October, 1974, Vol. 56, No. 10 655 Service inventions, as defined within the statute, are those that have arisen out of an employee's duties at this place of employment or are based on the practice or activities carried on at his place of employment. Other inventions are free inventions. The German Law includes dependent inventions with free inventions. Service inventions may be claimed by the employer in whole or in part; the employer must be offered a non-exclusive license in dependent inventions. Reasonable compensation must be paid to the employee in either situation. The computation of employee compensation is determined as per directives issued July 20, 1959: = Compensation Invention Value x Share Factor in % Invention Value=Base x License Rate in % The Invention Value may be determined by either license analogy, actual profit, or by estimate." The Share Factor is determined by asking the employee questions which are included in the invention disclosure. Three elements are included in the Share Factor: a. A Factor of from 1 to 6 is allotted to the assignment of the task, ranging from a specific assignment with a suggested solution to complete originality. b. The extent of the employer's aid in development of the invention is also weighted from 1 to 6. c. Duties and position of the employee are rated from 1 to 8: EMPLOYEE CLASSIFICATION FACTOR 8 Unskilled workers, laborers, jobtrained work ers, apprentices Skilled workers, foreman, laboratory help, mechanics, draftsmen, assistant to master craftsman 7 27 For detailed discussion see Schmied-Kowarzik, note 25 supra, at 815-816. 656 Journal of the Patent Office Society Master craftsman, senior master craftsman, Dept.), engineers (in the Testing Lab.) 6 5 4.5 4 3 Department managers in development departments, supervisors in research departments 2 Research manager, technical manager of entire plant 1 ་ The sum of a+b+c may range from 3 to 20 and is noted in the upper line of the Table below. The lower line represents the Share Factor as a percentage amount corresponding to a value of a+b+c: a+b+c=3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (20) Share Factor=2 4 7 10 13 15 18 21 25 32 39 47 55 63 73 81 90 (100) "Author's Certificates" are issued in the U.S.S.R. to acknowledge the inventor's contribution.28 These entitle the inventor to compensation based on the savings or earnings achieved by use of the invention and are calculated on a percentage based on the highest savings. during a five year period. Other privileges such as income tax exemptions on the earnings and better living quarters are available to the inventor. The Soviet Government assumes a complete monopoly of all inventions. The "Regulation on Compensation for Discoveries, Inventions, and Innovation Proposals" requires remuneration to the employee as follows: The first attempt in the United States to pass legislation guaranteeing employee inventor rights occurred with H.R. 4932 of the 88th Congress, 1st Session introduced by Congressman George Brown of California.29 The legislation was designed to amend title III of the Labor Management Relations Act, 1947 (29 U.S.C. 185187) with the following section:30 "RESTRICTIONS ON PATENT ASSIGNMENT" "SEC. 306. It shall be unlawful for an employer to require as a condition of employment that any prospective employee of his or any of his employees agree to assign any patent or patentable invention to the employer or to maintain or enforce any agreement with any of his employees to assign any patent or patentable invention to the employer where such agreement was a condition of employment." There is no doubt that this bill was a one-sided attempt to ensure the employee inventor his rights; not only would it disregard the employer's contribution-possibly creating a great shrinkage in research and development expenditures by industry-but it would throw any employer-employee disputes into the mire the common law. 28 "Soviet Law on Inventions and Patents", 43 JPOS 5, (1961). The Soviet law was approved on April 24, 1959, and became effective on May 1, 1959. 20 Reintroduced as H.R. 5918 of the 89th Congress, 1st Session. 30 For a discussion of its constitutionality see Section IV, A, infra. 658 Journal of the Patent Office Society Any rights granted the employee would have to be decided on a case-by-case basis, unreasonably burdening the courts. A more balanced approach was suggested by Representative Moss of California in his attempt to amend title 35 United States Code.31 The legislation proposed to balance employer and employee rights, similar to the West German statute. Service invention in the statute is defined as an invention made by the employee at any time during his period of employment which either: (a) has grown out of the type of work performed by the employee or (b) is definitely based on experiences gained during his employment or on operations carried out by the employer.33 Under $412, the employer may claim an employee's service invention and may take all rights to such invention subject to employee compensation. Insofar as employee compensation is concerned the statute attempted to determine Compensation by weighing both the employee's duties and position against the quantum of employer contribution in the invention.34 The employer's rights were also protected as to the employee's use of free inventions, which under the common law could be licensed to an employer's competition. The employee was required to offer the invention to his employer; if the employer did not accept within two months, the employee was free to utilize the invention without restriction.35 Should there be a dispute between the 31 H.R. 15512 of the 91st Congress, 1st Session, reintroduced as H.R. 1483 of the 92nd Congress, 1st Session. 32 S.402 "Definitions". 33 The term "definitely based on experiences gained during his employment" could be quite subjective. It should be the employer's burden to prove such facts should the issue arise in reference to a seasoned employee whose experience may be quite specialized and may include varied employers. 34 S.414 "Compensation for Service Inventions". Guidelines for the determination of compensation were to be issued by the Secretary of Labor under S.439 at a later date. Hopefully, they would have reflected the attempt for exactness that the West German guidelines seek. 35 S.431 "Free Inventions; notice; duty of making an offer". October, 1974, Vol. 56, No. 10 659 employer and employee, the bill proposed an arbitration board to dispose of such matters. The arbitration board was to comprise three members from the Patent Office, one member selected by the employee from a labor or professional group, and one member chosen by the employer from the national or regional organization which represents the employer's interests. Thus the statute strove for a true equitable balance between employer and employee. At present if an employer decides not to patent an employee's invention or not to exploit the invention after it is patented, the employee has no recourse to require the employer to do so.37 The Moss bill attempted to reconcile this problem, at least for the situation in which the employer refused to apply for a patent on the employee's invention. The statute would have required an employer to apply for a patent on a service invention within six months following a declaration of a claim to the invention. If he failed to do so, the invention would become a free invention.38 In order for the Moss bill to have provided a viable solution to the employer-employee patent rights' problem it would have required good faith on the part of both the employer and employee. Thus if either party had disputed the compensation agreement based on petty arguments, the burden on the arbitration board would have produced an administrative nightmare.89 Another advantage seen in the fruits of the statute might have been a decision on the part of industry not to apply for patents that it did not feel were potentially profitable. Those patents not considered profitable may have comprised those that quite possibly might have been held invalid by a court because of their similarity to other 36 S.437 "Arbitration". 37 See note 10, supra: (B) said inventions and innovations to be the exclusive property of the Company or its nominees, whether or not patented or copyrighted; 38 S.421 "Patent Application". 30 This problem could have been solved in part by precise guidelines as in note 33 supra. |