Calculating the remuneration of employees (Germany)

The majority of all inventions are made in companies or at universities. In Germany, these inventions are automatically so-called employee inventions and are subject to the German Employees’ Invention Act (ArbnErfG) - a complex issue.

Introduction to Employees’ Inventions (Germany)

In principle, every employee working in Germany who conceives an invention is obliged by the German ArbnErfG to disclose it immediately in writing to the employer, indicating that it constitutes an Employees’ Invention. The employer, in turn, is obliged under ArbnErfG to respond to this invention disclosure; in doing so, he has several options. If the employer claims the invention in an unrestricted manner, then, according to the German law, all rights to the invention are transferred to the employer and, in return, the employer is obliged to pay the inventor remuneration.

In practice, this inventor remuneration is a sensitive and complex issue for both the inventor and the employer, and one with potential for conflict. The so-called license analogy has become established under the ArbnErfG as an approximation to the question of how high an appropriate remuneration should be, a not always straightforward calculation of the inventor remuneration for an Employees’ Invention.

Your benefit of our work: calculation in best quality – and the right questions asked

The calculation of an employee inventor’s remuneration according to the German Employees’ Inventions Act using the license analogy takes into account certain key parameters, which concern, among other things, the share of the respective inventor in the invention, the experience and know-how of the inventor and also his position in the company as well as the economic potential of this invention. Even this small excerpt from the parameters that have to be considered while calculating this remuneration makes clear: the right questions must be asked to compile these parameters, and this is often not so easy for the parties involved.

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FAQ - frequently asked questions

1) What does “remuneration for employee inventions” mean?

If an employee makes a technical invention in the course of their work (service invention) and the employer files a patent application for the invention, claims the invention, or uses it, the employee is generally entitled to reasonable remuneration. The amount typically depends on the economic value the invention holds for the company and the share the employee has in the invention (e.g., through their own creative contribution and the company’s working conditions).

2) Who is entitled to remuneration?

The inventor or employee who made the service invention is entitled to remuneration. Depending on the circumstances, several co-inventors may also be involved, whose respective shares must be evaluated separately.

3) What is the difference between a service invention and an independent invention?

Service invention: is directly related to the activities specified in the employment contract or is based primarily on company resources or experience. In such cases, remuneration is typically considered.

Independent invention: arises independently of the employee’s work activities and without significant company input. It generally belongs to the employee (subject to certain information and disclosure obligations, depending on the case).

4) What determines the amount of remuneration?

Remuneration is often determined based on typical valuation factors, in particular:

• Economic value of the invention (e.g., additional revenue, cost reduction, license value),
• Type and scope of use (product, process, internal application, licensing),
• Inventor’s contribution (how the inventor’s specific creative contribution should be weighted against company contributions such as task assignment, preliminary work, teamwork, and resources),
• the employee’s position and scope of responsibilities.

5) How is the remuneration calculated in practice?

There are several common calculation methods, e.g.:

• license analogy (what license fee would be appropriate between independent parties?),
• cost-saving/profit-based approaches (what measurable benefit does the invention provide?),
• estimates/lump-sum payments for uses that are difficult to measure (e.g., internal process improvements).

6) Does the employer have to pay on their own initiative—or do I have to request remuneration?

In many cases, remuneration is not automatically calculated correctly in full and on a permanent basis “just like that.” The following are often required:

• Clarification of the inventor designation/co-inventor shares,
• Establishing a basis for remuneration (use, value, calculation method),
• Renegotiation, if necessary, if the scope of use or economic success develops significantly differently at a later date than originally assumed.

Those who document thoroughly and proceed in a structured manner early on typically improve their negotiating position. Although employers are obligated to calculate and pay remuneration, employees sometimes have no choice but to demand payment.

7) What if I have left the company?

A claim to remuneration may continue even after termination of the employment relationship, particularly if the employer continues to use or exploit the invention. It is important to keep an eye on deadlines and statutes of limitations and to secure documentation (e.g., notifications, patent applications, proof of use).

Disclaimer

This FAQ provides general information and is not a substitute for legal advice in specific cases. Whether an employee is entitled to remuneration for an employee invention — and, if so, in what amount — depends on the specific circumstances.