The Court of Cassation has upheld a decision that the fair price owed at the time of assignment of an invention conceived outside the scope of an employee's employment contract, but assignable to the employer, may be assessed based on the commercial impact of the invention after the date of assignment.
Before 1991, Mr Audibert invented a new way for dry storing mud waste produced from the cooling process in steel manufacturing. Audibert – who was not an engineer and had no creative tasks under his employment contract – conceived the invention independently, while benefiting from the resources and infrastructure of his employer to reduce his invention to practice. Audibert notified his employer of his invention and the employer decided to acquire all rights to the invention. In 1991 a French application was filed, covering the invention. This French filing was extended internationally through the Patent Cooperation Treaty route; a Canadian application was also filed. The invention saved Audibert's employer money and partially resolved its mud waste storage issues.
Under Article L611-7 (2) of the Code of Intellectual Property, such inventions are considered as made by an employee outside the scope of his or her employment contract. If the employer wishes to be assigned the invention, it must pay the 'fair price' for the invention at the time the assignment takes place.
Even if the fair price is set at the time of assignment of the invention (ie, early in the economic life of the invention), the future economic prospects of the invention must also be taken into account.
Nevertheless, after assignment of an invention, in case of later commercial success, some employees go back to their employer to seek an additional payment in proportion to the unforeseen commercial value of the invention.
The Court of Cassation clearly stated that in setting the fair price owed to an employee by his or her employer, it is possible to take into account events that occur after assignment of the invention in order to confirm the initial assessment of the economic prospects of the invention.
Consequently, in this case, the Court of Cassation upheld the decision of the Court of Appeal, which took into account the savings made by Audibert's employer due to the invention between 1991 and 2006 and set the fair price owed to Audibert at €320,000.
Employers should keep in mind that the commercial success of an employee's invention may lead employee-inventors to seek subsequent reassessment of the fair price, based on its success. Employees should keep an eye on their inventions made outside of the scope of their employment agreement, even once they have been assigned to their employer.
For further information on this topic please contact Stanislas Roux-Vaillard at Hogan Lovells International LLP by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email (email@example.com). The Hogan Lovells International LLP can be accessed at www.hoganlovells.com.