A is employed as a development engineer at X-GmbH, a company specializing in sustainable mobility solutions. His job is to develop new technologies in the field of e-bikes. During his work, A succeeds in inventing an automatic energy management system that optimizes battery consumption based on riding style and increases range by up to 20%.
Since A developed this idea as part of his duties, he knows that it is a service invention, which in principle belongs to X-GmbH. He then informs his boss, who is also the managing director of the company, about the invention, presents the technical documentation, and explains the invention to him in a conversation.
If an employee invention exists, i.e., if all of the above conditions are met, the invention does not automatically transfer to the employer. Instead, a specific procedure must be followed to ensure that the transfer of the invention is handled correctly from a formal point of view. This process begins with the employee reporting the employee invention.
Report
The employee who made the invention is obliged to report the employee invention without delay. This means that the report must be made without culpable delay as soon as the employee becomes aware of the invention. The law does not stipulate any strict formal requirements for this report.
A fulfills his legal obligation to report the employee invention without delay. As soon as he has developed the automatic energy management system for e-bikes and recognized that it is a patentable invention, he informs his boss, who is also the managing director of X-GmbH, without undue delay. Since the invention was reported to the managing director, it has also been reported to X-GmbH.
In small companies where direct communication between employees and management is common, the notification can be informal. For example, the employee could present the invention to the managing director in person or explain it in an informal conversation. This type of notification is common in less structured corporate environments where there is close cooperation between employees and employers.
For the notification to be valid, it is sufficient for A to describe the invention in a way that is comprehensible. A therefore hands over the technical documents explaining the functioning and advantages of the system and explains the idea in a conversation. He has thus reported the invention in good time. In theory, it would also be sufficient for him to demonstrate and explain the invention to the managing director. For reasons of proof, however, it is advisable to document the invention in writing and to document the handover.
In larger companies, which often have systematic innovation management, there are usually fixed structures for handling invention disclosures. Here, the invention is often reported to a special department, such as the patent or legal department, which is responsible for managing inventions and patent applications. These departments act as an interface between the employee and management and ensure that the invention is properly registered and examined.
A writes an email to the patent department describing his invention and attaching the technical documentation. He then discusses the details directly with the responsible patent officer. The patent officer confirms receipt in writing. This means that the report has been made properly and verifiably – A himself, the patent department, and the company management are clear about the time and content of the invention report.
Although the law does not require written notification, it is common practice for invention notifications to be made in writing. For the employer, a written notification has the advantage that the invention is documented objectively. The content of the invention is thus recorded independently of the inventor, which makes it easier for the company to claim the invention and possibly patent it at a later date.
Even though the law does not require a written report, X-GmbH decides to document and file the report submitted by A in writing. This allows the company to objectively verify at any time which invention was reported and to what extent. In this way, the content of the invention is clearly recorded separately from the inventor. X-GmbH can later prove beyond doubt that the invention was reported, claim it, and prepare a patent application in the next step. This ensures that it is clearly established which invention belongs to the company.
Written documentation also offers advantages for the employee. A written invention report ensures that the invention is clearly recorded in terms of its scope and technical description. This is important not only for determining what the invention actually is, but also for the subsequent calculation and payment of remuneration to the employee if the invention is successfully exploited.
Their written report on the energy management system clearly documents what their invention consists of and what technical contribution they have made. This clear description prevents any later uncertainty as to whether it is actually a service invention and what its scope is. In addition, written confirmation from X-GmbH provides proof of when the period for claiming the invention began and when it ends, so that even if X-GmbH takes no action, A, as the inventor, has clarity as to whether the invention will be claimed at all.
Claim
Reporting a service invention does not automatically transfer the invention to the employer. Instead, the report merely gives the employer an option to claim the invention within a certain period of no more than four months. In most collective agreements, this period is reduced to three months. If the employer does not exercise this option in time, it expires.
After receiving A's invention notification, R-GmbH has a choice. If it remains inactive during the three-month period for claiming the invention or expressly refuses to claim it, the rights remain with A. However, if it claims the invention within the period, the right to apply for a patent and exploit the invention is transferred to R-GmbH.
This provision represents a key difference from German law in the treatment of employee inventions: if the employee reports an Austrian employee invention and the employer does not claim it within the deadline, the invention remains with the inventor. The employer loses its option, and the employee is free to decide whether to register the invention itself or transfer it to a third party. Under German employee invention law, the legal provision is exactly the opposite. If the employer does not actively waive its rights within the deadline, the invention automatically passes to the employer. In other words, silence leads to acquisition by the employer.
The claiming of a service invention is made by means of a declaration of intent by the employer, in which they expressly state that they are claiming the invention. Although this could also be done verbally in a small company—for example, through a direct announcement by the managing director to the inventor—this is risky for reasons of proof. If the inventor leaves the company and later registers the invention himself, the employer would have to prove that he claimed the invention in good time.
It is also advisable to confirm receipt of the claim in writing and to date it. This ensures that the inventor can prove that they have reported the invention and the employer has clear evidence that the claim was made within the deadline. This also determines the date from which the deadline for the claim begins to run.
For reasons of legal certainty, R-GmbH should obtain written confirmation of receipt from D and keep it carefully so that it can prove that the declaration of claim was received in the proper manner in the event of subsequent disputes.
The claim is not a contract in the true sense of the word. Rather, it is a unilateral declaration of intent by the employer; the inventor cannot refuse the claim. The invention is claimed by the employer's will, and the inventor must take note of this. The written confirmation merely confirms receipt of the claim without requiring the inventor's consent.
R-GmbH declares its claim to D's invention. Even if D expressly objects to the claim, the invention is transferred to R-GmbH by virtue of the declaration. D's task is limited to acknowledging the notification.
In exceptional cases, a so-called “de facto claim” may also occur. This occurs when the employer simply uses the invention without making a formal declaration. However, in this case too, it is necessary to inform the inventor whether the invention remains in his possession or is claimed by the employer. However, this method should only be considered as a last resort if other evidence is lacking.
The employer immediately begins to use or further develop the invention, and the inventor is involved in this process. In this case, there is de facto appropriation, but in the event of a dispute, this can only be proven with great effort, e.g., by hearing witnesses.
Problems arise, for example, if D leaves the company before further development has taken place. Without clear communication, he or she will not know of R-GmbH's intention to claim the invention – legally, there is then no effective claim.
A common misconception is that a service invention can only be effectively claimed if the employer subsequently also files a patent application. This is not true under Austrian law. The only decisive factor is the employer's declaration of claim within the statutory period. The employer has the choice of whether to patent the invention or use it in another way. In particular, they can decide not to disclose the invention, but to treat it as a trade secret. In this case, the know-how remains exclusively within the company and is not made public by a patent application.
In the example of R-GmbH, the employee invention relates to a process for producing battery fluid. The company decides not to apply for a patent, but to keep the process secret in order to secure a competitive advantage. In order for the rights to be transferred to R-GmbH, a clear declaration of intent to claim is required. A patent application, on the other hand, is not necessary.
Confidentiality obligations
An invention that has not been patented remains valuable only as long as it remains secret. In the phase between the reporting of the invention and the claim or even the rejection of the claim by the employer, the ownership situation of the invention has not yet been finally determined. The invention could therefore later belong to both the employer and the employee. In order to prevent the invention from losing its value during this phase, both parties – the employer and the employee – are obliged to maintain confidentiality.
A, a development engineer, made a service invention and reported it properly by informing his managing director and submitting the technical documentation. This marks the beginning of the phase in which X-GmbH has the option to claim the invention within the statutory period. Until this point, the ownership situation is not finally clarified:
The invention could belong to X-GmbH if it declares its claim. However, it could also remain with A if X-GmbH allows the deadline to pass or rejects the claim. Confidentiality is crucial, especially during this period of uncertainty. If A were to disclose the invention, its value could be lost—for example, due to a lack of novelty for a later patent application. Similarly, X-GmbH may not publish the invention until it is clear who is ultimately entitled to it.
However, once it is clear that the employer has claimed the invention, the employer, as the legal owner, is free to dispose of it and publish or exploit the invention. These rights also apply analogously to the employee if the employee invention is not claimed.
As soon as X-GmbH has expressly claimed A's service invention, it becomes the legal owner of the invention. This gives it full power of disposal:
It can apply for a patent for the invention, it can use it as a trade secret, or it can also make the invention public and publish it if this is in line with its corporate strategy.
The decision rests solely with X-GmbH, as the right to the invention is transferred entirely to it after utilization.
After the employer has utilized the invention, the obligation to maintain confidentiality may continue to exist, for example, on the basis of the employment contract, which typically obliges the employee to maintain confidentiality regarding all information that he or she has learned in his or her capacity as an employee. The employee may not disclose the invention to the public without consent.
Even though the patent secrecy obligation ends with the claim by X-GmbH, A remains subject to a contractual secrecy obligation. Such clauses are regularly found in the employment contracts of development engineers and oblige them to treat all company information as confidential, even beyond the employment relationship.
A may therefore not disclose or publish the invention without the consent of X-GmbH, even if the invention has already been claimed by X. The decision-making authority regarding disclosure or confidentiality lies exclusively with X-GmbH.
If one of the parties violates its confidentiality obligations, it may be liable for damages, for example because the invention is published and can therefore no longer be patented later.
If A publishes the invention despite its contractual confidentiality obligation, this will result in a serious disadvantage for X-GmbH. As a result of the publication, the invention is no longer considered new, meaning that a subsequent patent application is no longer possible. The economic value of the invention – in this case 3 million Euros – is thus lost.
A has therefore breached his contractual confidentiality obligation and is liable to pay damages to X-GmbH. In this case, the damage corresponds to the lost economic value of the invention, i.e., the 3 million Euros.
Even in the context of employee inventions, situations may arise in which an unauthorized application is filed. This is the case, for example, if the employee files an employee invention in his own name, even though the employer has already effectively claimed the invention. Conversely, the employer may also act without authorization if he files an application without a valid declaration of claim. In both cases, the true owner has the right to reclaim the invention by means of an application for revocation. The same applies if the employee fails to fulfill his obligation to report the invention and instead files a patent application himself: this also constitutes an unauthorized application, which can be corrected in favor of the employer upon request.
Inventor A submits the employee invention to the patent office himself without reporting it to the employer. As soon as X learns of the patent application by A, the period for claiming the invention begins for X. If X claims the invention within this period, he becomes the rightful owner retroactively.
This means that A was not entitled to file the application from the outset. X is retroactively the true beneficiary due to his claim. X can have the patent filed by A transferred to himself by filing a revocation request. The request is successful because A filed the application without authorization and X, as the employer, has a better claim due to his timely declaration of claim.
