Employee-Inventors Compensation in Germany — Burden or Incentive?

In Germany, around 80 to 90 percent of all inventions are created by employees. This leads to a conflict between the German principles of employment law and patent law. According to employment-law principles, the results of work are the property of the employer; the salary compensates the employee for all assigned rights and benefits. Under German patent law, however, the right to an invention arises first of all in the natural person of the employee (inventor principle). To settle this tension, the German Act on Employees' Inventions created a comprehensive set of rules back in 1957. Under the Act, the employer can acquire the rights to employee inventions on a case by case basis only; in return, the employee is mandatorily entitled to reasonable compensation for each single invention achieved. Thus, the Act on Employees' Inventions focuses on two key issues: • Ownership of inventions • Claim for reasonable compensation (beyond salary) In addition, the Act on Employees' Inventions imposes certain ancillary obligations including the employer's obligation to apply for a patent or utility model in Germany and to retransfer the rights to the invention or a filed or granted patent to the employee if the employer fails to exercise its right to apply for patent protection or decides to abandon a patent application or to let a granted patent lapse (section 14-16 Act on Employees' Inventions). In these cases, the employer is obligated to notify the inventor and at the inventor's request, transfer and assign all rights to the application or granted patent to the inventor at the inventor's expense