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The discrepancies in the different compensating systems is said to create a complex compliance obligation for international organizations and an unclear compensation regime for inventors.505 _{This captures the problems of managing a disharmonized} compensation system in multinational companies well. Indeed, there are disadvantages both for the employers and the inventors. For employers, the different compensation obligations are difficult to control. For inventors, the disadvantages include the general demotivation experienced by those receiving no compensation, and increased demotivation when different rules apply to co-inventors in joint inventions resulting from cross-border co-operation.506 _{Indeed, the problem comes} sharply into focus, particularly with co-inventors who have contributed to the same invention, in the form of a phenomenon that is referred to as an “envy debate”.507 _In addition, discrepancies in company compensation systems can cause competition distortions between enterprises, in other words companies that compensate their inventors equally win the most prominent employees. Further, the public interest can also be caused some disadvantages, by for example leading to unreasonable influence on the flexibility and fluctuation of employee inventors and unreasonable

505 _{AIPPI Standing Committee on Patents, Study on Inventor Remuneration, July 21, 2017.} http://aippi.org/wp-content/uploads/2017/08/Questionnaire-Inventor-Remunerationmailing_ 210717.pdf AIPPI, The International Association for the Protection of Intellectual Property, is the world’s leadinginternational organization dedicated to the development and improvement of legal regimes for theprotection of intellectual property. AIPPI dates back to 1897, following the signature of the ParisConvention for the Protection of Industrial Property in 1883. Following the initiative of leading legalscientists and practitioners, a founders meeting was held in Brussels on May 8, 1897 and in October1897 the first Congress was convened in Vienna. After the Annual Work Programme is established, Study Committees are formed to study pending Study Questions (SQ), based on reports by 65 National and 2 Regional Groups consisting of experts of the respective country or region at the field of SQ. These reports and the Summary Report wherein the Group Reports are synthetized serve as a basis for preparation of draft Resolutions that are then discussed at Congresses.

506 _{Bernhard Villinger, ‘Legal framework of the relationship between employed inventors and} employers – incentive systems encouraging creativity’, Workshop on Innovation Support Services and their Management organized by the World Intellectual Property Organization (WIPO) and the Carl Duisberg Gesellschaft (CDG) in co-operation with the German Patent and Trademark Office (GPTO), the Aachen Corporation for Innovation and Technology Transfer (AGIT) and the European Patent Office (EPO), Munich, Nurember, Aachen (Germany), June 12 to 22, 2001, p. 9.

507 _{Sebastian Wündisch, ‘Employee-Inventors Compensation in Germany - Burden or Incentive?’} (2017) LII(3) les Nouvelles – Journal of the Licensing Executives Society, p. 110.

influence on decisions relating to industry sites508_{, an aspect which is also relevant} in the context of the rights to the inventions.

For all of the aforementioned reasons, companies are strongly encouraged to harmonize their existing incentive programs, to prevent a harmful impact on creativity, inventor satisfaction and employee loyalty. For employers, creating a holistic global compensation policy is a complex task, yet necessary for the equal treatment of inventors, at least in joint inventions where different rules apply to the co-inventors. In fact, one possibility is to adopt a holistic approach only in respect of joint inventions which involve inventors that are entitled to compensation, to treat the co-inventors of the same invention equally. However, it is also possible to selectively adopt a holistic approach for example based on the technology of the inventions. Creating a holistic approach and its practical insights are discussed in further detail in the context of cross-border collaboration, in the chapter 7.3.

Certainly, adopting a truly equal system where compensation could be tied to the actual evaluation of the contribution by individual inventors, would be possible. Indeed, according to Hovell, “[t]he most academically pure method for compensating each contributor would be to determine the inventor's and the developer's contribution and give each a pro-rata share of the invention's value. This method, however, would be highly impractical because it requires meticulous records of each participant's work and detailed analysis of each invention's worth.”509 There are, however, also attempts to link compensation to individual contribution. For example, according to Fisk the doctrines of different eras called for particularized and fact-intensive inquiry, with a perception of whether the employee was a man of ‘inventive genius’ or a ‘mere mechanic.510 _{Also Hovell discusses the} categories of specifically-inventive, generally-inventive and non-inventive employment511 _{and concludes that “[t]his three-tiered employment status analysis} 508 _{Bernhard Villinger, ‘Legal framework of the relationship between employed inventors and}

employers – incentive systems encouraging creativity’, Workshop on Innovation Support Services and their Management organized by the World Intellectual Property Organization (WIPO) and the Carl Duisberg Gesellschaft (CDG) in co-operation with the German Patent and Trademark Office (GPTO), the Aachen Corporation for Innovation and Technology Transfer (AGIT) and the European Patent Office (EPO), Munich, Nurember, Aachen (Germany), June 12 to 22, 2001, p. 9.

509 _{William P. Hovell, ‘Patent Ownership: An Employer’s Rights to His Employee’s Invention’} (1983) 58(4) Notre Dame Law Review, p. 863.

510 _{Catherine L. Fisk, ‘Removing the ”fuel of interest” from the ”fire of genius”: Law and the} Employee Inventor, 1830-1930’ (1998) 65(4) The University of Chicago Law Review, p. 1198. 511 _{William P. Hovell, ‘Patent Ownership: An Employer’s Rights to His Employee’s Invention’}

(1983) 58(4) Notre Dame Law Review, fn 18: See Robert L. Gullette, ‘State Legislation Governing Ownership Rights in Inventions Under Employee Invention Agreements‘ (1980) 62 Journal of the Patent Office Society, p. 733. Gullette divides employment into “specifically- inventive”, “generally-inventive” and “non-inventive”.

divides patent rights between an inventor and his employer according to reasonable expectations.”512 _{However, although the theory of the “individual genius” recognizes} the individual work behind an invention, companies are still considered the “logical repositories” of legal rights over intellectual property developments.513

4.8

Summary and transitional thoughts

A valid entitlement requires that the rights to an invention made by an employee are

acquired in a valid manner according to the regulations that are relevant to the case

at hand. These rules vary from country to country, depending on whether the country belongs to a contractual or a statutory regime. In statutory regimes, in order to get the rights to inventions made by its employees, the employer needs to act in a timely manner as defined by the relevant law. In contractual regimes, there needs to be a

valid assignment from the employee to the employer, including some consideration.

In statutory regimes, the consideration is not something to be agreed upon, but the right of the employee-inventor is set by the law. The rules regarding the duty to pay

compensation and the means to calculate such also vary from one country to another.

It is extremely important for companies operating in multiple countries to be aware of and comply with all the relevant laws and rules in respect of acquiring the rights to inventions made by its employees, as well as in compensating the rights. Creating company policies that sufficiently address the national requirements set for compensation can help to prevent later disputes.

Additional complexity to these situations is brought with subcontracted

inventions. Due to increased collaboration between companies, joint inventions can

also be made via collaboration wherein one or some of the co-inventors are employed by a third-party company. Even if there is a contract in place regarding the rights to inventions raised during this collaboration, in statutory regimes this contract cannot overrule the mandatory regulations regarding employee inventions. The national laws, either the employee invention laws dedicated to such issues or the patent laws containing equivalent regulations shall be applied in the relation between the subcontracted inventors and their own employers. It is not until the rights have been duly transferred according to the requirements of the respective laws from the inventor to the employer that they can be assigned further. Non-compliance with the law in the relevant relationships leaves room for disputing the validity of entitlement later, which no company investing in patenting its technologies can afford to risk. 512 _{William P. Hovell, ‘Patent Ownership: An Employer’s Rights to His Employee’s Invention’}

(1983) 58(4) Notre Dame Law Review, p. 869.

513 _{Shannon H. Hedvat, ‘A New Age of Pro-Employer Rights: Are Automatic Assignments the} Standard?’ (2011) 3(3) University of Pennsylvania Journal of Business Law, p. 820.

The situation becomes increasingly complex when joint inventions are made in

cross-border collaboration projects where the co-inventors originate from different

countries which have different rules. In these situations, the different rules apply to the co-inventors, in respect of the very same invention. Regarding the compensation, this could lead to a situation where some of the inventors are entitled to additional compensation for the rights to the invention whereas others are not. Whether the co- inventors are put into different positions in this respect is a question of company policy. Nevertheless, even if different rules apply to the individual co-inventors, they can still be applied in parallel in respect of the invention. Namely, even if one invention can involve the rights of multiple inventors, their rights can - and need to be - acquired separately, since acquisition is an individual action. However, in questions pertaining to the effective securement of employee inventions by patenting, the variety of country-specific rules that apply to a joint invention involving contributors from different countries are applied as a whole in respect of the single invention. Applying the different rules simultaneously can lead to a true conflict of laws that needs to be solved.