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Employee invention of managing directors or board members?

5. January 2021

Managing directors of a GmbH or board members of an AG are not employees within the meaning of the ArbEG. So what is the right of access to inventions and their possible remuneration for these board members and Managing directors?

German ArbEG does not apply to managing directors

According to German  § 1 ArbEG, only inventions and technical innovations of employees in the private and public sector, and also – less known – of civil servants and soldiers are subject to the Employee Inventions Act (ArbEG). However, managing directors of a GmbH or board members of an AG are not employees within the meaning of the ArbEG.

Where there is no fixed regulation such as the employee invention law, the free agreement applies. This in no way precludes § 22 sentence 1 ArbEG. However, obligations to offer may arise from the individual service agreement or partnership agreement. A so-called advance disposition is possible. In this case, the managing director or board member would undertake to transfer his future invention rights in advance. It is important to note the difference between a transfer obligation and an advance disposition: the transfer obligation requires an act of transfer, whereas in the case of an advance disposition the company acquires the right to the invention without an act of transfer.

Contractually in the field of technical development

This also applies in the factual situation where board members are contractually active in the area of technical development – insofar as they have drawn on the resources of the company for the invention. In practice, this is probably the normal case, since prior knowledge or special knowledge of the company, personnel support and also the use of material resources of the company flow into the invention work. In individual cases, this may give rise to obligations to provide services. This is because, in principle, there is no obligation for members of executive bodies to develop inventions. And first of all, Section 6 Sentence 1 of the German Patent Act (PatG) applies to inventions. According to this, the inventor, i.e. also a board member, is personally entitled to the invention.

The decisive question for an obligation to tender is whether the invention was the result of the contractually owed service or is based on a so-called superobligatory effort. If, for example, a managing director is assigned his own development and research activities, the invention would accordingly not be a special service, but would already be compensated by the agreed managing director’s remuneration.

Is the invention a special service?

This question was also at issue in a specific case heard by the Higher Regional Court (OLG) Frankfurt in April 2017 (OLG Frankfurt a.M., April 13, 2017, 6 U 69 / 16). The plaintiff, the company, demanded the transfer and rewriting of several utility models from the defendant shareholder, including claims for the grant of two European patents. In this case, the plaintiff argued that the inventions were the result of the contractually owed activity and thus already compensated by the profit sharing of the defendant. The plaintiff was successful before the Frankfurt Higher Regional Court, and the Court of Appeal also upheld the judgment of the Higher Regional Court.

The Court of Appeal emphasized that the principles on the scope of duties of board members under inventor law could also be applied to the inventions of shareholders. The defendant in this case was formally employed as a commercial manager with an employment contract. In his actual activities, however, he acted like a managing director, and this was decisive.

It was also significant in this case that the inventions were attributable to the business object of the plaintiff. The company had proven expertise in the subject area of the invention. It was proven that prior knowledge and employees from the company and also a loan of the plaintiff financed by operating funds were involved in the development activities. In assessing the overall circumstances, the court also recognized the defendant’s duty of loyalty. This is because, according to the “business opportunity doctrine”, a managing director of a partnership is fundamentally obliged to exploit business opportunities in the company’s line of business not for himself but for the company (BGH Dec. 4, 2012, DB 2013, 15 = NJW-RR 2013, 363).

Property right application fees may be retained

Ultimately, the court granted the defendant a right of retention under Section 1000 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) in the amount of the property right application fees he had paid. This is because these are regarded as necessary expenditures within the meaning of Section 994 of the German Civil Code. If, on the other hand, the defendant had developed his inventions not only formally but also actually as an employee for the company, the plaintiff would have been obligated to pay an inventor’s compensation pursuant to Sec. 9 ArbEG.

Do you also need support in German employee invention law ?

Our lawyers are experienced in patent and trademark law, national and international law.

 

Sources:

OLG Frankfurt a.M., 13.04.2017, 6 U 69 / 16

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Category iconPatent Law Tag iconOLG Frankfurt,  ArbEG,  research and development,  employee invention,  obligation to offer,  service contract,  managing partner,  managing director,  partnership agreement,  profit sharing,  fiduciary duty,  obligation to transfer,  contractually owed service,  advance disposition,  board member,  § 6 PatG

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