Background
Dr David Parsons, an analytical chemist employed by medical-products company Convatec from 1991 to 2023, claimed compensation under section 40 of the Patents Act 1977 for inventions protected by seven patent families. He alleged that products embodying the inventions generated approximately $3.2 billion in global sales through 2021 and valued his claim, at its highest, at about £366 million. Convatec disputed the claim, including Parsons’ entitlement to rely on the aggregate benefit of multiple inventions or patents where none was individually of outstanding benefit.
The Patents Court declined to resolve the aggregation issue before trial. In separate costs-budgeting proceedings, it provisionally approved approximately £4.7 million in Parsons’ future costs and £6.5 million in Convatec’s, but held that section 106 of the 1977 Act did not apply at the budgeting stage. Parsons appealed both decisions. The underlying compensation claim remained listed for a 37-day trial in February 2028.
The Court’s Holding
The Court of Appeal allowed the first appeal. It held that section 40(1) permits the court to consider the aggregate benefit derived from more than one invention, more than one patent, or combinations of inventions and patents when deciding whether the employer received an outstanding benefit. Convatec’s proposed categorical rule against aggregation was inconsistent with the statutory scheme and could produce irrational or unworkable results, particularly where one patent covers several inventions, one invention is protected by several patents, or overlapping inventions and patents jointly produce the commercial benefit. The challenged parts of Convatec’s defence were therefore struck out.
The ruling did not establish that Parsons’ inventions or patents actually produced an outstanding benefit or that aggregation is appropriate on the facts. Those questions remain for trial, where Parsons must identify the particular combinations on which he relies and explain why aggregation is justified.
The Court also allowed the costs appeal. It held that section 106(1), which requires consideration of all relevant circumstances including the parties’ financial positions, applies to costs budgeting because budget approval is an important step toward determining recoverable costs. After setting aside the judge’s discretionary decision, the Court limited Convatec’s approved future costs to £4 million, finding that figure fair to both parties in light of Parsons’ limited means, his need for after-the-event insurance, the scale of the claim, and Convatec’s legitimate defence requirements.
Key Takeaways
- Section 40(1) does not require each invention or patent to be assessed in isolation; related or interacting inventions and patents may be evaluated collectively for outstanding benefit.
- Aggregation is not automatic. Its appropriateness is a fact-sensitive question, and the employee must specify the combinations relied upon and justify treating them together.
- Section 106(1) applies during costs budgeting, allowing the court to consider financial inequality and access-to-justice concerns before any final costs award.
Why It Matters
The decision rejects a bright-line interpretation that could allow employers to defeat compensation claims by dividing commercially valuable technology among multiple inventions or patents. It gives employee inventors a potentially broader route to establish outstanding benefit while preserving the trial court’s responsibility to decide whether aggregation is justified in each case.
The costs ruling also gives courts a mechanism to address unequal resources before trial, when exposure to an employer’s costs may affect an employee’s ability to insure or finance a claim. The Court nevertheless emphasized balance: section 106 does not eliminate litigation risk or prevent an employer from recovering a reasonable budget for defending a substantial claim.