1 October 2012PatentsRahul Vartak

Employee inventions: renumerations and penalties

A patent is an exclusive right granted for disclosure of an invention. An inventor will disclose the new invention only if he is rewarded; otherwise he may work it secretly. In consideration of the grant of exclusivity for a limited period, the inventor discloses the details of the new invention.

However, individual inventors may not have the financial resources and the machinery to invent. Usually, large corporations employ technically empowered personnel to work and invent. Many countries have specific provisions in their national patent law for additional rewards to employee inventors for the patented invention over and above their salary. In this way, rewards percolate down the organisation to the employee inventor.

Other countries require the first filing of a patent application in the country where the inventor resides. Violation of this requirement may lead to penalties.

UK

The UK Patent Act specifically provides guidance on the rights to employee inventions. According to Section 39 of the act, an invention made by an employee belongs to his or her employer if made in the course of the normal duties.

However as per Section 40 of the act, an employee should receive additional remuneration if the patent is of outstanding benefit to the employer. Even in case of compulsory licensing, under Section 50(b) of the UK Patents Act, the comptroller can exercise his powers so that that the inventor or other person beneficially entitled to a patent shall receive reasonable remuneration.

Along with such beneficial employee remuneration laws, Section 23 of the UK Patents Act applies restrictions on filing patent applications abroad by UK residents. The person who files or causes to be filed a patent application in contravention of Section 23 shall be liable to a fine not exceeding £1,000 ($1,500) or imprisonment for a term not exceeding two years, or both.

Netherlands, Hungary & Sweden

The Patent Act in the Netherlands under Article 12 (6) and Article 14 of The Patent Act of Hungary provide equitable remuneration for the employee inventor related to the pecuniary importance of the invention.

In Hungary, the amount of the remuneration must be equal to that which would be payable by the employer for a patent licence. Section 6 of the Swedish Patent Act states that the inventor should be offered a reasonable remuneration for his or her invention by the employer.

Italy

In Italy, an employee invention belongs to the employer, but the employee is entitled to equitable remuneration, to be defined depending on the importance of the invention.

The Italian Patent Law requires under Article 27 that persons residing in Italy file the patent application first in Italy or obtain authorisation for foreign filing. Any violation of Article 27 attracts penalties of a fine of not less than €30,000 ($37,000) or imprisonment. If the violation was committed after denial of the authorisation, imprisonment for not less than one year will be imposed.

Germany

According to the German Employee Invention Act, if the employer claims an invention the employee is entitled to remuneration, the amount of which is determined by the economic usability of the invention, the employee’s tasks and position within the firm, and the firm’s share in the emergence of the invention.

At the same time, Section 52 of the German Patent Act requires that a patent application containing a state secret may be filed outside Germany only with the written consent of the competent highest federal authority. Any person who files a patent application in violation of this requirement shall be liable to imprisonment not exceeding five years or a fine.

France

According to Article L611-7(1), inventions made by a salaried person in the execution of a work contract comprising an inventive mission corresponding to his effective functions or of studies and research which have been explicitly entrusted to him, will belong to the employer. The employer is obliged to pay an additional remuneration for the invention; the amount of additional remuneration was in the past in the range of one to three times the monthly wage.

However, in December 2000, the Paris Cour de Cassation awarded an inventor an additional remuneration of 4,000,000 French francs (approximately $830,000) based on the exploitation of a patent relating to a pharmaceutical composition for the treatment of prostate cancer. French patent law also requires legal persons residing in France to file the application in France prior to foreign filing. A breach of these provisions can incur sanctions including imprisonment and a fine.

Japan

In Japan, an employee inventor shall have the right to a reasonable remuneration for enabling the patent right to pass to the employer. However, there is no requirement in Japan to obtain a foreign filing licence.

India

Section 39 of the Indian Patent Act requires a resident in India to file a patent application first in India or to obtain a foreign filing licence. Contravention of Section 39 includes punishment with imprisonment. However there is no provision in the Indian Patent Act which provides for remuneration to the employee inventor.

The patent filing strategy is not the task of an employee inventor and an employee might never know the country where the application has first been filed. However, the patent laws of most countries requiring a foreign filing licence hinge on the residency status of the inventor.

The person resident would mean a legal person or a corporation with its business in that country, but the patent law of these countries does not specifically exclude individual inventors from liability.

Irrespective of whether such penal provisions are justified in countries where the employee inventor receives additional remuneration, it might be questionable in countries where the employee inventor does not receive any additional remuneration beyond the usual salary, yet has to bear the burden of potential imprisonment.

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