As part of his employment relationship, an employee developed an algorithm to which the employee applied for patent rights after the employment relationship had ended. However, the Maritime and Commercial Court found that the employee was not entitled to the invention in accordance with the Danish Employee Inventions Act, and that it was therefore a violation of the Danish Trade Secrets Act to make use of it after the employment relationship had ended.
The circumstances of the case:
As part of his work at the company Oticon A/S, the employee had developed a so-called DBSA invention, which is a special algorithm. In connection with the invention, a so-called DBSA report, i.e. a technical report on the activities of the invention, was prepared.
The employee resigned from his position at Oticon on 31 March 2012 without notifying Oticon of the invention, and after that the employee filed several patent applications regarding the invention in question.
As Oticon believed the invention belonged to them, the court was to decide who had the rights to the invention in question.
According to the Employee Inventions Act, section 5, 1st sentence, an employer is entitled to claim that inventions made by an employee as part of his employment relationship are transferred to the employer if the invention is deemed to have been achieved during the employment and if the exploitation of the invention falls within the area of work of the company.
According to section 6 of the Employee Inventions Act, an employee who has made an invention covered by the above is obliged to notify the employer of the invention without undue delay and at the same time provide the employer with the necessary information for the employer to assess the significance of the invention, including whether it falls within the company's area of work.
Furthermore, it follows from section 7 of the act that in order to acquire the right of an invention in accordance with section 5, an employer must notify the employee of the assumption of such right within 4 months after the employee has given the notice pursuant to section 6.
In the case in question, it was agreed that the invention took place during the employment with Oticon, and it was also agreed that the invention was covered by the Employee Inventions Act. The essential question in the case was therefore whether the employee had given notice to Oticon in accordance with section 5 of the Employee Inventions Act, and if so whether Oticon had notified the employee of the assumption of the invention within the 4-month deadline.
The Maritime and Commercial Court’s comments:
In relation to the question whether the employee notified Oticon of the invention, the court notes that the employee has the burden of proving that the correct notification has been made, with the consequence that the 4-month deadline begins to run.
On 7 October 2011, the employee submitted a DBSA report to Oticon, but the court found that neither the contents nor the purpose of the report was to notify Oticon of the invention as it instead was prepared to establish further technical and business considerations. The court held that this was also the case as to a PowerPoint presentation which was presented approx. 2 months after the DBSA report.
In this connection, the court noted that the employee could easily have fulfilled his obligation to notify the employer if he had used Oticon’s IT system for reporting inventions. A system that the employee had previously used to report other inventions.
The fact that another co-inventor had submitted a notification to Oticon about the invention 3 years and 10 months after the employee's resignation could not, in the court's view, be regarded as proper notification under the Employee Inventions Act.
As the employee had not complied with his obligation to notify in accordance with section 6 of the Employee Inventions Act on that basis, the court held that the invention belonged to Oticon.
As the employee after his resignation had unlawfully disposed of the invention as if it was his own, the employee had thus also violated the act on business secrets, just as the court ruled that the approved patent applications belonged to Oticon.
Bird & Bird’s remarks:
Primarily, the judgement states that the employee has the burden of proving that the obligation to notify has been fulfilled and that by the time of the notice, it must be clear to the employer that it is an invention and that the notice is thus given in accordance with the obligation in the Employee Inventions Act.
Furthermore, the judgment confirms that if the employee does not comply with this obligation to provide information, the starting point of section 5 of the Employee Inventions Act , which states that the employer has the right to an invention that an employee has made as part of his employment, applies if the use of the invention is within the company’s area of work.
Thus, in each single case, and in order to later have the opportunity to acquire the rights to an invention, an employee must ensure to give clear and distinct notice of the development of any such invention however provided that the employer does not assume the invention within the deadline.
Bird & Bird recommends that employees who may potentially develop inventions of interest to the company for the sake of good order are made aware of the obligations that follow from both the Employee Inventions Act and the Trade Secrets Act in their employment contracts.