1. Employee Inventions

In general, the right to a patent belongs to the inventor (Section 6 Patent Act). If, however, the inventor made the invention in the course of his service for his employer, the Act on Employees' Inventions comes into play. This law provides that the employer is entitled to these so-called service inventions. Accordingly, the employer has a right of appropriation of a service invention which transfers the invention to him. In order to execute these rights, an employee is obliged to report an invention to his employee immediately in a written notice, indicating that said writing constitutes the report of the invention (Section 5.1 Act on Employees' Inventions). Even if the employee has made a free invitation, ie an invention neither resulting from the employee's task nor based on the experience of the employers business, the employee is required to report this invention as well to the employer and to offer the invention to employer before exploiting it any further.

If the employer has claimed those invention the employee is entitled to reasonable compensation for the use of the invention. This compensation of an employee is less than a self-employed inventor would receive. Compensation must be fixed either by agreement or by assessment of the employer, which becomes binding if the employee does not object. It has been noted that prior arrangements between employer and employee under which the employee waives his rights under the Act on Employees' Inventions are not permitted.

2. Transfer and Licensing

As any other property right, a patent may be transferred or inherited (Section 15 para 1 Patent Act). An assignment can be made accompanied by certain conditions, may be granted for the full right or only parts of it or may be limited by the patentee.

The rights to a patent may also be licensed on an exclusive or non-exclusive basis (Section 15 para 2 Patent Act). Licenses may be granted expressively or may be implied. Patentee as licensor, however, is always obliged to provide the invention according to the agreement to licensee, generally to keep the patent in force by payment of annuity fees and to guarantee the existence of the patent at the time the license agreement is executed. Licensee has the duty to pay the license fees and to comply with the terms and conditions of the license agreement. A license agreement may grant to licensee the right to any feasible use, or may limit him to manufacture, distribution or use only. It is possible to limit a license to a certain person or business. The license agreement may also entitle the licensee to grant sublicenses. License agreements do not fall under any of the existing types of contracts under German law and are deemed to be contracts of separate legal nature.

License agreements usually contain restrictions imposed either on licensor or licensee (eg the exclusive license to use a patent only in the territory). These restrictions have to be considered under antitrust law, both national (Section 20 Act Against Restraints of Competition) and European (Article 85 and Article 86 Treaty of Rome).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.