Modification of employee invention compensation upon termination of employment

If an employee makes an invention during his work for the employer, he may, if the invention is exploited by the employer, claim compensation for it. This may also be granted in the form of a flat-rate salary increase. However, the question then arises what happens to the compensation portion if the employment relationship is terminated. On this matter the LG Düsseldorf had to decide.

The employee made several service inventions in the course of his work for the employer, for each of which a utility model application was filed. The initially agreed sales-dependent employee invention compensation was later replaced by a flat-rate salary increase, which was intended, by agreement, to remunerate all existing and future inventions of the employee. The salary increase coincided with a change in the employee's field of activity, namely a promotion. Following termination of the employment relationship, the plaintiff demands his former employer's consent to a modification of the compensation model because the compensation lapsed without replacement as a result of the termination of the employment relationship. Furthermore, the employee claims damages because the employer culpably only registered the patentable inventions as utility models with a shorter term of protection.

The court's decision

An employee inventor has a claim to a modification of the compensation regulation for service inventions if circumstances which were material for the determination of the compensation change materially. According to the view of the LG Köln in its judgment of 25.03.2014 (Az. 4a O 122/12), this is not automatically the case upon termination of the employment relationship. However, to the extent that the compensation is linked to salary, such conditions should at any rate apply in the case of a longer-term or indefinite employment relationship. In such a case, reasonable contracting parties would have agreed that compensation should be paid up to the expiry of the right of protection (in this case utility model). The employee may therefore demand a decoupling of the employee invention compensation from the lapsed wage claim and thus a different compensation regulation.

The court also fundamentally affirmed the possibility of a claim for damages in the event that an invention is not filed as a patent, provided that a patent application would be expedient. However, to establish the claim, the employee must demonstrate and, if necessary, prove that the invention could actually have been successfully registered as a patent. In the present proceedings, however, this was lacking.

Conclusion

The flat-rate granting of employee invention compensation as part of salary has advantages but also disadvantages. It is advantageous in that the parties may be spared difficult calculations. However, as the judgment shows, this approach also carries risks for the employer, since the employer cannot be certain whether and to what extent he must continue to pay compensation after termination of the employment relationship. It is therefore strongly recommended to regulate this matter so that all parties know what will befall them should the case arise.