Meaning
Statutory provisions in the United Kingdom govern the default ownership of patentable inventions created by employees during their employment relationship. This section of the law establishes that an invention belongs to the employer if it was made in the course of the employee’s normal duties, or duties specifically assigned to them, and an invention might reasonably be expected to result from the carrying out of those duties. It also covers inventions made by employees who have a special obligation to further the interests of the employer’s undertaking, such as senior directors or executives.
If these conditions are not met, the invention belongs to the employee as a matter of law, and any contractual clause that purports to assign such non-employment inventions to the employer prior to their creation is void. This statutory boundary represents a critical risk area for technology startups in the UK, as it limits their ability to claim ownership of employee-developed technologies that fall outside their core job descriptions.
Duty Boundaries
Determining whether an invention was created in the course of an employee’s “normal duties” is a highly fact-specific inquiry that frequently leads to legal disputes. The courts evaluate the employee’s job description, their actual day-to-day activities, the level of supervision they received, and whether they were specifically tasked with solving the problem that led to the invention. For example, a software engineer hired to develop a mobile application would likely be found to have created any app-related patents in the course of their duties.
However, if the same engineer develops a novel hardware component, the invention may be deemed to fall outside their normal duties, and the patent rights would default to the employee. To protect their intellectual property, UK startups must ensure that their employee job descriptions are broad, accurate, and kept up to date to reflect the actual scope of work performed.
Venture Capital
Institutional investors and acquirers conducting due diligence on UK-based technology startups will carefully review all historical employee agreements and job descriptions for compliance with Section 39. The investor’s legal team must be confident that the startup holds secure, exclusive title to all core technologies, and that no key patents are vulnerable to being reclaimed by current or former employees. Gaps in the startup’s intellectual property ownership can occur if the technology was developed by an employee whose job description did not cover the invention, or if the employee signed an agreement that was deemed void under the statute.
If such issues are discovered, investors may require the startup to obtain executed confirmatory assignments and pay additional consideration to the employee inventors to secure the title before closing the investment round.
Inventor Compensation
The UK Patents Act also contains provisions that allow an employee inventor to apply for additional compensation if their invention has been of outstanding benefit to the employer’s business. This statutory right to compensation is separate from the default ownership rules and cannot be excluded or limited by the employment contract. The court or the Comptroller of Patents can award the employee a fair share of the benefit derived from the patent, taking into account the size and nature of the employer’s business and the employee’s contribution to the technology.
While “outstanding benefit” is a very high threshold to meet, the risk of compensation claims must be managed by startups by implementing structured employee incentive and reward plans that recognize and compensate key inventors for their contributions to the company’s patent portfolio.
