652 Journal of the Patent Office Society may vary from nothing from Bell Telephone Laboratories to sizable grants from IBM.14 Some employers, such as AT&T, regard monetary awards to individuals as contrary to promoting teamwork and cooperative spirit. However, there seems to be evidence contrary this opinion, as most patents are credited to individual effort.16 B. United States Government Most United States Government agencies are governed by the patent policies of Executive Order 10096 of 1950,17 and the Kennedy Memorandum of October 10, 1963.* Executive Order 10096 allows discretion on the part of the agencies and in general, follows the common law doctrine, except that the "shop right" inventions are deemed to belong to the government. Awards for civil service inventors are provided for in the Government Employees' Incentive Awards Act of 1954 (public Law 763, 83rd Congress 2nd session).1 19 192 (1940); Hebbard vs. American Zinc, Lead & Smelting Co., 161 F.2d 339 (1947). Courts usually assume equal bargaining power between employer and employee: see Bonsack Machine Co. vs. Hulse, 57 F.519 (1893), rejecting public policy arguments. 14 See generally Neumeyer, note 7 at 87-88. Also provided with the G.E. argeement is a Form entitled "Reasons for the Employee Confidential and Proprietary Information Agreement", which reads in part: While the Company holds out no promise of additional compensation for assignment of inventions or for other specific innovative contributions (the awards given in connection with the filing of patent applications being considered token payments only), it is Company practice to recognize all service of whatever nature by proper adjustment of the salaries of employees, by advancement in opportunity, by assignment of added responsibility, and otherwise. Innovative ability in general is recognized just as selling ability, executive ability, and other valuable capabilities are recognized. 15 Siegel, "The Employee Inventor-An Economist's View", 47 Journal of the Patent Office Society (JPOS) at 498 (1965). 16 Id, p. 498. 17 3 C.F.R. 292 (1949-1953 Comp.); "Providing for a Uniform Patent Policy for the Government with Respect to Inventions made by Government Employees and for the Administration of Such Policy". 18 3 C.F.R. 238 (SUPP. 1963). "Presidential Memorandum and Statement of Government Patent Policy." 19 For case studies of government employer patent policies see generally Neumeyer, Note 7 supra at 207-423. October, 1974, Vol. 56, No. 10 653 Government contractor rights are set out in the Kennedy Memorandum. Under this document, ownership of inventions made under federal contracts is di.vided into two groups: (1) the government retains title to the invention, or (2) the contractor maintains rights to the invention subject to a government "shop right".? Corporations with both governmental and commercial divisions are apt to either transfer any new concepts from the governmental to the commercial department or to disregard them.21 C. University 20 University patent policies, in general, tend to be more liberal than that of industry. They may range from total non-interference with employee inventor rights (Harvard University) to the granting of worthwhile percentage bonuses to creative employees after compulsory assignment.22 However, government contracts with universities usually require that university employee invention rights be reserved to the government, creating minimum latitude for significant individual 20 See Neumeyer, Note 7 supra at 245-246. "Contractor" is defined in the Kennedy Memorandum as "any individual, partnership, public or private corporation, association, institution or other entity which is a party to the contract" (Sec. 4 (c)). Contractor employees are not a party to the contract and are, therefore, subject to the contractor's own patent policy. Thus, the Kennedy Memorandum has had little effect upon contractor employees' patent rights. 21 See Rines note 14 supra at p. 45. Rines reports that one company's NASA operations produced four inventions in a five-year program, while the corresponding commercial department filed 30 to 50 applications per year in the same five year period. See also Sanders, "Government Versus Industry Financed R&D", 10 Patent, Trademark and Copyright J. of Research and Education, 51 (1966), for the disparity between government and company funds necessary for patent output. Approximately 10 times as much government funding compared with industry funding is necessary for patent output. 22 See generally Neumeyer note 7 supra at 425-495. See also the Rutgers Camden Law School Bulletin, 1973, p.42, which requires all Rutgers Law Students to submit to the university's patent policy, which in turn requires all Rutgers graduate and undergraduate students to assign to the university all patents emanating from university connected research as a condition of enrollment. In return the student receives 15 percent of any gross income received from the patent. 654 Journal of the Patent Office Society university patent policy at institutions with large federal research contracts.23 III. LEGISLATIVE APPROACH Certain European Countries 24 and Japan have decided that employees are entitled to compensation beyond salary for their inventions and have, therefore, granted them remuneration through statutory remedies. Three areas of inventive activity are generally covered: (1) Service inventions are those made by the employee both within the scope of his employment and within the field of business activity of the employer; (2) dependent inventions are inventions made by an employee outside the scope of employment, but within the field of the employer's business activity; and (3) free inventions are those made by an employee outside the scope of his employment and outside the field of business activity of the employer. Service and dependent inventions would usually belong to the employer subject to employee compensation, while free inventions would belong to the employee.25 These statutes usually balance the invention's value and the employee's contribution to determine compensation; Appendix A, Table I presents a matrix of international employed inventor rights, showing the applicable statute, how compensation is determined, and the rights of the employee in Free Inventions. Two statutes of interest are those of West Germany and the U.S.S.R. Nazi Germany adopted an extensive patent compensation statute in 1936; the present West German law of July 25, 1957, incorporates the basic features of the previous legislation.26 23 Neumeyer, note 7 supra at 488. 24 Italy, Netherlands, Austria, Sweden, W. Germany, Switzerland. 25 Free Inventions under some statutes can be acquired by the employer through a negotiation or a compensation agreement. See Table I, infra. 26 All information on the West German Statute was gathered from Calvert, "Encyclopedia of Patent Practice and Invention Management," Reinhold, 1964, PP. 233, 238-242; and Schmied-Kowarzik, "Employee Inventions Under German Law" 54 JPOS 807 (1972). 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.27 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 Unskilled workers, laborers, jobtrained work ers, apprentices Skilled workers, foreman, laboratory help, mechanics, draftsmen, assistant to master craftsman 8 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 68 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: |