Employees’ Inventions and Right to Fair Compensation
Art. 64 in a nutshell
While Art. 65 of IPC regulates inventions of Universities and Public Research Institutes’ employees (as already analysed here), Art. 64 IPC refers to all other cases of employment relationships.
Art. 64 IPC distinguishes several sorts of inventions based on two main criteria: the employee’s contract type and the invention’s type in relation to the employer’s scope of activity.
In particular, three types of inventions are pointed out:
- service inventions (Art. 64(1) IPC), that is to say those inventions created while fulfilling the working relationship when the employee’s contract includes inventiveness among duties together with a specific wage for it. In this case, property rights upon the industrial invention are completely due to the employer, while the inventor is entitled to be acknowledged as author;
- company inventions (Art. 64(2) IPC), created while fulfilling the working relationship as well, but belonging to the more complicated category of those job contracts where no wage is given for inventiveness. In this case, property rights are due to the employer anyways but, if a patent is obtained or the invention gets exploited in a trade secrecy regime, the employee inventor is entitled to a fair compensation;
- occasional inventions (Art. 64(3) IPC) refer to those inventions conceived outside of the working relationship, but belonging to the employer’s scope of activities. In this case, the employer – within three months from the communication of the patent filing – has a right of pre-emption to use or purchase the patent and to request or obtain patents abroad, after paying the employee a lease or a price.
Among these types, company inventions certainly represent the most interesting case, as it entails the determination of a fair compensation to the employee and, most of all, the estimate of it.
Right to fair compensation
As explained above, the fair compensation is given to employees having no inventiveness included in their contracts, as this is an indemnity-kind of feature due for an extraordinary performance, but always belonging to his/her job tasks.
Therefore, the essential part of the inventive activity should be carried out during the working relationship, as there have to be both a chronological connection and a direct causality between the employee’s activity in that field and the invention’s realization. Moreover, as previously said, the right to fair compensation has to be acknowledged to the employee only when a patent is obtained or in case the invention is used in a trade secrecy regime.
Declaration of nullity and inventions never exploited commercially
What happens in case of patent’s declaration of nullity for a so-called company invention?
According to Art.77(c) IPC, even though the declaration of nullity does have a retroactive effect, it doesn’t compromise “payments already given in compliance with articles 64 and 65 as fair compensation, lease or price”.
So, this rule applies to compensations already given.
Moreover, some distinctions have been done regarding the possibility that the employer claims the patent’s nullity in order to avoid paying the fair compensation to the employee.
Another situation which is not regulated by Art. 64 IPC is when the invention was registered as a patent but never exploited commercially. In this case, the case law seems to be inclined to give the employee a fair compensation anyways, as the commercial value of the invention may come from the sole exploitation of the exclusive area against third parties (in particular, please see the recent judgement of the Court of Milan n. 7094/2019).
More inventors or multiple patents
We talk about group’s inventions when the result of the inventive activity follows the collaboration of a number of individuals acting in a coordinated way in the framework of a single project.
By the way, the legislation implemented by Art. 64 IPC is unsuitable to regulate group’s inventions, being shaped upon the single inventor’s model. In particular, the enforceability of such regulation is not clear about the right to fair compensation for inventions created by many employees as a team.
The intellectual creation generated by the collaboration of many employees acting as co-inventors and co-authors is regulated by Art. 6 IPC as well as by the relevant rules of community of property (Art. 1101 c.c.). Therefore, for inventions created by many employees as a team, when they are not researchers in Universities or Public Research Institutes (in compliance with Art. 65 clause 1), an assumption of equality of shares should be applied according to Art. 1101 c.c. in order to determine the amount of fair compensation possibly due to each one of the co-inventors.
In this regard, the recent case law (in particular Court of Milan n. 7094/2019) looks as particularly relevant, stating that the right to fair compensation cannot be considered as a shared right for all participants when its existence should be established. However, it’s important to take into account the contribution of each inventor when establishing the amount of fair compensation, as the sum of fair compensations given to single inventors should never reach the value of the whole invention.
Lastly, in case of more patents regarding the same invention (for example, patents filed in different countries and claiming the same priority date), it is excluded that a fair compensation is given for each patent. Therefore, the compensation is unique and even a single patent is sufficient to acknowledge it (Cass. 27500/2017).
Determination of a fair compensation
According to Art. 64 IPC clause 2, determining the amount of fair compensation should take into account the following four aspects:
- invention’s importance;
- inventor’s tasks;
- inventor’s salary; and
- wage the inventor gained from the employer’s organization.
One of the most common methods to determine the amount of fair compensation is the so-called German formula. This formula allows to calculate the amount of the indemnity to be given to the inventor by multiplying a value V, corresponding to the value of the invention, by a proportional factor P, quantifying the employee’s contribution to the invention. The value V can be calculated in several ways and can correspond, for example, to the sum the company should pay to acquire patent rights from third parties. The factor P is calculated based on three index, each one having a score:
- employee’s autonomy in facing the technical problem at the base of the invention;
- company’s contribution to the employee in order to solve such technical problem; and
- employee’s tasks and position within the company.
The P factor is then converted into a percentage and, therefore, the value I of the indemnity will be equal to the percentage P of the value V of the invention.
All disputes regarding fair compensation according to Art. 64 IPC are solved by specialized sections in intellectual and industrial property. In particular, as for the existence of the right to fair compensation, the competence is given to the judicial authority that delegates an arbitration committee to solve disputes about the amount of fair compensation, in case an agreement is not reached between parties.
The arbitration committee is composed of members appointed by the parties, usually three arbitrators, according to the rules established by the Code of Civil Procedure (Articles 806 and following).
In particular, Art. 64 clause 5 establishes that the arbitration committee can pronounce on the determination of fair compensation even in case of pending judgement about the existence of the right to fair compensation, that is when the decision of the arbitration committee depends on the judgement actually confirming the right.