Patent Reform: Needed For Employees, Too

Jul 1, 2009 12:00 PM
SAM DAVIS, Editor in Chief

An Area Not Covered in Many Discussions on patent reform is compensation to the employee for a patented invention. To date, discussions about patent reform have neglected the employee-inventor. Most previous attention for patent reform has involved changes in the U.S. Patent and Trademark Office (PTO) as well as damages for patent infringement. Changes are definitely warranted as noted by Rick Weiss, a Senior Fellow at the Center for American Progress and the Science Progress blog.

In January 2009 Weiss discussed the patent situation in the U.S. in “Tackling the Challenge of Patent Reform.” He noted, “While the widespread characterization of the [PTO] as ‘broken’ is an overstatement, there is no disagreement that improvements are needed. Most obvious among the current failings, examiners are overwhelmed by the sheer volume of applications and the lack of time and resources to perform their jobs at the level of excellence demanded of them.

“As a result, too many patents are issued that, but for the scarcity of time and resources, would almost surely have either been honed to greater quality through the examination process or not issued at all. There is broad consensus today that the U.S. system for protecting intellectual property is burdened with too many patents of questionable quality and validity.”

Weiss pointed out that judges and juries have been asked to decide cases involved with science, technology and the law. “While the judicial approach to resolving patent issues is inherently reactive, episodic, and slow, there is reason to hope that to the extent the PTO and Congress fall short of the goal of comprehensive patent reform, the courts will fill some of the key gaps.”

Getting back to employee compensation, Piper Patent Attorneys (www.piperpat.com) point out, “In the U.S., most companies have rules regarding compensation for employee inventions. There is, however, no statutory obligation to do so. The overriding feature regarding compensation for inventions is between the employer and the employee to decide and is generally decided in the Employment Agreement.”

I know this situation first-hand from my time as an employee of Litton Data Systems. I received a check for one dollar for an invention describing a method for installing electronic systems on-board a naval ship.

The invention probably saved hundreds of thousands of dollars and many weeks in ship construction. I never cashed the check.

The United Kingdom is far ahead of the U.S. with regard to employee compensation for patents. The UK's patent law of 1977 was amended in 2007. It states that there will be a compensation award to an employee for a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive. Among other things, the award takes the following into account:

• The nature of the employee's duties, his remuneration and the other advantages he derives or has derived from his employment or has derived relative to the invention;
• The effort and skill the employee has devoted to making the invention;
• The effort and skill that any other person has devoted to making the invention jointly with the employee concerned, and the advice and other assistance contributed by any other employee who is not a joint inventor of the invention;
• The contribution made by the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, by the provision of opportunities and by his managerial and commercial skill and activities;
• When you join a company make sure the employment agreement you sign provides compensation for patented inventions. Or, maybe there will be a patent reform act in the U.S. that covers this compensation like it does in other countries. But, don't hold your breath.

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