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20 November 2017
Employee inventions and designs
Employee inventions applicable solely to patentable inventions
Service and free inventions
Employee invention regimes
Statutory imperative provisions on employee inventions
Employee invention requirements
Employee relations based on freedom of contract
Employee design requirements
Timeline for reporting invention and claiming ownership
No service invention without claim of full ownership
Effects of service inventions
Free invention and partial ownership claims
Filing patent applications
Fee payment to employees
Criteria and parameters for calculating fees
Inventions made by higher education bodies
Employee inventions and designs
Employee inventions and designs are two of the new Code of Industrial Property 6769's (the IP Code's) main areas of intervention. The provisions of the now repealed Decree-Law 551/1995 on Patents and Utility Models and Employee Inventions – adopted from German legislation on the subject – have undergone substantial structural modifications under the new IP Code.
The ad hoc regulation issued under the IP Code on September 29 2017 introduces the criteria and parameters to determine and calculate fees to be paid to employee inventors. As no such regulation had been issued under Decree-Law 551/1995, the issue of determining and calculating the fee to be paid to an employee inventor had previously been unaddressed.
Although they are detailed and precise, the new rules on employee inventions are open to interpretation. This update examines these structural changes and provides information and guidance on the subject.
Under the new IP Code, employee designs and inventions are addressed under separate – but to a large extent parallel – provisions:
The regulation of April 24 2017 issued under the new IP Code contains no provisions on employee inventions or designs.
The ad hoc regulation which entered into force on September 29 2017 exclusively concerns employee inventions (but not designs) and establishes the criteria and parameters to determine:
In contrast to the repealed Articles 16(1) and (2) to 33 of Decree-Law 551/1995, which distinguished between patentable inventions and non-patentable technical improvements within the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 about non-patentable technical improvements. Accordingly, under Article 113(1) of the new IP Code, employee inventions are restricted to patentable inventions only.
The IP Code distinguishes between service and free inventions and regulates employee inventions according to this basic distinction, which constitutes the main regime applicable by default and, unless otherwise specified, to private and public sector firms.
While retaining the basic distinction between service and free inventions, the new IP Code provides separate regimes for inventions made:
The IP Code provides three different regimes for employee inventions depending on the context in which they have been made.
The contractual relationship between employers and employees is based on the freedom of contract principle. Under Articles 113(4) and 117(1) of the IP Code, employers and employees can freely determine the terms of their contractual relationship.
The parties enjoy freedom of contract from the date on which:
Articles 113 to 122 of the IP Code concern employee inventions. These provisions constitute the legal framework under which an employment contract can be deemed null and void.
Law 6550 of July 3 2014 applies to inventions made by research bodies and Article 121 of the IP Code, which concerns inventions made by higher education bodies, applies to circumstances in which Law 6550 is silent.
Under Article 117(1) and (2) of the IP Code, employers cannot enter or make any factual implementation that would breach the legal provisions on employee inventions or contravene employee interests.
According to Article 25(1) of the ad hoc regulation "the terms of the collective work or service contract" (if any) or "the practice as is implemented in a work premises" which are "favourable to the employee" are taken as a basic reference.
An agreement between employers and employees is deemed null and void if it is:
The act is silent on the ownership of an invention and what happens if an agreement between an employer and an employee is deemed null and void. The same rule applies by analogy to the fee to be paid for the invention (Article 117(2) of the IP Code).
The fairness of the agreement or the fee to be paid for the invention must be contested within six months from the termination of the work or employment contract (Article 117(3) of the IP Code).
As specified under Article 113(1) of Book 4 of Chapter 5 on Employee Inventions, in order to qualify as an 'employee invention', an invention must be realised:
Further, an invention may result from the nature of the employee's work assignment or be based to a large extent on the employer's experience and activities.
As specified under Article 73(1) of Book 3 of Chapter 4 on Employee Designs, in order to qualify as an 'employee design', a design must be realised:
The design may be the result of an employer's work assignment or be based to a large extent on the experience and activities of the employer.
As regards the definition of 'employee inventions', Article 113(1) defines an 'employer' as an enterprise or firm without specifying whether it is a private or public company. If an employer is determined to be a private firm, designers working with public firms or bodies will not benefit from the provision of Article 73(1).
According to Article 73(2) for designs realised outside the scope of Article 73(1) of the new IP Code, the employer will be the rights holder of the design if the employee realises it by using knowledge from the employer's overall field of activity via means available on the employer's premises, provided that ownership of the design is claimed by 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) of the new IP Code, which concerns employee designs, will apply to designs realised by teaching staff, students or interns in the course of scientific research and activities (as specified under Article 3(1) of Act 2547).
Under Article 114(1) of the new IP Code, service inventions impose reporting obligations on employees, including making an invention declaration to their employer in written form without delay.
Articles 5(7) and 29(9) of the ad hoc regulation provide that "the employee is responsible for compensating the damages resulting from the non-respect of the obligation of reporting (the invention)".
The invention declaration must include:
Under Article 115/1 of the ad hoc regulation, employers can claim full or partial ownership of an invention within four months from 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:
Service inventions also involve an employer obligation to apply for a patent on claim of full ownership. In such cases, the employer must file the first patent application before the Patent and Trademark Office.
Under the repealed Decree-Law 551/1995, employers had the right to apply to the Patent and Trademark Office for a patent (Article 26/1) and could also file a patent application in a foreign country (Article 27/1).
Employer's must now convert an invention into a free invention on the request of the employee for countries in which the employer does not wish to obtain patent protection. This action must be taken in a reasonable timeframe in order to give the employee the possibility to file a patent application in said countries. The employer must also provide the employee with the possibility to reserve the non-exclusive right to use the invention for a fair fee in said countries and request a guarantee from the employee that its interests arising from the reserved right will be safeguarded.
Employers must provide the necessary assistance to an employee to enable him or her to make the declaration of invention.
The respective obligations and rights of the parties regarding a patent application under Article 118/1 of the new IP Code are as follows:
Service inventions also place an obligation of confidentiality:
Service inventions also involve the payment of a fee when:
Employers must pay such a fee after having claimed full ownership of an invention. However, in the case of an invalidation action where a court rules to invalidate a patent, an employee cannot request the payment of the fee.
(Article 121 of the IP Code and Articles 29 and 31 of the ad hoc regulation concern higher education bodies and Article 122 of the IP Code and Article 37 of the ad hoc regulation concern projects supported or financed by public bodies.)
An invention which is not a service invention under the meaning of 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 in the course of 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 said invention 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 (Article 119/3 of the new IP Code).
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.
The requirements for service inventions are:
Notably, while a service invention which benefits an employer requires a contractual relationship between the employer and the employee inventor, it is not classified as such just because it is made during the course of the contractual relationship. Rather, this requires an explicit decision from the employer in written form. In fact, a service invention exists only where an employer claims full ownership within the statutory four-month deadline in response to the employee's declaration of invention.
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.
Employers' claims to partial ownership render an invention a free invention under Article 115/3 of the new IP Code. These claims also give employers the right to use such inventions on the basis of partial ownership.
In such case, the employer may use the invention on the basis of partial ownership. Where such use by the employer greatly hinders the employee to valorise the invention, the employee may request that the employer claims full ownership of the invention or stops using it on the basis of partial ownership.
The employer must respond to such requests within two months from its notification. Failure to reply on time results in the termination of the employer's right to use the invention on the basis of partial ownership.
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 (Article 116/1 of the IP Code). Employers may refrain from filing a patent application where the interests of the firm so require (Article 116/2 of the code). Employers can file a patent application in respect of an invention which has become a free invention (Article 116/3 of the code).
The IP Code is silent on the country in which an employee must file the first patent application. This conflicts with the obligation on employers to file the first application in Turkey.
Patent application in a foreign country
Employers that have claimed full ownership of an invention may file an application for the protection of the invention in a foreign country (Article 116/5 of the code). The obligation on the employer to file the first patent application is lifted if (Article 116/2 of the code):
A service invention becomes a free invention under Article 116/4 of the code 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 carrying out a compulsory work assignment.
Under Article 115 of the new IP Code, a fee must be paid to an employee on an employer's claim of full or partial ownership of the invention, as stated in Article 4/1(a) of the ad hoc regulation.
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 the 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 an 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 modality of payment are determined for each inventor separately (Article 115/10 of the code).
Article 115/11 of the code provides and determines the criteria, parameters and rules to determine and calculate the fees on service inventions and the arbitration procedure in the case of disagreement regarding the fee and modality of payment.
Under Article 115/7 of the IP Code, the following will be considered when calculating the appropriate fee for a service invention:
Specific parameters and method of calculation
The fee to be paid 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:
Article 20 of the ad hoc regulation provides three categories under which an invention may fall:
The earnings generated by the invention are made up by the employer's earnings generated:
The earnings generated by an invention are determined according to Articles 12 to 18 of Chapter 3 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 period to determine fees expires when patent protection terminates (Article 22/1 of the ad hoc regulation). The obligation to pay a fee terminates in the case of an invalidation action. An employer must pay the fee until the date when the court's invalidation decision becomes final. However, where the economic impact of the patent right is diminished to an extent that releases the employer from its obligation to pay, the employee cannot request the payment of the fee (Article 23/2 of the ad hoc regulation).
Specific regime and capped fees for 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 revenues obtained from the invention (Articles 113/15 and Article 121/8 of the IP Code).
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 and body 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 of the ad hoc regulation).
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 regarding fees and payment
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).
The parties may settle their disagreements through the Mediation Law (6325/2012) before referring their differences to arbitration (Article 24/5 of the ad hoc regulation). Where there is no written arbitration agreement, the Arbitration Law (6100/2011) will apply.
The International Arbitration Law (4686/2001) applies to any cases that involve a foreign party or element.
Under Article 119/4 of the IP Code, employers can benefit from pre-emption rights where:
In the case of a pre-emption right benefiting employers, employees must make the first offer to the employer before he or she starts to exploit or use the invention in order to enable it to benefit from the invention under fair conditions without recognising that it has full ownership.
An employer's pre-emption rights terminate if it fails to reply to the employee's offer within three months from notification. Where an employer accepts an employee's offer to make use of the invention but finds the terms put forward disagreeable, such terms will be determined by the courts on agreement by the parties.
Employee pre-emption rights on full ownership
Under Article 120/1 of the IP Code, a pre-emption right exists when:
The amount to be paid to the employee for his or her invention is deemed as a prioritised debt. The liquidation office distributes such a debt by apportioning it between the prioritised creditors.
The employee may request that the status of the invention be changed to a free invention in the settlement of his or her prioritised credit.
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 the staff of higher education bodies are subject to the provisions on employee inventions, to the extent that they are not subject to the provisions provided under special laws.
The ownership of inventions that result from work performed on the basis of specific contracts concluded between teaching staff – including students and interns – with other public bodies or private firms is determined according to the terms of contract between the parties under the proviso that the provisions of other laws (where applicable) are reserved (Article 121/9 of the IP Code).
The abolition of the so-called 'professors' privilege' regarding the ownership of inventions made during the performance of work is one of main changes that the new IP Code has introduced to the area of employee inventions.
Under Article 41/1 of the repealed Decree-Law 551/1995 on Patents and Utility Models and Employee Inventions, the ownership of an invention made by teaching staff inventors rested with them. According to the new IP Code, all inventions made by teaching staff in the course of their work are deemed to belong to the higher education body concerned, on the 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 of the invention reverts to the inventor (Articles 121/3 and 4 of the new IP Code).
Under Article 121/4 of the new IP Code, higher education bodies can claim only full ownership of an invention. The term 'ownership' can be understood to mean full ownership, as the relevant provision does not expressly state that higher education bodies can claim partial ownership.
The following articles of the new IP Code are not applicable to inventions made by higher education bodies:
Under Article 121/3 of the new IP Code, 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 (Article 121/8 of the IP Code).
Objection to claim of ownership
In the case of an objection raised by a teaching staff inventor under the new IP Code, the higher education body must reconsider the case and render its reasoned decision. A negative decision will see the invention become a free invention under the last sentence of Article 121/4 of the new IP Code.
This sentence is open to interpretation, as the new IP Code is silent about the appeal to be filed following a negative decision by a higher education body which is an administrative body.
Therefore, a decision to refuse the objection can be appealed before the administrative courts and at second instance before the State Council (High Administrative Court). According to the general rule of administrative legislation, where an administration does not reply to an objection within 60 days, the objection is refused and the administrative decision is maintained.
Accordingly, where a higher education body does not reply to an objection within 60 days, the teaching staff inventor may appeal before an administrative court. Consequently, an invention will become a free invention only on the decision of a higher education body to accept an objection raised.
Under Article 121/2 of the new IP Code, teaching staff inventors must report to the higher education body details of any inventions or patent applications (if any) in written form and without delay (the timeframe is not specified in the act or ad hoc regulation).
Pre-emption rights of teaching staff inventors
The pre-emption rights of teaching staff inventors include an obligation on higher education bodies to make the first offer to assign a patent or patent application to the inventors in question. If the higher education body decides to abandon a patent or patent application after the filing of a patent application, the invention becomes a free invention.
If an offer is accepted by a teaching staff inventor, all rights are assigned to him or her. However, the higher education body may reserve the right to use the patent or patent application on a non-exclusive basis for a fair licence fee. If this proposal is not accepted by the teaching staff inventor, the rights to the patent or patent application remain with the higher education body.
Article 121 of the new IP Code will be applied in accordance with the ad hoc regulation.
Inventions made under projects supported or financed by public bodies
Article 122 of the IP Code constitutes new rules for inventions made in the scope of projects supported or financed by public bodies. Persons benefiting from such a project or support must inform the public body in question in writing within one year from the declaration of an invention if they claim ownership thereof.
Failure by the person benefiting from the project to claim ownership of the invention in a timely fashion may result in the public body claiming ownership.
Notably, 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, it appears that Article 122 will not apply to an inventor who is an employee of a firm benefiting from such project support.
Article 122/1 of the code involves an obligation:
The body supporting or financing a project can request information from the person benefiting from the project regarding the use or attempts to use an invention by regular intervals.
Further, under Article 122/3 of the code, contractual terms apply for distributing revenue that result from the use of such an invention.
The body supporting or financing a project has the right to 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).
In addition, 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.
Inventions made in research and development or design development centres established on the basis of Law 5746/2008 and inventions made in technology development centres established on the basis of Law 4691/2001 are excluded from the application of Article 122 of the IP Code to the extent that the invention is realised in the context of works carried out under projects supported by public bodies without being subject to a contract or based on a project.
The new IP Code introduces three different regimes depending on the context in which an invention is made, which is complex in itself. Whether these regimes will achieve their aim to increase the number of inventions created is unclear. It appears likely that the three regimes which the IP Code provides will result in substantially different practices and differences regarding the fees and modality of payment for inventions. This in turn is likely to result in difficulties and inconsistencies regarding implementation and arbitration.
The ad hoc regulation complements the legal basis that was missing until now to determine the fees to be paid to employee inventors. It is expected that this will permit a more complete application of the rules on employee inventions.
The new IP Code and the ad hoc regulation contain points which 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. In short, the complete set of rules are now available and ready for application.
For further information on this topic please contact Mehmet Nazιm Aydιn Deris at Deriş Patents and Trademarks Agency by telephone (+90 212 252 6122) or email (email@example.com). The Deriş Patents and Trademarks Agency website can be accessed at www.deris.com.tr.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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