Waiver of inventor remuneration in return for a bonus

An employee inventor may waive his inventor rights under § 16 ArbEG in exchange for a premium from the employer. This may result in a possible claim for adjustment to the inventor remuneration.

Inventor remuneration in event of a premium

According to German law for employee’s inventions (ArbEG) it is the free entrepreneurial decision of an employer not to use, or to no longer use, a property right arising from an employee invention. If an employer wishes to abandon such a patent, the employer must inform the employee of his intention to abandon the patent and thus offer the employee the right to take over the patent.

It is also possible, however, that the employee inventor waives his inventor rights under § 16 ArbEG in return for a bonus from the employer. This is certainly the case and is also correct if the employee consents to such an agreement in accordance with § 22(2) ArbEG. Such an approach has advantages for the employer, as it avoids a considerable and possibly expensive administrative burden. The agreement of a premium payment in waiver of the inventor’s rights may, however, give rise to a claim to adjustment of the inventor’s remuneration.

The Arbitration Board of the DPMA clarified that it was unrealistic for the employee inventor himself to achieve his own exploitation of his service invention, because otherwise the industrial property right would not have been abandoned by the employer. But then a premium would be without reference to the economic usability of the service invention. Such a bonus could therefore not be regarded as inventor remuneration and could therefore not be unfair under § 23(1) of the ArbEG.

Patent is given up – but continues to be used

This would be different if the employer were to drop the patent regardless of any existing use in order to achieve a reduction in the employee’s remuneration. For even in the event that the employer assigns the property right to the employee inventor, the employee inventor would normally have a continuing claim to remuneration from the employer based on the employer’s acts of use in accordance with § 16 (3) ArbEG. The premium paid would then have the character of an agreed flat-rate payment, since it would be a direct consideration by the employee for the reduction of his entitlement to remuneration.

If, in such a case, the continued use of the premium was already recognisable for the employee and the employer at the time the premium was agreed, despite the abandonment of the property right, it is possible to examine the premium on the basis of § 23 ArbEG.

Right to adjustment of inventor’s remuneration due to significant changes

Often, however, there is another case: the employer decides to drop the patent as part of normal portfolio maintenance. In such a case, there may be a claim for adjustment under § 12 (6) ArbEG, according to which a different remuneration arrangement may be demanded if the circumstances subsequently change significantly.

In the context of this examination, the premium paid would have to be compared with the remuneration to which the employee would be entitled under § 16 (3) ArbEG if he had taken over the property right and the employer continued to use it on the basis of a reserved right of use.

The Arbitration Board of the DPMA explained this idea in detail. According to the Arbitration Board, this remuneration would then be about 20 – 25 % lower than before the transfer of the property right, since the employer would now only have the pecuniary advantage of a simple right of use and no longer an exclusive right of use, and the personal proportional factor would also have to be further taken into account. For through the transfer the employer’s share in the creation of the service invention is not lost.

The Arbitration Board thus stated that the inventor remuneration pursuant to § 16 (3) ArbEG less the maintenance fees to be paid would have to be compared with the premium received for the waiver. If the employee inventor then lost an amount, the waiver agreement would have to be adjusted if this lost amount were three times as high as the premium received.

Considerable administrative burden for employers

Such an examination would, however, far exceed the administrative costs associated with the obligation under Section 16 ArbEG.
Therefore, the Arbitration Board recommends that employers, irrespective of the existence of a legal obligation, pay an inventor remuneration for the actual use, even in the case of a waiver of § 16 ArbEG and the abandonment of the patent, insofar as this takes place within the maximum term of protection of the patent.

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

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