Inventor remuneration and agreement on R & D

In principle, a claim to remuneration arises when the right of an employee-inventor to an invention is transferred to the employer as a result of the employer's claim. However, in a group of companies this process is not so clear and company agreements especially concerning R & D in the group complicate the situation.

The following case constellation illustrates the problem:

The facts

The subsidiary claims an employee invention and the parent company applies for an IP right for this invention in Germany. However, the parent company does not file a request for examination, but asks for early disclosure of the patent application. In the further course, the parent company allows this patent application to lapse by not paying the maintenance fees. The invention is used throughout the group.

Is this legally compliant?

The abandonment of an IP application can be decided by the employer at any time, but the employee-inventor must be informed of the intention to abandon (according to § 16 ArbnErfG) to enable him to continue the German IP application himself.
However, this was not done, and the inventor was also not granted a release that would have enabled him to file his own IP rights abroad (under § 14 ArbnErfG).

Agreement on R & D - research and development

A framework agreement on research and development exists between the parent company and the subsidiary. Based on this agreement, the parent company alone is entitled to register service inventions created at the subsidiary in its own name. In return, the subsidiary is granted a royalty-bearing right of use to supply third parties with products based on the invention.

Dispute on the claim for remuneration

The dispute between the parties was on the remuneration of the employee invention, or more precisely the question of a remuneration claim. From the point of view of the parent company, the use of the invention in the parent company was not relevant to remuneration, as any remuneration claims would only exist against the subsidiary. The subsidiary, in turn, did not consider itself to be obliged to pay for the invention, as the parent company, not the subsidiary, was the owner of the property right position. For this transfer of rights, the employee-inventor had received a lump sum of 150 euros gross from the parent company as remuneration, which was considered appropriate by the employer.

Assessment of the German Arbitration Board

The Arbitration Board of the German patent and trademark office (DPMA) dealt with this case constellation in Arb.Erf. 63/18, in particular with regard to the limits of the entrepreneurial freedom to structure employee invention rights and inter-company agreements in a group of companies.

Contractually, the inter-company agreements were designed in such a way that, in the event of a claim to an employee invention by the group subsidiary, a double transfer of ownership automatically took place in a single step:

1. by transferring ownership of the right to the patent from the employee-inventor via the employer (the subsidiary)
2. to the parent company, which becomes not only the legal but also the economic owner of the right to the patent without being bound by the law on employee inventions because it is not itself an employer.

The Arbitration Board considered this to be inadmissible. The Arbitration Board said that the transfer of the right to the patent to the employer shall not expropriate the inventor completely and without replacement, but only change the content of the property right.

Contracts and unilateral legal transactions up to the invention disclosure that change the claims under the German Employee Invention Act to the disadvantage of the employee are invalid due to § 22 ArbnErfG and German Civil Code.

Renumeration in compliance

A contractual arrangement of the legal relations of group companies as in the agreement – R & D is therefore inadmissible, because it leads to a situation that could not be effectively brought about under ArbnErfG.

Therefore, the Arbitration Board explained that only two variants of an appropriate remuneration are conceivable, which would be permissible:
i) Either the parent company has paid a purchase price for the service invention to the subsidiary that is customary in the market, in which its employee inventor would have to participate according to § 9 ArbnErfG.

ii) Or there is a claim for damages under $ 823 (2) BGB (Civil Code) for breach of § 14, 16 ArbnErfG, which relates to the worldwide group uses. For the worldwide group use, the parent company would have to pay during the maximum protection period of 20 years.

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