France’s Take on Employee Inventions and The Right to Additional Compensation

Under French law, employees creating patentable inventions in the course of their employment are entitled to a specific compensation that comes on top of their regular salary. Unknown to many, this legal obligation introduced in 1990 notably works as an incentive for employees to create and communicate more transparently about their inventions.

The French Intellectual Property Code (IPC) distinguishes between two categories of inventions that entitle employees to additional compensation:

1. “Mission” inventions are made by the employee entrusted with the duty to invent. While the invention and related IP rights automatically vest with the employer, the employee is entitled to an “additional remuneration.”
2. Inventions conceived “outside the scope of a duty to invent” can nevertheless be attributed to the employer if made as a result of the employee’s work, and/or within the field of the company’s activities, or thanks to the knowledge or use of resources provided by the company. The employer may obtain ownership subject to paying a “fair price” to the employee.

For both types of compensation, the law neither specifies the amount that must be paid nor the method to calculate it. Remuneration conditions can be laid down through industry-wide collective bargaining agreements (CBA), company-wide bargaining agreements, or (more rarely) employment contracts.

For industries significantly relying on research and development (R&D), most national CBAs address employees’ inventions and the compensation issue. While some merely reiterate the provisions of the IPC, others set clear guidance on how to calculate the amount. By way of example, the new Metallurgy CBA provides for a minimum of € 300 additional remuneration for any patentable mission invention, which can be increased if the invention is of exceptional interest to the company. The CBA for Plastics Processing does not mention any amount but underlines that the calculation should take into account the economic interest of the invention for the company and the personal and original contribution of the inventor.

As the task can be trickier in the absence of clear guidance in the CBA, case law has provided insights on how to define this obligation in the employment contract.

Assessing the “Additional Remuneration” for Mission Inventions

In practice, the additional remuneration may take the form of:

• a lump-sum bonus compensating the employee’s additional work,
• a remuneration linked to the exploitation, or
• a combination of the two (payment of a bonus when the patent is filed and, subsequently, another bonus assessed on the basis of exploitation of the invention).

Some companies can even complete this remuneration by awarding stocks. As per case law, the amount should notably be determined based on:

• the scientific and economic interest of the invention,
• the difficulties of putting the invention into practice, and
• the importance of the employee’s personal contribution or the exploitation of the invention.

Since these elements are normally assessed once the invention has been created and exploited, a lump-sum amount set in the employment contract could prove artificial. A more relevant approach could be to outline in the contract the criteria taken into account and how they would be weighed in calculating the final amount to be awarded once the company has filed for a patent and/or several months a year after its first exploitation to adequately assess its commercial impact. Employees can claim payment within three years.

Agreeing on a “Fair Price” for the Transfer of the Invention

The fair price is decided by the parties on the date on which the employer exercises its right of attribution. In the absence of agreement between the parties, the IPC stipulates that the fair price must be set by the conciliation committee (CNIS) or judges, taking into account:

• • the initial contributions of the employer and the employee, and
  • the industrial and commercial usefulness of the invention.

Judges have already held that valuation on the date on which the employer exercises its right of attribution does not prevent subsequent factors from being taken into account if they enable assessment of the development prospects of the invention.  In practice, they may also take into account the company’s involvement, particularly in terms of the resources required to carry out the invention and in assessing its industrial and commercial potential. Since this amount is not part of the employee’s remuneration, claims are subject to a five-year statute of limitation.

As it compensates transfer of ownership, the fair price is always higher than the additional remuneration in case of mission invention. To better anticipate the costs of these payments, it could be advisable to assign employees a wide duty to invent whenever possible and to append an internal grid with calculation percentages for additional remuneration in the employment contract.