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Companies should encourage their employees to be creative and own intellectual property because of the resulting commercial benefits, argues Bernd Janssen of Uexküll & Stolberg.
A company can make an impression on a market by providing quality products based on innovative ideas. What could be more obvious in this context than making use of the expertise and dedication of competent and motivated employees and converting their ideas into the company’s intellectual property?
The company should support and motivate its employees to develop and communicate their own solutions to problems. An essential part of this is establishing an ‘inventive culture’ and implementing measures to strengthen the reporting, claiming and realising of inventions of employees. Experience has shown that failure to establish such a culture is ultimately associated with negative consequences for companies.
According to the principles of German employment law, all work products created in the employment relationship remain with the employer. According to German patent law, however, it is initially the inventor who has the right to a patent. This conflict is resolved by the German Employees’ Inventions Act, which places obligations on and grants rights to both employees and employers that are intended to lead to a fair balance of interests between the parties.
An employee’s most important obligation arising from the act is the duty to report the invention. This applies to all inventions that have resulted from the employee’s obligations or that are based on the company’s experiences (so-called service inventions). Any employee who has made a service invention is obliged to report it (upon completion) to the employer, and in doing so to indicate that it is a notification of an invention (section 5 of the act). The report is to be made in writing and separately, ie, not be included in other reports.
"Establishing an inventive culture, therefore, does not just involve motivating employees to develop solutions to problems, but also supporting the reporting of employee inventions by issuing ready-made forms."
The employer is then in a position to make a claim to the service invention (section 6 of the act), and with the claim, all financially exploitable rights to the service invention pass to the employer. In return, the employee receives the right to appropriate compensation from the employer, the type and extent of which is to be determined by an agreement between the employer and the employee. However, many employees do not know about these rights and obligations. It is therefore necessary to carry out appropriate information campaigns and issue guidelines on the proper reporting of service inventions.
In the report, the employee is to describe the technical problem, its solution, and the implementation of the service invention. The report should indicate instructions or guidance officially issued to the employee, the company knowledge or facilities that were used, the collaborators, the type and scope of their collaboration, and should highlight what the employee drafting the report sees as his or her own part.
If the report does not meet the requirements of paragraph 2, section 5 of the act, the employer can request a supplement. Establishing an inventive culture, therefore, does not just involve motivating employees to develop solutions to problems, but also supporting the reporting of employee inventions by issuing ready-made forms.
Also, it is expedient to appoint a contact person for the employee. This does not have to be an in-house patent expert; in smaller businesses, external patent attorneys or lawyers are frequently appointed for this.
Following receipt of the invention report, the employer can claim the service invention. For all employee inventions reported after October 1, 2009, however, the claim is considered to be declared as long as the employer has not released the service invention within four months of the reporting in the proper form (ie, there is a legal presumption of a claim).
However, it is recommended to document the receipt and claim of the service invention in order to establish proper transfer of rights of the service invention from the employee to the employer.
If the employer (actively) releases the service invention, all rights to the invention remain with the employee, and he or she can find another way to exploit the service invention that has been released.
The duty to report further applies to all other types of inventions that the employee may have made during the employment and that are not service inventions (so-called free inventions). If an invention is reported to the employer and the employee states that it is a free invention, then the employer has three months to challenge this. If it is not challenged, a service invention that an employee has stated is free can no longer be claimed by the employer as a service invention.
The employer’s duty
With the claim to the invention, the employer takes over a range of obligations. According to section 13 of the act, the employer must without delay apply for IP rights to be granted for the service invention, at least with effect in Germany. Furthermore, all monetary advantages that accrue to the employer from the service invention are to be shared with the employee inventor.
The legal claim to compensation is payable as soon as the employer establishes the economic usability of the invention. As a rule, this requires the acceptance of use or licensing. The type and extent of the compensation are to be established within a reasonable period after the claim of the service invention by an agreement between the parties of the employment contract.
Instead of a continuing payment, a lump-sum fee is also permissible and is widely used. Here too, patent attorneys or appropriately qualified lawyers are able to lend support in an advisory capacity.
How can employees be motivated to develop technical solutions to problems? The prospect of the expected compensation is a significant motivating factor and this should be explained to them. However, in our experience, recognition within the business plays an almost greater role. The most successful innovative companies exhibit particularly successful employee inventions in a prominent location within the company, together with the names of the inventors. Others have created whole patent galleries in the entrance area.
Ultimately, the entire company benefits from the exploitation of employee inventions, because a technological advancement and unique selling points also protect and increase the value of the company.
Bernd Janssen is a German and European patent attorney and a partner at Uexküll & Stolberg in Hamburg. He works in the chemistry and trademark teams at the firm, and his activities include drafting patent applications, patent prosecution and litigation. He can be contacted at: firstname.lastname@example.org
Bernd Janssen, Uexküll & Stolberg, employee inventions, patent, intellectual property,