Arbitration Board under the Employee Inventions Act
Provisions under the Employee Inventions Act
Employees have the obligation to report an invention made during the employment relationship to the employer.
Employers have the obligation to apply for a patent for a reported invention and are entitled to transfer the right to the patent to themselves.
THEN the employee receives a remuneration claim for it.
Who invented it? In almost all cases it has been an employee, even if he or she has benefited substantially from having been involved in corporate processes!
The Patent Act also applies to these inventions. It confers the right to the patent on the inventor, even though the invention is usually a work product and these work products belong to the employer under labour law. This is where the Employee Inventions Act (Gesetz über Arbeitnehmererfindungen) comes into play, which resolves this conflict in favour of the employer and obliges employees to report an invention made during the employment relationship to the employer. In return, the employer has the obligation to apply for the grant of a patent for a reported invention, but is also entitled to obtain the right to the patent.
Normally, the employer makes use of this option. As a result, the employee loses the right to the patent, but receives an additional claim to remuneration — independent of the salary — which is intended to encourage further innovation.
According to the law, the amount of the remuneration depends on the commercial applicability of the invention, the duties and position of the employee in the enterprise, and the enterprise’s contribution to making the invention. These are all vague legal terms that can easily lead to different assessments and consequently sometimes even to disputes between the parties to the employment contract. But that would not be a good basis for a working environment that is supposed to generate further innovations.
That is why the legislature has provided for the Arbitration Board as a dispute mediator in the Employee Inventions Act. The Arbitration Board is equipped with legal and technical expertise. The chairperson of the Arbitration Board is a lawyer qualified to hold judicial office and the two assessors are chosen from among patent examiners according to their particular technical expertise for the respective arbitration proceedings.
Course of arbitration proceedings
Employees and employers
are given the opportunity to present their respective views
Arbitration Board
submits a settlement proposal
acceptance of the settlement proposal
amicable settlement = the parties conclude a private-law contract, thereby settling the dispute.
Objection to the proposal
arbitration proceedings are deemed to have failed. The parties are free to resolve their dispute elsewhere — in or out of court.
First, the Arbitration Board gives employees and employers involved in the dispute the opportunity to present their respective views and then submits a proposal for an amicable settlement to them. If the parties involved accept the settlement proposal, they conclude a private-law contract, thereby settling the dispute. In 2020, the Arbitration Board concluded 72 such proceedings; the acceptance rate of the proposals was 50%.
The Arbitration Board dealt with the following questions, among others:
- Abandonment of monopoly position in order to be able to use the technical teaching of the invention — Arb.Erf. 06/19
- Value of a software function of a controller integrated in the product, which is only used during manufacture — Arb.Erf. 49/18
- Value of an invention that does not only shape product characteristics but also saves manufacturing costs — Arb.Erf. 48/17
- Value of an invention, if the component according to the invention is very low-cost, but substantially improves the product — Arb.Erf. 07/17
- Value of an invention if the product makes use of a large number of inventions — Arb.Erf. 19/18
- Interpretation of a remuneration statement, practised by the employee and the employer after the end of the employment relationship without express written or oral agreement – Arb.Erf. 57/18
- Interpretation of a payment on account agreed in the cancellation agreement on remuneration claims – Arb.Erf. 31/16
- Inventorship when drawing up specifications — Arb.Erf. 41/18
- Influence of a business trip on making an invention — Arb.Erf. 47/14
For more detailed information about these and other selected decisions of the Arbitration Board (in German) please visit the DPMA website.
| Requests | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Receipt of requests | 72 | 54 | 71 | 61 | 66 |
| Arbitration proceedings concluded by | |||||
| Settlement proposals and compromises | 44 | 55 | 47 | 43 | 44 |
| Proposals accepted (%) 1 | 69,8 | 60,0 | 68,0 | 76,7 | 50,0 |
| Refusals to participate in arbitration proceedings | 12 | 16 | 15 | 9 | 19 |
| Other cases concluded, in particular, by withdrawal of request, order, provisional proposals, etc. | 15 | 8 | 5 | 6 | 9 |
| Total of cases concluded | 71 | 79 | 67 | 58 | 72 |
| Arbitration proceedings pending at the end of the year | 112 | 87 | 91 | 94 | 88 |
The Arbitration Board under the Act on Collective Management Organisations
Those who want to make use of literary, artistic or similar works have the obligation to pay remuneration to the authors and holders of related rights. The Arbitration Board under the Act on Collective Management Organisations (CMO Act – Verwertungsgesellschaftengesetz) mainly mediates disputes between collective management organisations and users about the amount of royalties. These include also disputes about what is referred to as inclusive contracts. Inclusive contracts are concluded between a collective management organisation or collection agency and users of works who have joined up to form an association.
Further information is available on our website.
In 2020, the Arbitration Board continued its consolidation course in terms of open proceedings: On the one hand, there are 96 requests received and on the other hand there are 207 concluded proceedings. This means that the total number of open proceedings was reduced by 111 compared to the previous year.
| Requests / Cases concluded | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Requests | |||||
| Total requests received | 162 | 164 | 159 | 143 | 96 |
| including inclusive contracts under Sec. 92(1), no. 3 CMO Act | 1 | 5 | 5 | 2 | 5 |
| Cases concluded by | |||||
| Settlement proposals of the Arbitration Board | 28 | 15 | 69 | 67 | 81 |
| Partial settlement proposal of the Arbitration Board 1 | 2 | 0 | 20 | ||
| Order | 62 | 21 | 107 | 135 | 126 |
| Total (without partial settlement proposals) | 90 | 36 | 176 | 202 | 207 |
| Requests pending at the end of the year | 455 | 583 | 566 | 507 | 396 |
| Payment of security 2/ provisional settlement | |||||
| Requests | 10 | 16 | 19 | 25 | 3 |
| Orders | 0 | 3 | 7 | 5 | 32 |
The Arbitration Board has further developed its settlement practice on cable retransmission in the “IP” transmission standard by several settlement proposals. In contrast to pure “Over the Top Content Services” (OTT), IPTV involves the delivery of broadcasting signals via proprietary or at least controlled networks of the cable company to the end user. In this context, VG Media had established a tariff, in 2018, whose tariff rates differentiate between cable retransmission where “data are collected” and cable retransmission where this is not the case. According to the Arbitration Board’s findings, the economic assessment of the monetary value of “data” is currently still in its infancy.
Accordingly, within the framework of a cost-oriented data evaluation approach, one way to assess the monetary value of “data” is to consider the costs for their acquisition. Those who collect the data themselves save the corresponding purchase costs, which could consequently be used to assess the monetary value of the data. In the case of self-collected data, the associated costs accruing for producing, updating, keeping the data available, quality assurance and making the data available can also be factored in. Data cannot be assigned an actual market value within the framework of a market price-based approach, at least not at present, because there is no market for data and no procedure that could determine their value for the buyer in a comparable and plausible way.
In this context, the Arbitration Board found that, insofar as the data are used to optimise one’s own services, they constitute pecuniary benefits that were not obtained directly through the act of use but through the efforts of the applicants’ member companies. Consequently, insofar as the costs for saved expenses were used to assess these pecuniary benefits, there would be a lack of the necessary causality to the act of use. However, in the view of the Arbitration Board, such measures to improve one’s own market position can be regarded as “benefits” within the meaning of section 39 (1) sentence 2 of the CMO Act and be taken into account in an evaluative form, insofar as they are attributable to data collected through the act of use. However, a prerequisite would be a change in the tariff of cable retransmission in the form of IP-TV compared to the existing tariffs.
In 2020, the Arbitration Board continued to develop its settlement practice regarding copyright levies on devices. In this context, it is worth mentioning that, as far as can be seen, the Arbitration Board for the first time took a position on the question of whether intermediaries like traders or importers have the obligation to pay remuneration. The Arbitration Board denies this question. However, since the question was assessed in proceedings on the payment of security, this only applies provisionally and does not decide the issue conclusively.