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Employee Invention: Tied Invention or Free Invention

When an employee, within an employment relationship, makes a technical invention with patent or utility model status, it is called an employee invention. German employee invention law regulates the handling and the rights related.

The law applies to:

• employees in private and public service
• civil servants and soldiers
• inventions that are related to the occupation of the employee and that are based on experiences or the work in the facility

Where that applies, inventions are called service inventions, or tied inventions. If those conditions are not fulfilled, they are free inventions. For free inventions, the inventor is in total command of his patent or utility model. For service inventions, in contrast, the employer has the right to totally or partially claim the patent. In case of a total claim, any proprietary invention rights and duties (the initial costs and fees as well as potential profits) are transferred to the employer. In case of a partial claim, the employer is only entitled to exploit the invention. In both cases, the inventor is entitled to a reimbursement.

The criterion that distinguishes the employee invention from an improvement suggestion is its patentability, or utility-model suitability.

• Report an invention to your employer in a written invention report without delay. Describe the technical problem, the solution and the coming about of the invention. If there are other co-inventors, mention them along with their share of the work. Use the form that your company provides, if there is one. You should report free inventions as well
• The employer must writtenly confirm the receipt of the invention report
• Within 2 months, the employer can object to the report
• For a service invention reported, the employer has to inform the inventor within 4 months after the report whether they wish to claim the invention and the rights associated. To do so, they have to deliver a respective statement of intention. If the 4 months have passed without that having succeeded, the invention is a free one and is fully at the inventor’s command
• In case a “free” invention is reported, the employer can object to the invention’s being a free one within 3 months. If they fail to do so, they will no longer be entitled to claim the invention as a service invention
• The right of use of a free invention made in the company must be offered to the employer for remuneration
• In case the employer claims the rights related to the invention, you are entitled to remuneration
• In case the employer claims the rights, they are obliged to register the patent or utility model
• Within the “priority year” (1 year from the patent grant on), the employer must inform the inventor in which countries they do not claim patent rights. The inventor can obtain the rights himself in those countries
• The remuneration of a service invention can be determined by the methods of license analogy, capturing of operational value and estimation
• The remuneration determined should be recorded in a written agreement between employer and employee
• In case of disagreement, either of the parties can call upon an arbitration panel of the German patent and trade authority which will suggest a model agreement. If, within one month after that, no objection is made, it is considered accepted. If still no agreement can be made, legal action must be taken
• By all means comply with your duty to report inventions. Violation can result in extraordinary dismissal without notice or damage claims
• If the employer makes use of a free invention, the inventor has to be remunerated
• Titles to remuneration expire after 3 years. The period starts with the invention report