Newsletter

Employee inventions – the employee's right to reasonable remuneration

by Knut Sverre Skurdal Andresen, Jenny Nondal and Sondre Arora Aaserud

Published: 23 November 2021

Pursuant to the Norwegian Employees' Inventions Act § 7, an employee is entitled to "reasonable remuneration" if the employer acquires rights to an invention made by the employee. If the value of the right acquired by the employer exceeds what the employee was reasonably expected to perform in return for the salary and other benefits the employee has received, the employee is entitled to such "reasonable remuneration" even though the parties may have agreed otherwise prior to the invention being made. Thus, if an employer does not reasonably compensate an employee in return for rights to an invention made by the employee, the employee may claim remuneration from the employer at the courts.

As of today, eleven Norwegian court decisions regarding § 7 are publicly available. In five of the cases, the courts order the employer to pay remuneration to the employee. The level of the remuneration awarded by the courts seems to be increasing. Previously, an employee could not expect more than approximately an amount equal to one year's salary of that employee. In the latest decision on this area of law from earlier this year, an employer was ordered by the Court of Appeal to pay NOK 3 million as remunerationto an employee. To our knowledge, this is the highest amount a Norwegian court has ordered an employer to pay an employee as remuneration for rights to an invention. The case illustrates the importance of properly evaluating the level of remuneration to be paid to an employee in return for rights to an invention made by the employee.

In this article, we set out how employers can ensure that employees receive "reasonable remuneration" in return for rights to an invention made by the employee.

Govern the rights to an invention in the employment agreement

Employers should regulate the rights to inventions in the employment agreement.

The employment agreement should grant the employer all rights and title to any invention made by the employee under the term of the employment. The employment agreement should explicitly state that:

The employee and the employer may agree on a borader scope, for the rights to inventions to be transferred to the employer, than what is provided under the Norwegian Employees' Inventions Act. Additionally, if the employer and the employee have not agreed on automatic transfer, the Norwegian Employees' Inventions Act requires the employer to issue a claim for such rights to be transferred to the employer, in order to obtain the rights.
Further, in order to establish an expectation that the employee will develop inventions as part of his/her employment, the job description in the employment agreement should include making inventions in the relevant field.
Lastly, the employer should carefully consider the employee's salary and other benefits, in light of the presumed value of the inventions the employee is expected to make as part of his/her work in employment.

Procedures to ensure individual assessments of remuneration

If an employee claims remuneration in return for the employer's acquisition of rights to an invention, the employer must carefully consider the following three questions for the invention in question.

Consequently, employers should have procedures in place to ensure that the three questions set out above are addressed and considered for new inventions. Employers may in some cases be obliged to provide additional remuneration to an employee, even though the employee is not entitled to such remuneration under the employment agreement. Although the assessments must be conducted specifically for each invention, invention incentive programs with pre-agreed amounts of remuneration per invention may prevent claims for further rremuneration by employees.

We regularly advise our clients on how to compensate employees for the transfer of rights to inventions to the employer.