Where a dispute is not resolvable, independent arbitrators can often be helpful. Two of such independent arbitration boards are located at the DPMA: the Arbitration Board under the Employee Inventions Act (Gesetz über Arbeitnehmererfindungen) and the Arbitration Board under the Act on Collective Management Organisations (Verwertungsgesellschaftengesetz).
Their task is to mediate an out-of-court settlement in the case of disputes. There is a large variety of contentious issues in practice.
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.
Where in Germany are most inventions made? The answer is clear! In the Arbitration Board’s experience, more than 90% of inventions are made in companies. Accordingly, a large majority of patent applications are based on a work result achieved by an employee.
From a legal point of view, this means that although a technological innovation is owned by the company under labour law, an asset attributed to the employee has been created under patent law.
Yet the right to the patent for the results of development is subject to a right of the employer to claim the invention from the outset, since the company’s internal framework conditions contribute to making the creation of inventions possible in the first place.
If the employer exercises its right to claim the invention, the right to the patent will be transferred to the employer, so the result of development in itself and the right to a patent for the technological innovation developed are held by a single entity again.
However, the asset pertaining to the right to the patent is not taken from the inventor, but its content is changed. Pursuant to section 9 of the Employee Inventions Act (Arbeitnehmererfindungsgesetz), employees are entitled to a remuneration claim in the form of a participation in the benefits gained from the IP right.
From an economic policy perspective, this approach of employee inventions law, consistently pursued in Germany since the beginning of the 20th century, has thus relied on the innovative power of employees for almost 120 years — a German success story!
The exact amount of the remuneration claim depends on the commercial applicability of the invention, the duties and position of the employee in the enterprise and the enterprise’s contribution to the invention. This means that the Act relies on vague legal terms for the determination of the amount of compensation in order to take into account the ever-changing economic framework conditions and business models. The advantage is a timeless regulatory system, the disadvantage is that the views of employees on the one side and companies on the other sometimes differ on how important the financial benefits gained by the company have been in the individual case.
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.
With disputes being prejudicial to a working atmosphere focused on innovation, the legislature has established the Arbitration Board under the Employee Inventions Act as a mediator in disputes, equipping it with legal and technical expertise. The Arbitration Board consists of a chairperson, namely a lawyer qualified to hold the office of a judge, and two assessors appointed for the respective arbitration proceedings from among the patent examiners according to their specific technical knowledge.
First, the Arbitration Board gives the parties the opportunity to present their views and then submits to them a proposal for an amicable settlement. The parties can object to this proposal without giving reasons. If the parties involved accept this settlement proposal, they enter into a private-law contract, thereby resolving the dispute. In 2023, the Arbitration Board concluded 51 such proceedings, with more than 60% of the settlement proposals accepted within the objection period.
The following is a selection of issues dealt with by the Arbitration Board in these proceedings:
- Claim for adjustment to a lump-sum remuneration agreement — Arb.Erf. 29/20
- Commencement of the obligation to pay remuneration where an invention has not been notified — Arb.Erf. 12/21
- Binding effect of remuneration agreements — Arb.Erf. 04/22
- Licence fee, specific or abstract licence analogy — Arb.Erf. 20/21
- Value of an invention in a mixed purchase contract between three parties — Arb.Erf. 40/21
- Party liable for remuneration and basis for the amount of the remuneration in the case of company reorganisations after the end of the employment contract — Arb.Erf. 23/21
- Remuneration for a proposal for operational improvement — Arb.Erf. 25/22
- Scope of application of the Employee Inventions Act — Arb.Erf. 47/19
- Remuneration for inventions at universities — Arb.Erf. 56/22
For details on these and other selected decisions of the Arbitration Board (in German) and for additional information on the Arbitration Board and on employee inventions law, please visit our website.
| Requests | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Receipt of requests | 61 | 66 | 53 | 60 | 53 |
| Arbitration proceedings concluded by | |||||
| Settlement proposals and compromises | 43 | 44 | 44 | 43 | 36 |
| Proposals accepted (%) | 76.7 | 50.0 | 65.9 | 67.4 | 61.1 |
| Refusals to participate in arbitration proceedings | 9 | 19 | 16 | 6 | 9 |
| Other cases concluded, in particular, by withdrawal of request, order, provisional proposals, etc. | 6 | 9 | 8 | 2 | 6 |
| Total of cases concluded | 58 | 72 | 68 | 51 | 51 |
| Arbitration proceedings pending at the end of the year | 94 | 88 | 73 | 82 | 84 |
Arbitration Board under the Act on Collective Management Organisations
Every day, extensive use is made of works protected by copyright, e.g. as background music at the restaurant or on television and the radio. It is obvious that the entry into individual licensing contracts with the respective rightholders would in practice result in an administration effort the parties involved would not be able to handle. Collective management organisations such as GEMA contribute to a reduction of that effort, as they are assigned by entitled persons to manage their rights and centrally grant licences to users. Moreover, collective management organisations collect the remuneration claims granted by the legislator to rightholders as compensation for statutory limitations to their rights. Collective management organisations are required to grant the rights managed by them on fair terms and set tariffs for the remuneration they claim. A dispute between a collective management organisation and a user about the applicability or the appropriateness of a tariff cannot be resolved in court until it has been brought to the Arbitration Board under the Act on Collective Management Organisations.
In 2023, we were once again able to further reduce the number of proceedings pending at the Arbitration Board — at the end of the year, 151 proceedings were pending. There were 102 concluded proceedings as against 55 new proceedings, including one set of inclusive contract proceedings. In the period under review, 13 requests for ordering the provision of security were filed, nine of which concerned proceedings that had been instituted in the previous years.
In case no. Sch-Urh 09/22, the Arbitration Board proposed to the parties a provisional settlement for the licensing of and remuneration for rights related to copyright held by press publishers.
In proceedings against parties liable for remuneration that are resident or established in other European countries, the Arbitration Board affirmed its international jurisdiction (Sch-Urh 38/21-SL).
In several proceedings (e.g. in the related proceedings Sch-Urh 31/21-SL and 37/22-SL), the Arbitration Board ordered that a bank guarantee be provided as security. The guarantee will not become due until a final or legally binding decision on the secured remuneration claim has been made by the Arbitration Board or a court, the remuneration claim has been recognised by the party liable for remuneration or the established remuneration claim has been included in the schedule of claims. The determination of a due date helps avoid the guarantee claim becoming time-barred prior to the final decision on the secured claim.
Selected settlement proposals and decisions by the Arbitration Board are provided in an anonymised form on our website.
| Requests / Cases concluded | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Requests | |||||
| Total requests received | 143 | 96 | 58 | 61 | 55 |
| including inclusive contracts under Sec. 92(1), no. 3 CMO Act | 2 | 5 | 1 | 1 | 1 |
| Cases concluded by | |||||
| Settlement proposals of the Arbitration Board | 67 | 81 | 95 | 56 | 43 |
| Partial settlement proposal of the Arbitration Board 1 | 0 | 20 | 13 | 0 | 0 |
| Order | 135 | 126 | 111 | 55 | 59 |
| Total (without partial settlement proposals) | 202 | 207 | 206 | 111 | 102 |
| Requests pending at the end of the year | 507 | 396 | 248 | 198 | 151 |
| Payment of security / provisional settlement | |||||
| Requests | 25 | 3 | 4 | 12 | 14 |
| Orders | 5 | 32 | 37 | 6 | 16 |