Rights on independent contractors’ inventions according to the IP Court of Milan

An invention made by an independent contractor, if that contractor was hired to invent, belongs to the client. This principle, which is already well established in Italian case-law, has been confirmed by the IP Court of Milan in recent judgment no. 6964/2014.

In the case brought before the Milan Court, a consortium of companies contracted a professional and a NewCo to research and develop innovative solutions in one of its many fields of activity (unblocking and cleaning filters), while undertaking to bear the initial cost of research and to pay a “fair compensation” in consideration for the work, consisting of a percentage of any income arising from the commercial exploitation of the inventive results achieved. The term “fair compensation” is the same used in Article 64 of the Italian IP Code to indicate the special reward payable to employees for inventions made by them, where their duties do not comprise an inventive activity and they are not already remunerated to invent; in fact, the parties had made specific, albeit improper, reference to Article 64 of the IP Code in the agreement.

The relationship between the parties deteriorated over time; the contractors sent the consortium notices for the payment of fees that were allegedly overdue under the R&D agreement, based on the supposed exploitation of innovative solutions developed by them, and informed the client that they had filed two Italian patent applications in the field of filter unclogging and cleaning in their own name.

Before long, the dispute, which centred on the performance of the respective obligations under the agreement and the ownership of the two patent applications (only the latter of which shall be addressed here), landed before the IP Court of Milan following a lawsuit filed by the client.

On the issue of ownership, the Milan judges noted that Article 64 of the IP Code, referred to (improperly) in the agreement between the parties, established that inventions made by employees belonged in principle to the employer, but did not expressly address the ownership of rights to inventions made by independent contractors. However, the Court noted that the majority of Italian IP courts take the view that, in client-contractor relationships, when the performance of inventive activities is the subject matter of the agreement, the rights to any invention made by the contractor are vested in the client, in accordance with a general principle within the Italian legal system.

The Court, having stated that it adhered to this doctrine, found that in the case at issue the literal interpretation of the contract left no doubt that the parties had intended for the activity contracted out to the defendants to be of an inventive nature. The Court also noted that, similarly to what happens in the typical context of companies’ in-house inventions, the plaintiff had agreed to cover the initial research costs and had made its premises and equipment available for use by the defendants.

In light of the above, the Court declared that the plaintiff owned all the economic rights on any inventions made under the agreement, in particular those covered by the two patent applications filed by the defendants (which had been granted pending proceedings). It thus ordered the patents to be transferred to the plaintiff’s name and enjoined the defendants from using the related inventions.