Employee's invention in a German subsidiary of an US parent group

An employee’s invention made in a German subsidiary of a US company must be reported to the US parent company if such an instruction exists. Nevertheless, the German subsidiary tacitly claims the invention – through the fiction of claiming it.

An invention which arises during working hours in a company belongs to the employer and must be made known to the employer immediately and separately in text form in accordance with German law for employee’s inventions (in German: Arbeitnehmererfindungsgesetz (ArbEG)). However, German companies are increasingly integrated into international corporations.
This has a serious impact on claiming an employee’s invention. To whom should the employee’s invention be reported now? And who’s claiming it?

Parent group has the right to direct

In the present case, the employee inventor worked from 2014 to 2015 in a German subsidiary (hereinafter referred to as “A GmbH”) which at that time belonged to a US parent company (hereinafter referred to as “A Inc.”).

From 2014 and thus at the time of the invention disclosure, the employees of “A GmbH” were obliged to report any invention disclosures directly to the US Patent Department of “A Inc. The employee inventor made five employee’s inventions in 2014, followed the instructions and reported his inventions to the American parent company. Thus he acted completely correctly in the sense of the right to direct (§ 106 S.2 GewO).

In legal terms, the US patent department of “A Inc.” was the receiving agent as a result of this instruction within the meaning of § 5.1 ArbEG . Consequently, the invention disclosures filed with the US patent department of “A Inc.” had a direct effect against “A GmbH”. Therefore, the invention disclosures were not only sent to the US patent department, but also to the German subsidiary “A GmbH” (pursuant to § 6.2 ArbEG).

It was therefore disputed between the employee inventor and the legal successor of the German company “A GmbH” whether “A GmbH” had claiming the inventions. The arbitration board of the DPMA was called upon to clarify this issue.

Decisions of Arbitration Board of DPMA are binding

With its decision, the Arbitration Board upheld the employee inventor who had asserted that “A GmbH” had claiming his invention. As the German “A GmbH” also received the invention disclosures, the German subsidiary had already at that time been obliged to register the service inventions for the grant of an industrial property right with effect for Germany pursuant to § 13.1 ArbEG – although the instruction to report to the US parent group was correct.

The Arbitration Board of the DPMA clarified that, as a result of the fiction under § 6.2 ArbEG, the “A GmbH” had claiming and made use of the employee’s inventions.

Excursus into the German Fiction of Claiming

The fiction of the claim is an implied claim, which is made without the active involvement of the employer. The so-called Fiction of Claiming (in German: Inanspruchnahmefiktion) applies to all inventions made after 1 October 2009. This fictional scheme as from 1 October 2009 reverses the previous scheme. Because before 1 October 2009, employee’s inventions became available if the employer did not declare the claim in writing within four months. Now things are exactly the other way around: the claim can be assumed to have been made if the employer does not declare the release within four months. The employer then tacitly claimed the invention.

This was fact in this case. As a result, “A GmbH” – like its legal successor – was obliged to pay compensation for the service inventions (§ 9.1 ArbEG).

Obligations are arising from § 14 ArbEG by assuming fiction of claiming

In addition, the obligations under § 14 ArbEG became effective for the “A GmbH”; this is also important to note for all internationally involved German companies.

§ 14 ArbEG Application for intellectual property rights abroad

After claiming the employee’s invention, the employer is entitled to register it abroad for the granting of industrial property rights.
For foreign states in which the employer does not wish to acquire protective rights, he must release the employee’s invention and, upon request, enable him to acquire protective rights abroad.

The release should be made in sufficient time so that the employee can take advantage of the priority periods of the interstate treaties in the field of industrial property protection.

The employer may, at the same time as the release pursuant to paragraph 2, reserve for himself a non-exclusive right to use the employee’s invention in the foreign states concerned against appropriate remuneration and demand that the employee, when exploiting the released invention in the foreign states concerned, take into account the employer’s obligations arising from the employee’s invention contracts existing at the time of the release against appropriate remuneration.

Have you made an employee’s invention? Or are you, as an employer, concerned about the resulting remuneration claims?

The patent law firm Dr. Meyer-Dulheuer & Partners LLP possesses extensive expertise in the field of employees’ inventions, enabling us to provide counsel to both, the company and the employee.