In a global marketplace, understanding which laws govern an intellectual property (IP) portfolio is crucial for maximizing the value of the IP rights. However, it can be a complex endeavor for companies, especially in the country-specific world of patent law. For instance, many countries require a Foreign Filing License to be obtained before an applicant or inventor may file a patent application outside of the country in which the invention was made, and the consequences for failing to secure such a license can be significant, including the risk of jail time for inventors in certain countries.

Another consideration is whether local laws entitle inventors to compensation from their employers. When technologies are developed by a global team with inventors working in different countries, a careful analysis is required to determine which country-specific laws apply to each invention and the underlying inventor-employer relationship. Such country-specific laws that prescribe a particular compensation or remuneration scheme for inventors are generally known as Remuneration Laws.

Country-Specific Compensation and Remuneration Laws

In general, Remuneration Laws require an employer to offer compensation for an employee’s invention in addition to the employee-inventor’s normal salary or wages, even if the invention was created in the scope of their employment. In some instances, such compensation must be specifically provided, and may not be satisfied by discretionary incentive bonus payments. Failing to consider Remuneration Laws may result in a loss or division of rights or profits acquired in an invention, significantly disadvantaging the employer(s).

Some countries that have Remuneration Laws include, but are not limited to: Argentina, Belgium, Brazil, Chile, China, Colombia, Costa Rica, Denmark, the Dominican Republic, France, Germany, Iceland, Indonesia, Italy, the Ivory Coast, Mexico, the Netherlands, the Philippines, Poland, South Korea, Spain, Switzerland, Thailand, Turkey and the United Kingdom. Importantly, different national Remuneration Laws may involve different considerations for determining when additional compensation is required and how such compensation is to be calculated. In some instances, remuneration is warranted only if the employer uses the employee’s invention. In other instances, remuneration is warranted when employee-inventors assign their rights in the invention to the employer, regardless of whether the employer actually uses the invention. Two detailed examples of these variations of Remunerations Laws are illustrated below.

Remuneration for Using the Invention

In Poland, inventors may be entitled to remuneration for the use of their invention by an employer who enjoys the right to use it, the right to a patent, the right of protection or the right in registration.[1] The right to remuneration is tied to the use of the invention, regardless of whether said invention was successfully patented.[2] If an employer and employee-inventor fail to agree on the amount of the remuneration, such amount is determined by a prescribed proportionality test, including considerations of:

• profit obtained by the employer from exploitation of the invention
• extent to which the employee-inventor assisted in making the invention
• scope of the employee-inventor’s duties while making the invention[3]

Poland’s Remuneration Law further provides that if later profits obtained by the employer substantially exceed the profits determined while initially considering remuneration under the proportionality test, the employee-inventor is entitled to increased remuneration based on the excess profits.[4]

However, the foregoing statutory remuneration scheme is superseded by any contractual agreements between the employer and the employee-inventor so long as the parties agreed to remuneration in the contract. The amount of remuneration, and whether the employee had opportunity to negotiate, is immaterial to whether the contract governs an employee-inventor’s right to remuneration. The only relevant question is whether the parties agreed to some amount of remuneration and a method of payment.[5]

The importance of a contractual agreement was addressed in a 2017 judgment in the Appellate Court in Warsaw, Poland, wherein an employee who invented an industry-standard technology for printing color drivers’ licenses sought remuneration from an employer when it became clear that the employer’s profits substantially exceeded the contractual compensation.[6] The agreement provided for a single lump-sum payment of 30,000 PLN for use of the invention, yet profits were later estimated to exceed several dozen million PLN.[7] The Appellate Court held that the employee was not entitled to additional compensation because the 30,000 PLN lump-sum was a mutually-agreed upon amount that excluded the transaction from the statutory remuneration scheme.[8] Importantly, had the employer not included sufficient language in the employment contract, Poland’s statutory remuneration scheme would have permitted the employee to seek increased remuneration based on the substantial profits.

Remuneration for Assigning the Invention

In South Korea, employee-inventors are entitled to “fair compensation” when they contractually agree to transfer or assign to their employer their rights to patents covering their inventions.[9] If the contract provides for additional compensation for an invention, whether said compensation was “fair” depends on the context of the agreement, including:

• nature of negotiations for establishing compensation guidelines
• nature of presentation of compensation guidelines to employees
• whether employee opinions were considered[10]

Hence, this statutory remuneration scheme necessitates an in-depth analysis of the overall fairness of compensation. If the contract does not provide for compensation, or if the contractual compensation cannot be considered “fair” in light of the aforementioned considerations, the amount of compensation shall be calculated in view of the following factors:

• benefits the employer anticipated to obtain with the invention
• degree of contribution of the employer to the completion of the invention
• degree of contribution of the employee to the completion of the invention[11]

Interestingly, rather than considering profits actually obtained by the employer, remuneration in this scheme looks to the benefits anticipated to be obtained by the employer. Further, even if the employer foregoes filing a patent application after securing contractual rights to the employee invention, the employer must still pay fair compensation.[12]

Determining the Governing Remuneration Law

An initial step in assessing remuneration requirements is determining which country’s laws apply to the specific inventor-employees. For transnational or international inventor-employer relationships, courts generally look to governing law provisions in the employment contract, the country where the employee habitually carries out the work in performance of the contract and the circumstances of the inventor-employer relationship as a whole (e.g., citizenship and residency of the inventor team, location of research and development, and underlying employment agreements).

This choice of law issue arose, for example, when a German employee-inventor sued his German employer for remuneration and argued that the law of the Netherlands should apply rather than German law because the employee worked in Germany for 15 years before moving to the same employer’s Netherlands location for 11 years.[13] Under the applicable law in this case, priority is given to the country where the employee habitually carries out the work, but other elements of the employment relationship can be taken into account if such elements suggest that the contract is more closely connected with a different country.[14] Here, the court found that while the employee habitually carried out his work without interruption in the Netherlands, Germany was more closely connected to the employment contract because the employee was governed by German law, pension arrangements were made with a German pension provider, the employee resided in Germany after termination, the employee paid social security contributions in Germany, the employment contract referred to mandatory provisions of German law, and the employer reimbursed the employee for travel from Germany to the Netherlands.[15]

Recommendations for Managing a Patent Portfolio with a Global Inventor Team

In general, companies in the global marketplace should be mindful of three key factors – citizenship, residency, and location – of their employee-inventors engaged in research and development as a first step in assessing compliance with foreign Remuneration Laws. These key factors can also help employers appropriately tailor their inventor-employment agreements. Additionally, an internal audit of a company’s patent portfolio may reveal compliance issues related to inventor compensation and remuneration that may be remedied and corrected to avoid a potential dispute. Notably, even if a company is headquartered and has its principal place of business in a country without a Remuneration Law, that company may still be subject to compliance with foreign Remuneration Laws depending on the foregoing key factors.

[1] Act of 30 June 2000 Industrial Property Law, Art. 22(1).

[2] “Unless the parties have agreed otherwise, the employee as the inventor of the invention has the right to remuneration for the use of the invention, regardless of the patent protection obtained for the invention by the entrepreneur.” II PK 173/19.

[3] Id. Art. 22(2).

[4] Id. Art. 23.

[5] “If the creator and the entrepreneur agree on the amount of remuneration and the method of its payment, then the rules contained in the [Industrial Property Law] will be excluded.” I ACa 204/16.

[6] Id.

[7] Id.

[8] Id.

[9] Invention Promotion Act, Art. 15(1).

[10] Id. Art. 15(2)(1)-(3).

[11] Id. Art. 15(3).

[12] Id. Art. 16.

[13] Anton Schlecker v. Melitta Josefa Boedeker, Court of Justice of the European Union C-64/12 (Sept. 12, 2013).

[14 Id. at 32, 37.

[15] Id. at 29.

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