On May 17, 2017, the Compensation and Royalties Committee under Section 134 of the Patent Law, 1967 (respectively, the “Law” and the “Committee”) held that a collective labor arrangement that deals, inter alia, with compensation for inventions in the course of employment constitutes an agreement between the employer and the employee for the purposes of Section 134 of the Law. The Committee thus has no authority to consider the issue of compensation owed for such inventions. The names of the parties were not published.

The Petitioner was employed by the Respondent from 1993. In the course of his employment he invented a number of inventions (or possibly, cost-efficiency suggestions), for eight of which he received awards under the Respondent’s patent procedure, which had been in place since 1990. One of the inventions was assigned to the Petitioner and his co-inventors, with the Respondent maintaining the right to utilize the invention for its own purposes free of charge. The Petitioner claims that he is entitled to compensation for these inventions, to be calculated as a percentage of the amount the Respondent saved by utilizing them, and that the awards he received did not constitute compensation.

The Committee found that all of the following applied to the parties in this case: a collective arrangement from 1957, under which the legal rights of inventors were to be preserved; a set of rules from 1985, adopting the relevant provisions of the collective arrangement; and the patent procedure from 1990 (updated from time to time), which defined “inventions” and “service inventions” in keeping with the Law. That same procedure also provided that where the Respondent decides to use a service invention for its own purposes, no compensation is to be paid to the inventor, but any revenues from registering and selling a patent would be divided between the Respondent and the inventors.

According to Committee, in practice the parties acted in accordance with the collective arrangement, the rules and the procedure, and rejected the Petitioner’s claim that they do not apply to the matter at hand. The Committee also decided that a collective arrangement (i.e. a document signed between the company and a workers’ union or workers’ committee, but which is not formally recorded as a Collective Agreement with the registrar of collective agreements), are to be considered an “agreement” for the purposes of compensation for service inventions pursuant to Section 134 of the Law.

Once the Committee concluded that the collective arrangement, the rules and the procedure constitute agreements for the purpose of the employee’s entitlement to compensation for service inventions, its extent and the conditions applying to it, it held that in such circumstances it is not authorized to consider the issue of the compensation to which the Petitioner is entitled, if any. As to the questions raised by the parties regarding the status of the Petitioner’s inventions/suggestions, where the Petitioner argues that they are inventions, but not service inventions, and the Respondent argues that they are not inventions at all, the Committee points out that if these were not service inventions, it would have no jurisdiction over the matter to begin with.

As for the specific invention that was separately assigned, the Committee defers to the terms of that agreement, which require all disputes in connection with the agreement to be heard by the court specified in the agreement itself.

This is a significant decision in that it clearly states that collective arrangements also constitute agreements for the purposes of Section 134 of the Patent Law, and not only agreements between an employer and a specific employee. Any decision that increases certainty regarding the Committee’s jurisdiction is a step in the right direction.