Summary of the Provisions of the Law on Employee Inventions
The Law on Employee Inventions (LEI) regulates the rights to service inventions. The
LEI is not only concerned with inventions which are subject of a patent or of protection
as a utility model but also with trade secrets (Sec. 17 LEI) and so-called qualified
technical improvement proposals (Sec. 20 LEI).
A service invention is one that is made during a period of employment,
irrespective of whether it was made during working hours, in leisure
time or on vacation. The invention must have resulted from the
employee's tasks in the private company or be essentially based on
experiences or activities of the company (Section 4, subsection 2).
The employee must report a service invention to the employer immediately in a
separate written notice (Sec. 5) in text form (Sec. 126b of the Civil Code). The contents of the invention report are laid
down in detail in Section 5, subsection 2. The invention report must be
recognizable as such.
The employer must immediately give the employee written confirmation in text form of
receipt of the invention report. The employer has two months in which to require
amendments to an invention report that is incomplete.
The employer can lay claim to a service invention by a declaration transmitted to the employee (Sec. 6,
subsection 1). A declaration laying claim is deemed to be made unless the employer releases the invention
within 4 months of receipt of the report (Sec. 6, subsection 2).
If an invention report is incomplete, and the employer requires it to be amended within
two months, the 4-month period does not commence until the employer has received the amended report.
The employer can also claim a service invention without invention report, e.g.
when he was notified of the service invention by a third party.
In practice, difficulties frequently arise because the employer and employee
disagree as to the protectability of the service invention. However, it should
be noted that doubts as to the protectability of the invention do not affect
the applicability of the LEI. Laying claim to an invention does not constitute
an acknowledgement by the employer of protectability of the invention, but gives
the employee a right to compensation. If the employer wants to avoid this right
to compensation, he can treat the reported alleged invention as a simple technical
improvement proposal. If the employee is nevertheless successful in acquiring a
protective right for his invention, the employer will have to obtain a license
from his employee in return for a corresponding royalty. Therefore, in case of
doubt, claim should be laid to a potential invention.
Another possibility is that employer and employee agree to treat the reported invention as a simple technical
improvement proposal. In this case, attention should be paid to Sections 22 and 23 according to which such an
agreement is admissible only after the service invention has been reported and must not be manifestly
inequitable. Otherwise, the agreement is null and void.
All rights to the service invention pass to the employer in case of claim being layed to the invention (Sec. 7, subsection 1).
The service invention will become free if the employer releases it by declaration in text form. The employee can
have available a released service invention without the restrictions of Sections 18 and 19.
The Employee's Compensation
To assess the compensation, in particular the commercial exploitability of the
service invention, the duties and position of the employee in the company as
well as the company's contribution to the service invention are decisive (Section
9, subsection 2). The compensation is generally assessed in accordance with
the directives issued by the Federal Minister of Labor for the
compensation of inventions made by employees in private employment.
A right to reasonable compensation exists as soon as the employer has made
claim to the service invention (Section 9, subsection 1). The right to compensation is not dependent
on whether the invention is actually used. As long as the patent is not granted, generally only preliminary
compensation is agreed upon, e.g. 50% of the final compensation. The final compensation is to be fixed at the
latest within 3 months of the grant of the patent. According to case law, compensation has to be paid at the
latest when the invention is used.
If employer and employee cannot agree on the amount of compensation, the employer must fix the compensation
unilaterally and make payment according to the amount fixed. The employee has two months in which to contest
the fixed amount. Failing that, the fixed amount becomes binding. If the circumstances change substantially,
both the employer and the employee can, however, require the other to consent to a new compensation arrangement.
It is generally applicable that once compensation has been paid, it cannot be claimed back.
The employer is obliged to file a reported service invention without delay for patent or utility model
protection (Section 13, subsection 1). This obligation exists irrespective of whether the employer wants to
claim the service invention or not. Of course, this obligation no longer exists when the employer has released
If the employer has laid claim to the invention, he is also entitled to file the invention for
protection abroad. The employer must release the service invention to the employee for the countries in which
the employer himself does not want to acquire a protective right and the release must be in good time before
expiration of the priority year. Upon release of the invention, the employer can reserve a non-exclusive right
for himself to use it in the country concerned (Section 14).
If the employer wants to abandon a protective right, he must offer the protective right to the employee for
assignment. Three months after such an offer, the employer can abandon the protective right if the employee has
not declared his willingness for assignment in the meantime. Here, too, the employer can reserve a non-exclusive
right for himself to use the service invention (Section 16).
If an employee makes a free invention, i.e. an invention that has nothing to do with his tasks in the company,
he is obliged to notify the employer. The notification must contain all necessary statements for the employer
to be able to evaluate whether a free invention is actually involved. If the employer does not contest the fact
that the invention reported to him is a free invention within three months, it is no longer possible to claim the invention
as a service invention (Section 18).
The employee's obligation to notify is, however, not applicable if the free invention obviously cannot be used
within the activities of the company.
With regard to the exploitation of a free invention, the employee must initially offer the employer at least
non-exclusive right of use (Section 19). A three-month term then exists for acceptance of the offer.
A distinction is drawn between simple technical improvement proposals and qualified technical improvement
proposals. Simple technical improvement proposals are regulated in collective agreements or single-plant
bargaining. Qualified technical improvement proposals are meant when the improvement affords the employer an
advantageous position similar to that obtained from an industrial protective right, e.g. know-how. In respect
of qualified improvement proposals, the same provisions apply for compensation as with an claim.
If the employer wishes to treat a reported invention as a trade secret, Section 17 is to be noted.
There is an Arbitration Board at the German Patent Office and its function is to seek an amicable settlement in
cases of dispute between employer and employee. The Arbitration Board can be petitioned by simple written
request. The proceedings are free of charge. After clarification of the situation, the Arbitration Board will
make a settlement proposal to the parties. The settlement proposal is deemed to have been accepted if neither of
the parties raises an objection to the settlement proposal within one month. In any event, the arbitration
proceedings are concluded with the settlement proposal. If one of the parties raises an objection to the
settlement proposal, the proposal will not become binding and the parties can assert their rights by taking
legal action before the ordinary courts or the Labor Court. Petitioning the Arbitration Board is as a rule a
prerequisite for taking legal action.
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