In short the claimant, a retired employee, had invented during his employment a compressor to be used in his employer's business. The employer secured patent protection and then insisted on flat-rate compensation, the claimant having to waive his right to further compensation. In a subsequent action the claimant sought adequate remuneration, arguing that, inter alia, (i) a change in circumstances entitled him to additional compensation and (ii) the waiver was invalid according to Austrian law.
Under the Austrian Patent Act, employees (if not specifically employed for the purpose of making inventions) are entitled to adequate compensation if their invention -- or any right to use the invention -- is transferred to the employer. The agreed compensation can be adjusted (both in advance and retrospectively) if the compensation is rendered inadequate following a change in circumstances, so long as the employee is not required to repay any compensation received.
The Supreme Court, disagreeing with the Appeal Court's view that such agreements were null and void, said they were enforceable, but subject to adjustment by the courts. Payment of a flat rate can actually be advantageous for the employee, who immediately receives greater financial funds to dispose of and need not suffer any diminution in compensation if the invention drops in value later on. Thus, compensation for employee inventions may be effected either by periodic payment (licence fees) or by a single lump-sum payment.
Even though the claimant waived his right to claim further compensation, this waiver was invalid and did not affect a retrospective adjustment of the compensation. Adjustment of the amount of compensation is also permissible if the employee knew of the true value of the invention when concluding a flat-rate agreement or accepting a waiver, but could not provide sufficient evidence for that assumption. The amount of compensation will reflect the value of the invention and is to be computed on the basis of the economic significance and other relevant aspects of the invention. If the invention is at least of some internal economic relevance for the employer, compensation in the amount of what is proper in the individual case must be paid (cost benefit analysis).
The author of this note observes that the employer is at risk of extensively using an invention for which it has paid a flat-rate fee, only to find out later that, by way of a retroactive adjustment to the employee's benefit, the use turned out to be more expensive. Such a circumstance is particularly troubling for the employer if - as in the present case - other non-patented technical alternatives were available for use.
Under the Austrian Patent Act, employees (if not specifically employed for the purpose of making inventions) are entitled to adequate compensation if their invention -- or any right to use the invention -- is transferred to the employer. The agreed compensation can be adjusted (both in advance and retrospectively) if the compensation is rendered inadequate following a change in circumstances, so long as the employee is not required to repay any compensation received.
The Supreme Court, disagreeing with the Appeal Court's view that such agreements were null and void, said they were enforceable, but subject to adjustment by the courts. Payment of a flat rate can actually be advantageous for the employee, who immediately receives greater financial funds to dispose of and need not suffer any diminution in compensation if the invention drops in value later on. Thus, compensation for employee inventions may be effected either by periodic payment (licence fees) or by a single lump-sum payment.
Even though the claimant waived his right to claim further compensation, this waiver was invalid and did not affect a retrospective adjustment of the compensation. Adjustment of the amount of compensation is also permissible if the employee knew of the true value of the invention when concluding a flat-rate agreement or accepting a waiver, but could not provide sufficient evidence for that assumption. The amount of compensation will reflect the value of the invention and is to be computed on the basis of the economic significance and other relevant aspects of the invention. If the invention is at least of some internal economic relevance for the employer, compensation in the amount of what is proper in the individual case must be paid (cost benefit analysis).
The author of this note observes that the employer is at risk of extensively using an invention for which it has paid a flat-rate fee, only to find out later that, by way of a retroactive adjustment to the employee's benefit, the use turned out to be more expensive. Such a circumstance is particularly troubling for the employer if - as in the present case - other non-patented technical alternatives were available for use.
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