Who owns an employee’s invention: employer or employee?
As a matter of fact, a great number of inventions are not made by self-employed inventors, but by employees in the course of their employment. This might be a new drug formulation, a process of preparation of a compound, a method of control of a plant disease, or an article of manufacture. The question who owns these inventions: the inventor or his employer is of the same importance as the rules on allocation of employees’ inventions and employer’s rights and remuneration, since rules that unduly favor either side, employer or employee, may easily lead to disputes over social justice and technological competition. Answer to the above question varies from a country to a country and shall be discussed below.
Inventions are very often created by employees during their employment hours. As it can be seen from some court cases, if the rights of both employers and employees are not expressly pre-defined in some form of written or oral agreements, it can often lead to lengthy and costly legal disputes. Employees tend to argue that the patents for their inventions do not necessarily belong to the employers since they themselves, but not their employers, invented those inventions. Employers, on the other hand, may think that they are entitled to obtain patents for such inventions and shall be given an exclusive right over the patented invention because such inventions have been created by their employees in the course of their employment using their own facilities. So, what patent laws in different jurisdictions should do to ensure that employers and inventor-employees retain their portions of the rights to the invention?
Different approaches have been available worldwide. Under Australian law, an employer generally has rights over an invention created by an employee. Japan patent law, in contrast, gives the employees the ownership over inventions made in the course of employment. Employers shall obtain non-exclusive but transferable licenses subject to payment of a reasonable remuneration to the employees/licensees. German rules for employees’ inventions have been known as favorable to the employees as well. Inventions belong to employees and employers shall merely have a right to use the service inventions that are made within the scope of business and duties by the employees upon payment of an equitable remuneration. The US approach to this kind of inventions is rather open since there is no strict federal law for remuneration of employees’ inventions. Most companies have rules regarding compensation for employee inventions. There is, however, no statutory obligation to do so. It is generally presumed that patent rights automatically belong to employers via an implicit agreement with employees – or that any compensation terms for employees’ inventions would have been worked out in advance with staff members during initial employment contract negotiations.
Shop right rule
Although the US patent law provides employers with a far more favorable situation than in Europe, employees may still avail themselves of a shop right limitation if they are not specifically hired or employed to invent. Shop right are an employer's non-exclusive royalty-free right to use technology developed by employee while on the job using the employer’s finance or work time. A shop right is generally implied when an employee, who is not specifically hired to invent, uses the employer’s facilities to develop a new technology during the employment time. It is based on the employer’s presumed contribution to the technology through his own materials, appliances, time and equipment. A shop right permits employer to use the invented technology, but not to sell it nor to prohibit others from using it. It is unfettered right to the manufacture, use and sale of the invented technology and without any requirement to reimburse the inventor. A shop right is like a license the invented technology to competitors and to receive royalties and the like.
Employees’ inventions in Vietnam
Vietnam IP Law provides that the right to file patent applications with respect to employees’ inventions belong to the entities or individuals who have provided finance and material facilities to the inventors through a job assignment or job hiring unless otherwise agreed by relevant parties. Thus, employers shall be entitled to obtain a patent for such invention and be given an exclusive right over the patented invention. Employees shall enjoy some moral rights over the invented technology to be named as inventor in relevant letters-patents as well as in any document in which the invented technology is published or introduced. Employees shall also enjoy some remuneration in accordance with the law.
However, it is rather obscure whether the situation remains the same if the employees are not specifically hired or employed to invent or if the invention is made outside the scope of business. In the former situation, should the employer establish an employer’s royalty free, non-exclusive and non-transferable shop right based on his presumed material and time contribution instead of an exclusive right to such invention? Or should the rules on employee inventions be changed to be more favorable to employees? In Vietnam, the change of employment is not a common practice and has been regarded as a stigma rather than an advantage. It puts employed inventors in a disadvantageous position when negotiating with employers about remuneration as long as they still wish to stick to companies. The legislatures should make sure that employees are properly awarded for their inventive efforts but not at the expense of employers. It is a prerequisite to encourage employees’ innovation while protecting legitimate rights of employers over employee inventions at the same time.
Vision & Associates