anything, unless the value of the invention to the employer is extraordinarily high. For inventions further removed from the specific duties of the employment, the amount of compensation becomes significant. A board is established by the law to issue advisory opinions in disputes about the amount of compensation due for any particular invention. The Swedish courts are empowered to make final decisions in such disputes.

Most technical employees in Sweden are governed by an agreement between the Swedish Employers' Confederation and the associations for clerical and technical employees. They are either covered directly by this agreement or by others patterned closely after it. Such agreements provide that an invention within the scope of normal or special duties of the employee is the property of the company; this would include invention A. A second category of inventions under the agreement are those that fall within the business of the company, but outside the normal or special duties of the employee. The employer has a right to acquire title to those if certain notification procedures are followed (inventions B and C). The agreement specifies that all other inventions remain the property of the employee (invention D). The primary difference between the Swedish patent law and those of West Germany and Great Britain, is that only in Sweden does invention C belong to the employer.

The collective agreement specifies, as it must under Swedish law, that for any invention to which the employer takes title, the employee receives extra compensation in an amount determined by taking into account the value of the invention, the employee's salary and benefits, and the contribution he or she made to the invention. Mr. Torr is not likely to receive any bonus for invention A because it is so clearly related to his employment duties. He would be entitled to something extra for B, and considerable compensation for invention C. which is unrelated to his

Denmark, Finland, and Norway

The other Scandinavian countries-Denmark, Finland, and Norway-have followed Sweden's lead and have established similarly comprehensive laws on employee invention rights. Preinvention assignment agreements are permitted if reasonable in scope, but they cannot take away the right of the employee to extra compensation for inventions. The amount of reward depends mainly on the value of the invention and how closely it is related to employment duties.

Japan

In Japan, the preinvention assignment agreement is widely used, but the Japanese patent law severely restricts its scope. Only inventions that result from a worker's duties and that are also related to company business may be acquired by the employer by prior agreement. The employee retains title to any other inventions. Therefore, assuming that Mr. Torr is working in Japan under an agreement giving his company the maximum rights under the law, invention A could be acquired by the ABC Corporation under an appropriate agreement. Although there is some question, B probably could not be acquired by a Japanese employer, and C and D certainly could not.

Japanese law also provides for "a reasonable amount of compensation" for any invention obtained by the employer under a contract from the employee. In practice, the amount of extra compensation is not very large,

but it must be remembered that the employer can take title only to those inventions that result from duties that the employee was hired or assigned to perform. All remaining inventions belong to the employee, so the question of adequate compensation by the company does not, of course, arise. The employee can exploit these inventions by dealing with the company or any other party.

Switzerland

The Swiss Code of Obligations provides that inventions made in the course of carrying out an employee's duties are the property of the employer. A preinvention assignment agreement is allowed to give the employer a right in other inventions that the employee may make during the period of employment, but if the employer takes title to these, the law compels some special compensation. The amount of reward is determined by the circumstances of the invention-its value, the contribution made by the employer and other personnel, the effort of the employee, and the employee's position within the company.

In our hypothetical situation, the ABC Corporation would own invention A, and may own B as well. Inventions C and D may be acquired by the corporation under an agreement, provided that an additional bonus is paid. This is less favorable to the employee than either British or German law, but still superior to U.S. practice because compensation is guaranteed for any inventions that are not related to the job.

Austria

Only preinvention assignment agreements concerning the following classes of invention are valid and enforceable under Austrian law:

1. An invention arising from the assigned duties of the employee.

2. An invention that has been substantially facilitated by the use of the experience or resources of the employer. 3. An invention resulting from a stimulus to the employee as the result of his or her employment.

Mr. Torr thus could be required to assign inventions A and B, but the employer is prohibited by statute from taking title to inventions C and D.

Austrian law further provides that, for those inventions to which the employer does take title, extra compensation is to be paid to the employee. However, if the employee is hired for inventive activities and if a particular work assignment leads to the invention, extra compensation over and above the salary and regular benefits provided by the employer is unlikely. Therefore, extra compensation would likely not be due Mr. Tour for the making of invention A since it arose out of a specific work assignment. Some extra compensation should be due for the making of invention B, to which his own initiative and curiosity principally contributed.

Italy

Italian law fixes the rights of the employer and employee in employee inventions, and the worker's rights cannot be diminished by agreement. The law provides that if inventive activity in some field is expected as an object of the employment, inventions that result are the property of the employer. Contrary to the assumption behind the laws in most countries, in Italy such inventions are held to be originally owned by the employer, rather than being initially owned by the employee and assigned to the employer. For this class of inventions, no extra compen

IEEE spectrum MARCH 1978

IEEE on the employed-Inventor question In 1966, the IEEE Board of Directors adopted the following policy statement 7110, which is still in effect: "In order to promote the progress of electrical arts and sciences, it is Institute policy to encourage the establishment of appropriate Incentive systems for the development and disclosure of inventions. Implementation of this policy may include such actions as, but not limited to, improving laws that provide better residual rights for employed engineer inventors, and disseminating more equitable standard patent pre-assignment agreements."

In furtherance of that policy, a task force on the rights of the employed inventor was established. In 1976 and 1977, this task force drafted legislation that it proposed be introduced in Congress, to restrict the scope of enforceable preinvention assignment agreements. Employers would still be able to draft employment agreements to meet their particular needs so long as the agreements satisfied certain minimum requirements. This is to be compared with existing laws in some other countries, such as Great Britain and West Germany, that completely replace the employment agreement with a statutorily imposed division of invention rights.

The minimum requirements for an employment agreement to be enforceable under the task-force bill include the following provisions:

1. Inventions that neither result from the employee peforming his or her duties, nor are based on the employer's data or information, are to be owned by the employee. This would restore the incentive of the patent system to individuals for in

sation is provided.

Another class of inventions specified by the statute is those relating to the business of the employer but not falling into the preceding class. The employee originally owns these inventions but the employer has an option to acquire them. The statute provides for extra compensation when that occurs. All other inventions belong to the employee.

In our example, Mr. Torr would own invention D, and the employer would have original ownership of inventions A and B. There would be little or no right of compensation for these. For invention C, ownership would initially reside in the inventor, but the company would have an option to acquire all rights and pay an adequate amount in addition to salary and regular benefits.

The Netherlands

Holland's law provides that if an employee is hired to make inventions of a certain type, the employer is entitled to patent all the employee's inventions of that type. The statute does not prohibit reasonable agreements to assign other inventions to the company. Extra compensation must be paid for all inventions acquired if the employee's salary cannot be deemed adequate in light of the value of the invention to the employer. This right to compensation cannot be taken away by contract.

United States law

If Mr. Torr has no preinvention agreement and is subject to United States common law, invention A belongs to his employer because it resulted from specific work assignments, which the company supported him in doing. In that case, he would have no right to further compensation, and could not even use the invention himself without

ventions not related to the employment.

2. All other Inventions may be acquired by the employer in advance of the inventions being made, provided that the agreement gives the employeeInventor the right to compensation in proportion to the value of the Invention, in addition to regular salary and benefits. Detalls of how much compensation would be paid and its method of computa. tion would be left to the employment agreement. The bill sets a lower threshold Invention value of $50 000, below which special compensation need not be paid by the employer. It is the goal of the bill to provide small-percentage employee rewards only for extraordinarily valuable Inventions, thus minimizing the administrative burden on employers.

3. Inventions first conceived after the termination of employment cannot be acquired in advance by the employer.

4. If an employer does not utilize an invention to which he takes title, or does not patent or publish the invention within a reasonable time, rights must revert to the employee. This is to encourage use or disclosure of all inventions, for the public benefit.

All provisions of the task force bill are designed to further the public policy of the patent laws; namely, to encourage the making, disclosure, and utilization of inventions. It does this by balancing the relative rights of employers and employees to maximize potential patent law Incentives.

Gerald Parsons, Chairman

1977 Task Force on Patent Rights of Employed Inventors

permission from the company. This is consistent with the result in most other countries.

In many states, invention B would likely belong to Mr. Torr in the absence of an employment agreement. The courts of some other states would award entire title to B to the company on the ground that Mr. Torr was hired to invent and B was a reasonably forseeable consequence that was covered by his salary. The ABC Corporation would have a nonexclusive, fully paid-up license to the invention under a "shop right" doctrine, since Mr. Torr made the invention as part of the company's work operation. But because he was not specifically assigned to do work that led to the invention, and because the invention in fact resulted from his own curiosity and the exercise of his own initiative, the rest of the ownership rights in the invention belong to Mr. Torr. If the ABC Corporation wanted to obtain exclusive rights, it would have to purchase them from him.

Concerning inventions C and D, there is little question that Mr. Torr would be the owner of all the rights, unless there were a contract saying otherwise, because they have no relation to his employment. (This is consistent with general European practice.) But since Mr. Torr did sign an invention agreement, the ownership of these particular inventions will be governed exclusively by its terms. (Such an agreement would be of no effect in most European countries.) An overly broad agreement may be ruled unenforceable on grounds that it is unconscionable, anticompetitive, preempted by the patent laws, or denies an individual the right to be fully engaged in his or her profession. But these defenses are beyond the scope of this article since they are not of general applicability.

Some form agreements utilized by certain companies in the United States require that any invention made by its

Parsons-US. lags in patent law reform

employees during the term of employment become the property of the company. Under this type of agreement, Mr. Torr would be obligated to assign all four of his inventions to the ABC Corporation. Such an agreement is the least reasonable of those used in the United States. What legitimate claim could ABC possibly have in Mr. Torr's vehicle alarm or swimming-pool alarm?

By using such a broad agreement, a company actually discourages its inventive employees from engaging in their own private investigations outside of their work assignments. This is certainly contrary to the first purpose of the patent laws discussed at the beginning of this article-namely, to encourage individual inventive activity and the disclosure of inventions once they are made. The agreement is also anticompetitive in that it would prevent Mr. Torr from starting a business exploiting invention C or D. The public may never see the inventions if ABC chooses not to exploit them.

Another type of agreement that is widely used in the United States is one that requires assignment of all inventions resulting from the duties that might, from time to time, be given to the employee, and any invention that relates to the business of the company. This certainly sounds more reasonable than the "all inventions" type of agreement, but such terms can be very broad when the employer is involved in a wide variety of technological fields.

In our example, the ABC Corporation would be entitled to full right and title in inventions A, B, and C under the terms of such an agreement, and Mr. Torr would only retain ownership of invention D. Invention C would belong to the company merely because it has a far-flung division involved with the technology of vehicle alarms.

The main justification asserted by firms requiring the "related to the business of the company" provision is that it encourages cross-fertilization among divisions of the company. Even though a particular employee is not assigned to a given remote division, that employee may come in contact with its personnel in the course of his or her work, and may conceive inventions as a result of what is learned. It is suggested here that a more reasonable provision is one that would give the company title to all inventions based on data or information from the company. That would protect investment without unnecessarily removing the patent system's incentive from the individual. Mr. Torr's invention C was not based on such information, even though related to the company's business, so it is difficult to see why the company should have title to it.

A few companies-a minority so far-use an agreement that limits an employee's obligation to the assignment of those inventions resulting directly from the work assigned to that employee. Under such a pact, Mr. Torr would clearly have title to inventions C and D: the company would clearly have title to invention A; and the ownership of invention B would depend on the exact language of the agreement. Such an agreement is all that a company requires in order to protect its interests, except perhaps for a right to inventions that are based upon data or information that it has developed, particularly trade-secret infor

mation.

The company supposedly has organized an R&D effort for inventions resulting from the duties of employees, and has invested in facilities, equipment, materials, and people directed toward that goal. What our hypothetical inventor, Ivan Torr, does at home concerning vehicle

alarms and swimming-pool alarms is not the result of any contribution or support by the corporation. The company does not need to have title to these inventions in order to be encouraged to invest in R&D in new semiconductor circuits. It has already hired Mr. Torr for that purpose. If assignment agreements were to be so restricted, the patent laws would then return to providing the individual incentive that they once did without detracting from the incentive necessary for companies to invest in research and development.

A few employers, particularly university research institutions, provide for bonuses to inventors in amounts related to the value of their inventions. Such compensation restores the patent system so that it provides a direct incentive to the employee-inventor, even where the employer legitimately takes title to the work produced. A modest reward related to the value of the small percentage of inventions that are extraordinarily valuable cannot act to discourage employers from investing in R&D activities. Each of the non-U.S. countries discussed above provide for such a bonus.

Federal legislation has been proposed in the United States from time to time to correct this patent situation, but no serious action has ever been taken with respect to any of the bills. H.R. 2101, introduced by Representative John Moss (D.-Calif.), has been pending in various forms since 1971, and hearings are yet to be held. The bill is substantially a copy of the invention-rights provision of the West German law. Another bill, introduced in 1977 by Representative Bruce Vento (D.-Minn.), is H.R. 4331, which limits enforceability of overly broad provisions. H.R. 8596, introduced in 1977 by Representative Ray Thornton (D.-Ark.), pertains principally to rights in inventions developed by private companies under contract with the United States Government, but also contains provisions that secure certain rights for Federal employeeinventors in their inventions. It even provides for compensation under certain circumstances.

A law enacted by the state of Minnesota in 1977 renders preinvention assignment agreements unenforceable and void to the extent that they attempt to obligate an employee to sign away independently made inventions that have no relation to his or her duties. A similar attempt to pass legislation in California failed in 1966 but has been revised in a different form through two 1978 bills, A.B. 2256 and A.B. 2257, introduced by Assemblyman Terry Goggin

It is hoped that more employers will restrict the scope of their preinvention assignment agreements to those inventions they actually need to maintain an incentive to invest. But since there seems to be little movement in this direction, further legislation is expected.

Gerald P. Parsons (M) is a partner in the law firm Limbach, Limbach & Sutton in San Francisco, Calif. Mr. Parsons was graduated from Oregon State University with a bachelor-of-science degree in electrical engineering, and has been elected to membership in Eta Kappa Nu, Tau Beta Pi and Phi Kappa Phi. He also was graduated from the Univer sity of San Francisco with the J.D. degree. He is a member of the California and Pennsylvania bars and has been admitted to practice before numerous Federal courts as well as the Patent and Trademark Office. Mr. Parsons has been active on patent committees within IEEE.

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Parsom-U.S. lags in patent law reform