Lump-sum inventor remuneration – rules and aspects

Lump-sum inventor remuneration is part of the everyday practice of a company. This form of remuneration is also permissible, but to be able to remunerate inventors in this way in a legally secure and smooth manner, there are essential points to consider. We summarise the most critical aspects and refer in particular to settlement proposals of the Arbitration Board for Employees' Inventions and our tried and tested practice.

Rules for a lump-sum inventor remuneration

The lump-sum inventor remuneration is regulated in § 12 of the Employee Inventions Act. Accordingly, lump-sum inventor remuneration is permissible. § 12.1 ArbnErfG states that "the type and amount of the remuneration shall be determined by agreement between the employer and the employee within a reasonable period of time after the service invention has been claimed". This also implies a lump-sum inventor remuneration.

In practice, companies also repeatedly find clauses that exclude a lump-sum remuneration for employee inventions or basically stipulate a certain lump-sum remuneration for all employee inventions. However, this is not permissible!

Pursuant to § 22 ArbnErfG, the provisions on inventor remuneration (and other rights under the ArbnErfG) cannot be deviated from to the disadvantage of the employee-inventor. A lump-sum inventor remuneration may not be determined "in advance" for all employees by the employer.

The specific lump-sum inventor remuneration must therefore be agreed and only after a proper invention disclosure to the employer.
Apart from that, the same deadlines apply to a lump-sum inventor's compensation as to any other inventor's compensation:

- The inventor's remuneration must be determined no later than three months after the grant of the protective right.

- The employee-inventor may object to the determination within two months by declaration in text form if he/she disagrees with the determination.

What is an appropriate lump-sum remuneration?

In principle, the amount of the lump-sum inventor remuneration should be reasonable, analogous to all types of inventor remuneration. Also, in the case of a lump-sum remuneration, its amount is estimated based on the so-called licence analogy.

In practice, of course, the actual value of the invention often only becomes apparent after some time. Therefore, an adjustment of the remuneration can also be agreed upon for a lump-sum inventor's remuneration. Inventors and employers should talk to each other about this. Adjustments or additional agreements in the case of profound changes would be pretty common. Examples are the start of series production, international expansion, or significant turnover increases.

The calculation of inventor compensation is correspondingly complex. As a service of our law firm, we offer you a calculation of the inventor's remuneration, precisely determined and also legally secure. You can find more information HERE.

Differing expectations regarding inventor remuneration

The Arbitration Board often hears cases in which the employer and the employee inventor have different expectations regarding inventor remuneration. Accordingly, the Arbitration Board has already made several proposals for agreements on this issue, which provide guidance.

In principle, an agreed lump-sum remuneration can be challenged under § 23 ArbnErfG if it is substantially unfair. High standards are set for this. Unfairness must have existed from the beginning. Even significant later deviations, for example, in the scope of use within the company, are not considered unfair if these deviations can be made plausible and were not obvious at the time of the remuneration agreement (see Arb.Erf. 52/13).

For a lump-sum remuneration, the Arbitration Board specifically only suspects a possible inequity if the actual scope of use is about three times as high as the projected use.

Incidentally, an agreement on a lump-sum inventor remuneration, which was allegedly concluded under pressure, is also valid, the Arbitration Board has stated as an unofficial guiding principle (see Arb.Erf. 58/16).

An appeal against such an agreement could only be asserted with reference to the Civil Code. For this, it would have to be proven that the conclusion of the contract was unlawfully determined by threat pursuant to § 123 (1) of the Civil Code.

In conclusion, an agreement on the lump-sum remuneration is always preferable to the above-mentioned scenarios. Essential for this is the calculation of the inventor remuneration, precisely calculated and legally compliant.

Our patent law firm has a lot of experience with this.
We will be happy to calculate the inventor's remuneration for you.
Contact us without obligation via telephone at +49 (0)69 69 59 60-0 or info@kollner.eu.