Cross-border publisher, the of Cross-border permission Key features of employee com- employee of features Key When the employer owns the in- the owns employer the When kind www.practicallaw.com/lifescienceshandbook. the www.practicallaw.com/9-500-8968 visit with or reproduced is and by UK employees will belong to the employer (section 39, Eligibility for compensation. level. The basis for assessing the compensation must be The time period in which claims for compensation brought. The frequency of awards. private sector The treatment of employees working in the and universities. ether compensation is payable. payable. is compensation ether 2009/10 h wnership of inventions. In most circumstances, inventions cre- he UK „ „ „ „ „ The Netherlands, France, Italy, Austria, Portugal, Spain and Hun- and Spain Portugal, Austria, Italy, France, Netherlands, The their in provisions compensation inventor employee include gary) national patent legislation. Others, such as Germany, Denmark, Finland, Norway and Poland, have enacted to right statutory a provide not does specificBelgium laws. compensation employee compensation, although a right has developed through case law (see below, Belgium: Overview). Irish or Swedish laws, however, do not contain any obligation on employers to compensate em- ployees for employee inventions. For compensation. to approaches different of number a are There example, in some countries, the right to compensation is linked to whether the employee is “employed to invent”. In others, the right to compensation is the same for any inventions owned by There are also differences relating to: the employer. These differences are explored in greater detail for the selected box, also See below. jurisdictions pensation regimes in selected jurisdictions. W T O Patents Act 1977). The employer owns the invention if it made was in the course of the employee’s normal duties (or duties specifically assigned to the employee), provided that the inven- tion might reasonably be expected to result from such duties. carrying out Employers also own any inventions made during the course duties of by employees with a special obligation to further the em- re- the and duties their of nature the of because interests ployer’s sponsibilities arising from those duties. This can cover executive employees whose seniority gives rise to an obligation to further the interests, employer’s even though their normal duties do not include making inventions. ated „ „ „ „ „ vention, the employee may be entitled to compensation from the em- the from compensation to entitled be may are employee the awards that is vention, regime UK the of circumstances. characteristic a However, exceptional in ployer. only awarded is Compensation unusual. [email protected], Handbook contact CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook 63 CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook PLC please Sciences Kelly v GE Life copies obtain s to w Cross-border a or l PLC l a the in information ion t a further published For first was Company. Law

document The differences in laws in the selected jurisdictions. can be rights to compensation Whether an employee’s altered contractually. An overview of national laws in Europe.

This „ „ „ © Practical The chapter considers: Against this background, this chapter considers the legal frame- work in a number of selected jurisdictions for compensating em- ployees for patented inventions, which the employees developed UK, the are considered jurisdictions The own. employers their but The Netherlands and Belgium. France, Germany, A number of substantial compensation awards have been made recently. For example, the UK pensation for the Patents first time in Court 2009, in the awarded case of com- However, despite companies’ potentially significantthere exposure, is much uncertainty regarding employees’ rights to com- pensation. In large part this is due to the complexity of national laws and the lack of harmonisation across Europe. Even where a right to compensation can be established, the amount is often unpredictable. Many life science companies rely on their employees’ inventive- ness to fuel their research and development (R&D) efforts and generate patents. The most successful inventions can generate billions of euros of sales annually. In some circumstances, entitled be the may inventions patentable the created who employees significantly vary area this in laws the However, compensation. to across European jurisdictions. Healthcare [2009] EWHC 181. Between them, the two inven- tors were awarded GB£1.5 million (about US$2.2 former million). employee A of French National Railways (Société Nation- ale des Chemins de fer français instance first of court a from EUR503,000) (about US$750,000 (SNCF)) received more than around save to SNCF allowed that system a inventing for Paris in US$22 million (about EUR14.8 million) annually (X c. Société International Rail Vape et Français Fer de Chemins des Nationale SAS (VRI), Tribunal de grande instance of Paris, 3rd chamber, 1st section, 19 May 2009). The chapter also provides a checklist of considerations for those considering bringing or defending claims (see checklist, Consid- erations for potential litigants). The source of employee inventor compensation laws differs from country to Many country. European countries (including the UK, An overview of n

Morag Peberdy and Alain Strowel, Covington & Burling LLP* and Alain Strowel, Covington Morag Peberdy inventions - a European perspective - a European inventions Life Sciences 2009/10 Life Sciences for to compensation rights Employee’s „ „ „ Cross-border Practical © This „ 64 Cross-border if both: available is compensation 2005, January 1 before filed patents For filed. was patent the when on depends test applicable The L R F rationale Underlying entitlement for R „ egislation elevant equirements e document „ „ outstanding benefitis: The processusedtodeterminewhethertherehasbeenan Benefits fromforeignpatentscanbetakenintoaccount. The patentisofanoutstandingbenefittotheemployer. a Law PLC „ „ t CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook u assessed. The actual benefits derived from the patented patents, only the benefit attributable to the patent is assessing the level of relevant benefit. For pre-2005 cause of the benefit; efit. There is no requirement that the patent be the only showing a causal link between the patent and the ben- Key fe Key Company. r e was first For „ „ Patents Act1977. Sections 40to42, circumstances if both: tors in exceptional Compensating inven- compensation. employer topay it is“just”forthe to theemployer, and outstanding benefit the invention)isof in 2005orlater, or, for patentsfiled The patent(and/ a „ „ published t and theemployee. by theemployer benefits received parity betweenthe There is a real dis- employer. ing benefit to the been of outstand- the invention) has in 2005 or later, or, for patents filed The patent (and/ further u r es of employee employee of es UK information in the PLC or Cross-border to obtain employee inventions. tory rulesregarding There arenostatu- exceptional cases. courts inrather be awardedbythe Compensation can connection toit). ment butwitha scope oftheemploy- (made outsidethe “mixed inventions” to compensationfor Possible entitlement ment contract). scope oftheemploy- (made withinthe “service inventions” compensation for No entitlementto Belgi copies Life c Sciences o please mpens u m contact Handbook a [email protected], Code 1992. Intellectual Property as codifiedbythe Patent Act1978, owns. that theemployer employee inventions be awardedforall Compensation must ownership. employer claims attribuable) ifthe tion horsmission normal duties (inven- outside employee’s prix) forinventions compensation (juste Entitlement tofair attribuable ( scope of employment tions made within the mentaire ( ditional remuneration Entitlement to ad- t invention de mission rémunération supplé- ion regimes in sele in regimes ion 2009/10 F r ) for inven- a „ „ ). n and c particularly the employer’s size and nature. ing the benefit, all relevant factors must be considered, so does not extend to reputational benefit. In assess- benefit itself must be “in money or money’s worth”, and normally expect to arise from the employee’s duties. The or “good”. The benefit must go beyond what one would the ordinary”, and more than “substantial”, “significant” agreeing that it means “something special” or “out of courts have resisted defining “outstanding”, beyond determining whether the benefit is “outstanding”. The been sold in the absence of patent protection; which might have accrued if the product or process had invention are compared with the hypothetical benefits e is reproduced of Labour. sued bytheMinister and guidelinesis- ungen) (ArbnErfG) (Arbeitnehmererfind- tions Act1957 Employees Inven- employer. claimed bythe service inventions be awardedforall Compensation must service invention. take ownershipofa exercised itsrightto the employerhas compensation if ment toreasonable Automatic entitle- or with G visit e the rm www.practicallaw.com/lifescienceshandbook. c kind t ed j ed a n permission y u r isdi Life Sciences2009/10 of Act 1995 Article 12,Patent extra remuneration. lowance oranyother salary, pecuniaryal- for thepatentinhis been compensated tor hasnotalready awarded iftheinven- should onlybe Compensation industrial employers. relation tolarge, this, particularlyin reluctant tofind Courts havebeen deemed insufficient. tual remunerationis the existingcontrac- table remunerationif Entitlement toequi- N the e c therl publisher, t ions T h e a n ds Cross-border ds n a e h publisher, T ions the t therl c of e Cross-border N The claim must be brought within 3 years of the grant of the patent. The employee is entitled to an equitable remunera- tion related to the financial importance of the invention and the circumstances in which it was made. Determining a fair share is complex. It involves an assess- ment of a large number of factors. isdi r permission u y kind n a ed j www.practicallaw.com/lifescienceshandbook. the t Calculation of the employee’s com- c visit rm with or e G The right to compen- sation is automatic, and does not need to be specifically claimed. The starting point is the economic value of the invention. It is then reduced by a reflect to factor share role, the employee’s assigned tasks and role of the employee in the company. In the private sector, compensation is normally between the of 20% and 10% economic value. Various valuation Various methods are permit- ted but the licence analogy is most commonly used. The valuation is done shortly after the in- vention is patented. reproduced is and of compensation. e c n The employer’s benefit is quantified. This calculation is benefit is quantified. This The employer’s con- actual profitability, made on the basis of the patent’s sidering all available evidence, including the future profits that can be reasonably expected. It should not be based on a hypothetical royalty that would have been obtained a 2009/10 r „ aluation F situations this may assist the employee, for example, where an in- an where example, for employee, the assist may this situations revocation. patent’s the despite successful commercially is vention Similar compensation provisions exist for patents which belong to the employee, if the employee has assigned or exclusively li- censed their rights to the employer. Compensation is payable if employer’s the to relation in inadequate is benefit employee’s the benefit from the patent. V pensation is a two-step process: „ [email protected], ion regimes in sele t The right to compen- sation is automatic. In case of a dispute, the claim must be made within 5 years. Remuneration of of Remuneration 3 to 1 between employee’s the times is salary monthly inven- for common scope the within tions employment. of awards court (Some higher.) been have Compensation for inventions outside normal employee’s duties must be “fair compensation” based on factors, such as the invention’s economic value and the employee’s contribution. Compensation for inventions within the employment of scope is often pre-deter- mined. Compensation for in- ventions outside the normal employee’s duties is determined when the invention is disclosed to the employer. Handbook a contact CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook 65 CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook - PLC m please Sciences u mpens Life see box, box, see o copies c Kelly. Belgi obtain to tion. The claim must be brought within 10 years of the inven The courts will as- sess compensation taking into account all circumstances of the case. Cross-border or PLC - the in information UK es of employee ). It is possible that an award of further further of award an that possible is It ). further r published For u t first a Any time from the date of the grant of the patent until 1 year after the patent has expired. The employee is en- titled to a fair share of the benefit which the employer has derived, or may rea- sonably be expected to derive. Determining a fair share is complex, and involves assess- ing a large number of factors. lated after the patent lated after the patent has been exploited, by considering all available evidence. The value is calcu was Company. e , an award was just even though only two of the three three the of two only though even just was award an , r Law Key fe u document Kelly t a compensation may be unjust if the employer has already paid paid already has employer the if unjust be may compensation inven- the for employee the to payment bonus a or incentive an in considered not was issue this although tion, inventors had made a claim, the limitation period had nearly nearly had period limitation the claim, a made had inventors years of number a waited had claimants the and expired, ( claim a making before employment leaving after Healthcare GE v Kelly It is “just” (that is, fair) to award compensation. The award is is award The compensation. award to fair) is, (that “just” is It How- issues. factual all considers court the and discretionary, be commonly will requirement this and hurdle low a is it ever, proved. been has employer the to benefit outstanding an if met In This e aluing the ime frame „ for claims T F Calculation of compensation benefit V Practical © The The firstlimb of the test is now different for patents filed on or after 1 January 2005. The benefitof the and invention, not just certain In patents. those for account into taken be can patent, the Life Sciences 2009/10 Life Sciences „ Cross-border Practical © This Factors thatarelikelytoincreasethe“fairshare”include: risks (seebox,KellyvGEHealthcare). parator) in parator) tors was not considered an appropriate point of comparison (com- inven- academic of position The universities. in inventors demic aca- for typical are income exploitation the of one-third of around Payments project. the for employee the by accepted risk of degree relative the is compensation determining in factor key A „ „ „ 66 Cross-border be lower because its value is more speculative at that stage. ed, the value ascribed to it at an early stage in the patent’s life tomaythe employer. Even if an outstanding benefit can be demonstrat- harder it will be to prove that there has been an outstanding benefitassesstoisit the nature the patent’sof benefit, and therefore the the end of a patent’s term. The earlier a claim is brought,practice,however, the hardersuccessful claims arelikely madebetotowards six months after any application for restoration has been refused.patentexpired,patentafteryearthehastheuntiloneorgrant of In T to 33%orbeyond. share may in principle lie somewhere in the broad range from nil In awardedin be will future cases, considering the shares” complexity of the current approach. “fair what predict to difficult is It i „ „ „ ming. , for example, the judge stated that the employee’s fair employee’s the that stated judge the example, for Kelly, document „ „ „ „ The factorstobeconsideredinclude: tion for inadequate remuneration for the employment. not limited to a remedy for loss, so it can exceed compensa- the invention for patents granted post-2004). The amount is or may reasonably be expected to derive” from the patent (or cumstances) of the benefit which the employer has derived, award the employee “a fair share (having regard to all the cir- The fair share for the employee is calculated. The aim is to wise commercialisingit. market fortheinvention,licensingorother- The employeeplayingasignificantroleindevelopingthe employer without any substantial input from the employer. Creation of an entirely new product and income stream for the addition tothepatent,canbeconsidered. exist. Forpost-2005patents,thevalueofinvention,in the productwouldhavebeenreducedifpatentdidnot must bebasedontheamountbywhichtotalprofitsfor if thepatenthadbeenlicensedearlyinitslife.Instead,it Law PLC „ „ „ „ CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook Employees can claim compensation from the date of the ofcompensationEmployeesclaimdate canthe from has derivedfromtheemploymentorinvention; remuneration, andanyotheradvantagestheemployee the natureofemployee’s duties,theemployee’s the employer’s contribution,suchasproviding: employees; the effortandskillinvestedbyjointinventorsorother invention; the effortandskillwhichemployeedevotedto † † † † † Company. † † † † † , as the employer in employer the as Kelly, was any otherassistance. managerial and commercial skills and activities; and opportunities; facilities; advice; first For published further information in the PLC or Cross-border took the commercial the took Kelly to obtain copies Life Sciences please contact Handbook [email protected], 2009/10 „ „ „ „ „ „ „ „ foundation The PatentAct1978liststhreetypesofinventions: IPC codifiesprovisionssetoutinthePatentAct1978. O F are inventionsthatemployeescreateeither: employee’s “mission”(orduty)toinvent. the of extent the to according inventions differentiate categories a The employee. the of to favourable more is absence that clause contractual the in type, compensation the and rights IP the of ownership the both determines invention the of category The urm Court Supreme France’sbyemployee’saward common.theThe ismonthly wage timesarrangement.threetual andRemuneration between one of Typicallycontrac-additionaldeterminedaremuneration underis remuneration canbecalculatedonthebasisof: Additional remuneration. such of calculation for method the ify mentaire) for the invention. The statutory provisions do not spec- supplé- (rémunération remuneration” “additional to entitled is employee employer.However,an the to belong inventions These with his or her job description, which the courts interpret widely.They arise if the employee creates the invention acting in accordance I F sation,in be seen.be particularly profitable products having a good chance of success. regardingclaims only with rule, the than ratherexception an be figures. Therefore, compensation in the UK is likely to continue to haps even more important to the employee’s success than per-the profitability Myoview’swas best-sellingsalesunusualproduct. er) successful as Myoview, which was easily Amersham’s (the employ- be as significant as many have predicted. Very few products are as Rejet.; Pourvoi no 98- 11.900; and GRUR Int. 2001, 785 tion, Chambre Commerciale, November 21, 2000; Arrêt no 2086. exceptional( as viewed be only can cancer prostate of treatmentmaceutical phar- a to relation in patent a of inventor the to EUR557,000) nventions in the course of the employee’s normal duties. employee’snormal the of course the in nventions „ „ „ „ „ „ „ „ u rance verview. The Intellectual Property Code 1992 (IPC) provides the ture impact. non attribuables). Inventions ownedbytheemployee(horsmission hors missionattribuables). Inventions outsidetheemployee’s normalduties(Inventions (Inventions demissionattribuables). Inventions inthecourseofemployee’s normalduties Individual employmentcontracts. pany anditsunions,applicabletoallcompanyemployees). Company agreements (that is, agreements between the com- employees workinginaparticularindustrialsector). Collective agreements(thatis,governingall in thecourseoftheiremployment. During studiesorresearchtasksexpresslyassignedtothem ployment contract. In thecourseofaninventivemissiondefinedintheirem- and Kelly Kelly is for routine compensation of employed inventors. The inventors. employed of compensation routine for reproduced HoechstMarion Roussel/Raynaud, La Cour de Cassa- mayencourage moreclaims, butthecasemaynot and the future ofcompensation claims remains to To date, there has only been one award of compen-

( or e Cassation de Cour or with visit the www.practicallaw.com/lifescienceshandbook. kind permission o U$3,0 (about US$830,000 of ) Life Sciences2009/10 of the publisher, ). These Cross-border ), the the ), publisher, the of Cross-border see above, Overview above, see permission kind www.practicallaw.com/lifescienceshandbook. the Inventions are categorised as either: as categorised are Inventions visit with or reproduced If the employer claims ownership of a service in- is When created, both types of invention belong to the em- the to belong invention of types both created, When and The economic value of the invention. inven- the to led that task the whether is, that company. the assignment, or Task employee the of initiative the on based was tion solution, that is, whether or not the employee solved Task this task by using job-specific knowledge, company-specific work and knowledge, and the support of the company. Pay “reasonable compensation” to the employee, which is determined in accordance with the Guidelines. Ensure the invention is properly protected in Germany. The basic principles of labour law, which provide that an which provide that of labour law, The basic principles belongs to the employer. work employee’s made in Service inventions. These inventions are either activi- connection with employment, public service-related or based, to a ties or tasks that the employee must perform, expertise or activities. significant degree, on the employer’s Free inventions. These are all other inventions. nership. nership. 2009/10 w „ „ „ „ „ „ „ „ employer had to actively claim the invention. However, the default default the However, invention. the claim to actively had employer claim to deemed is employer The reversed. em- been now has the to situation invention the releases specifically it unless invention, the notification. the from months four within writing in ployee the if However, inventions. free own to right no has employer The invention falls within its field of the activity, inventor must offer the employer a non-exclusive exploitation right before he or she exploits the invention. If the employer does not take up the offer within three months, its right is extinguished. Compensation. vention, it must both: ployee. The employee must notify the employer of every patentable patentable every of employer the notify must employee The ployee. ownership claim can employer The made. service) or (free invention Until date. notification the from months four within invention the of ( ArbnErfG the to amendments recent the O If the employer and the employee cannot agree the terms conditions and of the compensation within a reasonable time frame, the employer must calculate the level of compensation in a writ- ten declaration that includes reasons. This declaration must be employee the If grant. patent the from months three within made disagrees with the proposed compensation, he or she can start arbitration proceedings. com- the of calculation for important particularly are factors Four pensation: As a result of the balancing exercise, the Act provides a make and categories, set various into inventions of classify which rules, it compulsory to notify the employer of all inventions. The em- limits time certain within invention the in rights claim can ployer if it complies with certain duties. These duties include paying inventor. compensation to the These 2009. October 1 from effect with amended was ArbnErfG The made to some changes limited amendments the laws on existing compensation. employee and inventions employee the of ownership criticis- changes, wider-reaching seeking been had however, Many, bureaucratic. and complex overly being for system the ing inventions. of Categorisation „ „ „ „ „ „ „ „ [email protected], Handbook contact CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook 67 CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook PLC please Sciences Life ) ) since 1957, copies Vergütungsrich- (INPI)) in 2008 obtain to Cross-border or (ArbnErfG)

PLC ) (Guidelines). ) The (Guidelines). ArbnErfG All other inventions fall into the the into fall inventions other All the in information further published For first was Company. Germany has Act Germany had Inventions a Employees separate Law document Section 6 of the Patent Act (Patentgesetz), which gives inventors rights in their inventions. Any other relevant circumstances relating to the invention. The invention’s economic value. The invention’s contribution to the invention. The level of the employee’s Exploitation of the invention begins. The employer notifies the employee that additional remu- The employer notifies the employee that neration will be paid. The employee learns (or could have learned) about the com- The employee learns (or could have learned) mercial exploitation of the patent. Remuneration granted at the time when the invention is Remuneration granted US$750 (about EUR500) and made is typically between US$3,000 (about EUR2,010). Remuneration granted after the exploitation of the inven- Remuneration granted between US$1,500 (about tion has begun is generally (about EUR12,000). EUR1,000) and US$18,000 This ventions owned by the employee. the by owned ventions ermany v „ „ „ „ „ „ „ „ „ © Practical nventions outside the employee’s normal duties. This category Gesetz Gesetz über Arbeitnehmererfindungen n third category. These inventions belong to the employee, who is free to to free is who employee, the to belong inventions party. These third any or category. employer third the through directly, invention the exploit The compensation can be a lump sum, staged royalty arrangement. payments or a If the employer acquires ownership, the employee is entitled to inven- the when calculated be to prix), (juste compensation” “fair on: based is compensation Fair employer. the to disclosed is tion covers inventions created while the employee is employed us- and created were that but category, first the into fall not do which ing knowledge, techniques, or methods specific to the employer or data provided by the employer. If the invention relates to the employer’s activities, the employer can request transfer of the a invention and the associated patent compulsory rights within of the invention. four months from the date it became aware Additional remuneration is usually payable on filing a patent. The patent. a filing on payable usually is remuneration Additional right to compensation is automatic but in the event of a dispute, the claim must be made within five years. Depending on the cir- point of this period can be when: cumstances, the starting I I The ArbnErfG seeks to strike a balance between: which is accompanied by Ministerial guidelines on the employees’ employees’ the on guidelines Ministerial by accompanied is which ( sector private the in inventions for compensation tlinien für Arbeitnehmererfindungen on follows and from case legislation previous law that recognises the inventors’ right to receive compensation for their inventions from their employers. The ArbnErfG covers all inventions made the and not during term applies only of contract, an employment suggestions and models utility to also but inventions, patentable to registrable. not are which improvements technical for G O erview. ( A survey conducted by the French Intellectual Property Institute (Institut national de la propriété industrielle Life Sciences 2009/10 Life Sciences revealed that additional remuneration tends to be higher when phase: the exploitation granted during „ „ „ „ „ „ „ „ „ Cross-border Practical © This „ 68 Cross-border emnd niiuly Te niiuls opnain s usually is compensation individual’s The individually. termined de- is employee each for Compensation Ownership). above, (see employer the to notification the in named be all must they tion, inven- the creating in involved was employee one than more If the of invention. the of 30% commercialisation from to generated revenues entitled are example, for inventors, university sector: public the to apply rules Special value. economic tion’s inven- the of 20% and 10% between often is compensation the practice, In inventor. the the to awarded points, compensation of the greater number the greater The percentage. overall an into table conversion a via converted and totalled are points ue val- These to assignment.) him for task are awarded points more the the research, the role ininventor’s directing more significant the for of each category. scale points value (For example, sliding a provide Guidelines The factor”). “share (his share employee’s remaining ( factors the three calculated, been has value economic the Once tion ofbetween10%and80%thehypotheticallicencefee. reduc- progressive a for provide Guidelines the million), US$2.2 (about million EUR1.5 exceeds turnover the If used. commonly nomic value of eco- the invention, of the which the determine licence analogy to is most methods various provide Guidelines The „ „ „ „ „ „ „ „ „ Consider „ „ „ „ „ „ „ „ document The positionoftheemployeeincompany. Law PLC „ „ „ „ invention? and employeetothedevelopmentexploitationof tion, inparticular, therelativecontributionsofemployer What arethesurroundingcircumstancesofinven- What are the procedural requirements for bringing a claim? Is therealimitationperiodforbringingclaim? reorganisations and/orpatentassignments. ter oflawandfact,wheretherehavebeencorporate can beparticularlydifficulttoassess,bothasamat- Which entitymusttheclaimbebroughtagainst?This the employmentcontractorotherwise?Ifso: Has theemployeealreadyreceivedcompensationunder nise differentinventioncategories)? What type of invention is it (for jurisdictions which recog- ployee? Does theinventionbelongtoemployerorem- Which nationallawapplies? „ „ „ „ CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook Company. tract outof,orvary, thestatutoryprovisions? has theemployermadeanyotherattemptstocon- compensation? was thisexpressedtofulfiltheentireentitlement contributed to the invention? of the invention in writing, or all persons who have inventor(s), those who have notified their employer who can bring a claim? Is it only the named the creationofinvention? what isthetimingofthesearrangementsrelativeto was see above see a first t For ions for potenti for ions published further ) are taken into account to establish the the establish to account into taken ) are information in the PLC or Cross-border to obtain a copies l litig Life Sciences please a contact n Handbook ts [email protected], 2009/10 „ „ „ „ „ „ „ „ tomatically entitledtotheiremployee’ O T that it was necessary to consider various circumstances, such as: manyfactors. In As in the UK, the assessment of the additional compensation involves been relativelylow. have Awards circumstances. exceptional very in and reluctantly awarded is compensation Additional occasionally. only R&D out carry regular who employees for compensation the sufficient includes salary if clear less is It R&D. do to hired specifically was regular salary earned. This is particularly the case the if the in employee compensated been have typically will inventor employee neken) in relation to large, sophisticated companies was that the Gin- Van v Hupkens HR, (IEPT19940527, case leading the in case law. The approach that the Supreme Court (Hoge Raad ) took of the in guidance principle limited only and applied, the be to is compensation how of Act Patent the in details no are There ter thedateofgrantpatent. inventor’sThe af- years three lapses compensation claim to right tra remuneration he receives” (Article 12(6), Patents Act ). 1995 he earns or the pecuniary allowance that he receives or in any ex- salary the “in patent the for compensated been have to deemed muneration (compensation) can be awarded if the inventor is not employer,the to belongs patent a If Compensation. re- equitable provisions and provide statutory that all inventions belong to the employer. the beyond go often contracts employment However, such as: The lower courts have also considered other factors to be relevant cient nor required for the additional compensation to be awarded. employer’sthe for tion suffi- neither was patent the of ownership compensa- representing component salary specific a of lack The principles applicabletocompensationforserviceinventions. same the using assessed is and payable, also is inventor the to compensation invention, free a of licence a takes employer an If incorrect ornon-binding. appears it unless agreement, this follow can employer the tion, if the co-inventors have previously agreed to apportion compensa- proportionate to his or her contribution to the invention. However, „ „ „ „ „ „ „ „ he Under Article 12, Patent Act 1995, employers are au- are employers 1995, Act Patent 12, verview.Article Under establishment. The inventorworksforauniversity, collegeorotherresearch make thesortofinventionstowhichpatentrelates. The employeewashiredtousehisspecialknowledge The extenttowhichtheemployer has: The roleplayedbyotheremployees intheinvention. The extentoftheemployee’s contributiontotheinvention. The natureandthefinancialsignificanceofinvention. The employee’s remuneration and other terms of employment. organisation. The employee’s positionandfunctionwithintheemployer’s N etherlands and is reproduced TNO v TerTNOv Meulen or with visit the www.practicallaw.com/lifescienceshandbook. kind permission , theSupreme, Courtconfirmed s patentsifeither: Life Sciences2009/10 of the publisher, Cross-border publisher, the of Cross-border permission kind www.practicallaw.com/lifescienceshandbook. the visit with or Service inventions belong to the employer. reproduced is e r and a c Performing a task which is not defined in the employment contract but which was later assigned to the employee by the employer. Service inventions. Mixed inventions. Free inventions. Performing a contract of employment which encompasses an inventive mission. th Both employees received advantages and recognition as a Both employees received success in mak- result of making the invention. Dr Kelly’s an acting ing the compound led to him being appointed management manager of R&D and thereby entering the in the grade salary structure. He also received recognition a starting sal- industry for the patents. Dr Chiu negotiated partly by ary in his next job double the size of his salary, being an inventor of the patents. inven- the to contributions important made employer The significant a to depended work Kelly’s Dr and Chiu’s Dr tion. make to provided employer the opportunities the on degree level high a and facilities provided employer The inventions. research the up set universities, from assistance external of develop- the through forward project the took and sections, work downstream The processes. manufacturing and ment in market the developed employer The executed. well was success. product the in factor major a was which US, the 2009/10 l ervice inventions. „ „ „ „ „ a „ „ S For service inventions, the salary alone is considered to be a suf- a be to considered is alone salary the inventions, service For ownership invention’s the of transfer the for compensation ficient to the employer. As in other countries where different categories of inventions ex- ist, the delineation between the three categories is varying interpretations. subject to They are made in the course of either: „ „ „ „ „ Weighing these factors, and taking a conservative approach, the Weighing judge held that a 3% share of the patents’ benefited represent- a just and fair award. Dr Kelly received 2% (about (GB£500,000 1% (GB£1 Chiu Dr and million million)) US$1.47 (about US$735,000)). tion would have caused the price of Myoview to drop by 10% on around half of its sales during the period between regulatory data exclusivity expiry and patent The expiry. conservative con- revenues would clusion drawn from this was that the employer’s have dropped by GB£50 million (about US$82.4 million), and this was the “absolute rock bottom figure for the benefit from the patents”. No one else made a significant contribution to the patents, and and thought significant employed had Chiu Dr and Kelly Dr both creativity various in factors their operated research. to However, reduce the awarded compensation: „ „ e [email protected], H

E Handbook G contact CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook 69 CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook PLC please Sciences Life Kelly v copies obtain to Cross-border or PLC the in information further published For first was Company. regime in relation to employee inventions. Draft statutes Draft inventions. employee to relation in regime Law assisted with the exploitation of the invention. provided the necessary facilities and research opportunities; document Only two of the three inventors made the claim. The claimants waited for a number of years after leaving The claimants waited for a number of years employment before making a claim. The claimants had waited until the limitation period had The claimants had waited until the limitation nearly expired. The existence of patent protection for a blockbuster prod- The existence of patent protection for a blockbuster market position by increas- uct improved the employer’s the successful ing its commercial leverage necessary for acquisitions of stakes in other companies. The patents protected the business against generic competi- generic against business the protected patents The on depending nine, and five (between years several for tion expired. period exclusivity data relevant the after country) the The R&D costs were relatively small, thereby providing a The R&D costs were relatively small, thereby high gross profit margin. The product was highly successful and was responsible for a for responsible was and successful 2007 highly at was as sales product Its The profits. company’s the of an played proportion It large billion). EUR1.43 (about billion GB£1.3 company. the for exceeded deals corporate major two in role important „ „ In practice, the right to compensation is rarely litigated and requests for compensation are not frequently granted. „ „ This „ „ „ „ „ „ „ Having established an outstanding benefit, the next step was to quantify it. into Taking account the employer’s own network of sales outlets which would have continued to sell the original Myoview product, the evidence suggested that generic competi- An award was not unjust, although: Belgium verview. is one of the few European countries with no When deciding whether to award compensation, the judge con- cluded that the employer’s benefit from the patents had been outstanding because: Dr Kelly and Dr Chiu, two inventors of a radioactive imaging agent agent imaging radioactive a of inventors two Chiu, Dr and Kelly Dr Myoview® brought successful proceedings for compensation in in before filed were case this The patents Court. the UK Patents 2005. „ „ „ „ „ „ „ „ © Practical The Dutch system has been criticised for being counterproductive being for criticised been has system Dutch The and treating its inventors unfairly. The German model has been suggested as a replacement (see above, the Germany). However, Minister of Economic Affairs had little sympathy for this sugges- tion in 2006, when the matter reached Parliament. Belgium O three categories: inventions fall into one of Under Belgian law, were proposed in the 1980s, but none has been adopted. There- fore, any rights that employees have to be compensated for their inventions arise from case law. Life Sciences 2009/10 Life Sciences statutory „ Cross-border Practical © This „ „ „ „ „ „ 70 C through: Employers can seek to alter statutory provisions for compensation c Contr Cross-border the circumstancesofcase. to additional compensation. This will be determined in light of all entitled be may employee owner,the the is employer the if that consider to reasonable is It invention. of type this owns who to as uncertainty for room leave commentaries legal and law Case inventions belongsolelytotheemployee. employer’sthe These of resources). any of use the without home at created is invention the example, (for employment the to tion connec- any without and contract employment the of scope the F once the invention has been made and the employeetheywere hasput into notifiedeffect before the the invention was created. However, strictemployee’sthe rightscompensationto enforceablenotare if InGermany, clauses inthe employment contract that exclude orre- tional laws:TheNetherlands:Overview ). na- of overview An above, (see rights compensation employee’s the fulfilling thereby express), be compensation the that ment require- no is (there compensation constitute employee the by received allowances other or salary the whether uncertain is it However, 1995). Act Patents 12(7), (Article void are pensation com- of employee an depriving law,provisions Dutch under ple, exam- clear.For less is position however,the countries, other In France: Inventions in the course of the employee’s normal duties ( contractsemployment agreements,union sanctioned company agreements, orindividual tions in the course of an employee’s normal duties in industry-wide France, it is possible to agree the level of compensation for inven- In employees. with arrangements contractual effectively through managed be can compensation employee countries, some In ies betweenmemberstates. ability to override effectively the relevant statutory provisions var- However, the enforceability of contractual arrangements and their tainty foremployersandemployees. cer- financial more provide and compensation, regarding putes dis- of number the reduce to designed are arrangements These to theemployment.Thisconnectionmaybeaconsequenceof: connection some with but contract, employment the of outside M „ „ „ „ „ „ ree inventions. ree o ixed inventions. ixed document mpens A combinationoftheabovefactors. The factthatitisdoneduringworkinghours. related totheactivityofemployer). The natureoftheinvention(forexample,ifitisdirectly tual resources. The employee’s useoftheemployer’s physicalorintellec- mercialised inventions. pre-determined lumpsumsorroyaltypaymentsforanycom- Providing voluntaryinventioncompensationschemeswith Entering intocontractualarrangementswiththeemployee. Law PLC CROSS-BORDER HANDBOOKS www.practicallaw.com/lifescienceshandbook Company. a was t a u t first a ion rights ion Free inventions are made by employees outside employees by made are inventions Free For l Mixed inventions are created by an employee an by created are inventions Mixed published

a further m see above, An overview of national laws: national of overview An above, see endments of of endments information in the PLC or Cross-border to obtain copies Life Sciences please contact Handbook ). [email protected], 2009/10 „ „ ularly the German and the Dutch, on the basis that existing laws: Criticism has been made of a number of national systems, partic- compensation aftertheinventionhasbeenexploited. calculate which UK, the as such countries, those than pensation com- of amounts lower award typically made, was invention the when time the at compensation assess Germany,which as such countries, Those level. lower much a at typically compensation but routine, is inFrance, other, the At significant. be to likely are but granted, rarely are claims UK, the in end, one At cant. signifi- are jurisdictions different y of laws the in disparities the tors and to industry. However, this chapter has demonstrated that m inven- to both important is compensation employee of issue The Su greatly appreciatedintheanalysisofGermanlaw. *The assistanceofGunnarWolf, Covington&BurlingLLP, was but to become familiar with the various different national regimes. choice little have Europe across located employees with ployers nationalcompensationquestionable.provisions is Therefore, em- The effectiveness of employer’s attempts to use contracts to avoid sation isalsounlikely. chapter, seem to have no appetite for reform. European harmoni- However, the national legislators in the countries, analysed in this statutory compensationafteraninventionhasbeenmade. this point. Employees and employers are free to agree the level of compensation would not be just. However, there is no case law on additional that grounds the on compensation, further of ployees em- deprive to operate may contracts employment incentive in invention schemes that possible is It of UK). overview The laws: An national above, (see contract) employment an through example, (for invention the of creation the before compensation employee the of out contract to permissible not is it UK, the In there has been a major change of circumstances.byagreement or the employer’s unilateral decision) be readjusted, Eachpartycan alsorequest if thattheagreed remuneration (whether writingwithin six months from the end ofthe employment contract. void. An allegation that compensation is 23ofinequitablethe ArbnErfG, which mustrenders be seriously made in inequitable agreements rightsthelieuofinunder ArbnErfG. the subjectThisissection to pensation. In practice, employers often proposeemployeritsofexistence, a lump-sumtheparties canpaymentnegotiate andagree com- „ „ W E F T M Covington &BurlingLLP

orag m compensation islessfrequentlyawarded. May leadtorelocationofR&Dfacilitiescountrieswhere Act asadeterrentininnovativeindustries. www astrowel@cov mpeberdy@cov +44 2070250832 +32 25495269 +44 2070672107 and P a .cov.com eberdy andAlain is r reproduced U ntri c .com o .com or with visit the www.practicallaw.com/lifescienceshandbook. b S kind trowel t or det or permission Life Sciences2009/10 of a i the ls publisher,