In a dispute, independent arbitrators can often be helpful. Two such independent arbitration boards are located at the DPMA: the Arbitration Board under the Employee Inventions Act (Gesetz über Arbeitnehmererfindungen) and the Arbitration Board under the Act on Collective Management Organisations (Verwertungsgesellschaftengesetz). Their task is to mediate an out-of-court settlement — and there are a large variety of contentious issues out there.
Arbitration Board under the Employee Inventions Act
Provisions under the Employee Inventions Act
Employees have the obligation to report an invention made during the employment relationship to the employer.
Employers have the obligation to apply for a patent for a reported invention and are entitled to transfer the right to the patent to themselves.
THEN the employee receives a remuneration claim for it.
When something is invented in Germany, this is almost always done by an employee. That should not come as a big surprise — a company’s development environment and being integrated in operational processes provide an ideal framework for innovation.
The patent law applies to these inventions just as it does to any other invention, and initially attributes the right to the patent to the inventor. But since the invention is usually the result of the operational work environment, the Employee Inventions Act stipulates that companies can claim the rights to inventions which were created in the course of the employment for themselves. On the other hand, they are also required to file a patent for these innovations.
If the company exercises its right to claim the invention, which it can do via an explicit declaration, but also by letting the period for claiming it pass, the right to the patent will be transferred to the company. As compensation, the inventors will receive a payment that is not tied to their salary.
The exact amount of the compensation depends on the commercial applicability of the invention, the duties and position of the employee in the company and the share of the company’s contribution to the invention — so on many vague legal terms, which can easily lead to differing assessments of the situation and thus to disputes between the parties to the employment contract. This, in turn, can have a negative effect on the work relationship and hinder the development of further inventions.
For these reasons, the state has established the Arbitration Board under the Employee Inventions Act as a mediator in disputes, whose members combine legal and technical expertise. Its chairperson is a lawyer qualified for judicial office; and the two assessors are appointed to the respective arbitration proceedings from among the patent examiners according to their specific technical knowledge. Equipped with all this expertise, the Board then tries to assist with the correct understanding of the relevant employee inventions law and its appropriate application to avoid unnecessary court proceedings.
First, the Arbitration Board gives the parties the opportunity to present their views, then it submits to them a proposal for an amicable settlement. If the parties accept the settlement proposal, they enter into a private-law contract, thereby resolving the dispute.
Course of arbitration proceedings
Employees and employers
are given the opportunity to present their respective views
Arbitration Board
submits a settlement proposal
acceptance of the settlement proposal
amicable settlement = the parties conclude a private-law contract, thereby settling the dispute.
Objection to the proposal
arbitration proceedings are deemed to have failed. The parties are free to resolve their dispute elsewhere — in or out of court.
In 2024, the Arbitration Board concluded 53 proceedings; in 63% of cases, their proposals were accepted.
The following is a selection of issues dealt with by the Arbitration Board in these proceedings:
- Questions about claiming a patent originating from the “adhesive label decision” of the Federal Court of Justice — Arb.Erf. 59/20
- Inventor rights in collaborations between universities and industry — Arb.Erf. 50/22
- Offset options for the wrong application of compensation agreements — Arb.Erf. 20/23
- Interpretation and adjustment options for compensation agreements — Arb.Erf. 50/21
- Intracompany order development and supply of temporary workers — Arb.Erf. 24/23
- Lawfulness of treating inventions as a company secret — Arb.Erf. 09/22
- Monopoly use despite prior public use — Arb.Erf. 57/22
- Blocking patent — Arb.Erf. 05/23
- Consequences of abandoning established rights in IP — Arb.Erf. 26/22
For more details about these and other selected decisions by the Arbitration Board and more information about the Arbitration Board and employee inventions law, please visit the website of the DPMA.
| Requests | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Receipt of requests | 66 | 53 | 60 | 53 | 52 |
| Arbitration proceedings concluded by | |||||
| Settlement proposals and compromises | 44 | 44 | 43 | 36 | 35 |
| Proposals accepted (%) | 50.0 | 65.9 | 67.4 | 61.1 | 62.9 |
| Refusals to participate in arbitration proceedings | 19 | 16 | 6 | 9 | 11 |
| Other cases concluded, in particular, by withdrawal of request, order, provisional proposals, etc. | 9 | 8 | 2 | 6 | 7 |
| Total of cases concluded | 72 | 68 | 51 | 51 | 53 |
| Arbitration proceedings pending at the end of the year | 88 | 73 | 82 | 84 | 83 |
Arbitration Board under the Act on Collective Management Organisations
Every day, an incredible amount of works protected by copyright are used — collective management organisations (CMOs) such as GEMA facilitate the entry into licensing contracts for users as well as rightholders. Without such CMOs, restaurant owners, radio channels or streaming services would have to enter into individual licensing contracts with every composer and lyricist whose music they want to play. In addition, CMOs also collect remuneration for uses that, although permitted by law, have to be paid for.
If there is a dispute about the remuneration requested by the CMO, it can be brought before the Arbitration Board under the Act on Collective Management Organisations. The Board can also be involved for disputes between a user association and a CMO about the terms of a general agreement as well as in cases where a CMO wants to conduct an empiric investigation on the scope devices and storage mediums are utilised for legally allowed uses.
In 2024, the Arbitration Board was once again able to further reduce the number of pending proceedings. At the end of the year, 141 proceedings were pending, 67 proceedings were concluded and 57 were new, including two general agreement proceedings.
In the reviewed period, the Board decided that the online storage that cloud providers offer their customers is neither a device nor a storage medium. For this reason, it rejected the request for conducting an empiric investigation on the usage of the cloud (Sch-Urh 11/22, confirmed by the ruling of the Bavarian Highest Regional Court of 12 August 2024, file no. 101 VA 64/24, not final), as well as the requests for information and assessment addressed to various cloud providers (e.g. Sch-Urh 46/22).
The Arbitration Board also proposed a remuneration of 3.5% of the income for the use of music in circuses in general agreement proceedings (Sch-Urh 58/21).
In other general agreement proceedings (Sch-Urh 138/19), the Board looked at the remuneration payable to music authors by providers of music streaming subscriptions. It proposed a general remuneration of 9% of the provider’s income and a minimum remuneration of € 1.20 per subscriber and month, after deduction of a general agreement discount.
In addition, the Arbitration Board decided that a remuneration of € 1.50 is payable for every infotainment system with a built-in hard drive that is integrated in a power-driven vehicle (related proceedings Sch-Urh 87/20 and Sch-Urh 42/21).
All decisions mentioned here and many more are published on our website in anonymised form.
| Requests / Cases concluded | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Requests | |||||
| Total requests received | 96 | 58 | 61 | 55 | 57 |
| including inclusive contracts under Sec. 92(1), no. 3 CMO Act | 5 | 1 | 1 | 1 | 2 |
| Cases concluded by | |||||
| Settlement proposals of the Arbitration Board | 81 | 95 | 56 | 43 | 48 |
| Partial settlement proposal of the Arbitration Board | 20 | 13 | 0 | 0 | 0 |
| Order | 126 | 111 | 55 | 59 | 19 |
| Total (without partial settlement proposals) | 207 | 206 | 111 | 102 | 67 |
| Requests pending at the end of the year | 396 | 248 | 198 | 151 | 141 |
| Payment of security / provisional settlement | |||||
| Requests | 3 | 4 | 12 | 14 | 3 |
| Orders | 32 | 37 | 6 | 16 | 4 |