An effective innovation management in multinational organizations requires the creation of cross-organizational policies for the notification, use and remuneration of employee-inventions. Several factors need to be considered for the establishment of such policies, including financial incentives to promote a culture of innovation. Also cost-benefit considerations regarding the territorial extension of patent protection are important. In addition, the expected administrative burden arising from the processing of invention disclosures, applications for patent protection and royalty payments must be included in this assessment.
Overall national legal systems play a very important role. The applicable national employee invention laws must be considered when drawing up cross-organizational policies. Patent law may be largely internationally harmonized. This certainly does not apply to the employee invention laws. There are striking differences between the national legal systems. If, for example, an international organization possesses development departments in the USA, in Germany and in France, an organization-wide policy must be measured against US, German and French law, whereby a common remuneration system should also respect the principle of equal treatment, especially if employees from different development departments are involved in a common inventive activity. International organizations are thus challenged to identify best solutions which treat their employees in an equal manner regardless of the place of employment and related legal differences.
The mandatory regulations of the German law cannot simply be contractually waived to the detriment of the employee. German law also imposes several obligations on the employer. These obligations must be observed from the date of notification of the invention throughout the term of the patent right and the non-observance of which can result in damages to be paid to the employee. For instance, the employer is basically obliged to protect the invention on a worldwide scale or, in case the protection is no longer desired, to effectively offer it to the employee. The aspects of remuneration of the employee are particularly important for cross-organizational policies. The employer must involve the inventor in an appropriate manner in the success of the protected product. Arrangements in the employment contract in advance are only possible to a very limited extent. This does not apply to agreements concluded after the inventions have been made and reported to the employer. Intelligent policies may create enough incentives for employees to accept such agreements including flat-rate payments and waivers to obligations imposed on the employer.
In the German industry various models of cross-organizational policies in the form of incentive programs have been developed. Many of these models are characterized by the fact that the trigger for payments are linked to events that would not yet result in a remuneration under the Employee Invention Act. For example, after receipt of the invention disclosure and its claiming, the payment of a lump sum can be offered. This offer could be tied to a waiver by the employee of filing, offering and information obligations normally imposed on the employer. Later, when a patent will be granted, a further incentive amount could be offered, followed by an ongoing remuneration linked to predetermined valuation factors. The employee may thus benefit from earlier payments, whereas the employer gets in return better planning security. He may also reduce the administrative burden.
This is only a rough pattern of a possible program. The creation of an incentive policy therefore requires that, in a first step, the relevant factors are compiled. Then, in a further step, one must acquire profound knowledge of the national patent and employee invention laws, in order to design a policy which fits best to the organization.
For the German law a guide can be downloaded here.
The content of the guide provides a first in-depth overview of the German situation. It represents a partial aspect of the assessment but might be of help together with the other relevant factors when setting up a cross-organizational policy for inventions made by employees in a multination organization.