Política macro prudencial

law, the right to obtain a patent will be held with the employee. In other words, these are the only options provided by the law for the employer to gain exclusive rights to an employee’s invention made in Russia. They can thus be considered to constitute a form of acquisition in Russia, which will be next discussed in further detail.

It should be noted that the Russian Civil Code requires an explicit form only for the notification by the employee. The employee shall report the employee’s invention to the employer in writing.258 _{There is no explicit requirement for the employer for} acquiring the right to obtain a patent for the invention, more specifically for retaining such an initial right the employer is entitled to according to the law.259 _{However, out} of the options for the employer to retain the right to a patent for an employee’s invention the filing of a patent application is one which always needs to be done in writing. Also, transferring the right is something that would be wise to document in written form. For documenting purposes and for the sake of efficient invention management, it would be safe to execute all the options in writing. However, despite the title it is not the main purpose of this chapter to explore the strictly formal requirements of the actions required by the employer. Instead, the content of the different options provided by the law to the employer desiring to obtain - or to retain - the right to a patent to an employee’s invention is explored in further details.260

Starting from the third option, notifying the employee that the information

related to the invention shall be kept secret, such a decision may be appropriate with

inventions which relate for example to the company’s manufacturing processes. They are typically not revealed outside the factory premises nor can use of them normally be detected from the end-products. Thus, protecting such an invention by patenting would only make it public, yet without the possibility to detect potential patent infringements taking place in the closed manufacturing premises of the competitors. However, even if the employer failed to notify the employee about 258 _{Civil Code of Russian Federation, Art. 1370.4(1).}

259 _{Civil Code of Russian Federation, Art. 1370.3.}

260 _{Just as in Germany the form of acquisition was considered to also include the filing a patent} application, as a subsequent requirement for the transfer of rights, in Russia these alternative obligations can also be considered as formal requirements affecting the effective transfer of entitlement.

keeping the invention secret and thus the right to obtain a patent for such an invention is held by the employee, the employer is in any case entitled to use the service invention in question within the effective term of the patent, albeit only in its own business, and subject to a license fee.261 _{It should be noted, however, that also in case} of declaring the invention secret, the employer needs to pay the employee compensation for the rights.262 _{Nevertheless, it is possible that the employer in these} cases pays a lower price than for a license for a patent.

In the event that it is important for the employer to ensure its freedom to use the invention and to also gain some revenues from permitting others to use it, filing a

patent application is the most appropriate option to use. However, not all inventions

are necessarily worth investing a relatively high price of a patent application, for example when the invention is a minor improvement to an existing innovation. In this case it may be possible to merge the improvement to a same patent application concerning the related invention in case a patent application for it is still under preparation. Or, if the priority year for the application has not yet expired, then it should also be possible to add it as a further aspect to the foreign patent applications to be filed.263 _{It is certainly feasible to combine several inventions regarding the same} subject matter to a single patent application already from the very beginning, if they are considered to form a unified inventive entity intended to solve the same technical problem, which is one of the formal requirements for a patent application.264 However, if no option exists for merging a minor invention with an existing patent application or for combining the invention into an application with another invention, which would reduce the costs for patenting, the requirement to file a patent application to avoid losing the right to obtain a patent is quite a harsh requirement for the employer. The situation can also be such that an invention, which at the time of reporting is not considered worthy of patenting even if patentable, appears to be worth protecting later. In countries where the employer is entitled to acquire the rights to inventions only partly, the most appropriate option in these kinds of cases is to reserve all the rights, thus also the right to obtain a patent, without filing a patent application. However, in Russia there is no such an option available. The employer needs to file a patent application within four months from the invention report.

261 _{Civil Code of Russian Federation, Art. 1370.4(2).} 262 _{Civil Code of Russian Federation, Art. 1370.4(3).}

263 _{It should be noted that in the latter case, the added material receives priority from the date of the} submission, and not from the priority date.

264 _{The concept of unity of invention is based on “one patent for one invention”. The “unity of} invention” –requirement is defined, for example, in the Patent Co-operation Treaty. Under Rule 13.1, a PCT application “shall relate to one invention only or to a group of inventions so linked as to form a single general inventive concept”.

Based on the language of the Article, it seems that the employer would only be required to file a patent application.265 _{Thus, literally interpreting, would it be} sufficient for the employer to file a patent application with a very modest content, with reasonable costs, and to withdraw it prior to publication? The article continues as follows:

Article 1370

4(3)If the employer obtains a patent for an employee’s invention, employee’s utility

model, or employee’s industrial design, or takes a decision to keep information on such an invention, such a utility model, or such an industrial design in secrecy and informs this to the employee or transfers the right to obtain a patent to another person or fails to obtain a patent on the basis of the application filed by him due to

circumstances for which he is responsible, the employee shall have the right to

remuneration. The amount of remuneration, the terms, and the procedure for payment by the employer shall be determined by a contract between him and the employee and in case of a dispute settled by a court.266

Notably, there seems to be a certain level of duty of diligence set for the employer also in Russia, just as in Hungary. In cases where the employer does not receive a patent for the invention due to circumstances that the employer is responsible for, then the employee is entitled to a fee subject to a contract between the employer and the employee. The reasons under the employer’s control imply some sort of omission or negligence from the employer’s side which has resulted in the rejection of a patent. Merely the fact that the patent has not been granted, despite the employer having used their best efforts to argue against the objections to the patentability, cannot be deemed to be such reasons.

Yet another option for an employer to retain patent rights to an employee invention is to assign the right to obtain a patent to another person. In fact, in this case, the employer does not retain the right itself but transfers it to a third party, and in doing so prevents the right being held with the employee. This option can be used in situations where the employer for some reason does not want to patent the invention. It should be noted that the law only mentions assigning the right to obtain a patent which, literally interpreting, means that the other rights, such as the right to use the invention, will remain with the employer. When the invention relates to the employer’s field of business, and the right to use the invention needs to be retained, it would be wise to explicitly agree on the right to use it, namely of a license, in the relevant assignment agreement. However, what if the third party to whom the right to obtain a patent has been assigned does not file a patent application? The law only talks about assigning

265 _{Civil Code of Russian Federation, Art. 1370.4(2).}

such a right and nothing about filing a patent application. Further, the obligation to pay a fee to the employee when the patent is not received for reasons within the employer’s control only refers to a patent application filed by the employer. Thus, literally interpreting the Article, this does not seem to apply to situations where the employer assigns the right to obtain a patent to a third party who omits filing an application, or when a patent is not received for the reasons under the third party’s control. Therefore, one could question the extent to which the requirement is complied with if the right to obtain the patent for a service invention is formally assigned to a third party, even without knowing whether a patent application will be filed?

A further observation regarding the wording of the Article is that it mentions assigning the right to obtain a patent for a service invention to another person. Firstly, assignment of the rights is to a person. The definition of a person shall be interpreted in the light of the Russian law. However, it cannot possibly mean only natural persons but any kind of a third party, also including legal persons. A second theoretical question is, whether another person, such as another business entity, needs to be wholly unrelated to the employing company? Namely, at multinational companies the inventions made by employees at their subsidiaries are typically assigned to the parent company after the rights have been acquired by the employer company of the inventor. The parent company can then either file a patent application or choose not to, but in both cases the right to obtain a patent for a service invention is assigned by the employer in accordance with the Russian law. Whether this kind of assignment within the same group of companies complies with the requirement of the law is a different issue, and it would need to be explored further in terms of the law and its preparatory work, and possibly also case law. However, this is beyond the scope of this thesis.

Yet further, the wording in the Article, “during the validity term of the patent”267_, seems to imply that the license applies to the patent, which is indeed a general presumption in licensing; the license is generally defined as the right to use the patented invention, irrespective of whether it has already been granted a patent or not. But what if the employee does not file any patent application nor assign the right to a third party who would do this? In fact, one could ask whether in all cases where the employer for some reason does not want to patent the employee’s invention, it would be sufficient to settle for the non-exclusive right to use the invention in the employer’s business and omit the actions defined in the law. Of course, there is always the risk that the invention will be patented later, and the employer would then be obliged to pay compensation for its use.

The Article leaves many issues open for interpretation. However, it is not the purpose of this thesis nor is it even possible here to attempt to find answers to all the

specific issues in the individual national laws. Notwithstanding, asking these questions is a key tenet in trying to give a general overview of the variety of different issues that multinational companies confront in ensuring the validity of their entitlement to the inventions made by their employees. Knowledge of this labyrinth which comprises different rules and dilemmas is a prerequisite to introducing the situations where several different national laws conflict and need to be simultaneously complied with.