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PROSYSCOR LIMITED V. NETSWEEPER INC AND OTHERS [2019] ECHW 1302 (IPEC)

The recent case of Prosyscor v. Netsweeper concerned a dispute of ownership of a patent application, where the applicant’s employer claimed ownership. The judgement, given by the Presiding Judge of the Intellectual Property Enterprise Court, HHJ Hacon, considers the principles underpinning employee inventions.

Facts

Bradley Kite was employed by Netsweeper from 2008. He had taught himself how to create computer programs while at school, and then worked as a software developer. He took up employment at Netsweeper as a Systems Engineer in the development team, responsible for the “architecture, design and implementation and coding of key components and product capabilities” for Netsweeper.

In March 2009, Mr Kite began to develop an idea of how to develop authentication software, i.e. the software that permits numerous computers which have the same IP address to separately access or block access to websites. Such software has particular application in schools, where different users can then be set different levels of permission for internet use.

On 30 March 2009, Mr Kite shared a summary of this idea with Netsweeper, on its intranet. At various points over 2009, Mr Kite provided updates to the intranet. In November 2010, Mr Kite named the software “Authent”, and on 2 November, Prosyscor was incorporated to act as the vehicle for the commercialisation of Authent.

Meanwhile, in early 2011, Netsweepers began work on a system which was to be called “Authentication Override”, to be used in schools as “Authent” was intended. When Netsweepers sought to register a patent for their system, Mr Kite sold his rights in Authent to Prosyscor, which then started proceedings, claiming ownership of the idea.

The Patents Act 1977

Section 39 provides: 

(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. 

Analysis

The judge reviewed the authorities including the leading case of LIFFE v. Administration and Management v. Pavel Pinkava [2007] EWCA 217, and drew the following general principles:

(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.

The judge reviewed the contractual documents and descriptions of Mr Kite’s employment duties, noting in particular the duty to write software to create “product capabilities”. He had no doubt that creating software such as Authent “fell squarely within the normal duties” of his employment.

It was no answer to this that Mr Kite had worked on Authent at home, in his own time and on his own computer. Although the time and place of the devising of an inventive concept could be relevant, they were not determinative. In a case where there is otherwise doubt about whether an individual’s acts were carried out in the course of their normal duties, such factors may tend to indicate that the acts were outside normal duties. But where the acts were very much the sort of acts which he individual was paid to carry out for the company, it would make no difference. Acts of such a nature as to be within the normal course of an employee’s duties do not cease to be so because the employee decides to carry out those normal duties at home and outside office hours.

Comment

This judgment provides clear guidance as to how to assess when an employee invention will belong to the employer. Employees who wish to develop an idea into an invention should consider the risk that s. 39 may apply and if so, seek either to agree with the employer an exemption or to enter into some form of collaboration.

Lucy Bone

Posted: 11.06.2019 at 15:13
Tags:  Comments  Employment Law
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