The remuneration of an employee who is also an inventor an area of great importance for all companies that carry out R&D.

In a very recent decision of 28 October 2015 the Court of Milan has clarified some points which such companies should therefore take into account. Indeed, given that in many EU countries there is relatively little case law on the topic of inventor remuneration, this decision may be relevant to jurisdictions other than the Italian one as well.

In the case brought before the Court of Milan, a former employee of a major group of companies with subsidiaries in in Italy and in the US, among other countries, had asked the Court to declare that he was entitled to be paid for the invention he had developed when working for the Italian company of the group.

The Court of Milan assessed both the arguments of the former employee and the defense put forward by the defendant company, and ruled that:

1. Remuneration can be obtained for an invention made during an employment contract with a certain company up to 10 years after the grant of the patent claiming the invention, and not 10 years after the inventor transferred his rights to the invention to the company (or to another company in the same group as the first).

2. The company that has to pay the inventor is the company with which the inventor had the employment contract at the time when the research that led to the invention was conducted. Therefore, the fact that the patent was requested by another company of the group (in this case, the US company) does not make the latter responsible for paying the inventor – and, in particular, it does not relieve the company with which the inventor had the employment contract from its responsibility to remunerate the inventor.

3. The assignment agreements that inventors have to sign for a patent application to be filed in the US do not automatically entail an implicit waiver by the inventors of all remuneration for their invention. In the case before the Court of Milan, the first patent application for the employee’s invention had been filed in the US, and to this end the inventor had signed an assignment agreement. However, this agreement did not contain an explicit remuneration waiver, but only a transfer of the right to the invention to the US subsidiary of the group.

4. In the case before the Court of Milan, the defendant company argued that the employment contract actually included inventive activity as an integral part of the duties assigned to the employee, and therefore the remuneration specified in that contract already included remuneration for any inventions developed by the employee. However, based on the evidence produced by the company the Court found that:
(i) the employment contract did not explicitly address remuneration for inventive activity, and
(ii) there was no evidence that the company had made a payment to the employee for making the specific invention that had then been patented by the US subsidiary of the group.

The Court of Milan therefore concluded that the inventor had the right to be remunerated for his invention by the payment of a fair premium, and that the company responsible for such remuneration is the company with which the inventor had the employment contract at the time when the invention was made.

This new decision of the Court of Milan is very important because it confirms the importance of inserting, in the employment contract for an employee whose duties encompass the possibility of developing inventions, explicit clauses stating that the contract also covers those duties, and also that the remuneration specified in the contract includes the remuneration for any inventions developed by the employee. An employment contract that contains such explicit clauses will in fact greatly lower, in Italy and in any other EU jurisdictions with a law identical or similar to the Italian one, the probability of disputes like the one dealt with by the Court of Milan, and will allow companies to avoid major unforeseen costs (such as that of a fair premium) many years after the development of a new technology or invention.

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