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Remuneration of employees' innovations

Worldwide overview about remuneration of employees' inventions and innovations
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Gian-Lluis Ribechini

on 14 March 2016

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Transcript of Remuneration of employees' innovations

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SPAIN
Patent Law 1986 (last amended 2011)
Inventions made by an employee during the term of his contract, work or service with a company, and which are the result of research that is explicitly or implicitly the object of his contract, shall belong to the employer.

An employee responsible as an inventor shall have no right to additional remuneration for his achievement, except where his personal contribution to the invention and its importance to the company obviously go beyond the explicit or implicit terms of his contract or work.
Ownership of inventions made by a professor as a result of his research responsibilities in a university and which come within the scope of his teaching and research functions shall belong to the university, without prejudice to the provisions laid down in Article 11 of the Institutional Act on University Reform [Ley Orgánica de Reforma Universitaria].

The professor shall nevertheless have the right to participate in the benefits gained by the university from working or assigning its rights in an invention under the terms of paragraph, above. The university statutes shall define the terms and amount of such participation.
Art. 64
Employees' inventions
1. When an industrial invention is made in performance or in execution of a contract or of an employment relationship, whereby the inventive activity is provided for as the object of the contract or of the relationship and for such purpose an employee receives compensation, the rights deriving from such invention are the employer's, subject to the inventor's right to be recognized as the author thereof.

2. If not planned and established a salary, in return for inventive activity, and the invention is made in the performance or fulfillment of a contract or an employment relationship or employment, the rights deriving from the invention belong the employer, but the inventor, except the right to be recognized as the author, it is, if the employer or its assignees obtain the patent or use the invention in a system of industrial secrecy, a fair reward for the determination of which will take into account the importance of the invention, the tasks performed and the salary received by the inventor, as well as the extent to which it has received from the organization of the employer.
To ensure the timely completion of the acquisition process of the patent and the subsequent award of a fair reward to the inventor, may be granted upon request by the organization of the employer concerned, the examination in advance of the application for the issuance of patent.
FRANCE
Intellectual property code 1992 (last amended 2006)
Art. L. 611-7
Where the inventor is a salaried person ... the following provisions:
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, shall belong to the employer. The conditions under which the salaried person who is the author of such an invention shall enjoy additional remuneration shall be determined by the collective agreements, company agreements and individual employment contracts.
Where the employer is not subject to a sectorial collective agreement, any dispute relating to the additional remuneration shall be submitted to the joint conciliation board set up by Article L. 615-21 or by the First Instance Court.

2. All other inventions shall belong to the salaried person. However, where an invention made by a salaried person during the execution of his functions or in the field of activity of the company or by reason of knowledge or use of technologies or specific means of the company or of data acquired by the company, the employer shall be entitled, subject to the conditions and the time limits laid down by decree in Council of State, to have assigned to him the ownership or enjoyment of all or some of the rights in the patent protecting his employee’s invention.
The salaried person shall be entitled to obtain a fair price which, failing agreement between the parties, shall be stipulated by the joint conciliation board set up by Article L. 615-21 or by the First Instance Court; these shall take into consideration all elements which may be supplied, in particular by the employer and by the employee, to compute the fair price as a function of oth the initial contributions of either of them and the industrial and commercial utility of the invention.
United Kingdom
Patents Act 1997
(last amended 2011)
section 40. (Compensation of employees for certain inventions)
Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that—
(a) the employee has made an invention belonging to the employer for which a patent has been granted,
(b) having regard among other things to the size and nature of the employer’s undertaking, the invention or the patent for it (or the combination of both) is of outstanding benefit to the employer, and
(c) by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation of an amount determined under section 41 below.
section 41 (Amount of compensation)
(1) An award of compensation to an employee under section 40(1) or (2) above shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive ...
POLAND
Industrial Property Law 1993 (last amended 2007)
Article 22
1. Unless the parties agreed otherwise, the creator of an invention, a utility model or an industrial design shall be entitled to remuneration for the exploitation by an economic entity of his invention, utility model or industrial design, where such entity enjoys the right to exploit it or the right to a patent, the right of protection or the right in registration under Article 11(3) and (5) or Article 21.

Article 23
The remuneration for the creator of an invention, a utility model or an industrial design, determined and paid under the provisions of Article 22(2) and (3) should be increased, if the profits obtained by the entity prove to substantially exceed the profits taken as a basis for the purpose of determining the remuneration paid.
FINLAND
Act on the Right in Employee Inventions 1967
(last amended 2000)
Where an employer acquires the right in an invention made by an employee by virtue of section 4 or on other grounds, the employee is entitled to reasonable compensation from the employer even if it was agreed otherwise before the invention was made.

When determining the amount of the compensation, particular attention shall be paid to the value of the invention, the scope of the right which the employer acquires, as well as to the terms and conditions of the employment contract of the employee and the contribution which other circumstances connected with the employment had to the conception of the invention.
A teacher and a researcher of a university, college or a similar institution of higher education shall not, in such capacity, be regarded as an employee within the meaning of this Act. This Act shall, however, apply to a teacher at a military educational institution who holds an office or a post in the Defence Forces. (526/1988)
Section 7 a (526/1988)
The employer shall be obligated to provide the employee with information necessary for the determination of the compensation for the invention, specifically the information on the filing and grant of the patents for the invention, as well as on the production quantities and selling prices of the products conforming to the invention, or of the products manufactured by a process conforming to the invention.
SWEDEN
Act on the Right to Employee’s Inventions 1949 (last amended 2009)
The present act relates to inventions patentable within the Kingdom, of employees in public or private employment.

If the employer in accordance with this act or otherwise, appears in whole or in part as assignee of the employee with respect to an invention made by the latter, the employee shall have the right to a reasonable remuneration and what has just been stated shall apply even though something else may have been agreed upon before the coming into existence of the invention.
Instructors at universities, polytechnical institutes or other institutions which fall under the educational system shall not, by virtue of such character, be considered employees pursuant to the present act, but the act shall apply to teachers at the armed forces schools that are career officers.

Then in THE SWEDISH PATENTS ACT:
Anyone who has made an invention which is susceptible of industrial application, or his successor in title, is entitled pursuant to Chapters I to X of this Act to obtain, upon application, a patent for the invention in this country and thereby acquire an exclusive right to exploit the invention commercially.
DENMARK
Act on Employees' Inventions 1986
(last amended 2008)
Patentable inventions produced by employees are governed by the Danish Act on Employees' Inventions, cf. Consolidated Act No. 931 of 18 March 1986 as amended.
Under the Act, the employee is the real owner of the rights to these inventions, but the company can claim the rights hereto, and must pay proper compensation.
Act on Inventions at Public Research Institutions (1999)

The rights to inventions made by an employee at an institution shall be accorded to the employee with the limitations that are a consequence of this Act.

If the rights to an invention which has been transferred to the institution under section 8 of this Act have been exploited commercially, the employee responsible for making the invention is entitled to reasonable compensation from the institution.
If the rights to an invention, on agreement with the institution, are exploited commercially by the employee who has made the invention, the institution is entitled to reasonable compensation.
ITALY
Industrial Property Code 2005 (last amended 2010)
Compensation for an Unlimited Claim
9.–
(1) The employee shall have a right to reasonable compensation as against his employer, as soon as the employer has made an unlimited claim to a service invention.
(2) In assessing compensation, due consideration shall in particular be given to the commercial applicability of the service invention, the duties and position of the employee in the enterprise, and the enterprise’s contribution to the invention.
GERMANY
Law on Employee Inventions 1957 (last amended 2009)
Ascertaining or Fixing Compensation
12.–
(1) The nature and amount of compensation shall be established by agreement between the employer and the employee within a reasonable time after the claim to a service invention.
(2) Where two or more employees have contributed to a service invention, compensation shall be determined separately for each of them. The employer must notify the employees of the total amount of compensation awarded and of the share assigned to each inventor.
(3) Where no compensation agreement is concluded within a
26.–
The rights and duties arising from this Law shall not be affected by termination of the employment relationship.
Employees in Public Service
40.–
Inventions and technical improvement proposals made by employees in enterprises and offices of the Federal Government and state governments, community authorities and other public corporations, corporate bodies and endowed institutions shall be governed by the provisions relating to employees in private employment –with the following provisos:
3. Technical Improvement Proposals
20.–
(1) For technical improvement proposals which afford the employer an advantaged position similar to that obtained from an industrial property right, an employee shall be entitled to reasonable compensation from his employer as soon as the latter exploits the proposal. Sections 9 and 12 shall apply mutatis mutandis.
(2) In all other cases, technical improvement proposals shall be regulated by collective agreements or single–plant bargaining.
Calculating the amount:
"Guidelines for the Remuneration of Employees’ Inventions in Private Employment"
JAPAN
Patent Law 1959 (last amended 2004)
Article 35
(3) Where the employee, in accordance with any contract, employment regulation or any other stipulation, permits the right to obtain a patent for an employee invention or the patent right for an Employee invention, to vest with the employers or grants an exclusive license therefor to the employers the said employee shall have the right to receive appropriate remuneration.
(4) Where a contract, employment regulation or any other stipulation provides for the remuneration provided in the preceding paragraph, the payment of remuneration in accordance with the said provision(s) shall not be considered unreasonable in light of the situation, including the fact that a consultation between the employer and the employee had taken place in order to set standards for the determination of the said remuneration, that the set standards had been disclosed, and that the opinions of the employee on the calculation of the amount of the remuneration had been heard.
(5) Where no provision setting forth the remuneration as provided in the preceding paragraph exists, or where the payment of the remuneration in accordance with the provision(s) of the previous paragraph is considered unreasonable, the amount of the remuneration under Paragraph 3 shall be determined in light of the profit to be received by the employer from the invention, the burden borne and the contribution made by the employer and the benefit received by the employee, in relation to the invention and any other factors.
PEOPLE'S REPUBLIC OF CHINA
Patent Law 1984 (last amended 2010)
Chapter VI Rewards and Remuneration for Inventors and Creators of Service Invention-creations

Article 78
Where an entity to which a patent right is granted fails to conclude with the inventor or creator an agreement on, and fails to provide in its bylaws formulated in accordance with law, the manner and amount of the rewards referred to in Article 16 of the Patent Law, it shall, after the patent for invention-creation is exploited within the duration of the patent right, draw each year from the profits from exploitation of the patent for the invention or utility model a percentage of not less than 2%, or from the profits from exploitation of the patent for the design a percentage of not less than 0.2%, and award it to the inventor or creator as remuneration.
The entity may, as an alternative, by making reference to the said percentage, award a lump sum of money to the inventor or creator as remuneration once and for all.
Where an entity to which a patent right is granted authorizes any other entity or individual to exploit its patent, it shall draw from the exploitation fee it receives a percentage of not less than 10% and award it to the inventor or creator as remuneration.
AUSTRALIA
Patents Act 1990 (last amended 2010)
Part 2—Ownership
15 Who may be granted a patent?
(1) Subject to this Act, a patent for an invention may only be granted to a person who:
(a) is the inventor; or
(b) would, on the grant of a patent for the invention, be entitled
to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person
mentioned in paragraph (b); or
(d) is the legal representative of a deceased person mentioned in
paragraph (a), (b) or (c).
(2) A patent may be granted to a person whether or not he or she is an Australian citizen.
In Australia, the Patents Act does not deal with the circumstances in which the employer is entitled to ownership of a patent for an invention made by an employee.

Under Section 15(1)(b) an employer may be entitled to a grant of a patent for employee invention if the employer can establish that he would be entitled to an assignment of the patent.
Employees’ Inventions
6.— (1) Employees shall also be entitled to the grant of a patent (Section 4) for inventions they have made during their employment relationship, unless otherwise provided by agreement (Section 7(1)) or in the circumstances of Section 7(2).
(2) “Employees” shall mean salary and wage earners of every kind.
7.— (1) Agreements between employers and employees under which any future inventions of the employee are to belong to the employer or which grant the employer a right to use such inventions shall be valid only if the invention is a service invention (subsection (3)). To be valid, the agreement must be in writing; this requirement shall be satisfied if the agreement is included in a collective agreement
AUSTRIA
Patent Law 1970 (last amended 2009)
8.— (1) An employee shall be entitled to special and fair remuneration where his invention becomes the property of his employer or subject to the employer’s right of use.
(2) Where, however, the employee has been appointed expressly to create inventions in the employer’s enterprise and where this was in fact his principal activity and where such activity has led to an invention, the employee shall be entitled to special remuneration only to the extent that the higher pay received under the employment contract in view of his inventive activity does not constitute adequate remuneration.
11.— (1) Where the amount of remuneration (Sections 8 to 10) has been made dependent on the exploitation of the invention by the employer and where the employer fails to work the invention to an extent commensurate with its economic importance for the enterprise, the remuneration shall be assessed as if the employer had worked the invention to an extent commensurate with its economic importance for the enterprise.
10.— (1) On the application of one of the parties, the remuneration may subsequently be varied, on an equitable basis, where the circumstances on which the amount was assessed have fundamentally changed. Payments received by the employee on the basis of an earlier assessment shall, however, in no case be refunded. Similarly, payments already made or becoming due on the basis of an earlier assessment may not subsequently be supplemented, except where remuneration is in the form of a non-recurring payment.
(2) The employee may also claim a variation of remuneration where the invention has been transferred by the employer to a third party, if the proceeds obtained by the employer through such transfer are manifestly disproportionate to the remuneration paid by the employer or if the employer continues to participate in the exploitation of the invention and obtains a return manifestly disproportionate to the remuneration paid to the employee.
16. The rights of the employer and employee arising from Sections 6 to 15 shall not be affected by the termination of employment.
17. The employee’s rights under Sections 6 to 16 may not be withdrawn or restricted by agreement.
CANADA
Patent Act 1985 (last amended 2006)
CANADA do not have specific legal stipulations for inventions made by employees
In Canada, there is no general rule requiring that an inventor or creator employee assign his or her invention or creation to the employer.
However, there are situations when an employee may still be legally obligated to assign his or her inventions or creations to the employer. One such situation might be where there is an agreement to assign an employee's work-related invention or creation to the employer. In the absence of an assignment agreement, an employer may also have the right to the employee's invention or creation if the employee is hired to invent or create or if the employer asks the employee to solve a work-related problem or create something that is also work related — in other words if the employee's invention or creation was conceived and developed within the scope of employment.
In general, an employer has no right to an employee's invention or creation conceived and developed outside the scope of employment, during the employee's own free time and without using any resources provided by the employer.
If someone works under contract, the IP ownership for the inventive or creative work made by the employee on contract may be a complicated question. In some cases, there is an expressed or implied contract agreement that covers the IP ownership question.

There also are situations when a former employer or a company that hired the employee on contract may have provided funding or work time for the inventive and creative work. Even if the employee on contract owns the IP rights, he or she may be obligated to give to the former employer or the company some non-exclusive rights to use the inventive or creative work without paying royalties.
NETHERLANDS
Patents Act of the Kingdom 1995
(last amended 2004)
Art. 12.–
1.Where the invention for which a patent application has been filed has been made by a person employed in the service of another person, the employee shall be entitled to the patent unless the nature of the service entails the use of the employee’s special knowledge for the purposes of making inventions of the same kind as that to which the patent application relates. Should the latter be the case, the employer shall be entitled to the patent.
2.Where the invention for which a patent application has been filed has been made by a person who performs services for another in the context of a training course, the person for whom the services are performed shall be entitled to the patent unless the invention has no connection with the subject of the services.
3.Where the invention has been made by a person carrying out research in the service of a university, college or research establishment, the university, college or research establishment shall be entitled to the patent.
4.For the purposes of Article 4(3) and (4), an application filed by a person not having a right to a patent shall be disregarded in respect of the subject matter of an application filed by the employer referred to in the first paragraph, last sentence, or by a person providing the opportunity to perform the services referred to in the second paragraph.
5. The provisions of paragraphs (1), (2) and (3) may be departed from by written agreement.
6. Where the inventor cannot be deemed to have been compensated, in the salary he earns or the pecuniary allowance he receives or in any extra remuneration he receives, for not having been granted a patent, the person who is entitled to the patent on the basis of paragraphs (1), (2) and (3) shall be obliged to award him equitable remuneration related to the pecuniary importance of the invention and the circumstances under which it was made. Any right of the inventor to claim under this provision shall lapse after the expiry of three years from the date of the grant of the patent.
7. Any stipulation departing from the sixth paragraph shall be void.

Art. 13. Where an invention has been made by two or more persons working together by agreement, they shall have a joint right to a patent.
PAKISTAN
Patents Ordinance 2000
(last amended 2002)
12. Right to patent for invention made by employee.

The right to the patent for an invention made by an employee during the course of his employment in the area of activity of the employer shall, in the absence of contractual obligation to the contrary belong to the inventor unless the employer proves that the invention could not have been made without the use of employer’s facilities, equipment and the like necessary for the invention.

Provided that an invention of exceptional economic value shall entitle the inventor to an equitable remuneration taking into account the nature of his duties, his salary and the benefits derived by the employer.
SWITZERLAND
Swiss Federal Institute of Intellectual Property:

What are an employee's rights to something invented at work?

The first step is to ascertain whether there is a specific regulation of employee rights to inventions in the employee's contract.
If not, Article 332 of the Swiss Code of Obligations states that inventions made by employees within the context of their work and the fulfillment of their employment obligations (or effected thereby) belong to the employer.
Inventions which are made through work but not as a result of specifically fulfilling the employee's contractual obligations are to be registered with the employer.
In turn, the employer has 6 months in which to decide whether to acquire the invention in question or to release it.
UNITED STATES OF AMERICA
As a general proposition, there is no rule in the U.S. that an employee must assign his rights in his inventions to his employer.

1. If an employee is not hired specifically for the purpose of inventing anything, then the employee will have ownership and patent rights of whatever he may invent during the course of his employment.

2. If the employee/inventor was "hired to invent," he likely will be obligated to assign his rights as to any invention to the Company.

3. When an employee is hired specifically to invent a particular device or process, the law will invariably require him to assign patent and exclusive rights to the Company.


In Solomons v. United States, the United States Supreme Court indicated that an employer's rights in an employee's invention depend upon whether there is an express agreement between the parties. In general, where there is a valid written employment agreement, the agreement controls. Absent an agreement, the controlling law is the law of the State in which the workplace is located.
ARGENTINA
Patent Law 1996 (last amended 2004)
Art. 10.
Inventions made in the course of employment relations:
(a) Those made by a worker during the currency of his contract or other employment or service relations with the employer where the object thereof is entirely or partly the performance of inventive activity shall belong to the said employers.
(b) The worker who has made an invention under the above circumstances shall be entitled to additional remuneration for the making of the invention if his personal contribution to it and its importance to the undertaking and the employer clearly goes beyond the express or implied terms of his contract or employment relations. Where the situation specified in subparagraph (a), above, does not obtain, if the worker has made an invention connected with his professional activity within the undertaking and the making of the invention has been predominantly influenced by skills acquired within the undertaking or by the use of means that it has provided, the employer shall be entitled to ownership or a reserved right of exploitation of the invention. The employer shall exercise that option within 90 days following the making of the invention.
(c) Where the employer assumes ownership or reserves the right of exploitation of an invention, the worker shall be entitled to equitable economic compensation determined in relation to the industrial and commercial significance of the invention, due account being taken of the value of the means or knowledge made available by the undertaking and the contributions made by the worker himself; in the event of the employer licensing the invention to third parties, the inventor may claim payment from the owner of the patent of up to 50% of the royalties actually charged by the latter.
(d) An industrial invention shall still be considered made in the discharge of a work or service contract where the patent application is filed up to one year following the date on which the inventor left the employment within the area of activity of which the invention was made.
(e) Work-related inventions in the making of which the circumstances provided for in subparagraphs (a) and (b), above, do not obtain shall belong exclusively to the maker thereof.
(f) Any advance renunciation by the worker of the rights conferred by this Article shall be null and void.
ISRAEL
Patent Law 1967 (last amended 2008)
CHAPTER EIGHT: SERVICE INVENTIONS

Inventions in consequence of service
132. (a) An invention by an employee, arrived at in consequence of his service and during the period of his service (hereafter: service invention) shall, in the absence of an agreement to the contrary between him and his employer, become the employer's property, unless the employer relinquishes the invention within six months after the day on which notification under section 131 was delivered to him.
(b) If, in his notification under section 131, the employee stated that – in the absence of a contrary reply from the employer within six months after delivery of the employee's notification – the invention will become the employee's property, and if the employer made no contrary aforesaid reply, then the invention shall not become the employer's property.

Remuneration for service invention
134. If there is no agreement that prescribes whether, to what extent and on what conditions the employee is entitled to remuneration for a service invention, then the matter shall be decided by the compensation and royalties committee established under Chapter Six.

Directives for determination of remuneration
135. In making a decision under section 134, the compensation and royalties committee shall also take into account the following factors:
(1) the capacity in which the employee was employed;
(2) the nature of the connection between the invention and the employee's work;
(3) the employee's initiative in making the invention;
(4) the possibilities of exploiting the invention and its actual exploitation;
(5) expenses reasonable under the circumstances incurred by the employee in order to secure protection for the invention in Israel.
Worldwide overview about
remuneration of employees' inventions and innovations
by Gian-Lluís Ribechini Creus

innogenierum@gianlluisribechini.com
REPUBLIC OF KOREA
Patent Law 1961 (last amended 1998)
Remuneration for In-Service Inventions

Article 40
(1) The employee shall have the right to obtain reasonable remuneration when he has transferred to the employer the right to obtain a patent or the patent right with respect to an in-service invention, or has given the employer an exclusive license in accordance with a contract or service regulation.
(2) The amount of the remuneration provided for in paragraph (1) shall be calculated in accordance with the profits to be realized by the employer from the invention and the extent of the employer's contribution to the creation of the invention; any suggestion made by the employee as to the method of settlement shall also be taken into account.
(3) If the State succeeds to an in-service invention made by a public official, the State shall provide reasonable remuneration to the public official. Matters relating to the payment of remuneration, etc., shall be prescribed by Presidential Decree.

Constitution for the United States of America
Article. I. Section. 8.
The Congress shall have Power:
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
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