Employee's invention in insolvency

It is possible that the economic Corona restrictions will lead to an increase in insolvencies. We therefore provide information on the subject of employee’s inventions in insolvency. The German ArbEG obliges the insolvency administrator to offer an employee invention to the inventor or to sell it together with the insolvent business.

German § 27 ArbEG – before and after 2009

§ 27 of the ArbEG concerns and regulates the fate of a service invention after it has been claimed by the employer in the event of insolvency. In 2009, however, § 27 ArbEG was significantly restructured. This affects an employee’s invention after it has been claimed by the employer and insolvency has been opened in the meantime.

The new § 27 of the ArbEG – since 2009 – obliges the insolvency administrator to offer the employee’s invention as well as the rights and duties relating thereto to the inventor for takeover if he does not plan to sell it together with the insolvent business.

The case law on the remuneration obligation of the new owner (and therefore new remuneration debtor) is also interesting in this respect.

New owner can discharge himself from the obligation to pay

According to a decision of the Arbitration Board of 2015 (Arb.Erf. 08/12), it is open to the new remuneration debtor, like the original remuneration debtor, to discharge himself from the remuneration obligation for the future by abandoning the IP right or the IP right application in accordance with § 16 ArbEG.

In the case heard at the time, the applicant had already left the company before the insolvency proceedings were opened. By means of an agreement, he had agreed with the insolvency administrator on claims to employee inventor remuneration for the period until the opening of the insolvency proceedings and a certain period of time, which the administrator also paid out.

The insolvency administrator sold the business division to the defendant, including all intangible rights pertaining to this business division, according to the purchase agreement. The purchase agreement also expressly referred to the existing obligations under the ArbEG with regard to the right to the protection of inventions.

Employee inventor no longer employed at the time of insolvency

Pursuant to § 27 ArbEG, the acquirer of an insolvent business is obliged to pay remuneration for acts of exploitation from the time of the opening of insolvency proceedings if the insolvency administrator disposes of the employee’s inventions together with the business. An obligation to pay remuneration exists with the sale of a technically and organisationally independent part of the business that theoretically allows the exploitation of the employee’s invention.

According to case law, this also applies if the inventor is no longer employed by the insolvent company at the time of insolvency. It also follows from § 26 ArbEG that the claims to employee’s inventor remuneration are generally not dependent on the continuation of the employment relationship.

Duty to offer under section 16 ArbEG

It is fact that § 27 ArbEG refers to the employer’s obligation to pay remuneration. However, the obligation to pay also includes the possibility to be relieved of this obligation, and the new party liable for payment also has such a right, the Arbitration Board ruled. This is also connected with the obligation to offer under § 16 (1) ArbEG, according to which the inventor can continue the abandoned service invention himself. Therefore, it is open to the new remuneration debtor, like the original remuneration debtor, to dispense with the remuneration obligation for the future by abandoning the IP right or the IP right application in accordance with § 16 ArbEG.

However, if the patent application is withdrawn without granting the inventor the possibility to take over the patent, the possibility of the inventor’s economic participation in the invention is irreversibly eliminated unilaterally and prematurely under patent law, the Arbitration Board stated. A violation of § 16 (1) ArbEG could therefore give rise to a claim for damages by the employee under § 823 (2) BGB against the person who abandoned the IP right.

Do you have questions about an employee’s invention?

Our patent law firm Meyer-Dulheuer has extensive expertise in the field of patent law and inventor law.

We will be pleased to represent your interests both before the arbitration board and in any court proceedings that may become necessary. Please feel free to take advantage of our consultation offer.