28.2.2018

Employee Inventions: Rights of the company and the inventor

The employee invention is an invention which is made by an employee during the employment relationship and which can be patented in Finland.

The purpose of the regulation is to combine principles regarding the inventor’s right to invention and the employer’s right to the results of the work of his employees.

Laws applicable to employment-related inventions

In Finland, patentable inventions are regulated in patent law 550/1967. The share of employee inventions among domestic patents is significant.

The employee inventions are regulated by the Act on the Right in Employee Inventions 656/1967 (laki oikeudesta työntekijän tekemiin keksintöihin 656/1967 hereinafter referred to as the “TSKL”). The Act applies to both employment and civil servants. The provisions of the Act are mostly dispositive, that is, they apply only unless otherwise agreed or stated in employment contract.

The inventor’s rights in the employee invention

Starting point for employee inventions is that the employee has the same right as the inventors in general unless otherwise provided TSKL or other law.

The inventor is entitled to receive reasonable compensation for the rights that the employer may get in the invention. A provision for reasonable compensation is compulsory.

In estimating the fairness of compensation, the value of the invention, the extent of the right of the employer, the terms of the employment contract and the other aspects of the employment relationship must be taken into account. A reasonable remuneration paid to an employee shall always be assessed on a case-by-case basis.

More specifically, the criteria for determining the reasonable remuneration paid to the employee are laid down in the Decree on the Right in Employee Inventions 527/1988. According to the regulation, a reasonable remuneration must in principle be defined partly as lump sum payment and partly as royalty.

The company’s rights to an employee invention

Under certain conditions laid down in the TSKL, the employer may obtain the rights in employee invention.
The scope of the employer’s rights depends on how closely the invention is related to the inventor’s employment and work.

According to this the employer might receive
1. rights in invention fully or partly,
2. right to utilize the invention
3. a privilege of negotiating with the employee about the rights in the invention.

Employee inventions are commonly categorized into four categories:

(A) Inventions resulting direct from the employment or through experience gained at work or as a result of carrying out a specific job

In this category the employer is entitled to the rights fully or partly.

(B) Inventions which fall within the scope of the employer ‘s business other ways than the A – Group’ s inventions

The employer is entitled to utilize the inventions in this group, but otherwise the employee can freely dispose of the inventions. However, the employer has the privilege to negotiate achieving broader rights to the invention.

C) Inventions that fall within the scope of the employer’s field of business but are made without any contact with the job

The employer has no other right to such an invention than the privilege of negotiating with the inventor about the rights to it.

D) Inventions not included in the above categories

The employer has no special right to these inventions. Nor does the TSKL apply to such inventions.

An employee is obliged to report an employment invention

The employer has the right to be informed of the employee invention.

Employees must notify the employer in writing about an invention without delay. The employee must explain the content of the invention the way the employer understands its nature. This employee notification obligation applies only to the inventions of the A – C groups.

Within four months of receiving the notification, the employer must indicate what action he or she takes on the invention.

When an employee has made a declaration about invention, he has the right to apply for a patent in Finland for his invention. In such cases, the employee may not file in the application to the patent authorities until one month has elapsed since he has given the employer written notice of the application for a patent

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