Patent – Law on Employees inventions in Europe

By Ms. Fabienne Paris, Ph.D.

Posted: 28th January 2016 09:49

The EU Unitary Patent and Unitary Jurisdiction, which are planned to enter into force in 2017, provide a major step towards achieving harmonization of the various national patent laws and jurisdictions that rule patent prosecution and enforcement in the EU. 
 
However, there are some patent-related issues that fully remain at the national levels.  One of these issues is ownership of and compensation for employees' invention.  EU harmonization is unlikely to happen soon in this field.
 
Therefore, whereas an EU-level strategy can and has to be adopted for patent prosecution and enforcement in Europe, local considerations still rule the right to validly file and own a patent that claims an invention made by an employee.  The laws on employees' inventions vary significantly across European jurisdictions.
 
MostEU countries (including the Common Law-based UK) provide statutory rules on employees' inventions.
In these countries, a contractual clause, which would be less favorable to the employee than what is mandatorily provided by the statutory rules, should be deemed void and therefore unenforceable.
The national law therefore provides with the minimal set of rules that have to be complied with.  Each country that provides statutory rules has its own specificities that have to be complied with, and there is little choice but to become familiar with these national specificities.
 
In most circumstances, however, an employee's invention will belong to the employer, as long as the invention was made in the course of the employee's normal duties, or was based on the employer's technical expertise or activities.
 
The main discrepancies reside in the compensation regimes, which range from compensation in (very) exceptional circumstances only (e.g., the UK) to mandatory compensation (e.g., France).  When compensation is mandatory in a Civil Law country, such as France, the contractual agreement does not and cannot supersede the statutory rules. 
 
Therefore, in such countries, it is essential to determine who has or does not have the status of employee, who has or does not have the status of inventor, to identify the employer's and employee's respective obligations, and to expressly pre-set the compensation calculation in accordance with the applicable statutory rules.
 
To give an example that illustrates a Civil Law regimen, French rules provide the following answers to these questions.
 
Do the French rules on employees' invention apply to foreign nationals?
 
Yes, the criteria for determining whether or not French law applies, is whether the contract of employment is subject to French law.  The nationality of the employee or employer and the place where the invention was made are not relevant.
 
Does the person have the status of employee?
 
An employee is generally understood to be a person who is hired to provide labor to a company on a regular basis in consideration of a wage and under the subordination of an employer.  A corporate executive, a consultant or a contractor does usually not have the status of employee.  Similarly, a trainee or student does usually not have the status of employee, even if the invention was performed when the trainee or student was working for the company (French civil Supreme Court, 25 April 2006).  Any contract with these persons should therefore contain specific IP provisions.  Absent any contrary contractual provision, the right to the invention may remain vested in these persons.
 
The status of employee is to be determined on the date when the invention was made.  The invention has to be made while the employee is under contract.  Therefore, an invention, which has been performed after the employment contract has ended, does not statutorily belong to the previous employer, and, conversely, an invention, which has been performed before the employment contract has started, does not statutorily belong to the new employer.
 
Does the employee have the status of inventor?
 
There is no statutory definition of the status of "inventor".  The inventor is usually understood to be the person, who has significantly and actively contributedto the conception and reduction-to-practice of a patentable invention.  The inventor is viewed as a person, who has analyzed the technical problem to be solved and has provided a technical solution, which is novel, inventive and industrially applicable.
 
On the one hand, the mere provision of resources or advices, the mere execution of tests or experiments, or the mere formulation of the problem to be solved, is generally insufficient to qualify as inventor. On the other hand, it is not required that the person has a permanent and explicit inventive mission.  The inventive mission can be implied by the facts and can be temporary. 
 
There is a presumption of validity of the designation of an inventor.  The burden of the proof to reverse such a presumption is particularly heavy, more particularly when this person has been designated inventor in a US counterpart application.  Therefore, the designation of inventors should be pondered over before filing the patent application. 
 
What should the employee inventor do?
 
The employee inventor should immediately declare the invention to the employer.
 
The French Patent Office provides with specific forms that can be used for that purpose.  Alternatively or complementarily, in-house forms can be used.
 
The declaration should describe the invention in full details (problem solved, technical solution, examples of embodiments, applications), and should further describe the circumstances under which the invention was made (instructions received, collaborations or technical assistance involved, etc.).
 
The main legal purpose of the declaration is to determine whether the invention was made in the course of the employee's normal duties, or was based on the employer's technical expertise or activities.  When the invention was made in the course of the employee's normal duties, the invention statutorily belongs to the employer.  No written assignment is needed to confirm this ownership.
 
When the invention was not made in the course of the employee's normal duties but was based on the employer's technical expertise or activities, the invention statutorily belongs to the inventor, but the employer is statutorily entitled to request the transfer of ownership (within four months from the date of receipt of the declaration).  Once validly requested by the employer, the transfer is compulsory (and free).
When the invention was neither made in the course of the employee's normal duties, nor was based on the employer's technical expertise or activities, the invention is a free invention that does not belong to the employer.
 
The employee inventor is of course bound to the general principle of good faith, but is not statutorily bound to provide assistance to the patent proceedings in case his/her expertise is needed.  It is therefore advisable to provide a contractual obligation in this respect.
 
Is the employer under obligation to pay in compensation for the employee's invention?
 
Yes, the employer is statutorily bound to pay for compensation of an employee's invention.
This obligation does not terminate with the contract of employment of the inventor, and applies even if no patent is ultimately filed or granted, and even if the invention is not implemented or otherwise exploited by the employer.
 
How is the compensation calculated?
 
The calculation of the compensation varies depending whether the invention was made in the course of the employee's normal duties, or whether it was based on the employer's technical expertise or activities.
 
In the former case, the employer is the statutory owner and the inventor is entitled to an "additional remuneration", whereas in the latter case, the employer is entitled to become the owner by requesting transfer of ownership in his/her favor, and the inventor is entitled to a "fair price" in compensation for this transfer.
 
The calculation of the "additional remuneration" is not statutorily defined.  It may however be defined in a collective agreement to which the company is required to be bound (e.g., a collective agreement that applies to all pharmaceutical companies).  Typically it is a lump sum, which is granted at the time when the invention is made and/or when the first patent application is being filed or published.
 
To provide an example, the "additional remuneration" usually amounts to 1-12 times the employee's monthly wage.  The award by France’s Supreme Court of about €550,000 to the inventor of a patent in relation to a pharmaceutical treatment of prostate cancer can only be viewed as very exceptional (Cour de Cassation, 21 November 2000).
 
The IP code provides that the "fair price" must take the economic value of the invention into account.  This value is typically assessed at the date when the employer exercises the right of transfer of ownership. 
The "fair price" can be a lump sum, staged payments or a royalty arrangement, and is usually granted during the exploitation phase.
 
The "fair price" tends to be higher than the "additional remuneration".  However, both remain at a relatively low average level (which, according to a 2013 survey, is of about €10,000-20,000 on average, the highest amounts rarely exceeding €60,000).
 
Is the employer bound to any other specific duties?
 
The employer is not obliged to file any patent.  Neither is he/she obliged to exploit the invention.  However, the employer is obliged to keep the employee inventor informed of the filing as well as of the grant of the patent(s) (Law 2015-990 of 6 August 2015).  This obligation applies to French patents, as well as most probably also to foreign counterpart patents.  This obligation does not terminate with the contract of employment.  Of course, any contravention to this obligation might have serious consequences if the amount of the compensation is contested by the employee inventor.
 
In case of dispute?
 
Dispute concerning ownership of or compensation for an employee’s invention can be brought to a specific conciliation board and/or to the Civil Courts.  In contrast to Civil Courts’ proceedings, the proceedings before the conciliation board are not public.  The applicable prescription is of 5 years (of 3 years only for the “additional remuneration” of inventions made since 17 June 2013).
 
What are the main differences compared to other EU Jurisdictions?
 
Compared to a Common Law EU country such as the UK, French rules mainly differ by the fact that they provide for mandatory compensation for an employee's invention, but also by the fact that this compensation is at a much lower level.
 
French specificities further include mandatory information of the employee on the filing and grant of the patents.  It is highly advisable to specify the compensation regime in the employment contract or in a collective agreement to which the company would be validly bound.

Ms. Fabienne Paris, Ph.D. is a senior Associate with E.G.Y.P., Paris, France.  She is a qualified European and French Patent Attorney with extensive background in life sciences, microbiology, molecular biology, immunology, and agrifood.  She has acquired a great deal of experience in complex proceedings before the EPO as well as in FTO and IP due diligence. 
 
The firm EGYP was founded in 1985 and is recognized as one of the most prestigious intellectual property firms in France (offices in Paris, Lyon and Alicante).

Dr. Fabienne Paris can be contacted on  +33 144511800 or by email at fabienne.paris@egyp.fr

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