Norway: The Employer´s Access To Intellectual Property Rights Produced By The Employee

Is your Norwegian company about to hire employees that might produce intellectual property rights while performing their work tasks? If so, your company can, to a substantial degree, secure that such rights become the company's assets, and not those of the employees. However, such asset protection needs to be considered at the time the employment contracts are drafted.

According to § 3 of the Norwegian Employee's Inventions Act, employees have the same rights as other inventors to their patentable inventions. In principle, this is also the basic rule as regards other intellectual property rights, but important statutory exceptions exist and the distribution between the employee and the employer can be modified by mutual agreement.

The term intellectual property rights (hereafter "IPR") includes patents, trademarks, designs (including integrated circuits designs), as well as works of literature, music, photography and film. Below we will explore how, and to which degree, the employer can make sure that the ownership to such rights ends up in company hands despite being produced by the company's employees.

As previously mentioned, the starting point of the Employee's Inventions Act is that the employee has the same rights to his patentable inventions as other inventors. However, § 4 of the act entitles the employer to acquire ownership of the invention if certain conditions are met. Firstly, the employer must have had R&D as his principal task, or the invention must be the result of specific instructions given by the employer. (The act contains special provisions regarding situations where this condition is not met, entitling the employer to a right of use or a preferential right to negotiate the purchase of the invention, as the case may be.) Secondly, the exploitation of the invention must lie within the area of the company's business activity.

According to § 5, an employee shall notify the employer of an invention without undue delay. After receipt of such notice, the employer must exercise his right to acquire the invention within 4 months. If the employee fails to notify the employer, the 4-month period will not commence.

According to § 7, the employee will be entitled to reasonable compensation unless the market value of the invention does not exceed what the employee could reasonably be expected to produce, taking his salary and other benefits into consideration. Please note that the employee cannot waive his right to consideration prior to the time of the invention.

Considering this, how should the employer proceed to assure that he has maximum rights to employees' inventions? The act allows the parties to deviate from certain provisions in the employment agreement. Hence, it can be agreed that the employer shall also be entitled to acquire patentable inventions that do not meet the above-mentioned conditions in § 4, and even though the employee's right to consideration in § 7 is mandatory, the employer can influence on the outcome of what will be considered "reasonable" in connection to a possible compensation claim by meticulously drafting the description of the employee's tasks in the work agreement, etc. The act also allows an agreement limiting the employee's right to exploit inventions that come into being within one year of the termination of the work agreement.

Finally, it should also be mentioned that the mandatory parts of the act only apply to patentable inventions. Consequently, the parties enjoy contractual freedom as regards division of rights to an employee's non-patentable inventions, including the issue of compensation.

As regards works of literature, science, art and photography, there is no legislation similar to the above-mentioned Employee's Inventions Act. Hence, the ownership to such rights developed by employees will be settled according to guidelines developed in case law and legal theory.

An employer that wishes to secure ownership of the results of the employee's efforts should therefore include a provision in the employment agreement stating that such rights belong to the company - without the employee being entitled to any compensation in excess of salary and other benefits. However, to assure that such a provision will not be deemed in conflict with the case law guidelines and other mandatory law, the employer's ownership rights should only extend to works that either originate from activities somehow related to the employment, or that are connected to the company's business operations.

The current Norwegian design legislation does not include relevant provisions and, hence, the situation is similar to that of works of literature, etc. New legislation is currently being prepared, but as far as we know, the draft does not deal with the issue at hand.

In selected areas there are statutory presumptions that the employer has the rights to IPR produced by employees. These areas include software programs and integrated circuit design. Regardless of the absence of a statutory provision, the same is assumed to apply as regards the producer's right to cinematic images.

An employer can substantially influence the distribution of ownership rights to IPR through careful drafting of employment contracts. In addition to what has already been mentioned, note that the contract can supplement the statutory presumptions regarding software, etc., to the benefit of the employer.

With regards to those employee work products that cannot be classified as IPR, it is also important that the work agreement provides for unlimited company ownership. This issue borders on issues like confidentiality and non-compete clauses, where similar prudence is imperative for human capital-intensive businesses.