U-Not-Clever: Unilever loses Supreme Court patent case

February 5, 2020

2 min read

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What's going on here?

Following a 13-year legal battle, the Supreme Court has ruled that Unilever PLC must pay their ex-employee Professor Shanks ÂŁ2m compensation for an invention made 40 years ago.

What does this mean?

Unilever PLC is one of Europe’s largest consumer goods companies, with over 400 products and companies under its roof. One such company, Unilever UK Central Resource Ltd (CLR) employed Professor Shanks in 1982, where he worked to develop an electrochemical capillary device (ECFD). This patent is now licenced out by Unilever, and is the main technology used in diabetics glucose testing kits, a £12-50bn market.

What's the big picture effect?

This story is a good examination of the law on patents. Professor Shanks argued that there had been an “outstanding benefit” to Unilever PLC, something he needed to show in order to claim compensation. Unilever argued that the £24m they made was not an outstanding benefit when compared to their multi-billion pound turnover, or the profitability of other patented products such as their Vienetta ice cream. This view was accepted by the High Court, the Court of Appeal and a hearing officer from the UK Intellectual Property Office. However, in October 2019 the Supreme Court ruled that the assessment of “employer’s undertaking” and “outstanding benefit” had been decided incorrectly. 

Primarily, Lord Kitchin ruled that the original hearing officer had been “wrong in principle” when he decided that CLR’s undertaking was that of the whole of the Unilever group. Instead, the Supreme Court said that CLR’s undertaking was instead to make and provide inventions and patents to Unilever. It was therefore inappropriate to judge the benefit of the patent against several things, such as the profitability of other patented Unilever products, like the Vienetta ice cream, which derive only a small amount of their profit from these patents. In addition, it certainly wasn’t appropriate to compare the profit from the patent to the overall profitability of the Unilever group.

Report written by Hari Majumdar

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