Employee inventions and designs
Employee inventions and designs are one of the main areas of intervention of the new Code of Industrial Property 6769. The new code substantially modifies the now repealed Decree-Law 551/1995 on Patents and Utility Models. The modifications brought on employee inventions are structural.
Although the new rules on employee inventions are detailed and precise, they are open to interpretation.
Under the new code, employee designs and inventions are addressed under separate but largely parallel provisions:
- Book 3, Chapter 4 on Employee Designs; and
- Book 4, Chapter 5 on Employee Inventions.
The 24 April 2017 regulation issued under the new code contains no provisions on employee inventions or designs.
The ad hoc regulation exclusively concerns employee inventions and establishes the criteria and parameters to determine:
- the fee to be paid to employees;
- the modality of payment; and
- the rules of arbitration in case of disagreement.
Applicable solely to patentable inventions
In contrast to the repealed Articles 16(1) and (2) to 33 of Decree-Law 551/1995 – which distinguished between patentable inventions and non-patentable technical improvements within the context of employee inventions – the new IP Code is silent on non-patentable technical improvements. Accordingly, under Article 113(1 of the code, employee inventions are restricted to patentable inventions only.
Service and free inventions
The code distinguishes between service and free inventions and regulates employee inventions according to this distinction, which constitutes the main regime applicable by default and, unless otherwise specified, to private and public sector firms.
Employee invention regimes
While retaining the basic distinction between service and free inventions, the new code provides separate regimes for inventions made:
- by higher education bodies (Article 121); and
- during publicly supported projects (Article 122).
The code provides three different regimes for employee inventions depending on the context in which they have been made.
Freedom of contract
The contractual relationship between employers and employees is based on the ‘freedom of contract’ principle. According to the code, employers and employees can freely determine the terms of their contractual relationship.
Statutory imperative provisions
Under Articles 117(1) and (2) of the code, employers cannot enter or make any factual implementation that would breach the legal provisions on employee inventions or contravene employee interests. An agreement between employers and employees is deemed null and void if it is:
- greatly unfair; or
- in breach of the legal provisions on employee inventions (Article 117(2)).
As specified under Article 113(1) of the code, to qualify as an ‘employee invention’, an invention must be realised:
- in the course of an employment relationship – this implies a contractual relationship, as the law is silent on formal written employment contracts;
- between an employer (ie, a private firm or a public administration body) and an employee (including students and unpaid interns); and
- during an assignment that the employee is obliged to conduct – this implies that the employee’s assignment is carried out on the employee’s premises, as the law makes no reference to where work is conducted.
An invention may result from the nature of the employee’s work or be based largely on the employer’s experience and activities.
Employee design requirements
As specified under Article 73(1) of Book 3, Chapter 4 on Employee Designs, to qualify as an ‘employee design’ a design must be realised:
- in the course of an employment relationship;
- between an employer and employee; and
- during an assignment that the employee is obliged to conduct unless the contrary is understood from an employment contract.
The design may be the result of an employer’s work assignment or based largely on the experience and activities of the employer.
Article 73(4) of the new IP Code provides that designs realised within the context of a contract to perform work which remain outside the scope of an employment relationship are subject to the terms of the contract between the parties. Article 73(3) will apply to designs realised by teaching staff, students or interns during scientific research and activities.
Under the new IP Code, service inventions impose reporting obligations on employees, including making an invention declaration to their employer in written form without delay.
Under Article 115/1 of the ad hoc regulation, employers can claim full or partial ownership of an invention within four months of notification by the employee. The employer’s reply must be in written form. An invention is deemed to be a ‘free invention’ if the employer:
- does not reply within the statutory deadline;
- does not claim ownership of the invention; or
- claims partial ownership of the invention.
Service inventions also result in an employer obligation to apply for a patent on claim of full ownership.
Employers must convert an invention into a free invention at the employee’s request for countries in which the employer does not wish to obtain patent protection. Employers must provide the necessary assistance to an employee to enable him or her to make the declaration of invention.
Employers must pay such a fee after having claimed full ownership of an invention.
An invention which is not a service invention under Article 113/1 of the new IP Code is deemed to be a free invention.
Free inventions are subject to reporting obligations for employees, who must make a declaration of invention to their employer if the invention is realised during their employment contract. The declaration must provide information on the invention and how it was realised in order to permit the employer to assess whether it can be considered a free invention. There is no reporting obligation if an invention cannot be obviously exploited or used within the employer’s field of activity. Employers can object to employees qualifying an invention as a free invention. Objections must be in written form and filed within three months from the date on which the declaration of invention was notified to the employer.
No service invention without claim of full ownership
The requirements for service inventions are: • an employer’s written explicit decision;
- a claim of full ownership; and
- a notification to the employee within the statutory four-month deadline.
Where an employer claims full ownership of an invention, all rights are transferred to the employer from the date on which the declaration of full ownership is notified to the employee.
“An invention may result from the nature of the employee’s work or be based largely on the employer’s experience and activities”
Partial ownership claims
Employers’ claims to partial ownership render an invention a free invention. These claims also give employers the right to use such inventions based on partial ownership.
Filing patent applications
An employer’s claim for full ownership of an invention creates an obligation to file the first patent application in Turkey with the Patent and Trademark Office.
Patent application in a foreign country
An employer that has claimed full ownership of an invention may file an application for its protection in a foreign country. The employer’s obligation to file the first patent application is lifted if:
- the invention becomes a free invention;
- the employee agrees that no patent application need be filed; or
- the patent application should not be filed for protecting an employer’s trade secrets (Article 116/2 of the code).
A service invention becomes a free invention if the employer does not fulfil its obligation to file the patent application where full ownership is claimed or the patent application is not filed within the term set by the employee.
A fee must be paid to an employee for a service invention irrespective of whether the invention is realised by the employee when conducting a compulsory work assignment.
A fee must be paid to an employee on an employer’s claim of full or partial ownership of the invention. Articles 4/1(l) and 7/2 of the ad hoc regulation state that an incentive fee must be paid to an employee, separately from the fee for the invention on an employer’s claim of full ownership, which cannot be less than he net minimum wage; this is not applicable to employees who work for public institutions or bodies.
The terms of contract or similar legal instruments signed between an employer and employee, after the employer has claimed full or partial ownership of an employee invention, determines the fee and its modality of payment
Article 115/9 of the new IP Code and Article 11/1 of the ad hoc regulation).
For inventions made by more than one inventor, the fee and its payment are determined for each inventor separately.
General criteria: The following will be considered when calculating the appropriate fee for a service invention:
- the invention’s potential economic value (Article 10/1 of the ad hoc regulation uses the more
restrictive term ‘economic value’);
- the nature of the employee’s work assignment; and
- the employer’s contribution to realising the invention.
Specific parameters and calculation: The fee for an invention is capped under Article 21/2 of the ad hoc regulation. The employer has no obligation to pay the fee for the portion of the earnings or revenue generated by the invention which exceeds 150,000 times the net minimum wage.
Under Article 10/2 of the ad hoc regulation, fees are calculated by:
- multiplying the ratio given in the table in Article 21 of the ad hoc regulation by the category in
Article 20 under which the invention falls; and
- considering the earnings and revenue generated by
Article 20 provides three categories of invention:
- The employee engages in work on the invention on its own initiative, as the subject of the invention is not part of his or her work assignment and the employer does not contribute to the invention.
- The employee’s work assignment is not directly related to the invention, which is realised as a result of solving a problem identified by the employer and with the employer’s contribution.
- The invention is realised as a direct consequence of the employee’s work assignment with the employer’s full contribution.
The earnings generated by an invention are determined according to Chapter 3, Articles 12 to 18 of the ad hoc regulation and the general rules of corporate tax legislation. If earnings cannot be determined by the corporate tax legislation, they are determined by:
- the benefit that the invention provides to the firm
in question; or
Public institutions: The fee to be paid to employees of public institutions for their inventions cannot be less than one-third of the earnings and revenue obtained from the invention (Articles 113/15 and Article 121/8 of the
However, Article 11/3 of the ad hoc regulation specifies that no less than one-third of net earnings is to be paid to employees. Where the public institution uses the invention itself, the fee must be paid to the employee in a single payment and cannot exceed 10 times the net salary that the employee received during the month in which
the fee is paid (Article 113/5 of the IP Code and Article 11/3 of the ad hoc regulation).
The fee to be paid to the employee is determined by Article 10 of the IP Code (Article 11/3 of the ad hoc regulation).
The net earnings generated by the invention are calculated by deducting all expenses generated in the course of realising the invention (Article 11/3).
No incentive fees are to be paid to employees that work for public institutions (Article 7/2 of the ad hoc regulation).
Disagreements and arbitration: Disagreements will be settled by arbitration where the parties cannot agree within two months from the date on which the employer started using or benefiting from the invention on claim of full ownership or the grant of the patent or utility model (Article 24/1 of the ad hoc regulation).
Inventions made by higher education bodies
Inventions made by the staff of higher education bodies are regulated by the second differentiated regime. Higher education bodies include those specified under Article 3/c of Law 2547 and those that depend on the Ministries of Defence and the Interior.
Article 121/1 of the new IP Code specifies that all inventions made by such staff are subject to the provisions on employee inventions, to the extent that they are not subject to the provisions under special laws.
The abolition of the so-called ‘professors’ privilege’ regarding ownership of inventions made during the performance of work is one of main changes that the new code has introduced. According to the code, all inventions made by teaching staff in the course of their work are deemed to belong to the higher education body concerned, on condition that it makes a formal ownership and patent claim in reply to the declaration of invention made by the teaching staff inventor. If a patent application is not filed on time, ownership reverts to the inventor (Articles 121/3 and 4).
Under Article 121/3, inventions made in higher education bodies entail similar obligations to service inventions. Higher education bodies must apply for a patent on submission of a claim of ownership in reply to the declaration of invention.
Fees paid to teaching staff inventors cannot be less than one-third of the earnings that the invention generates.
Under Article 121/2, teaching staff inventors must report to the higher education body details of any inventions or patent applications in written form without delay (the timeframe is not specified in the act or ad hoc regulation).
Projects supported or financed by public bodies
Article 122 constitutes new rules for inventions made in the scope of projects supported or financed by public bodies. Persons benefiting from such projects or support must inform the body in question in writing within one year from the declaration of an invention if they claim ownership.
Failure by the person benefiting from the project to claim ownership in a timely fashion may result in the public body claiming ownership. Article 122 mentions only the person benefiting from the support of a project. There is no mention of inventors or employees.
If a person benefiting from a project and an inventor are different persons, Article 122 will not apply to an inventor who is an employee of a firm benefiting from such project support.
The body supporting or financing a project can use such an invention under licence free of charge for its own needs if the person benefiting from the project support claims ownership of the invention. This right can be waived provided that it is mentioned in the contract (Article 122/4 of the code). The body supporting or financing the project has the right to request that a licence be granted to third persons under fair conditions in situations specified in Article 122/4.
The new IP Code introduces three different regimes depending on the context in which an invention is made. It appears likely that the three regimes will result in substantially different practices regarding fees and payment for inventions.
The ad hoc regulation complements the legal basis that was missing until now to determine the fees. It is expected that this will permit a more complete application of the rules on employee inventions.
The new code and regulation are open to interpretation. The practice and implementation of these new rules will be influenced by such interpretations, which cannot be estimated at this point. The complete set of rules is now available and ready for application.