit was outstanding, and that it was likely to be relevant in assessing what amounted to a fair share of that benefit. The issues to be decided by the further appeal were identified as: 1. What are the principles governing the assessment of outstanding benefit to an employer and did the hearing officer apply them correctly? 2. How should a fair share of an outstanding benefit be assessed and were the hearing officer and Arnold J wrong in their assessment?

Outstanding beneﬁt Lord Kitchin noted that the case law was helpful to a point, but no substitute for the statutory test which requires the benefit to be outstanding: “Put another way, in relation to what must the benefit from the patent be outstanding? Which factors may be taken into account in making that assessment?” Lord Kitchin noted that the Patents Act provides some guidance: “It says that the court must have regard among other things to the size and nature of the employer’s undertaking. But this gives rise to two further questions which were the subject of a good deal of argument before us. What is the employer’s undertaking for this purpose? And what is the relevance of that undertaking’s size and nature?”

Employer’s undertaking Lord Kitchin noted that the case presented particular difficulties: “CRL is part of a larger group of companies and … the work carried out by CRL’s researchers was exploited by that larger group as a whole. This gives rise to the question whether the relevant undertaking is CRL or the whole or a part of the larger group of which it forms a part, Unilever.” DECEMBER 2019

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