Employee VS Employer: Country Wise Ownership Rights on IP

31st May, 2016 - 9:12 am Categories: News & Updates Patents 0 Comments

The renewed focus on R&D especially under ‘Make in India’ to boost the manufacturing sector, needs the internationalization of Intellectual Property (IP) Rights policies. The confusion over the rights of employees and employer over the ownership of inventions needs special attention. The judgment of High Court (HC) of Bombay in Darius Rutton Kavasmaneck v Gharda Chemicals Ltd & ors (2014) SCC Online Bom 1851, discussed in more detail later, rules in favor of employees to own patents in their own name if their claimed invention was not part of their scope of work.  This blog aims to focus on some of these issues by taking examples of major countries and the practices being followed by them.

Germany

As per German law, employee inventions are of two kinds- tied or free. Tied inventions come under term of employment either from the employee’s tasks in the public or private organizations or are essentially based upon the experience or activities of these organizations. All other inventions are considered free and they belong to the employee. An employer has all the rights to the intellectual property for the invention by the employee during an employment for an unlimited period. The inventions at high schools, colleges of science by professors, research assistants and lecturers are considered free inventions.

UK

An invention made by an employee:

• Made in the course of normal duties or in the course of the duties falling outside the normal duties, but specifically assigned to him.
• At the time he had a special obligation to further the interests of the employer’s undertaking.

In both of the above cases the invention belongs to the employer. Any other invention by the employee belongs to him.

US

The inherent ownership right of the invention belongs to the owner. In general, the federal government obtains title, domestic rights and interests of invention by any government employee during working hours or using government facilities. But if the government’s contribution is found unjustifiable or the government has insufficient interest in the invention, then the employees own the right. The government retains the royalty free license.

In case the employee owns the invention, the employer may be entitled to “shop rights” (right to practice the invention on a nontransferable, royalty free basis), as a matter of equity for making use of employer’s resources.

Japan

In case the employee obtained a patent for an invention while working within the employer’s scope of business function, then the employer is entitled to a nonexclusive license to the patent. Noticeably the employer has no claim if the case does not belong to the invention in service.

France

All inventions that the employee makes for his inventive mission and functions as defined by his employment contract belong to the employer. The same is the case for the explicitly entrusted studies and research. In these cases the employee is entitled to an additional remuneration.

In all other cases, the invention is deemed to belong to the employee. If an employee’s invention belongs to the company’s field or uses company’s resources and data then the employer may claim ownership rights of the invention. Here the employee is entitled for due remuneration.

China

In China, the right to apply for a patent is subject to the division between the service and non-service invention.

• Service invention, in execution of tasks of entity that employs the inventor or made using the entity’s resources, give entity the right to apply for it.
• Non-service inventions give right to the inventor to apply for a patent. Additionally, the inventors are awarded money as prize for non-service inventions by any entity holding patents rights for such inventions.

Scenario in India and ideal practices

In India, public-funded research institutes have one of appointment terms assigning patent rights to the employing organization. Further the rules applicable to R&D personnel, involved in carrying out scientific and technical research, restricts them from applying or obtaining a patent for their inventions. Also there is a need to take permission from the employing organization in order to take commercial benefit out of a work.

Although, some premier institutes of research and development in India such as Indian Institute of Technology (IIT) and Indian Institute of Science (IISC) have framed their own IP Rights policies which are encompassing the rights of employees giving them more rights and benefits. Some of the other practices in India, and their comparison with more employee friendly norms in other countries, make a case for changes in the existing laws and policies like discussed below:

• In public- funded R&D organizations the case in Indian does not grant freedom to claim rights over the inventions made outside normal working hours or without using the employer’s resources. In many major countries the employees get the rights in this case.
• In India, an employee is not entitled to IP Rights for inventing outside the scope of the field of the employers. In other countries inventions made outside the business activity or the scope of specifically assigned tasks give rights to the employee.
• Surprisingly the situation is more confusing and complicated in case of private enterprises. There have been cases when employees have taken away intellectual property from the private employer, after resigning and claiming an invention for the work done in that organization. In an opposite scenario, companies also exploit employees by binding them for not using some information and skills even after termination of employment.

To conclude on a high note, the Bombay HC in Darius Rutton Kavasmaneck v Gharda Chemicals Ltd & ors (2014) SCC Online Bom 1851 applied the test of ‘duty to invent’. More particularly, the court was of the opinion that the defendant managing director, not under duty or instruction to invent per se, was not obliged to register the patent in the employing company’s name. Additionally, the court pointed out the contract of employment, which only stated managerial powers, along with the Indian law principles did not suggest that the patent filed by the employee belong to the employer, particularly in this case.  These developments again bring forward the stress on clear employment contacts in order to address the conundrum of IP rights.

Reference

1. Douglas Morgan, India – Employee-Owned Intellectual Property, March 2015
2. John P. McNeill, EMPLOYERS, EMPLOYEES, And INTELLECTUAL PROPERTY RIGHTS, Nov. 2011
3. V K Gupta, Employer VS Employee Inventions : IPR Issues in R&D Organizations, Vol 5, September 2000, pp 239-250

About the Author: Gyanveer Singh, Senior Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: gyanveer@khuranaandkhurana.com and Harsh, Junior Patent Associate at IIPRD and can be reached at: harsh@iiprd.com.