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Introductory example

D has been an engineer in the development department at R-GmbH for years and works on new solutions for sustainable energy storage. In the summer, E joins the company as an intern from June to September. E is motivated and brings fresh ideas from his studies. While discussing the existing battery technology at R-GmbH, which has been working with rigid modules up to now, the two talk about possible improvements. In the process, they have a decisive insight: they develop the concept of a flexible battery unit that can be put together like a puzzle. This idea would have major advantages—for example, for electric vehicles or portable devices with varying energy requirements. The modular design would allow customers to flexibly expand their energy storage without having to purchase a completely new system.

The vast majority of inventions are made by employees. These are usually people who are employed for research or development as part of their specific employment contract. However, it may also be the case that the specific invention is made without a specific development assignment by a person who, for example, uses, assembles, or repairs the products in question.

An invention initially belongs to the inventor or group of inventors who made the invention. However, even in an employment relationship, it is possible to assign the right to the invention and the right to file a patent application for it. For most employment relationships, this is already contractually stipulated in advance.

The invention—the concept of the flexible battery unit—initially belongs jointly to D and E, as both have made an intellectual contribution to it. They are therefore co-inventors and thus have the right to dispose of the invention and file a patent application. However, as both are employed by R-GmbH, there will usually be an obligation to assign the invention.

Typical employment contracts often contain clauses to this effect, which transfer the right to file patent applications for inventions made by the employee to the employer. In principle, freedom of contract also applies here, so that an employment contract may regulate the assignment of rights to inventions. The assignment of such rights is also legally permissible in an employment relationship. The employer is granted a legitimate interest in the research results it has financed.

For inventors D and E, the transfer of invention rights may already be agreed in advance in the employment contract. This means that R-GmbH is granted the right to apply for patents and exploit inventions made by its employees. In return, D and E are to receive appropriate financial compensation for their inventions.

At the same time, labor law provides that the employee is protected against possible exploitation by the employer. The law represents a minimum barrier that cannot be undercut. This means that no agreements can be made in an employment contract that place the employee in a worse position than that prescribed by law. However, agreements that place the employee in a better position are permissible. In addition to their regular remuneration, employees should also receive an additional incentive for their inventive activity in the form of financial remuneration.

Austrian law stipulates that inventors must receive remuneration as soon as the employer claims the rights to the invention. This statutory minimum remuneration may not be deviated from to the detriment of the employee. A complete waiver of remuneration would therefore be invalid. However, it is permissible to contractually improve the position of inventors: for example, the employment contract may stipulate that D and E receive twice the remuneration provided for by law. This ensures that economically weaker employees are protected, while at the same time leaving room for fair or generous additional agreements.

Unlike in areas such as patentability or patent infringement, where the regulations are often similar, there are considerable differences worldwide in the treatment of employee inventions. In the US, for example, it is possible to agree on the transfer of inventions without remuneration, which is not permitted in Austria and Germany. There are also differences between Austria and Germany, which are highlighted below.

Austrian employee invention law only applies to inventions made within the framework of an Austrian employment relationship. The location of the employment relationship is decisive in this respect. If there is no Austrian employment relationship, the rules of another country apply.

Since D and E work for R-GmbH in Graz, both have an Austrian employment relationship. This means that Austrian employee invention law applies to their invention. This means that R-GmbH can claim the rights to the invention, but only on condition that D and E receive the remuneration prescribed by law. If, on the other hand, the workplace were in Germany, German employee invention law would apply instead of Austrian law. This provides for a system for remuneration and the use of inventions by the employer, but differs from the Austrian system in details.

Requirements for the existence of a service invention

For an invention to be considered a service invention, it must originate from an employee and be created within the scope of an employment relationship. An employment relationship exists if the person in question is organizationally integrated into the employer's business and performs their work according to the employer's instructions. The decisive factor is therefore whether the inventor acts economically independently or whether they are part of the operational structure, like a typical employee or worker. However, there is no employment relationship if someone works completely independently and is organisationally independent, for example as an externally commissioned engineer.

D and E are both employees. As an employee of R-GmbH, D is firmly integrated into the company and is therefore undoubtedly covered by employment law. Although only an intern, E also works within the structures of R-GmbH, carries out tasks according to instructions, and is organizationally integrated into the company. He is therefore also subject to employee invention law.

Austrian employee invention law does not stipulate that inventions made by employees automatically belong to the employer. Rather, a contractual basis is required to transfer the rights to employee inventions to the employer. In practice, this transfer is almost always regulated by collective agreements, which provide for a blanket assignment of employee inventions to the employer. In addition, in many cases there are also individual contracts, especially for employees in the research and development sector. Different special regulations apply to certain groups such as public servants or university staff.

In the case of D, the legal situation is clear: his employment contract expressly stipulates that employee inventions are transferred to R-GmbH. In the case of E, however, the individual contract is silent on this point. However, as an intern, his employment relationship is covered by a collective agreement, which generally stipulates that employee inventions are transferred to the employer. This means that there is also a valid agreement in the case of E, and the rights to the joint invention of D and E are contractually transferred to R-GmbH.

For an invention to be considered a service invention, it is not decisive whether it was created during working hours or at the company. The only decisive factor is that it was created during a valid employment relationship, i.e., at a time when a valid employment contract existed. The employment relationship begins on the first day of work and only ends with termination by dismissal, expiry of the contract, or other reasons. Within this period, every invention is considered a service invention—regardless of whether it is made during working hours, in free time, on weekends, or even at night.

For D and E, this means that even if their idea came about over a beer after work, their employment relationship still existed – and so it is a service invention. The same would apply if D called E while on vacation and they came up with the idea together during the phone call: as long as the employment relationship is still in place, the invention meets the requirements of a service invention.

If an invention is made after the end of the employment relationship, it is no longer considered a service invention but belongs to the former employee. The exact timing can often be problematic, as employers may try to establish a connection to the previous employment relationship. In such cases, there are regular revocation proceedings to determine whether the invention was made during or after the employment relationship.

In the case of D and E, this difference is clear: the joint invention is made in October, i.e., at a time when the internship had already ended in September. For E, therefore, it is no longer a service invention; at this point in time, he is the sole owner of his contribution. For D, on the other hand, the employment relationship continues, which is why his contribution is considered a service invention and thus belongs to R-GmbH.

If the employment relationship ends—for example, through termination, expiry of the contract, or other termination—any inventions made thereafter are no longer covered by the employee invention law. They belong to the (former) employee himself. If there is a dispute about the exact time of the invention, for example, whether it was made during or after the employment relationship, this is decided in the context of a disqualification procedure. The employer bears the burden of proof that the invention was actually made during the period of employment. If the employer cannot prove this, the invention is deemed to have been made after the end of the employment relationship and belongs to the former employee.

D terminates his employment with R-GmbH in September and subsequently becomes self-employed. He hires E, whose internship had previously ended. Together, they work on a new invention, but it remains unclear exactly when it was created. D and E claim that the invention was not made until November, i.e., after the end of D's employment. R-GmbH, on the other hand, claims that the invention was already created in July and is therefore a service invention. If R-GmbH cannot prove the claimed date of creation with evidence such as work records or internal documentation, an application for revocation will fail. In this case, the invention is not considered a service invention, but continues to belong to D and E personally.

For an invention to be considered a service invention, it must be possible to assign the invention to the field of activity of the employer's company. This term is to be interpreted broadly: it covers not only inventions that arise directly within the scope of the employee's contractually agreed tasks, but also those that are more broadly related to the company's business areas. The decisive factor is whether the invention fits into the company's field of activity in terms of its nature – not whether it is processed in the inventor's department. This means that employees outside the research and development department can also make service inventions.

D is employed in the solar cell department of R-GmbH. However, due to personal motivation, he also worked on storage technologies and developed an invention in this field. Although batteries were not part of his direct job responsibilities, the business purpose of R-GmbH includes both solar cells and battery storage. The invention therefore clearly falls within the scope of the company's activities and is classified as a service invention. The fact that the invention was made outside the department is irrelevant for its legal classification. However, this circumstance may play a role in determining the remuneration for D, as he was working outside his immediate duties.

An invention is only not considered a service invention if it is made outside the company's territory. The decisive factor is whether it belongs to the company's field of business in terms of its nature and purpose. In case of doubt, consultation with the company can clarify whether it wishes to claim the invention. In practice, employers regularly claim inventions only if they are related to their field of activity.

D and E work for R-GmbH, a company that deals with solar cells and storage technologies. In their spare time, however, they develop a goalkeeper glove with improved adhesive properties because they both share a passion for materials science and soccer. Since this invention does not fall within the scope of R-GmbH's business, it is not a service invention but a free invention. D and E can therefore use or register it independently without R-GmbH being able to assert any rights to it. The company has no claim to the invention and is not obliged to pay any inventor's remuneration.

In order for an invention to be classified as a service invention, Austrian service inventor law requires that, in addition to the requirements described above, at least one of the following three conditions must be met:

Invention within the scope of official duties: The invention was made in the course of fulfilling the employee's contractual obligations. This means that the employee developed the invention within the scope of the tasks expressly assigned to him in the employment relationship. This is the classic case of a service invention, in which the invention is part of the work for which the employee was hired.

In the case of D and E: Both work in the storage department of R-GmbH, where they are conducting research on a new type of battery on behalf of the company. During this work, they jointly develop a novel battery cell with higher energy density. Since the invention was made directly within the department and thus within the scope of their official duties, it is clearly a service invention. The rights to it are transferred to R-GmbH, subject to statutory remuneration.

Invention through company suggestion: Although the invention was not expressly created within the scope of contractual duties, it was inspired by a suggestion or inspiration from the company environment. This can happen, for example, through discussions with colleagues or through information (plans, inspection of machines, etc.) that the employee has received during his work at the company. The idea for the invention therefore arises from the company context, even if it was not directly part of the inventor's assigned tasks.

In the case of D and E: D works in the storage department and also acts as an intern supervisor. For him, the development of a new battery type falls directly within his contractual duties – therefore, this is a classic service invention. E , on the other hand, was actually employed as an intern in the IT department. His involvement in the battery cell idea only came about because he talked to D about memory development and was inspired by it. For E, therefore, this is not an invention arising from his employment duties, but rather a company suggestion that nevertheless falls under the law on employee inventions because it originated in the company context of R-GmbH.

Invention using company resources: The invention was made possible by the use of company resources. These include technical aids such as machines, tools, or special software provided to the employee by the company. Even if the invention was not directly part of the contractual duties, it is classified as a service invention if it would not have been possible without these company-owned aids.

Assume that D is a developer of solar cells and is also an internship supervisor at R-GmbH; E is also involved in the development of solar cells as an intern. As part of the internship supervision , both had access to the battery laboratory. While working in the company laboratory, D and E came up with a novel idea for improving solar cells. Since the invention was made in the R-GmbH laboratory and would not have been possible without the resources available there, it is clearly a service invention to which R-GmbH is entitled.