Compensation for employee inventions: clarifications from the Milan IP Court

(The original Italian version is published also on Diritto24 – Il Sole 24 Ore)

On 28 October, the IP Court of Milan (Business Chamber “A”) issued an interesting ruling (no. 2048/2015) on a topic of no frequent discussion: the employee’s right to compensation for the inventions realised by him/her in the execution of his/her work, where no specific salary was agreed for such inventive activity. As is known, in fact, Art. 64(2) of the Italian IP Code (“IPC”) provides that, where an employee realises an invention in the execution of their work, without being paid a specific salary for this inventive activity, the rights arising from the invention belong to the employer, but the inventor is entitled to compensation (a so-called “fair price”) “if the employer or its assignees obtain the patent or use the invention as a trade secret“.

In the decision under review, in response to the employee’s request that his right to a fair price be ascertained, and to the defences of the employing company, the Court explained various aspects of the issue.

First, the Judges stated that the employee had correctly acted against his employer, although the patent was applied for and granted to another company of the latter’s group: the law, in fact, “identifies the employer as the holder of the rights deriving from the invention and of the relevant obligation to pay compensation for the inventive activity“. “The achievement of the patent gives rise to the employer’s obligation to pay the fair price even if the patent was granted to the employer’s assignees. The express provision – by Art. 64 IPC, as amended by the amending decree – of “the employer’s assignees” acknowledges and confirms the consistent case-law formed under the previous legislation“.

The judgment then clarified that the employee is entitled to a fair price for each patent for which he/she provided the inventive activity, even if two patents have the same inventive concept, i.e. in the case of dependent inventions. “The identity of the inventive core does not, in fact, imply the identity of the inventions, which in fact are the subject of separate patents. The identity of the inventive concept is relevant, rather, with respect to the amount of the fair price, but not with respect to the ascertainment of whether the fair price is due “.

As regards the ten-year term after which the right to a fair price is barred under statute, the Judges explained that it runs from the grant of the patent, “as the employee’s right to a fair price and the corresponding obligation of the employer to pay it arise from the achievement of the patent“. This does not change due to the fact that the current Art. 64(2) IPC, unlike Art. 4 of the previous Italian Patent Law, provides that the fair price is due even if the employer decides not to patent the invention but to use it as a trade secret: the current provision merely extends the right to a fair price to cases of failure of patenting, but it does not affect the statute of limitation for cases where patents are granted.

Finally, the judgment pointed out that the fact that the employee had signed an “Assignment of Invention”, in order to allow the company to obtain the patent in the United States, does not constitute a waiver of the right to a fair price: this is because, on the one hand, “the assignment does not contain any express and unequivocal waiver to the right to a fair price, so that no waiver value can be attributed to it (see the Supreme Court’s decision no. 11305/2003)“; on the other hand, the purpose of that assignment was only “to enable the completion of the procedure for the grant of the US patent“, and was required by the US Patent Act that otherwise would have granted all rights to the inventor.

In conclusion, considering that the inventive activity had in fact been put in place by the employee, and that the employer company had not demonstrated that it paid a remuneration for such activity, the Judges declared the employee’s right to a fair price under Art. 64(2) IPC, and ordered the company to pay the costs of litigation.